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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

Form 10-Q

(Mark One)ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended September 30, 2009ORo

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




Commission
File Number

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

State of Incorporation

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

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


Delaware


42-1648585333-85141

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


Delaware


87-0630358




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

Huntsman Corporation


YES ý


NO oHuntsman International LLC


YES ý


NO o


Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Huntsman Corporation


YES o


NO oHuntsman International LLC


YES o


NO o


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

Huntsman Corporation

Large accelerated filer ý

Accelerated filer o

Non-accelerated filer o

Smaller reporting company oHuntsman International LLC

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý

Smaller reporting company o


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

Huntsman Corporation


YES o


NO ýHuntsman International LLC


YES o


NO ý




On
October 29, 2009, 237,285,576 shares of common stock of Huntsman Corporation were outstanding and 2,728 units of membership interests of Huntsman International LLC were
outstanding. There is no established trading market for Huntsman International LLC's units of membership interests. All of Huntsman International LLC's units of membership interests are
held by Huntsman Corporation.



This
Quarterly Report on Form 10-Q presents information for two registrants: Huntsman Corporation and Huntsman International LLC. Huntsman
International LLC is a wholly owned subsidiary of Huntsman Corporation and is the principal operating company of Huntsman Corporation. The information reflected in this Quarterly Report on
Form 10-Q is equally applicable to both Huntsman Corporation and Huntsman International LLC, except where otherwise indicated. Huntsman International LLC meets the
conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and, to the extent applicable, is therefore filing this form with a reduced disclosure
format.



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Table of Contents



HUNTSMAN CORPORATION AND SUBSIDIARIES        HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD        ENDED SEPTEMBER 30,
2009        TABLE OF CONTENTS



PagePART I

FINANCIAL INFORMATION


3ITEM 1.

Financial Statements:


3Huntsman Corporation and Subsidiaries:Condensed Consolidated Balance Sheets (Unaudited)


3Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)


4Condensed Consolidated Statements of Cash Flows (Unaudited)


6Condensed Consolidated Statements of Equity (Unaudited)


8Huntsman International LLC and Subsidiaries:Condensed Consolidated Balance Sheets (Unaudited)


10Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)


11Condensed Consolidated Statements of Cash Flows (Unaudited)


12Condensed Consolidated Statements of Equity (Unaudited)


14Huntsman Corporation and Subsidiaries and Huntsman International LLC and Subsidiaries:Notes to Condensed Consolidated Financial Statements (Unaudited)


16ITEM 2.

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


74ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk


101ITEM 4.

Controls and Procedures


101PART II

OTHER INFORMATION


103ITEM 1.

Legal Proceedings


103ITEM 1A.

Risk Factors


103ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds


104ITEM 6.

Exhibits


105


2

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Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS



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

September 30,
2009

December 31,
2008ASSETSCurrent assets:Cash and cash equivalents

$
1,619

$
657Restricted cash


7


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


1,154


905Accounts receivable from affiliates


3


8Inventories


1,113


1,500Prepaid expenses


59


45Deferred income taxes


18


21Other current assets


107


99Total current assets


4,080


3,240Property, plant and equipment, net


3,562


3,649Investment in unconsolidated affiliates


263


267Intangible assets, net


133


153Goodwill


94


92Deferred income taxes


203


284Notes receivable from affiliates


9


9Other noncurrent assets


366


364Total assets

$
8,710

$
8,058LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
735

$
731Accounts payable to affiliates


12


16Accrued liabilities


632


617Deferred income taxes


36


36Current portion of debt


198


205Total current liabilities


1,613


1,605Long-term debt


4,028


3,677Notes payable to affiliates


5


6Deferred income taxes


344


117Other noncurrent liabilities


1,017


1,021Total liabilities


7,007


6,426Commitments and contingencies (Notes 14 and 15)EquityHuntsman Corporation stockholders' equity:Common stock $0.01 par value, 1,200,000,000 shares authorized, 237,297,159 and 234,430,334 issued and 233,968,776 and 233,553,515 outstanding in 2009 and
2008, respectively


2


2Additional paid-in capital


3,152


3,141Unearned stock-based compensation


(12
)

(13
)Accumulated deficit


(1,054
)

(1,031
)Accumulated other comprehensive loss


(404
)

(489
)Total Huntsman Corporation stockholders' equity


1,684


1,610Noncontrolling interests in subsidiaries


19


22Total equity


1,703


1,632Total liabilities and equity

$
8,710

$
8,058


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

3

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

Three Months
Ended
September 30,

Nine Months
Ended
September 30,2009

2008

2009

2008Revenues:Trade sales, services and fees, net

$
2,090

$
2,703

$
5,630

$
8,085Related party sales


18


28


37


82Total revenues


2,108


2,731


5,667


8,167Cost of goods sold


1,771


2,381


4,948


7,068Gross profit


337


350


719


1,099Operating expenses:Selling, general and administrative


214


231


611


692Research and development


36


39


108


118Other operating income





(16
)

(9
)

(3
)Restructuring, impairment and plant closing costs


62


3


139


8Total operating expenses


312


257


849


815Operating income (loss)


25


93


(130
)

284Interest expense, net


(65
)

(69
)

(178
)

(199
)Loss on accounts receivable securitization program


(3
)

(7
)

(13
)

(16
)Equity in (loss) income of unconsolidated affiliates


(1
)

3


1


10(Expenses) income associated with the Terminated Merger and related litigation


(2
)

(26
)

835


(35
)Loss on early extinguishment of debt


(21
)




(21
)

Other income


1


1


1


1(Loss) income from continuing operations before income taxes


(66
)

(5
)

495


45Income tax expense





(17
)

(449
)

(42
)(Loss) income from continuing operations


(66
)

(22
)

46


3(Loss) income from discontinued operations, net of tax


(2
)

1


(2
)

5(Loss) income before extraordinary gain


(68
)

(21
)

44


8Extraordinary gain on the acquisition of a business, net of tax of nil





1





10Net (loss) income


(68
)

(20
)

44


18Net loss (income) attributable to noncontrolling interests








4


(7
)Net (loss) income attributable to Huntsman Corporation

$
(68
)
$
(20
)
$
48

$
11Net (loss) income

$
(68
)
$
(20
)
$
44

$
18Other comprehensive income (loss)


38


(163
)

86


(46
)Comprehensive (loss) income


(30
)

(183
)

130


(28
)Comprehensive (income) loss attributable to noncontrolling interests


(1
)




3


(7
)Comprehensive (loss) income attributable to Huntsman Corporation

$
(31
)
$
(183
)
$
133

$
(35
)


(continued)

4

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

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

(In Millions, Except Per Share Amounts)

Three Months
Ended
September 30,

Nine Months
Ended
September 30,2009

2008

2009

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

$
(0.28
)
$
(0.10
)
$
0.21

$
(0.02
)(Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax


(0.01
)







0.02Extraordinary gain on the acquisition of a business, net of tax





0.01





0.05Net (loss) income attributable to Huntsman Corporation common stockholders

$
(0.29
)
$
(0.09
)
$
0.21

$
0.05Weighted average shares


234.0


233.6


233.9


231.4Diluted (loss) income per share:(Loss) income from continuing operations attributable to Huntsman Corporation common stockholders

$
(0.28
)
$
(0.10
)
$
0.21

$
(0.02
)(Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax


(0.01
)




(0.01
)

0.02Extraordinary gain on the acquisition of a business, net of tax





0.01





0.05Net (loss) income attributable to Huntsman Corporation common stockholders

$
(0.29
)
$
(0.09
)
$
0.20

$
0.05Weighted average shares


234.0


233.6


238.1


231.4Dividends per share

$
0.10

$
0.10

$
0.30

$
0.30Amounts attributable to Huntsman Corporation common stockholders:(Loss) income from continuing operations

$
(66
)
$
(22
)
$
50

$
(4
)(Loss) income from discontinued operations, net of tax


(2
)

1


(2
)

5Extraordinary gain on the acquisition of a business, net of tax





1





10Net (loss) income

$
(68
)
$
(20
)
$
48

$
11


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

5

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

Nine Months Ended
September 30,2009

2008Operating Activities:Net income

$
44

$
18Adjustments to reconcile net income to net cash provided by operating activities:Extraordinary gain on the acquisition of a business, net of tax





(10
)Equity in income of unconsolidated affiliates


(1
)

(10
)Dividends received from unconsolidated affiliates





11Depreciation and amortization


338


290Provision for losses on accounts receivable


7


3(Gain) loss on disposal of assets


(2
)

4Loss on early extinguishment of debt


21


Noncash interest expense


14


2Noncash restructuring, impairment and plant closing costs


5


3Deferred income taxes


311


15Net unrealized (gain) loss on foreign currency transactions


(8
)

16Stock-based compensation


14


16Other, net


2


2Changes in operating assets and liabilities:Accounts and notes receivable


(225
)

(53
)Inventories


424


(98
)Prepaid expenses


(13
)

(17
)Other current assets


(4
)

21Other noncurrent assets


(23
)

(125
)Accounts payable


25


(3
)Accrued liabilities


(13
)

20Other noncurrent liabilities


(9
)

(59
)Net cash provided by operating activities


907


46Investing Activities:Capital expenditures


(140
)

(325
)Proceeds from sale of assets, net of adjustments


5


(26
)Acquisition of business


(31
)

Investment in unconsolidated affiliate





(37
)Acquisition of intangible assets





(9
)Other, net


2


(3
)Net cash used in investing activities


(164
)

(400
)


(continued)

6

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Table of Contents

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

Nine Months Ended
September 30,2009

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

$
(10
)
$
370Net repayments of overdraft facilities


(14
)

(3
)Net repayments on short-term debt


(25
)

Repayments of long-term debt


(528
)

(7
)Proceeds from long-term debt


874


24Repayments of notes payable


(55
)

(35
)Proceeds from notes payable


63


40Dividends paid to common stockholders


(71
)

(70
)Dividends paid to preferred stockholders





(4
)Call premiums paid related to early extinguishment of debt


(14
)

Repurchase and cancellation of stock awards





(4
)Debt issuance costs paid


(5
)

(2
)Other, net


(1
)

Net cash provided by financing activities


214


309Effect of exchange rate changes on cash


5


(2
)Increase (decrease) in cash and cash equivalents


962


(47
)Cash and cash equivalents at beginning of period


657


154Cash and cash equivalents at end of period

$
1,619

$
107Supplemental cash flow information:Cash paid for interest

$
160

$
186Cash paid for income taxes


145


21


During
the nine months ended September 30, 2009 and 2008, the amount of capital expenditures in accounts payable decreased by $29 million and $2 million,
respectively. The value of share awards that vested during the nine months ended September 30, 2009 and 2008 was $11 million and $13 million, respectively. In connection with the
June 2009 Baroda acquisition, $5 million of payables from us to Metrochem Industries Limited were forgiven.

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

7

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(Dollars in Millions)

Huntsman Corporation Stockholders'Common Stock







Accumulated
other
comprehensive
lossAdditional
paid-in
capital

Unearned
stock-based
compensation

Accumulated
deficit

Noncontrolling
interests in
subsidiaries

Total
equityShares

AmountBalance, January 1, 2009


233,553,515

$
2

$
3,141

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

$
1,632Net income (loss)














48





(4
)

44Other comprehensive income

















85


1


86Issuance of nonvested stock awards








7


(7
)










Vesting of stock awards


550,052




















Recognition of stock-based compensation








4


8











12Repurchase and cancellation of stock awards


(134,791
)



















Dividends declared on common stock














(71
)







(71
)Balance, September 30, 2009


233,968,776

$
2

$
3,152

$
(12
)
$
(1,054
)
$
(404
)
$
19

$
1,703


(continued)

8

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) (Continued)

(Dollars in Millions)

Huntsman Corporation Stockholders'SharesCommon
Stock

Mandatory
convertible
preferred
stock

Common
Stock

Mandatory
convertible
preferred stock

Additional
paid-in
capital

Unearned
stock-based
compensation

Accumulated
deficit

Accumulated
other
comprehensive
income

Noncontrolling
interests in
subsidiaries

Total
equityBalance, January 1, 2008


221,036,190


5,750,000

$
2

$
288

$
2,831

$
(12
)
$
(1,540
)
$
257

$
27

$
1,853Net income




















11





7


18Other comprehensive loss























(46
)




(46
)Issuance of nonvested stock awards














12


(12
)










Vesting of stock awards


594,908











1














1Recognition of stock-based compensation














7


9











16Preferred stock conversion


12,082,475


(5,750,000
)




(288
)

288














Repurchase and cancellation of stock awards


(160,058
)
















(4
)







(4
)Effect of adoption of SFAS No. 158, (currently included in ASC 715-20-55), net of tax




















(3
)







(3
)Dividends declared on common stock




















(70
)







(70
)Balance, September 30, 2008


233,553,515




$
2

$


$
3,139

$
(15
)
$
(1,606
)
$
211

$
34

$
1,765


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

9

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

September 30,
2009

December 31,
2008ASSETSCurrent assets:Cash and cash equivalents

$
788

$
87Restricted cash


7


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


1,154


905Accounts receivable from affiliates


32


15Inventories


1,113


1,500Prepaid expenses


58


45Deferred income taxes


18


21Other current assets


122


99Total current assets


3,292


2,677Property, plant and equipment, net


3,397


3,466Investment in unconsolidated affiliates


263


267Intangible assets, net


136


157Goodwill


94


92Deferred income taxes


311


392Notes receivable from affiliates


9


9Other noncurrent assets


366


364Total assets

$
7,868

$
7,424LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
720

$
728Accounts payable to affiliates


43


16Accrued liabilities


625


560Deferred income taxes


36


35Note payable to affiliate


25


423Current portion of debt


197


205Total current liabilities


1,646


1,967Long-term debt


3,792


3,442Notes payable to affiliates


530


6Deferred income taxes


110


69Other noncurrent liabilities


1,013


1,021Total liabilities


7,091


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


3,111


2,865Accumulated deficit


(1,888
)

(1,414
)Accumulated other comprehensive loss


(465
)

(554
)Total Huntsman International LLC members' equity


758


897Noncontrolling interests in subsidiaries


19


22Total equity


777


919Total liabilities and equity

$
7,868

$
7,424


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

10

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

Three Months
Ended
September 30,

Nine Months
Ended
September 30,2009

2008

2009

2008Revenues:Trade sales, services and fees, net

$
2,090

$
2,703

$
5,630

$
8,085Related party sales


18


28


37


82Total revenues


2,108


2,731


5,667


8,167Cost of goods sold


1,766


2,376


4,935


7,055Gross profit


342


355


732


1,112Operating expenses:Selling, general and administrative


214


231


603


693Research and development


36


39


108


118Other operating income





(16
)

(9
)

(3
)Restructuring, impairment and plant closing costs


62


3


139


8Total operating expenses


312


257


841


816Operating income (loss)


30


98


(109
)

296Interest expense, net


(64
)

(68
)

(177
)

(199
)Loss on accounts receivable securitization program


(3
)

(7
)

(13
)

(16
)Equity in (loss) income of unconsolidated affiliates


(1
)

3


1


10Loss on early extinguishment of debt


(21
)




(21
)

Other income


1


1


1


1(Loss) income from continuing operations before income taxes


(58
)

27


(318
)

92Income tax benefit (expense)


19


(19
)

(135
)

(47
)(Loss) income from continuing operations


(39
)

8


(453
)

45(Loss) income from discontinued operations, net of tax


(2
)

1


(2
)

5(Loss) income before extraordinary gain


(41
)

9


(455
)

50Extraordinary gain on the acquisition of a business, net of tax of nil





1





10Net (loss) income


(41
)

10


(455
)

60Net loss (income) attributable to noncontrolling interests








4


(7
)Net (loss) income attributable to Huntsman International LLC

$
(41
)
$
10

$
(451
)
$
53Net (loss) income

$
(41
)
$
10

$
(455
)
$
60Other comprehensive income (loss)


39


(162
)

90


(42
)Comprehensive (loss) income


(2
)

(152
)

(365
)

18Comprehensive (income) loss attributable to noncontrolling interests


(1
)




3


(7
)Comprehensive (loss) income attributable to Huntsman International LLC

$
(3
)
$
(152
)
$
(362
)
$
11


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

11

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Table of Contents



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

Nine Months
Ended
September 30,2009

2008Operating Activities:Net (loss) income

$
(455
)
$
60Adjustments to reconcile net (loss) income to net cash provided by operating activities:Extraordinary gain on the acquisition of a business, net of tax





(10
)Equity in income of unconsolidated affiliates


(1
)

(10
)Dividends received from unconsolidated affiliates





11Depreciation and amortization


321


273Provision for losses on accounts receivable


7


3(Gain) loss on disposal of assets


(2
)

4Loss on early extinguishment of debt


21


Noncash interest expense


24


2Noncash restructuring, impairment and plant closing costs


5


3Deferred income taxes


125


20Net unrealized (gain) loss on foreign currency transactions


(8
)

16Noncash compensation


10


16Other, net


1


2Changes in operating assets and liabilities:Accounts and notes receivable


(225
)

(53
)Inventories


424


(98
)Prepaid expenses


(12
)

(16
)Other current assets


(19
)

17Other noncurrent assets


(23
)

(125
)Accounts payable


2


(21
)Accrued liabilities


37


23Other noncurrent liabilities


(5
)

(55
)Net cash provided by operating activities


227


62Investing Activities:Capital expenditures


(140
)

(325
)Proceeds from sale of assets, net of adjustments


5


(26
)Acquisition of business


(31
)

Investment in unconsolidated affiliates, net





(37
)Decrease (increase) in receivable from affiliate


8


(91
)Acquisition of intangible assets





(9
)Other, net


2


(7
)Net cash used in investing activities


(156
)

(495
)


(continued)

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

(Dollars in Millions)

Nine Months
Ended
September 30,2009

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

$
(10
)
$
370Net repayments of overdraft facilities


(14
)

(3
)Net repayments of short-term debt


(25
)

Repayments of long-term debt


(528
)

(7
)Proceeds from long-term debt


874


24Repayments of notes payable


(52
)

(35
)Proceeds from notes payable


60


40Repayment of notes payable to affiliate


(403
)

Proceeds from notes payable to affiliate


529


Dividends paid to parent


(23
)

Call premiums paid related to early extinguishment of debt


(14
)

Contribution from parent


236


Debt issuance costs paid


(5
)

Other, net


(1
)

(2
)Net cash provided by financing activities


624


387Effect of exchange rate changes on cash


6


(1
)Increase (decrease) in cash and cash equivalents


701


(47
)Cash and cash equivalents at beginning of period


87


154Cash and cash equivalents at end of period

$
788

$
107Supplemental cash flow information:Cash paid for interest

$
153

$
186Cash paid for income taxes


18


21


During the nine months ended September 30, 2009 and 2008, the amount of capital expenditures in accounts payable decreased by
$29 million and $2 million, respectively. During the nine months ended September 30, 2009 and 2008, Huntsman Corporation contributed $10 million and $16 million,
respectively, to Huntsman International related to stock-based compensation. In connection with the June 2009 Baroda acquisition, $5 million of payables from us to Metrochem Industries Limited
were forgiven.

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

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

Huntsman International LLC MembersMembers' equityAccumulated
deficit

Accumulated other
comprehensive loss

Noncontrolling
interests in
subsidiaries

Total
equityUnits

AmountBalance, January 1, 2009


2,728

$
2,865

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

$
919Net loss








(451
)




(4
)

(455
)Other comprehensive income











89


1


90Contribution from parent





246











246Dividends paid to parent








(23
)







(23
)Balance, September 30, 2009


2,728

$
3,111

$
(1,888
)
$
(465
)
$
19

$
777


(continued)

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HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) (Continued)

(Dollars in Millions)

Huntsman International LLC MembersMembers' equityAccumulated
deficit

Accumulated other
comprehensive income

Noncontrolling
interests in
subsidiaries

Total
equityUnits

AmountBalance, January 1, 2008


2,728

$
2,845

$
(1,143
)
$
187

$
27

$
1,916Net income








53





7


60Other comprehensive loss











(42
)




(42
)Contribution from parent





16











16Effect of adoption of SFAS No. 158, (currently included in ASC 715-20-55), net of tax








(3
)







(3
)Balance, September 30, 2008


2,728

$
2,861

$
(1,093
)
$
145

$
34

$
1,947


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

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

1. GENERAL

CERTAIN DEFINITIONS

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

In
this report, we occasionally use, without definition, the common names of competitors, other industry participants, and the common names or abbreviations for certain chemicals or
products.

INTERIM FINANCIAL STATEMENTS

The
interim condensed consolidated financial statements (unaudited) of our Company and Huntsman International were prepared in accordance with accounting
principles generally accepted in the United States of America ("GAAP" or "U.S. GAAP") and in management's opinion, reflect all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of results of operations, financial position and cash flows for the periods presented. Results for interim periods are not necessarily indicative of those to be
expected for the full year. These condensed consolidated financial statements (unaudited) should be read in conjunction with the respective audited consolidated financial statements and notes thereto
included in our Current Report on Form 8-K filed on July 30, 2009.

DESCRIPTION OF BUSINESS

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

We
currently operate in five segments: Polyurethanes, Advanced Materials, Textile Effects, Performance Products and Pigments. Our Polyurethanes, Advanced Materials, Textile Effects and
Performance Products segments produce differentiated organic chemical products and our Pigments segment produces inorganic chemical products. In a series of transactions completed in 2006 and 2007, we
sold substantially all of our former Polymers and Base Chemicals operations. We report the results of these businesses as discontinued operations. For more information, see "Note 20.
Discontinued Operations."

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

1. GENERAL (Continued)

COMPANY

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

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

HUNTSMAN CORPORATION AND HUNTSMAN INTERNATIONAL FINANCIAL STATEMENTS

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



PRINCIPLES OF CONSOLIDATION

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

USE OF ESTIMATES

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

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

1. GENERAL (Continued)

RECLASSIFICATIONS

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

SUBSEQUENT EVENTS

We
have evaluated material subsequent events through the time these financial statements were issued on November 4, 2009. For more information, see
"Note 2. Recently Issued Accounting Pronouncements."

On
October 16, 2009, we terminated our existing accounts receivable securitization program ("A/R Securitization Program") and entered into two new securitization programs. At that
time, the receivables trust repaid the entire balance of commercial paper outstanding under our existing A/R Securitization Program using proceeds received from the new programs. For more information,
see "Note 9. Securitization of Accounts Receivable."

RECENT DEVELOPMENTS



On August 28, 2009, we entered into an asset and equity purchase agreement (the "Tronox Purchase Agreement"), pursuant to which
our wholly owned subsidiaries, Huntsman Pigments LLC and Huntsman Australia R&D Company Pty Ltd, agreed to acquire certain assets of Tronox Incorporated and its subsidiaries ("Tronox")
under Section 363 of Chapter 11 of the United States Bankruptcy Code as well as certain assets and equity interest, including working capital, of Tronox's foreign subsidiaries, for an
aggregate purchase price of approximately $415 million (the "Tronox Transaction"). We intend to finance approximately fifty percent of the purchase price with debt. The assets to be acquired in
connection with the Tronox Transaction include:



Tronox's
joint venture partner in Australia, Exxaro Resources Limited, has agreed to waive contractual restrictions on the transfer of Tronox's joint venture interests to us, including
applicable

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

1. GENERAL (Continued)

right
of first refusal and change of control rights, in the event we are approved by the bankruptcy court as the buyer.

The
Tronox Purchase Agreement is subject to approval by the United States Bankruptcy Court for the Southern District of New York, in which the bankruptcy cases of Tronox Incorporated and
14 of its subsidiaries under Chapter 11 of the United States Bankruptcy Code are being jointly administered as In re Tronox Corporation, et al., Case No. 09-10156 (ALG). We
entered into the Tronox Purchase Agreement as a "stalking horse" bidder, and the Tronox Transaction is subject to Tronox's
solicitation of higher or otherwise better offers pursuant to specified bidding procedures and an auction process to be conducted under supervision of the bankruptcy court. We made a
$12 million refundable deposit toward the purchase price on the date of the execution of the Tronox Purchase Agreement and, to date, we have incurred $8 million in costs related to the
Tronox Transaction. On September 16, 2009, the bankruptcy court approved the bidding procedures and granted certain benefits and bid protections to us in our role as "stalking horse" bidder,
including expense reimbursement up to $3 million. We have the option to amend our bid should another bidder submit an offer that is greater than our bid described above. A decision to amend our
bid will not be made unless and until a superseding bid is made. Under the bidding procedures order, other potential bidders must, among other things, submit an irrevocable offer and a
$15.45 million good faith deposit on or before December 1, 2009. On November 2, 2009, we announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 ("HSR Act") has expired, which is a requirement to close on the Tronox Transaction.

The
Tronox Transaction is also subject to the satisfaction of various conditions specified in the Tronox Purchase Agreement. We can provide no assurance as to if or when the Tronox
Transaction will close; moreover, if the Tronox Transaction does not close, we can provide no assurance that we will receive all or part of any refundable deposit or expense reimbursement.



On September 7, 2009, we announced that we will close our styrenics facility located at West Footscray, Australia. We expect to
cease operation of the West Footscray styrene plant at or near year end 2009, with subsequent closure of our polystyrene and expandable polystyrene plants in early 2010. During the third quarter of
2009, we recorded closure costs of approximately $55 million ($25 million primarily in severance and a $30 million preliminary estimate of environmental remediation costs) and
expect to incur other closure related costs of approximately $15 million in 2010. We can provide no assurance that the eventual environmental remediation costs will not be materially different
from our current estimate. Products produced at the site represent less than 2% of our 2008 global sales. Our styrenics operations posted an operating loss of approximately $29 million in 2008.
Our other operations in Australia, including our RMAX® expandable polystyrene business, Performance Products, Polyurethanes, Textile Effects and Advanced Materials divisions, are not
affected by the announcement and will continue to operate in Australia.

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

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

We adopted Accounting Standards Update ("ASU"): No. 2009-01,Topic 105Generally Accepted Accounting
Principlesamendments based on Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles, as of September 30, 2009. Statement of Financial Accounting Standards ("SFAS") No. 168 replaces SFAS No. 162, The Hierarchy of Generally Accepted Accounting
Principles, and establishes the FASB Accounting Standards Codification as the source of
authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases
of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants as a result of this statement. As a result of
our adoption of this ASU, we have included references, where applicable, to the FASB Accounting Standards Codification in this report.

In
October 2009, the Financial Accounting Standards Board ("FASB") issued ASU No. 2009-13,Revenue Recognition (Topic 605):
Multiple-Deliverable Revenue Arrangementsa consensus of the FASB Emerging Issues Task Force. This ASU provides amendments to the criteria for separating
consideration in multiple-deliverable arrangements. The amendments in this ASU replace the term "fair value" in the revenue allocation guidance with "selling price" to clarify that the allocation of
revenue is based on entity-specific assumptions rather than assumptions of a marketplace participant, and they establish a selling price hierarchy for determining the selling price of a deliverable.
The amendments in this ASU will eliminate the residual method of allocation and require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the
relative selling price method, and they significantly expand the required disclosures related to multiple-deliverable revenue arrangements. The amendments in this ASU will be effective prospectively
for revenue arrangements entered into or materially modified in fiscal years beginning after June 15, 2010. We are evaluating this ASU to determine its impact on our consolidated financial
statements.

In
September 2009, the FASB issued ASU No. 2009-12,Fair Value Measurement and Disclosures (Topic 820): Investments in Certain Entities That
Calculate Net Asset Value per Share (or its Equivalent). This ASU provides guidance on measuring the fair value of certain alternative investments
and offers investors a practical expedient for measuring the fair value of investments in certain entities that calculate net asset value per share. This ASU is effective for the first reporting
period ending after December 15, 2009. We are evaluating this ASU to determine its impact on our consolidated financial statements.

We
adopted ASU No. 2009-05,Fair Value Measurements and Disclosures (Topic 820): Measuring Liabilities at Fair Valueas
of September 30, 2009. This ASU provides amendments to Accounting Standards Codification Subtopic 820-10, Fair Value Measurements and DisclosuresOverall, for the fair
value measurement of liabilities. It provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is
required to measure fair value using (a) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities and/or
(b) an income approach valuation technique or a market approach valuation technique, consistent with the principles of Topic 820. This ASU did not have a significant impact on our consolidated
financial statements.

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

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)

In
June 2009, the FASB issued SFAS No. 167,Amendments to FASB Interpretation No. 46(R)(pending integration to the ASC).
This statement amends FASB Interpretation No. ("FIN") 46(R),Consolidation of Variable Interest Entities, to replace the quantitative-based risks and
rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with a qualitative approach. This new approach focuses on identifying which
enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance and (1) the obligation to absorb losses of the
entity or (2) the right to receive benefits from the entity. It also requires ongoing assessments of whether an enterprise is the primary beneficiary of a variable interest entity, and it
requires additional disclosures about an enterprise's involvement in variable interest entities. This statement is effective for the first annual reporting period beginning after November 15,
2009. We are evaluating this statement to determine its impact on our consolidated financial statements.

In
June 2009, the FASB issued SFAS No. 166,Accounting for Transfers of Financial Assetsan amendment of FASB Statement
No. 140(pending integration to the ASC). This statement removes the concept of a qualifying special-purpose entity ("QSPE") from SFAS No. 140 and removes the
exception from applying FIN 46(R) to QSPEs. SFAS No. 166 modifies the derecognition provisions in SFAS No. 140 and requires that a transferor recognize and initially measure at
fair value all assets obtained (including a transferor's beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. It also requires
additional disclosures regarding the transferor's continuing involvement with transferred financial assets and the related risks retained. This statement is effective for the first annual reporting
period beginning after November 15, 2009. We are evaluating this statement, as well as SFAS No. 167, to determine their impact on our consolidated financial statements and we believe
sales of accounts receivable under our new securitization programs will no longer meet the criteria for derecognition upon adoption of this standard. Accordingly, we
believe the amounts outstanding under our new accounts receivable securitization programs will be accounted for as secured borrowings beginning in January 2010. See "Note 9. Securitization of
Accounts Receivable."

We
adopted SFAS No. 165,Subsequent Events(currently included in ASC 855-10), as of June 30, 2009. This
statement requires the disclosure of the date through which an entity has evaluated subsequent events and whether that date represents the date the financial statements were issued or were available
to be issued. We evaluate subsequent events through the date the financial statements are issued.

We
adopted FASB Staff Position ("FSP") No. FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or Liability
Have Significantly Decreased and Identifying Transactions That Are Not Orderly(currently included in ASC 820-10-65-4) as of June 30,
2009. This FSP provides guidance for estimating the fair value of an asset or liability when the volume and level of activity for the asset or liability have significantly decreased, as well as
guidance on identifying circumstances that indicate a transaction is not orderly. It also requires disclosure in interim and annual periods of the inputs and valuation techniques used to measure fair
value and a discussion of changes in valuation techniques and related inputs, if any, during the period. This statement did not have a significant impact on our consolidated financial statements.

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

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)

We
adopted FSP No. FAS 107-1 and APB 28-1,Interim Disclosures about Fair Value of Financial
Instruments(currently included in ASC 825-10-65-1), as of June 30, 2009. This FSP amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to
require disclosures about fair value of financial instruments for interim reporting periods as
well as in annual financial statements. This FSP also requires disclosure about the methods and significant assumptions used to estimate the fair value of financial instruments and changes in those
methods and significant assumptions, if any, during the period. See "Note 10. Fair Value."

We
adopted SFAS No. 141 (R),Business Combinations(currently included in ASC 805), which replaced SFAS No. 141, Business Combinations,and SFAS
No. 160 on January 1, 2009. These statements significantly change the accounting for business combinations
and noncontrolling interests. Among other things, these statements require more assets acquired and liabilities assumed to be measured at fair value as of the acquisition date, liabilities related to
contingent consideration to be remeasured to fair value each subsequent reporting period, an acquirer in preacquisition periods to expense all acquisition-related costs, and noncontrolling interests
in subsidiaries initially to be measured at fair value and to be presented separately in the financial statements. Upon adoption of this standard, we recorded a charge of $1 million in the
first quarter of 2009 to selling, general and administrative
expenses to write off previously deferred acquisition costs related to our Baroda acquisition. See "Note 3. Business Combinations." We retroactively applied the presentation and disclosure
requirements of SFAS No. 160 to all prior periods presented.

We
adopted FSP No. FAS 141(R)-1,Accounting for Assets Acquired and Liabilities Assumed in a Business Combination that Arise from
Contingencies(currently included in ASC 805), on January 1, 2009. This FSP requires assets acquired and liabilities assumed in a business combination that arise from
contingencies to be recognized at fair value if fair value can be reasonably estimated. If fair value of such assets and liabilities cannot be reasonably estimated, the assets or liabilities would
generally be recognized in accordance with SFAS No. 5,Accounting for Contingencies, and FIN 14,Reasonable
Estimation of the Amount of a Loss. Further, this FSP requires contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination to be
initially recognized and subsequently measured at fair value in accordance with SFAS 141(R). The adoption of this FSP did not have a significant impact on our consolidated financial statements.

We
adopted Emerging Issues Task Force ("EITF") Issue No. 08-6,Equity Method Investment Accounting Considerations(currently included in ASC 323-10), on January 1, 2009. EITF 08-6 clarifies the accounting for certain transactions and impairment considerations involving equity
method investments. The adoption of this standard did not have a significant impact on our consolidated financial statements.

In
December 2008, the FASB issued FSP No. FAS 132(R)-1,Employers' Disclosures about Postretirement Benefit Plan Assets(currently included in ASC 715-20-65-2). This FSP provides guidance on an employers' disclosures about plan assets of a defined benefit pension or other
postretirement plan. The disclosures about plan assets required by this FSP will be provided in our Annual Report on Form 10-K for the year ended December 31, 2009.

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

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)

We
adopted SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activitiesan Amendment of FASB Statement
133(currently included in ASC 815-10-65-1) on January 1, 2009. SFAS No. 161 requires enhanced disclosures regarding the
effect of an entity's derivative instruments and related hedging activities on its financial position, financial performance and cash flows. See "Note 8. Derivative Instruments and Hedging
Activities."

3. BUSINESS COMBINATIONS

BARODA ACQUISITION

On
June 23, 2009, we announced the acquisition of the Baroda Division ("Baroda") of Metrochem Industries Limited ("MCIL"), a
manufacturing facility for the production of intermediates and specialty dyes for textiles, located in Baroda, India. Baroda had been a significant supplier to our Textile Effects division and this
acquisition strengthens the Textile Effects division's competitiveness and supports its development in Asia. We initially entered into an agreement to acquire Baroda on June 29, 2007. The
initial agreement provided either party with the right to terminate the agreement if a transaction was not consummated by April 30, 2008. On February 6, 2009, we entered into a
non-binding agreement in principle with MCIL under which the purchase price was revised to be approximately $35 million (U.S. dollar equivalents), which includes receivables
existing on the closing date due to MCIL from our affiliates, which were also settled at acquisition. Payment of the acquisition cost was phased in various tranches. The first tranche of
$7 million was paid during 2008; additional tranches were paid during the nine months ended September 30, 2009; and a final payment of $2 million, subject to adjustment, will be
made upon completion of the audit of net working capital acquired. In addition, $5 million of accounts payable by us to MCIL were forgiven in connection with this acquisition. A majority of the
purchase price was funded through local financing.

We
have accounted for the Baroda acquisition using the acquisition method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed. The
preliminary

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

3. BUSINESS COMBINATIONS (Continued)

allocation
of acquisition cost to the assets acquired and liabilities assumed is summarized as follows (dollars in millions):

Acquisition cost:Cash payment made in 2008

$
7Cash payments made in 2009


31Forgiveness of amounts payable from us to MCIL


(5
)Amounts payable as of September 30, 2009


2Total acquisition cost

$
35Fair value of assets acquired and liabilities assumed:Accounts receivable

$
3Inventories


4Other current assets


2Property, plant and equipment


34Accounts payable


(3
)Accrued liabilities


(1
)Short-term debt


(3
)Deferred taxes


(1
)Total fair value of net assets acquired

$
35


The
acquisition cost allocation is preliminary pending finalization of the net working capital acquired. The acquisition cost allocation is also preliminary pending finalization of the
determination of the fair value of assets acquired and liabilities assumed, including final valuation of property, plant and equipment, intangible assets, estimates of asset retirement obligations and
determination of related deferred taxes. For purposes of this preliminary allocation of fair value, we have assigned any excess of acquisition cost over historical carrying values to property, plant
and equipment and no amounts have been allocated to goodwill. We expect that it is reasonably possible that changes to this allocation could occur.

TEXTILE EFFECTS ACQUISITION

On
June 30, 2006, we acquired Ciba's textile effects business (the "Textile Effects Acquisition") and accounted for the Textile Effects Acquisition
using the purchase method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed and we determined the excess of fair value of net assets over cost.
Because the fair value of the acquired assets and liabilities assumed exceeded the purchase price, the valuation of the long-lived assets acquired was reduced to zero. Accordingly, no
basis was assigned to property, plant and equipment or any other non-current nonfinancial assets and the remaining excess was recorded as an extraordinary gain, net of taxes (which were
not applicable because the gain was recorded in purchase accounting). During the three and nine months ended September 30, 2008, we recorded additional extraordinary gain of $1 million
and $10 million, respectively, related to the reversal of accruals for certain employee termination costs

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HUNTSMAN CORPORATION AND SUBSIDIARIES

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

3. BUSINESS COMBINATIONS (Continued)

recorded
in connection with the Textile Effects Acquisition and a reimbursement by Ciba of certain restructuring costs associated with the acquisition.

4. INVENTORIES

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

September 30,
2009

December 31,
2008Raw materials and supplies

$
250

$
282Work in progress


82


88Finished goods


822


1,192Total


1,154


1,562LIFO reserves


(41
)

(62
)Net

$
1,113

$
1,500


For
each of September 30, 2009 and December 31, 2008, approximately 9% of inventories were recorded using the LIFO cost method. For the three months ended
September 30, 2009, inventory quantities were reduced, resulting in a liquidation of certain LIFO inventory layers carried at costs lower than the cost of current purchases, the effect of which
decreased cost of goods sold by approximately $1 million. For the nine months ended September 30, 2009, inventory quantities were reduced, resulting in a liquidation
of certain LIFO inventory layers carried at costs that were higher than the cost of current purchases, the effect of which increased cost of goods sold by approximately $1 million.

In
the normal course of operations, we at times exchange raw materials and finished goods with other companies for the purpose of reducing transportation costs. The net
non-monetary open exchange positions are valued at cost. The amounts included in inventory under non-monetary open exchange agreements payable by us as of September 30,
2009 and December 31, 2008 were $10 million and $19 million, respectively. Other open exchanges are settled in cash and result in a net deferred profit margin. The amounts under
these types of open exchange agreements receivable by us at September 30, 2009 and December 31, 2008 were nil and $5 million, respectively.

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

5. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

As of September 30, 2009 and December 31, 2008, accrued restructuring costs by type of cost and initiative consisted of the following (dollars in millions):

Workforce
reductions(1)

Demolition and
decommissioning

Non-cancelable
lease costs

Other
restructuring
costs

Total(2)Accrued liabilities as of January 1, 2009

$
58

$
1

$
3

$
13

$
752009 charges for 2006 initiatives





1








12009 charges for 2008 initiatives


4











42009 charges for 2009 initiatives


81


8





14


103Reversal of reserves no longer required


(4
)










(4
)2009 payments for 2003 initiatives


(1
)










(1
)2009 payments for 2004 initiatives


(1
)










(1
)2009 payments for 2006 initiatives


(24
)

(1
)







(25
)2009 payments for 2008 initiatives


(14
)










(14
)2009 payments for 2009 initiatives


(24
)

(8
)




(12
)

(44
)Foreign currency effect on reserve balance


2








(2
)

Accrued liabilities as of September 30, 2009

$
77

$
1

$
3

$
13

$
94


(1)Of
the total workforce reduction reserves of $77 million, $11 million relates to restructuring programs recorded in connection with purchase
business combinations and are expected to be paid through 2009. The total workforce reduction reserves of $77 million relate to the termination of 695 positions, of which 402 positions had not
been terminated as of September 30, 2009.(2)Accrued
liabilities by initiatives were as follows (dollars in millions):


September 30,
2009

December 31,
20082003 initiatives & prior

$
8

$
92004 initiatives


4


62006 initiatives


2


262008 initiatives


11


242009 initiatives


59


Foreign currency effect on reserve balance


10


10Total

$
94

$
75


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

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



Details with respect to our reserves for restructuring and plant closing costs are provided below by segment and initiative (dollars in millions):

Polyurethanes

Advanced
Materials

Textile
Effects

Performance
Products

Pigments

Corporate
& Other

TotalAccrued liabilities as of January 1, 2009

$
3

$
1

$
63

$
1

$
7

$


$
752009 charges for 2006 initiatives








1











12009 charges for 2008 initiatives


1





1





2





42009 charges for 2009 initiatives





13


13





43


34


103Reversal of reserves no longer required








(2
)




(2
)




(4
)2009 payments for 2003 initiatives


(1
)
















(1
)2009 payments for 2004 initiatives














(1
)




(1
)2009 payments for 2006 initiatives








(25
)










(25
)2009 payments for 2008 initiatives








(11
)




(3
)




(14
)2009 payments for 2009 initiatives





(4
)

(3
)




(34
)

(3
)

(44
)Foreign currency effect on reserve balance








(1
)







1


Accrued liabilities as of September 30, 2009

$
3

$
10

$
36

$
1

$
12

$
32

$
94Current portion of restructuring reserve

$
3

$
10

$
36

$
1

$
7

$
32

$
89Long-term portion of restructuring reserve














5





5Estimated additional future charges for current restructuring projectsEstimated additional charges within one year

$


$
1

$


$


$
9

$
15

$
25Estimated additional charges beyond one year














1





1


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

Three months ended
September 30, 2009

Nine months ended
September 30, 2009Cash charges:2009 charges for 2006 initiatives

$


$
12009 charges for 2008 initiatives


2


42009 charges for 2009 initiatives


31


103Reversal of reserves no longer required


(1
)

(4
)Environmental remediation accrual recorded in connection with the Australian styrenics closure


30


30Non-cash charges





5Total restructuring, impairment and plant closing costs

$
62

$
139


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

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



Three months ended
September 30, 2008

Nine months ended
September 30, 2008Cash charges:2008 charges for 2004 initiatives

$
1

$
22008 charges for 2008 initiatives


2


4Reversal of reserves no longer required


(1
)

(1
)Non-cash charges


1


3Total restructuring, impairment and plant closing costs

$
3

$
8


During
the nine months ended September 30, 2009, our Advanced Materials segment recorded charges of $13 million primarily related to workforce reductions in connection with
a reorganization designed to implement a regional management structure. We expect to incur additional charges of $1 million primarily related to workforce reductions in Germany through 2011.

During
the nine months ended September 30, 2009, our Textile Effects segment recorded charges of $15 million primarily related to workforce reductions at our production
facility in Langweid, Germany and reversed $2 million of accruals no longer required related to the streamlining of the Textile Effects business into two global strategic business units,
apparel & home textiles and specialty textiles, as announced during the fourth quarter of 2008. We also recorded a non-cash benefit of $1 million for pension curtailment
associated with our workforce reduction.

During
the nine months ended September 30, 2009, our Pigments segment recorded charges of $45 million, of which $29 million primarily related to the closure of our
Grimsby, U.K. plant and $16 million primarily related to workforce reductions at our Huelva, Spain plant. Of the $29 million charges at our Grimsby plant, $13 million related to
contract terminations, $8 million related to workforce reductions and $8 million related to decommissioning. We also recorded non-cash charges of $4 million primarily
related to a provision against engineering spare parts at our Grimsby plant. We expect to incur additional charges of $10 million primarily related to the closure of our Grimsby plant through
June 30, 2010.

During
the nine months ended September 30, 2009, we recorded charges of $34 million in Corporate and Other, of which $25 million related to workforce reductions
associated with the closure of our styrenics operations in West Footscray, Australia and $9 million related to other aspects of our 2009 fixed cost reduction projects announced in the first
quarter of 2009. We expect to incur additional charges of $15 million related to the West Footscray closure through 2010. In addition, we recorded $30 million of estimated environmental
remediation costs associated with the closure of our Australian styrenics operations. For more information regarding the closure of our West Footscray, Australia styrenics operations, see
"Note 1. GeneralRecent DevelopmentsClosure of Australian Styrenics Operations." We also recorded a non-cash impairment charge of $1 million
primarily related to capital expenditures and turnaround costs associated with our Australian styrenics business. The long-lived assets of our Australian styrenics business were previously
determined to be impaired. Capital expenditures and turnaround costs in this business, which are necessary to maintain operations, are also considered to be impaired immediately after they are
incurred.

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

6. INVESTMENT IN UNCONSOLIDATED AFFILIATES

During 2008, we contributed $44 million as our 50% equity contribution to our ethyleneamines manufacturing joint venture in Jubail Industrial City, Saudi Arabia (the "Saudi Joint
Venture") with Zamil Group. The Saudi Joint Venture's funding requirements will be satisfied through a combination of debt and equity, with the equity already provided on a 50/50 basis by us and Zamil
Group. The Saudi Joint Venture obtained various loan commitments in the aggregate amount of approximately $195 million (U.S. dollar equivalents), of which $166 million was drawn and
outstanding as of September 30, 2009. We expect to reach mechanical completion of the manufacturing facility by the end of the fourth quarter of 2009. We have provided certain guarantees of
approximately $14 million for these commitments which will terminate upon completion of the project and satisfaction of certain conditions. We have estimated that the fair value of these
guarantees was nil as of the closing date of this transaction and, accordingly, no amounts have been recorded. The Saudi Joint Venture is accounted for under the equity method.

7. DEBT

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

Huntsman Corporation

September 30,
2009

December 31,
2008Senior Credit Facilities:Term loans

$
1,966

$
1,540Secured notes





295Senior notes


430


198Subordinated notes


1,308


1,285Australian credit facilities


38


41HPS (China) debt


157


196Other


91


92Convertible notes


236


235Total debt

$
4,226

$
3,882Current portion

$
198

$
205Long-term portion


4,028


3,677Total debt-excluding affiliates

$
4,226

$
3,882Total debt-excluding affiliates


4,226


3,882Notes payable to affiliates


5


6Total debt

$
4,231

$
3,888


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

7. DEBT (Continued)

Huntsman International

September 30,
2009

December 31,
2008Senior Credit Facilities:Term loans

$
1,966

$
1,540Secured notes





295Senior notes


430


198Subordinated notes


1,308


1,285Australian credit facilities


38


41HPS (China) debt


157


196Other


90


92Total debt

$
3,989

$
3,647Current portion

$
197

$
205Long-term portion


3,792


3,442Total debt-excluding affiliates

$
3,989

$
3,647Total debt-excluding affiliates

$
3,989

$
3,647Notes payable to affiliates


555


429Total debt

$
4,544

$
4,076


DIRECT AND SUBSIDIARY DEBT

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

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

TRANSACTIONS AFFECTING OUR DEBT

Senior Credit Facilities

As of September 30, 2009, our senior secured credit facilities ("Senior Credit Facilities") consisted of (i) the
$650 million revolving loan facility ("Revolving Facility"); (ii) a $1,524 million term loan B facility ("Term Loan B"); and (iii) a $500 million
($442 million carrying value) term loan C ("Term Loan C" and collectively with Term Loan B, the "Dollar Term Loans"). As of September 30, 2009, we had no borrowings outstanding under our
Revolving Facility, and we had approximately $33 million (U.S. dollar equivalents) of letters of credit and bank guarantees issued and outstanding under our Revolving Facility. The Revolving
Facility matures in August 2010, Term Loan B matures in 2014 and

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

7. DEBT (Continued)

Term
Loan C matures in 2016; provided, however, that the maturities of the Revolving Facility and the Dollar Term Loans will accelerate if we do not repay or refinance all but
$100 million of our outstanding debt securities on or before three months prior to the maturity dates of such debt securities.

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

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



The
Waiver is effective from April 16, 2009 through June 30, 2010.

As
consideration for the Waiver, Huntsman International agreed to increase the interest paid on the Revolving Facility by 225 basis points from LIBOR plus 1.75% to LIBOR plus 4% and to
increase the applicable unused fee by 25 basis points from 0.5% to 0.75%. In addition, during the Waiver period, Huntsman International agreed not to:



Pursuant
to the Texas Bank Litigation Settlement Agreement, we entered into a Fourth Amendment to Credit Agreement dated June 22, 2009 (the "Amendment"). The Amendment created
Term Loan C.

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

7. DEBT (Continued)

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

2016 Senior Notes

Pursuant to the Texas Bank Litigation Settlement Agreement, Huntsman International entered into a Note Purchase Agreement dated
June 22, 2009 (the "Note Purchase Agreement") with affiliates of Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. (collectively, the "Banks"), pursuant to
which the Banks purchased $600 million aggregate principal amount of 2016 Senior Notes from Huntsman International (the "2016 Senior Notes").

The
2016 Senior Notes are senior unsecured obligations of Huntsman International and are guaranteed by certain subsidiaries named as guarantors.

The
2016 Senior Notes bear interest at the rate of 5.5% per year payable semi-annually on June 30 and December 31, beginning on December 31, 2009. The
2016 Senior Notes will mature on June 30, 2016. Huntsman International may redeem the 2016 Senior Notes in whole at any time or in part from time to time, upon not less than 30 nor more than
60 days' notice, at a redemption price equal to the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the date of redemption. The 2016 Senior Notes are governed by
an indenture imposing certain limitations on the ability of Huntsman International and its subsidiaries to, among other things, incur additional indebtedness; pay dividends or make certain other
restricted payments; enter into certain transactions with affiliates; create dividend or other payment restrictions affecting restricted subsidiaries; merge or consolidate with any other person; sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all of their assets; or adopt a plan of liquidation.

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

As
of September 30, 2009, we had outstanding $600 million ($430 million carrying value) of 2016 Senior Notes with an effective interest rate of 11.73%.

Redemption of Notes

On July 23, 2009, Huntsman International redeemed in full all of its $296 million 11.625% senior secured notes due
October 2010. The total redemption payment, excluding accrued interest, was $305 million, which included principal of $296 million and a call premium of approximately $9 million.

On
August 3, 2009, Huntsman International redeemed in full all of its $198 million 11.5% senior notes due July 2012. The total redemption payment, excluding accrued
interest, was $204 million, which included principal of $198 million and a call premium of $6 million.

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

7. DEBT (Continued)

Other Debt (India)

In connection with the Baroda acquisition, a portion of the purchase price was funded through local financing and from liquidity
available from our subsidiaries located in India. As of September 30, 2009, our local Indian entities had combined debt outstanding of approximately $19 million (U.S. dollar
equivalents). This debt is comprised of various facilities including approximately $9 million (U.S. dollar equivalents) in working capital facilities that are callable on demand and a five year
term loan facility of approximately $10 million (U.S. dollar equivalents). See "Note 3. Business Combinations."

Intercompany Note

As of September 30, 2009, under an existing promissory note (the "Intercompany Note"), we have loaned $550 million to our
subsidiary, Huntsman International. The Intercompany Note is unsecured and $25 million of the outstanding amount is classified as current as of September 30, 2009 on the accompanying
condensed consolidated balance sheets (unaudited). As of September 30, 2009, under the terms of the Intercompany Note, Huntsman International promises to pay us interest on the unpaid principal
amount at a rate per annum based on the previous monthly average borrowing rate obtained under our A/R Securitization Program for U.S. dollar outstandings, less 10 basis points (provided that the rate
shall not exceed an amount that is 25 basis points less than the monthly average borrowing rate obtained for the U.S. LIBOR-based borrowings under our Revolving Facility). Subject to the conditions of
the Waiver, with our consent, the principal and accrued interest outstanding under the Intercompany Note may also be forgiven, capitalized or satisfied with any alternate form of consideration.

Other Debt (Insurance)

During the third quarter of 2009, we incurred other debt related to the financing of our insurance premiums in connection with our
annual renewal in July 2009. As of September 30, 2009, the outstanding amount of financed insurance premiums was $29 million, all of which was classified as current. The insurance
premium financing is secured by the prepaid insurance premiums.

COMPLIANCE WITH COVENANTS

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

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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

All
derivatives, whether designated in hedging relationships or not, are recorded on our balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes
in the fair value of the derivative and the hedged items are recognized in earnings. If the derivative is designated as a cash

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

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

flow
hedge, changes in the fair value of the derivative are recorded in accumulated other comprehensive (loss) income, to the extent effective, and will be recognized in the income statement when the
hedged item affects earnings. To the extent applicable, we perform effectiveness assessments in order to use hedge accounting at each reporting period. For a derivative that does not qualify as a
hedge, changes in fair value are recognized in earnings.

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

Our
cash flows and earnings are subject to fluctuations due to exchange rate variation. Our revenues and expenses are denominated in various currencies. We enter into foreign currency
derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, we net multicurrency cash balances among our subsidiaries to help reduce
exposure to foreign currency exchange rates. Certain other exposures may be managed through financial market transactions, principally through the purchase of spot or forward foreign exchange
contracts (generally with maturities of one year or less). We do not hedge our currency exposures in a manner that would eliminate the effect of changes in exchange rates on our cash flows and
earnings. As of September 30,
2009, we had approximately $101 million notional amount (in U.S. dollar equivalents) outstanding in forward foreign currency contracts.

On
January 15, 2008, we entered into a series of forward foreign currency contracts in our Pigments segment to partially hedge the impact, for up to one year, of movements in
foreign currency rates associated with the purchases of raw materials and sales of pigment in non-functional currencies. During the first quarter of 2009, any remaining contracts matured
and the realized gains (losses) recorded in the accompanying condensed consolidated statements of operations (unaudited) were not considered significant. For the three months ended
September 30, 2008, the effective portion of the changes in the fair value totaling $4 million were recorded in other comprehensive income (loss), with ineffectiveness resulting in a
credit of nil recorded in cost of goods sold and a foreign currency gain of nil. For the nine months ended September 30, 2008, the effective portion of the changes in the fair value of
$1 million were recorded in other comprehensive income (loss), with ineffectiveness amounting to a credit of $2 million recorded in cost of goods sold and a foreign currency gain of
$1 million.

On
October 24, 2008, we unwound a cross currency interest rate swap pursuant to which we swapped $153 million of LIBOR floating rate debt payments for
€116 million of EURIBOR floating rate debt payments. This swap was not designated as a hedge for financial reporting purposes. For the three and nine months ended
September 30, 2008, we recorded a foreign currency loss on this swap of $19 and $6 million, respectively, in the condensed consolidated statement of operations (unaudited).

On
October 24, 2008, we unwound a cross currency interest rate swap pursuant to which we had swapped $96 million of LIBOR floating rate debt payments for
€71 million of EURIBOR floating rate debt payments. This swap was designated as a hedge of a net investment for financial reporting purposes. We received a net cash benefit from
the unwind of $3 million in the fourth quarter of 2008. For the three and nine months ended September 30, 2008, the effective portion of the changes in the

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

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

fair
value of $12 million and $5 million, respectively were recorded in other comprehensive income (loss).

As
of and for the nine months ended September 30, 2009, the fair value and the realized gains (losses) of our other outstanding foreign currency rate hedging contracts and
derivatives were not considered significant.

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

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

From
time to time, we review our non-U.S. dollar denominated debt and swaps to determine the appropriate amounts designated as hedges. As of September 30, 2009, we
have designated approximately €225 million ($329 million) of euro-denominated debt as a hedge of our net investments. For the three and nine months ended
September 30, 2009, the amount of loss recognized on the hedge of our net investments was $12 million and $14 million, respectively, and was recorded in other comprehensive income
(loss). As of September 30, 2009, we had approximately €916 million ($1,339 million) in net euro assets.

9. SECURITIZATION OF ACCOUNTS RECEIVABLE

As of September 30, 2009, our existing A/R Securitization Program consisted of commercial paper conduit programs with a committed amount of approximately $575 million (U.S.
dollar equivalents). As of September 30, 2009, the underlying effective capacity of the program was $402 million. As of September 30, 2009, the receivables trust under our
existing A/R Securitization Program had $258 million in U.S. dollar equivalents (comprised of $55 million and approximately €139 million ($203 million)) in
commercial paper outstanding.

Our
existing A/R Securitization Program was scheduled to mature on November 12, 2009. On October 16, 2009, we entered into a Termination and Release Agreement, pursuant to
which we terminated our existing A/R Securitization Program and replaced it with the U.S. and European programs described below. At that time, the receivables trust repaid the entire balance of
commercial
paper outstanding under our existing A/R Securitization Program using proceeds received from the new programs.

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

9. SECURITIZATION OF ACCOUNTS RECEIVABLE (Continued)

U.S. ACCOUNTS RECEIVABLE SECURITIZATION PROGRAM

On
October 16, 2009, Huntsman International entered into a new accounts receivable securitization program using Huntsman Receivable Financing
II LLC, a bankruptcy-remote special purpose entity (the "U.S. SPE"), for our U.S. originator subsidiaries (the "U.S. A/R Program").

The
maximum funding availability under the U.S. A/R Program is $250 million, which is divided between two facilities: a $125 million three-year facility and a
$125 million two-year facility. The amount of actual availability under the U.S. A/R Program is subject to change based on the level of eligible receivables sold. Availability is further
subject to changes in the credit ratings of Huntsman International's customers, customer concentration levels, and certain characteristics of the accounts receivable being transferred. The yield on
the three-year facility is based on the LIBOR rate (as defined in the applicable agreement) plus a margin rate of 3.75% per annum and, in the case of the two-year facility, if funded by commercial
paper, the CP Rate (as defined in the applicable agreement) plus a margin rate of 3.50% per annum. In addition, the U.S. SPE is obligated to pay commitment fees to the lenders based on the amount of
each lender's commitment.

The
U.S. A/R Program contains various customary affirmative and negative covenants and also contains customary default and termination provisions, which provide for acceleration of
amounts owed under the U.S. A/R Program upon the occurrence of certain specified events, including, but not limited to, failure by the U.S. SPE to pay interest and other amounts due, defaults on
certain indebtedness, certain judgments, change in control, certain events negatively affecting the overall credit quality of transferred accounts receivable, bankruptcy and insolvency events, and
failure of our Company to maintain a minimum liquidity level of $400 million (the "Liquidity Requirement"). We guarantee certain obligations of Huntsman International in its capacity as
contributor and servicer guarantor under the U.S. A/R Program.

We
expect that receivables transferred under the U.S. A/R Program will qualify as sales through December 31, 2009. However, upon adoption of new accounting guidance in 2010, we
believe that the receivables transferred will no longer meet the criteria for derecognition and amounts outstanding will be accounted for as secured borrowings.

EUROPEAN ACCOUNTS RECEIVABLE SECURITIZATION PROGRAM

Also
on October 16, 2009, Huntsman International entered into a second new accounts receivable securitization program using Huntsman Receivables
Financial LLC, a bankruptcy-remote special purpose entity (the "EU SPE"), for our European originator subsidiaries (the "EU A/R Program," and together with the U.S. A/R Program, the "A/R
Programs") for a term of two years.

The
maximum funding availability under the EU A/R Program is €225 million (approximately $329 million). The amount of actual availability under the EU A/R
Program is subject to change based on the level of eligible receivables sold. Availability is further subject to changes in the credit ratings of the originators' customers and country, customer
concentration levels, and certain characteristics of the accounts receivable being transferred. The yield is based on GBP LIBOR, USD LIBOR or EURIBOR (each as defined in the applicable agreement) plus
a margin rate of 3.75% per annum if funded by

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

9. SECURITIZATION OF ACCOUNTS RECEIVABLE (Continued)

commercial
paper. In addition, the EU SPE is obligated to pay a commitment fee to the lender based on the amount of the lender's commitment.

The
EU A/R Program contains various customary affirmative and negative covenants and also contains customary default and termination provisions, which provide for acceleration of amounts
owed under the EU A/R Program upon the occurrence of certain specified events, including, but not limited to, failure by the EU SPE to pay interest and other amounts due, defaults on certain
indebtedness, certain judgments, change in control, certain events negatively affecting the overall credit quality of transferred accounts receivable and bankruptcy and insolvency events and a cross
acceleration provision tied to the Liquidity Requirement.

We
expect that receivables transferred under the EU A/R Program will qualify as sales through December 31, 2009. However, upon adoption of new accounting guidance in 2010, we
believe that the receivables transferred will no longer meet the criteria for derecognition and amounts outstanding will be accounted for as secured borrowings.

10. FAIR VALUE

The fair value of financial instruments as of September 30, 2009 and December 31, 2008 were as follows (dollars in millions):

Huntsman Corporation

September 30, 2009

December 31, 2008Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair ValueNon-qualified employee benefit plan investments

$
14

$
14

$
10

$
10Long-term debt (including current portion)


4,226


4,200


3,882


2,537


Huntsman International

September 30, 2009

December 31, 2008Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair ValueNon-qualified employee benefit plan investments

$
14

$
14

$
10

$
10Long-term debt (including current portion)


3,989


3,833


3,647


2,302


The
carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or
short-term maturity of these financial instruments. The fair value of non-qualified employee benefit plan investments is estimated using prevailing market prices. The estimated
fair values of our long-term debt other than the Convertible Notes are based on quoted market prices for the identical liability when traded as an asset in an active market. The estimated
fair value of our Convertible Notes is based on the present value of estimated future cash flows, calculated using management's best estimates of key

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

10. FAIR VALUE (Continued)

assumptions
including relevant interest rates, expected share volatility, dividend yields and the probabilities associated with certain features of the Convertible Notes.

The
fair value estimates presented herein are based on pertinent information available to management as of September 30, 2009 and December 31, 2008. Although management is
not aware of any unusual factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since
September 30, 2009, and current estimates of fair value may differ significantly from the amounts presented herein.

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

Fair Value Amounts UsingDescription

September 30,
2009

Quoted prices
in active markets
for identical assets
(Level 1)

Significant other
observable inputs
(Level 2)

Significant
unobservable inputs
(Level 3)Assets:Available-for-sale securities(1)

$
14

$
14

$


$
Retained interest in securitized receivables(2)


319








319Total assets

$
333

$
14

$


$
319


(1)Using
the market approach, the fair value of these securities represents the quoted market price times the quantities held.(2)The
income approach is used to value these assets. Fair value is based on the present value of expected cash flows, calculated using management's best
estimates of key assumptions including credit losses and discount rates commensurate with the risks involved.


Fair Value Measurements Using Level 3

Three months ended
September 30, 2009

Nine months ended
September 30, 2009Balance at beginning of period

$
162

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


1


(9
)Purchases, issuances, and settlements


156


181Balance at end of period

$
319

$
319The amount of total gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at
September 30, 2009

$
3

$
4


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

10. FAIR VALUE (Continued)

Gains
and (losses) (realized and unrealized) included in earnings (or changes in net assets) for the three and nine months ended September 30, 2009 are reported in loss on
accounts receivable securitization program and other operating income (expense), as follows (dollars in millions):

Loss on accounts
receivable securitization
program

Other operating
income (expense)Three months
ended

Nine months
ended

Three months
ended

Nine months
endedSeptember 30, 2009

September 30, 2009Total (losses) gains included in earnings

$
(4
)
$
(17
)
$
5

$
8Changes in unrealized (losses) gains relating to assets still held at September 30, 2009


(2
)

(4
)

5


8


The
following liabilities were measured at fair value on a nonrecurring basis (dollars in millions):

Fair Value Amounts UsingDescription

Initial
Recognition

Quoted prices
in active markets
for identical assets
(Level 1)

Significant other
observable inputs
(Level 2)

Significant
unobservable inputs
(Level 3)Liabilities:2016 Senior Notes(3)

$
425

$


$


$
425Term Loan C(3)


439








439Total liabilities

$
864

$


$


$
864


(3)In
June 2009, these liabilities were measured at fair value upon initial recognition. These fair value amounts do not agree to the amounts recorded in the
accompanying condensed consolidated balance sheets (unaudited) at September 30, 2009 due to the subsequent amortization of the discounts recorded on these debt instruments. We used primarily
the income approach to determine the fair value of these instruments. Fair value represents the present value of estimated future cash flows calculated using interest rates that were available to us
for issuance of debt with similar terms, adjusted for differences in remaining maturity using relevant debt yield curves.


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

11. EMPLOYEE BENEFIT PLANS

Components of the net periodic benefit costs for the three and nine months ended September 30, 2009 and 2008 were as follows (dollars in millions):

Huntsman Corporation

Defined
Benefit Plans

Other
Postretirement
Benefit PlansThree Months
Ended
September 30,

Three Months
Ended
September 30,2009

2008

2009

2008Service cost

$
13

$
17

$
3

$
Interest cost


36


38


3


3Expected return on assets


(37
)

(47
)




Amortization of prior service cost


(1
)

(1
)

(1
)

(1
)Amortization of actuarial loss


8


1


(3
)

1Special termination benefits


1








Net periodic benefit cost

$
20

$
8

$
2

$
3




Defined
Benefit Plans

Other
Postretirement
Benefit PlansNine Months
Ended
September 30,

Nine Months
Ended
September 30,2009

2008

2009

2008Service cost

$
46

$
55

$
5

$
2Interest cost


106


116


7


7Expected return on assets


(107
)

(144
)




Amortization of transition obligation





1





Amortization of prior service cost


(4
)

(4
)

(2
)

(2
)Amortization of actuarial loss


25


3


(2
)

2Special termination benefits


2








Curtailment gain


(1
)







Net periodic benefit cost

$
67

$
27

$
8

$
9


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

11. EMPLOYEE BENEFIT PLANS (Continued)

Huntsman International

Defined
Benefit Plans

Other
Postretirement
Benefit PlansThree Months
Ended
September 30,

Three Months
Ended
September 30,2009

2008

2009

2008Service cost

$
13

$
17

$
3

$
Interest cost


36


38


3


3Expected return on assets


(37
)

(47
)




Amortization of prior service cost


(1
)

(1
)

(1
)

(1
)Amortization of actuarial loss


10


3


(3
)

1Special termination benefits


1








Net periodic benefit cost

$
22

$
10

$
2

$
3




Defined
Benefit Plans

Other
Postretirement
Benefit PlansNine Months
Ended
September 30,

Nine Months
Ended
September 30,2009

2008

2009

2008Service cost

$
46

$
55

$
5

$
2Interest cost


106


116


7


7Expected return on assets


(107
)

(144
)




Amortization of transition obligation





1





Amortization of prior service cost


(4
)

(4
)

(2
)

(2
)Amortization of actuarial loss


30


8


(2
)

2Special termination benefits


2








Curtailment gain


(1
)







Net periodic benefit cost

$
72

$
32

$
8

$
9


During
the nine months ended September 30, 2009 and 2008, we made contributions to our pension and other postretirement benefit plans of $115 million and
$84 million, respectively. During the remainder of 2009, we expect to contribute an additional amount of $35 million to these plans.

12. HUNTSMAN CORPORATION STOCKHOLDERS' EQUITY

5% MANDATORY CONVERTIBLE PREFERRED STOCK

In connection with the initial public offering of our 5% mandatory convertible preferred stock on February 16, 2005, we declared
all dividends that will be payable on such preferred stock from the issuance through the mandatory conversion date, which was February 16, 2008. Accordingly, we

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

12. HUNTSMAN CORPORATION STOCKHOLDERS' EQUITY (Continued)

recorded
dividends payable of $43 million and a corresponding charge to net loss attributable to Huntsman Corporation common stockholders during the year ended December 31, 2005. We paid
the final dividend in cash on February 16, 2008. Also on February 16, 2008, the mandatory convertible preferred stock converted, pursuant to its terms, into 12,082,475 shares of our
common stock.

COMMON STOCK DIVIDENDS

On March 31, 2009, June 30, 2009 and September 30, 2009, we paid cash dividends of approximately
$24 million each, or $0.10 per share each, to common stockholders of record as of March 16, 2009, June 15, 2009 and September 15, 2009, respectively. On March 31,
2008, June 30, 2008 and September 30, 2008, we paid cash dividends of approximately $23 million each, or $0.10 per share each, to common stockholders of record as of
March 14, 2008, June 16, 2008 and September 15, 2008, respectively.

13. OTHER COMPREHENSIVE INCOME (LOSS)

Huntsman Corporation

Accumulated
other comprehensive
income (loss)

Other comprehensive
income (loss)Three Months Ended

Nine Months EndedSeptember 30,
2009

December 31,
2008

September 30,
2009

September 30,
2008

September 30,
2009

September 30,
2008Foreign currency translation adjustments, net of tax of $12 and $16 as of September 30, 2009 and December 31, 2008, respectively

$
272

$
204

$
28

$
(162
)
$
68

$
(44
)Pension and other postretirement benefits adjustments net of tax of $152 and $158 as of September 30, 2009 and December 31, 2008,
respectively


(693
)

(713
)

9





20


Other comprehensive income (loss) of unconsolidated affiliates


6


9








(3
)

Other, net


5


4


1


(1
)

1


(2
)Total


(410
)

(496
)

38


(163
)

86


(46
)Amounts attributable to noncontrolling interests


6


7


(1
)




(1
)

Amounts attributable to Huntsman Corporation

$
(404
)
$
(489
)
$
37

$
(163
)
$
85

$
(46
)


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

13. OTHER COMPREHENSIVE INCOME (LOSS) (Continued)

Huntsman International

Accumulated
other comprehensive
income (loss)

Other comprehensive
income (loss)Three Months Ended

Nine Months EndedSeptember 30,
2009

December 31,
2008

September 30,
2009

September 30,
2008

September 30,
2009

September 30,
2008Foreign currency translation adjustments, net of tax of $(1) and $3 as of September 30, 2009 and December 31, 2008, respectively

$
270

$
202

$
27

$
(162
)
$
68

$
(43
)Pension and other postretirement benefits adjustments net of tax of $185 and $193 as of September 30, 2009 and December 31, 2008,
respectively


(747
)

(771
)

11


2


24


4Other comprehensive income (loss) of unconsolidated affiliates


6


9








(3
)

Other, net





(1
)

1


(2
)

1


(3
)Total


(471
)

(561
)

39


(162
)

90


(42
)Amounts attributable to noncontrolling interests


6


7


(1
)




(1
)

Amounts attributable to Huntsman International LLC

$
(465
)
$
(554
)
$
38

$
(162
)
$
89

$
(42
)


Items of other comprehensive income (loss) of our Company and our unconsolidated affiliates have been recorded net of tax, with the exception of
the foreign currency translation adjustments related to subsidiaries with earnings permanently reinvested. The tax effect is determined based upon the jurisdiction where the income or loss was
recognized and is net of valuation allowances that have been recorded.

14. COMMITMENTS AND CONTINGENCIES

Discoloration Claims

Certain claims have been filed against us relating to discoloration of unplasticized polyvinyl chloride products allegedly caused by
our titanium dioxide ("Discoloration Claims"). Substantially all of the titanium dioxide that is the subject of these claims was manufactured prior to our acquisition of the titanium dioxide business
from ICI in 1999. Net of amounts we have received from insurers and pursuant to contracts of indemnity, we have paid an aggregate of approximately $16 million in costs and settlement amounts
for Discoloration Claims through September 30, 2009.

During
each of the nine months ended September 30, 2009 and September 30, 2008, we did not settle any Discoloration Claims. The two Discoloration Claims unresolved as of
September 30, 2009 asserted aggregate damages of €34 million (approximately $50 million). An appropriate liability has been accrued for these claims. Based on our
understanding of the merits of these claims and our rights under contracts of indemnity and insurance, we do not believe that the net impact on our financial condition, results of operations or
liquidity will be material.

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

14. COMMITMENTS AND CONTINGENCIES (Continued)

While additional Discoloration Claims may be made in the future, we cannot reasonably estimate the amount of loss related to such claims. Although we may incur additional costs as a
result of future claims (including settlement costs), based on our history with Discoloration Claims to date, the fact that substantially all of the titanium dioxide that has been the subject of these
Discoloration Claims was manufactured and sold more than nine years ago, and the fact that we have rights under contract to indemnity, including from ICI, we do not believe that any unasserted
Discoloration Claims will have a material impact on our financial condition, results of operations or liquidity. Based on this conclusion and our inability to reasonably estimate our expected costs
with respect to these unasserted claims, we have made no accruals in our financial statements as of September 30, 2009 for costs associated with unasserted Discoloration Claims.

Asbestos Litigation

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

Where
a claimant's alleged exposure occurred prior to our ownership of the relevant "premises," the prior owners generally have contractually agreed to retain liability for, and to
indemnify us against, asbestos exposure claims. This indemnification is not subject to any time or dollar amount limitations. Upon service of a complaint in one of these cases, we tender it to the
prior owner. None of the complaints in these cases state the amount of damages being sought. The prior owner accepts responsibility for the conduct of the defense of the cases and payment of any
amounts due to the claimants. In our nearly fourteen-year experience with tendering these cases, we have not made any payment with respect to any tendered asbestos cases. We believe that
the prior owners have the intention and ability to continue to honor their indemnity obligations, although we cannot assure you that they will continue to do so or that we will not be liable for these
cases if they do not.

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

Nine months
ended
September 30,2009

2008Unresolved at beginning of period


1,140


1,192Tendered during period


13


18Resolved during period(1)


14


66Unresolved at end of period


1,139


1,144


(1)Although
the indemnifying party informs us when tendered cases have been resolved, it generally does not inform us of the settlement amounts relating to
such cases, if any. The


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

14. COMMITMENTS AND CONTINGENCIES (Continued)

indemnifying
party has informed us that it typically manages our defense together with the defense of other entities in such cases and resolves claims involving multiple defendants simultaneously, and
that it considers the allocation of settlement amounts, if any, among defendants to be confidential and proprietary. Consequently, we are not able to provide the number of cases resolved with payment
by the indemnifying party or the amount of such payments.


We
have never made any payments with respect to these cases. As of September 30, 2009, we had an accrued liability of $16 million relating to these cases and a
corresponding receivable of $16 million relating to our indemnity protection with respect to these cases. We cannot assure you that our liability will not exceed our accruals or that our
liability associated with these cases would not be material to our financial condition, results of operations or liquidity; however, we are not able to estimate the amount or range of loss in excess
of our accruals. Additional asbestos exposure claims may be made against us in the future, and such claims could be material. However, because we are not able to estimate the amount or range of losses
associated with such claims, we have made no accruals with respect to unasserted asbestos exposure claims as of September 30, 2009.

Certain
cases in which we are a "premises defendant" are not subject to indemnification by prior owners or operators. The following table presents for the periods indicated certain
information about these cases. Cases include all cases for which service has been received by us, other than a number of cases that were erroneously filed against us due to a clerical error. The cases
filed in error have been dismissed.

Nine months
ended
September 30,2009

2008Unresolved at beginning of period


43


39Filed during period


1


4Resolved during period


3


1Unresolved at end of period


41


42


We
did not pay any settlement costs for asbestos exposure cases that are not subject to indemnification during the nine months ended September 30, 2009 and 2008. As of
September 30, 2009, we had an accrued liability of $225,000 relating to these cases. We cannot assure you that our liability will not exceed our accruals or that our liability associated with
these cases would not be material to our financial condition, results of operations or liquidity; however, we are not able to estimate the amount or range of loss in excess of our accruals. Additional
asbestos exposure claims may be made against us in the future, and such claims could be material. However, because we are not able to estimate the amount or range of losses associated with such
claims, we have made no accruals with respect to unasserted asbestos exposure claims as of September 30, 2009.

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

14. COMMITMENTS AND CONTINGENCIES (Continued)

Antitrust Matters

We have been named as a defendant in civil antitrust suits alleging that between 1999 and 2004 we conspired with Bayer, BASF, Dow, and
Lyondell to fix the prices of MDI, TDI, polyether polyols, and related systems ("polyether polyol products") sold in the U.S. in violation of the federal Sherman Act. These cases are consolidated as
the "Polyether Polyols" cases in multidistrict litigation known as In re Urethane Antitrust Litigation, MDL No. 1616, Civil
No. 2:04-md-01616-JWL-DJW, pending in the United States District Court, District of Kansas. The Kansas court has ruled that plaintiffs may
prosecute the Polyether Polyols cases on behalf of a class of all direct purchasers of polyether polyol products in the U.S. Bayer has entered into a settlement with the plaintiffs' class and has been
dismissed as a defendant. Merits discovery is underway, and trial, previously set for May 3, 2011, is scheduled to begin October 24, 2011.

We
and the other Polyether Polyol defendants (excluding Bayer) have also been named as defendants in two civil antitrust suits brought by certain direct purchasers of polyether polyol
products that opted out of the class certified in MDL No. 1616. These cases have been brought by 12 groups of affiliated companies, 73 plaintiffs in all, who allege that between 1994 and 2006
inclusive the Polyether Polyol defendants conspired to fix the prices of polyether polyol products sold in the U.S. and abroad in violation of the Sherman Act, similar laws of several U.S. states, and
the laws of the European Union and certain of its member states. We and the other defendants moved to dismiss the opt-out complaints. The Court partially granted the motion to dismiss
state law claims and the claims outside the class period. Subsequently, the plaintiffs filed amended complaints and we and the other defendants have again filed motions to dismiss their claims outside
the class period. Our motion to dismiss certain claims under the laws of the European Union has not been decided.

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

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

Along
with Dow, BASF, and Lyondell, we have also been named as a defendant in a third amended complaint proposed for filing in an existing civil antitrust suit pending against Bayer and
Chemtura in federal district court in Massachusetts. The proposed amended complaint alleges that beginning around 1990 we and the other defendants conspired to fix the prices of MDI, TDI, polyether

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14. COMMITMENTS AND CONTINGENCIES (Continued)

polyols,
and polyester polyols sold throughout the U.S. in violation of the federal Sherman Act and the laws of various states. The proposed amended complaint seeks to sue on behalf of all indirect
purchasers of such products in the U.S. The Massachusetts action has been stayed pending plaintiffs' settlement of the previously asserted claims against Bayer and Chemtura. We have filed papers
opposing the motion for leave to file the proposed amended complaint adding us as a defendant in that action.

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

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

MTBE Litigation

We are named as a defendant in 18 lawsuits pending in litigation filed between March 23, 2007 and June 24, 2009 in New
York federal and state courts alleging liability related to MTBE contamination in groundwater. Numerous other companies, including refiners, manufacturers and sellers of gasoline, as well as
manufacturers of MTBE, were named as defendants in these and many other cases that were pending in U.S. courts. The plaintiffs in the 18 cases in which we are named are municipal water districts, a
regional water supply authority, and municipal corporations that claim that defendants' conduct has caused MTBE contamination of their groundwater. Four cases are pending in the U.S. District court
for the Southern District of New York and 14 are pending in the Supreme Court of the state of New York, nine in Nassau county and five in Suffolk county. The plaintiffs seek injunctive relief, such as
monitoring and abatement, compensatory damages, punitive damages and attorney fees. Together with other defendants, we have filed motions to dismiss all of the state court cases. At this time, we have
insufficient information to meaningfully assess our potential exposure in these cases and therefore we have not accrued a liability for these claims. We believe that
our liability in these cases, if any, would likely be covered, at least in part, by insurance and/or by indemnity agreements with prior owners.

Shareholder Litigation

From July 5 to July 13, 2007, four putative shareholder class action complaints were filed against our Company and our
directors alleging breaches of fiduciary duty in connection with our then-proposed sale to Basell and the receipt of a superior proposal from Hexion. Three actions were filed in Delaware:
Cohen v. Archibald, et al., No. 3070, in the Court of Chancery for the State of Delaware (filed July 5, 2007); Augenstein v. Archibald, et al., No. 3076, in the Court of Chancery
for

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14. COMMITMENTS AND CONTINGENCIES (Continued)

the
State of Delaware (filed July 9, 2007); and Murphy v. Huntsman, et al., No. 3094, in the Court of Chancery for the State of Delaware (filed July 13, 2007). Another action was
filed in Texas Schwoegler v. Huntsman Corporation, et al., Cause No. 07-07-06993-CV, in the 9th Judicial District Court of Montgomery
County, Texas (filed July 6, 2007). As subsequently amended, these lawsuits together allege that we and our directors breached fiduciary duties to the stockholders by, among other things,
engaging in an unfair sales process, approving an unfair price per share for the Hexion Merger, and making inadequate disclosures to stockholders, and that Basell, Hexion and MatlinPatterson entities
aided and abetted these breaches of fiduciary duty. The lawsuits sought to enjoin the stockholder vote on the Hexion Merger.

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

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

Port Arthur Plant Fire Insurance Litigation

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

Pursuant
to a December 29, 2008 agreement among the parties to the actions referenced above: (1) a mediation was scheduled for February 24-25, 2009,
(2) if the disputes were not fully resolved in

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14. COMMITMENTS AND CONTINGENCIES (Continued)

mediation,
the parties would submit all coverage and quantum issues to a three-arbitrator panel in the second half of 2009, with a binding award to be entered by September 30, 2009,
(3) the Reinsurers paid an additional $40 million on our claim on December 29, 2008 and agreed that all monies paid by the participating Reinsurers on the claim to date are
nonrefundable, (4) we waived our noncontractual claims against the Reinsurers, (5) the first action referenced above is stayed pending final resolution and entry of judgment, and
(6) the second action referenced above has been dismissed. Because the non-binding mediation was not successful, we and the Reinsurers have now agreed to participate in binding
arbitration which began on November 2, 2009. Reinsurers responsible for a small percentage of our remaining claim were not parties to the two lawsuits and are not parties to the agreement; thus
we may need to pursue actions against them separately for their pro rata shares of the unpaid claim. We have paid our deductible on the claim of $60 million and have been paid
$365 million to date by the Reinsurers. As of September 30, 2009, we have claimed an additional approximately $242 million plus interest as presently due and owing and unpaid
under the Policy for losses caused by the fire. For more information, see "Note 17. Casualty Losses and Insurance RecoveriesPort Arthur, Texas Plant Fire."

Other Proceedings

We are a party to various other proceedings instituted by private plaintiffs, governmental authorities and others arising under
provisions of applicable laws, including various environmental, products liability and other laws. Except as otherwise disclosed in this report, we do not believe that the outcome of any of these
matters will have a material adverse effect on our financial condition, results of operations or liquidity.

15. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

GENERAL

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

EHS SYSTEMS

We are committed to achieving and maintaining compliance with all applicable environmental health and safety ("EHS") legal
requirements, and we have developed policies and management systems that are intended to identify the multitude of EHS legal requirements applicable to our

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operations,
enhance compliance with applicable legal requirements, ensure the safety of our employees, contractors, community neighbors and customers and minimize the production and emission of wastes
and other pollutants. Although EHS legal requirements are constantly changing and are frequently difficult to comply with, these EHS management systems are designed to assist us in our compliance
goals while also fostering efficiency and improvement and minimizing overall risk to us.

EHS CAPITAL EXPENDITURES

We may incur future costs for capital improvements and general compliance under EHS laws, including costs to acquire, maintain and
repair pollution control equipment. For the nine months ended September 30, 2009 and 2008, our capital expenditures for EHS matters totaled $28 million and $39 million,
respectively. Since capital expenditures for these matters are subject to evolving regulatory requirements and depend, in part, on the timing, promulgation and enforcement of specific requirements, we
cannot provide assurance that our recent expenditures will be indicative of future amounts required under EHS laws.

REMEDIATION LIABILITIES

We have incurred, and we may in the future incur, liabilities to investigate and clean up waste or contamination at our current or
former facilities or facilities operated by third parties at which we may have disposed of waste or other materials. Similarly, we may incur costs for the cleanup of wastes that were disposed of prior
to the purchase of our businesses. Under some circumstances, the scope of our liability may extend to damages to natural resources.

Under
the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), and similar state laws, a current or former owner or operator of real
property may be liable for remediation costs regardless of whether the release or disposal of hazardous substances was in compliance with law at the time it occurred, and a current owner or operator
may be liable regardless of whether it owned or operated the facility at the time of the release. We have been notified by third parties of claims against us for cleanup liabilities at approximately
10 former facilities or third party sites, including, but not limited to, sites listed under CERCLA. Based on current information and past experiences at other CERCLA sites, we do not expect any of
these third party claims to result in material liability to us.

In
addition, under the U.S. Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), and similar state laws, we may be required to remediate contamination originating from
our properties as a condition to our hazardous waste permit. Some of our manufacturing sites have an extended history of industrial chemical manufacturing and use, including on-site waste
disposal. We are aware of soil, groundwater or surface contamination from past operations at some of our sites, and we may find contamination at other sites in the future. For example, our Port
Neches, Texas, and Geismar, Louisiana, facilities are the subject of ongoing remediation requirements under RCRA authority.

In
June of 2006, an agreement was reached between the local regulatory authorities and our Advanced Materials site in Pamplona, Spain to relocate our manufacturing operations in order to
facilitate new urban development desired by the city. Subsequently, as required by the authorities, soil

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15. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

and
groundwater sampling was performed and followed by a quantitative risk assessment. Although unresolved at this time, some level of remediation of site contamination may be required in the future,
but the estimated cost is unknown because the remediation approach and timing has not been determined.

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

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

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

Environmental Reserves

We have accrued liabilities relating to anticipated environmental cleanup obligations, site reclamation and closure costs and known
penalties. Liabilities are recorded when potential liabilities are either known or considered probable and can be reasonably estimated. Our liability estimates are based upon requirements placed upon
the company by regulators, available facts, existing technology and past experience. The environmental liabilities do not include amounts recorded as asset retirement obligations. We had accrued
$42 million and $7 as of September 30, 2009 and December 31, 2008, respectively. Of these amounts, $11 million and $4 million were classified as accrued
liabilities in our condensed consolidated balance sheets (unaudited) as of September 30, 2009 and December 31, 2008,

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15. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

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

REGULATORY DEVELOPMENTS

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

GREENHOUSE GAS REGULATION

In the EU and other jurisdictions committed to compliance with the Kyoto Protocol to the United Nations Framework Convention on Climate
Change, there is an increasing likelihood that our manufacturing sites will be affected in some way over the next few years by regulation or taxation of greenhouse gas ("GHG") emissions. For example,
Australia recently proposed its Carbon Pollution Reduction Scheme, which may impact our Australian operations and program implementation is currently scheduled for 2011. In addition, although the U.S.
is not a signatory to the Convention, several states are implementing their own GHG regulatory programs, and a federal program in the U.S. is likely for the future. Draft U.S. federal legislation and
the recent U.S. EPA Clean Air Act

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15. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

endangerment
findings for carbon dioxide have focused corporate attention on the eventuality of measuring and reporting of GHG emissions for operations in the U.S. The U.S. EPA has also recently
proposed mandatory GHG reporting requirements for U.S. sources in excess of 25,000 tons. Final details of a comprehensive U.S. GHG management approach is, as yet, uncertain. Nevertheless, we are
already managing and reporting GHG emissions, to varying degrees, as required by law for our sites in locations subject to Kyoto obligations and/or EU emissions trading scheme requirements. Although
these sites are subject to existing GHG legislation, few have experienced or anticipate significant cost increases as a result, although it is likely that GHG emission restrictions will increase over
time. Potential consequences of such restrictions include capital requirements to modify assets used to meet GHG restriction and/or increases in energy costs above the level of general inflation, as
well as direct compliance costs. Currently, however, it is not possible to estimate the likely financial impact of potential future regulation on any of our sites.

CHEMICAL SECURITY

The Department of Homeland Security ("DHS") issued the final rule of their "Chemical Facility Anti-Terrorism Standard" in
2007. The initial phase of the rule required all chemical facilities in the U.S. to evaluate their facilities against the DHS Appendix A list of "Chemicals of Interest." Facilities which have
specified chemicals in designated quantities on the Appendix A list were required to submit a "Top Screen" to DHS in 2008. A Top Screen is a questionnaire completed by a facility having
Chemicals of Interest in designated threshold quantities. In early 2008, we submitted Top Screens for all of our covered facilities. After reviewing the Top Screens, DHS determined that some of our
sites were "High Risk" facilities. As a result, we were required to perform Security Vulnerability Assessments ("SVAs") at the High Risk sites. The SVAs were completed and sent to DHS during the
fourth quarter of 2008. Based on their assessment of the SVAs, we received notice from DHS that one of our sites was elevated to a higher security tier. We are currently awaiting the final risk
ranking of the other three sites from the DHS. Sites which are considered High Risk after the DHS assessment will be required to develop Site Security Plans (SSPs) based on a list of
DHS risk-based performance standards. We are unable to determine the cost of security enhancements at our High Risk sites until the SSPs are developed. We anticipate this phase of the rule
to be completed by year-end 2009. We believe that security upgrades to the tier-elevated site will be required; however we do not know what these required updates will be and
thus cannot reasonably estimate associated costs at this time, but we do not anticipate that they will be material. Additionally, on November 26, 2008, the Transportation Safety Administration
of the DHS published a final rule regarding "rail security sensitive materials" that are received at or shipped from facilities. We have two sites that are subject to this new rule, but at this time
do not anticipate that the costs to comply will be material.

MTBE DEVELOPMENTS

We produce MTBE, an oxygenate that is blended with gasoline to reduce vehicle air emissions and to enhance the octane rating of
gasoline. Litigation or legislative initiatives restricting the use of MTBE in gasoline may subject us or our products to environmental liability or materially adversely affect our sales and costs.
Because MTBE has contaminated some water supplies, its use has become controversial in the U.S. and elsewhere, and its use has been effectively eliminated in the U.S. market.

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15. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS (Continued)

We
currently market MTBE, either directly or through third parties, to gasoline additive customers located outside the U.S., although there are additional costs associated with such
outside-U.S. sales which may result in decreased profitability compared to historical sales in the U.S. We may also elect to use all or a portion of our precursor tertiary butyl alcohol to
produce saleable products other than MTBE. If we opt to produce products other than MTBE, necessary modifications to our facilities will require significant capital expenditures and the sale of such
other products may produce a lower level of cash flow than that historically produced from the sale of MTBE.

Numerous
companies, including refiners, manufacturers and sellers of gasoline, as well as manufacturers of MTBE, have been named as defendants in more than 150 cases in U.S. courts that
allege MTBE contamination in groundwater. Many of these cases were settled after the parties engaged in mediation supervised by a court-appointed special settlement master. Beginning in March 2007 and
continuing through June 24, 2009, we have been named as a defendant in 18 of these lawsuits. For more information, see "Note 14. Commitment and ContingenciesLegal
MattersMTBE Litigation." The plaintiffs in the MTBE groundwater contamination cases generally seek compensatory damages, punitive damages, injunctive relief, such as monitoring and
abatement, and attorney fees. We currently have insufficient information to meaningfully assess our potential exposure in these cases. We believe that some of our liability in these cases, if any, is
likely covered by insurance and/or indemnity agreements with prior owners. It is possible that we could be named as a defendant in additional existing or future MTBE contamination cases. We cannot
provide assurances that adverse results against us in existing or future MTBE contamination cases will not have a material adverse effect on our business, results of operations and financial position.

16. STOCK-BASED COMPENSATION PLANS

Under the Huntsman Stock Incentive Plan (the "Stock Incentive Plan"), a plan approved by stockholders, we may grant non-qualified stock options, incentive stock options,
stock appreciation rights, restricted stock, phantom stock, performance awards and other stock-based awards to our employees and directors and to employees and directors of our subsidiaries, provided
that incentive stock options may be granted solely to employees. The terms of the grants are fixed at the grant date. We were authorized to grant up to 21.6 million shares under the Stock
Incentive Plan. As of September 30, 2009, we had 2.7 million shares remaining under the Stock Incentive Plan available for grant. Option awards have a maximum contractual term of
10 years and generally must have an exercise price at least equal to the market price of our common stock on the date the option award is granted. Stock-based awards generally vest over a
three-year period.

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16. STOCK-BASED COMPENSATION PLANS (Continued)

The
compensation cost under the Stock Incentive Plan for our Company and Huntsman International were as follows (dollars in millions):

Three months
ended
September 30,

Nine months
ended
September 30,2009

2008

2009

2008Huntsman CorporationCompensation cost

$
5

$
5

$
14

$
16Huntsman InternationalCompensation cost

$
5

$
5

$
10

$
16


The
total income tax benefit recognized in the statements of operations for each of our Company and Huntsman International for stock-based compensation arrangements was $4 million
and $5 million for the nine months ended September 30, 2009 and 2008, respectively.

STOCK OPTIONS

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses the
assumptions noted in the following table.
Expected volatilities are based on the historical volatility of our common stock through the grant date. The expected term of options granted was estimated based on the contractual term of the
instruments and employees' expected exercise and post-vesting employment termination behavior. The risk-free rate for periods within the contractual life of the option was
based on the U.S. Treasury yield curve in effect at the time of grant.

Three months
ended
September 30,

Nine months
ended
September 30,2009

2008

2009

2008Dividend yield


5.2%

NA


15.4%

NAExpected volatility


70.8%

NA


70.4%

NARisk-free interest rate


2.9%

NA


2.5%

NAExpected life of stock options granted during the period


6.6 years

NA


6.6 years

NA


During
the three and nine months ended September 30, 2008, no stock options were granted.

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16. STOCK-BASED COMPENSATION PLANS (Continued)

A
summary of our stock option activity under the Stock Incentive Plan as of September 30, 2009 and changes during the nine months then ended is presented below:

Option Awards

Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term

Aggregate
Intrinsic
Value(in thousands)



(years)

(in millions)Outstanding at January 1, 2009


6,135

$
21.33Granted


6,537


2.61Exercised





Forfeited


(695
)

13.31Outstanding at September 30, 2009


11,977


11.58


8.0

$
41Exercisable at September 30, 2009


5,353


21.42


6.3





The
weighted-average grant-date fair value of stock options granted during the nine months ended September 30, 2009 was $0.50 per option. As of September 30,
2009, there was $4 million of total unrecognized compensation cost related to nonvested stock option arrangements granted under the Stock Incentive Plan. That cost is expected to be recognized
over a weighted-average period of approximately 2.0 years.

During
the nine months ended September 30, 2009 and 2008 no stock options were exercised.

NONVESTED SHARES

Nonvested
shares granted under the Stock Incentive Plan consist of restricted stock, which is accounted for as an equity award, and phantom stock, which is
accounted for as a liability award because it can be settled in either stock or cash. A summary of our nonvested shares activity as of September 30, 2009 and changes during the nine months then
ended is presented below:

Equity Awards

Liability AwardsShares

Weighted
Average
Grant-Date
Fair Value

Shares

Weighted
Average
Grant-Date
Fair Value(in thousands)



(in thousands)Nonvested at January 1, 2009


930

$
22.62


171

$
22.82Granted


3,317


2.59


1,869


2.66Vested


(477
)(1)

20.02


(73
)

22.31Forfeited


(157
)

8.14


(64
)

6.29Nonvested at September 30, 2009


3,613
(1)

5.20


1,903


3.60


(1)As
of September 30, 2009, a total of 263,399 restricted stock units were vested, of which 249,233 vested during the nine months ended
September 30, 2009. These shares have not been reflected as vested shares in this table because, in accordance with the restricted stock unit agreements, shares of common stock are not issued
for vested restricted stock units until termination of employment.


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16. STOCK-BASED COMPENSATION PLANS (Continued)

As of September 30, 2009, there was $26 million of total unrecognized compensation cost related to nonvested share compensation arrangements granted under the Stock
Incentive Plan. That cost is expected to be recognized over a weighted-average period of approximately 2.3 years. The value of share awards that vested during the nine months ended
September 30, 2009 and 2008 was $11 million and $13 million, respectively.

17. CASUALTY LOSSES AND INSURANCE RECOVERIES

PORT ARTHUR, TEXAS PLANT FIRE

On
April 29, 2006, our former Port Arthur, Texas olefins manufacturing plant (which we sold in November 2007) experienced a major fire. With the
exception of cyclohexane operations at the site, which were restarted in June 2006, the operations at the site were shutdown until the fourth quarter of 2007. The Port Arthur manufacturing plant was
covered by property damage and business interruption insurance. With respect to coverage for this outage, the deductible for property damage is $10 million and business interruption coverage
does not apply for the first 60 days, subject to a combined deductible for property damage and business interruption of $60 million.

Through
September 30, 2009, we received partial recovery advances on this loss totaling $365 million. We have claimed an additional approximately $242 million plus
interest as of September 30, 2009 as presently due and owing and unpaid under the insurance policy for losses caused by the fire. On December 29, 2008, we reached a partial settlement
with certain of the reinsurers whereby we received a partial claim reimbursement of $40 million (which is included in the total partial recovery advances of $365 million) and we and the
reinsurers agreed to dismiss all legal suits arising from this insured loss and to participate in non-binding mediation in February 2009. Because the
non-binding mediation was not successful, we and the reinsurers have agreed to participate in binding arbitration that began on November 2, 2009. Future collections on this insured
loss, if any, will represent additional income for us upon final settlement and will be used to repay secured debt in accordance with relevant provisions of our debt agreements. For more information,
see "Note 14. Commitments and ContingenciesPort Arthur Plant Fire Insurance Litigation."

18. (EXPENSES) INCOME ASSOCIATED WITH THE TERMINATED MERGER AND RELATED LITIGATION

On July 12, 2007, we entered into an Agreement and Plan of Merger with Hexion and one of its subsidiaries (the "Hexion Merger Agreement"). On June 18, 2008, Hexion, Apollo
and certain of their affiliates filed an action in Delaware Chancery Court seeking to terminate the Hexion Merger. We countersued Hexion and Apollo in the Delaware Chancery Court and filed a separate
action against Apollo and certain of its affiliates in the District Court of Montgomery County, Texas. On December 13, 2008, we terminated the Hexion Merger Agreement and, on
December 14, 2008, we entered into the Apollo Settlement Agreement. Pursuant to the Apollo Settlement Agreement, Hexion and certain Apollo affiliates have paid us an aggregate amount of
$1 billion.

On
September 30, 2008, we filed suit in the 9th Judicial District Court in Montgomery County, Texas against the Banks (the "Texas Bank Litigation"). On June 23,
2009, we filed a Current Report on

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

18. (EXPENSES) INCOME ASSOCIATED WITH THE TERMINATED MERGER AND RELATED LITIGATION (Continued)

Form 8-K
with respect to our entering into an Agreement of Compromise and Settlement dated June 22, 2009 with the Banks (the "Texas Bank Litigation Settlement Agreement").
The Texas Bank Litigation was dismissed with prejudice on June 23, 2009. In accordance with the Texas Bank Litigation Settlement Agreement, the Banks paid us a cash payment of
$632 million, purchased from Huntsman International the 2016 Senior Notes in the aggregate principal amount of $600 million, and provided Huntsman International with Term Loan C in the
principal amount of $500 million. The 2016 Senior Notes and Term Loan C were recorded at a combined fair value of $864 million.
Accordingly, we recognized a gain of $868 million in connection with the Texas Bank Litigation Settlement Agreement.

During
the three months ended September 30, 2009, we recorded $2 million of legal fees related to the Texas Bank Litigation and, during the nine months ended
September 30, 2009, we reported income of $835 million related principally to the gain recognized in connection with the Texas Bank Litigation Settlement Agreement, offset in part by
legal fees and employee retention bonuses. During the three and nine months ended September 30, 2008, we incurred $26 million and $35 million, respectively, of expenses associated
with the Terminated Merger related primarily to professional fees and board of directors fees.

19. INCOME TAXES

We use the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets
and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed
each period on a tax jurisdictional basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax
assets for each jurisdiction. During the first quarter of 2009, we established a valuation allowance of $146 million on the U.K. net deferred tax assets, primarily as a result of a recent
history of operating losses that became a cumulative loss in the first quarter of 2009.

On
April 12, 2007, we received a Revenue Agent Report from the Internal Revenue Service ("IRS") related to the examination of our federal income tax returns for the years 2002
through 2004. The IRS initially proposed a decrease to our net operating losses of approximately $387 million related to transactions completed in 2002. However, on January 5, 2008, we
were notified by the IRS that no adjustment would be made to our net operating loss for this disputed item. As a result of the settlement of this audit cycle and the effective settlement of two
uncertain tax positions in other countries, during the nine months ended September 30, 2008, we recorded a decrease in unrecognized tax benefits with a corresponding income tax benefit of
approximately $18 million.

On
September 7, 2009, we announced the closure of our Australian styrenics operations. For more information, see "Note 1. GeneralRecent
DevelopmentsClosure of Australian Styrenics Operations." U.S. tax law provides for a tax return deduction on investments that are deemed "worthless" for U.S. tax purposes. We believe that
the investments in our Australian styrenics business are worthless for U.S. tax purposes. Therefore, we recorded a net tax benefit of $69 million related to the cumulative investments in our
Australian styrenics business during the nine months ended

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

19. INCOME TAXES (Continued)

September 30,
2009. As a result, we do not expect to make any additional U.S. federal estimated tax payments during the remainder of 2009.

HUNTSMAN CORPORATION

We
recorded discrete tax expense of $309 million for the nine months ended September 30, 2009 related to the net $835 million of income
related to the Texas Bank Litigation Settlement Agreement, discrete tax benefit of $69 million related to the worthless stock deduction for the investment in our Australian styrenics business,
and we recorded a valuation allowance of $146 million in the first quarter of 2009 against the net deferred tax assets in the U.K. We recorded a discrete tax benefit of $18 million in
the first quarter of 2008 due to a decrease in unrecognized tax benefits for the effective settlement of examinations. Excluding these items, we recorded income tax expense of $63 million for
the nine months ended September 30, 2009 and income tax expense of $60 million for the nine months ended September 30, 2008. Despite increased pre-tax losses, our tax
expense increased (net of these items) primarily due to pre-tax losses in jurisdictions where we do not record a tax benefit due to valuation allowances. Our tax obligations are affected
by the mix of income and losses in the tax jurisdictions in which we operate.

HUNTSMAN INTERNATIONAL

Huntsman
International recorded discrete tax benefit of $69 million for the nine months ended September 30, 2009 related to the worthless stock
deduction for the investment in our Australian styrenics business, and recorded a valuation allowance of $156 million in the first quarter of 2009 due to the establishment of a valuation
allowance against the net deferred tax assets in the U.K. Huntsman International recorded a discrete tax benefit of $18 million in the first quarter of 2008 due to a decrease in unrecognized
tax benefits for the effective settlement of examinations. Excluding these items, Huntsman International recorded income tax expense of $48 million for the nine months ended
September 30, 2009 and income tax expense of $65 million for the nine months ended September 30, 2008. The decrease in income tax expense (net of these items) was primarily due to
a
decrease in pre-tax operating earnings, including amounts in jurisdictions where we do not record a tax benefit due to valuation allowances. Our tax obligations are affected by the mix of
income and losses in the tax jurisdictions in which we operate.

20. DISCONTINUED OPERATIONS

On November 5, 2007, we completed the sale of our former U.S. base chemicals business ("2007 U.S. Base Chemicals Disposition"). This disposition included our former olefins
manufacturing assets located at Port Arthur, Texas. The captive ethylene unit at the retained Port Neches, Texas site of our Performance Products segment operations was not included in the sale. This
asset, along with a long-term post-closing arrangement for the supply of ethylene and propylene from Flint Hills Resources to us, will continue to provide feedstock for our
downstream derivative units. The EBITDA of the former U.S. base chemicals business was reported in our former Base Chemicals segment and has been presented as discontinued operations in the
accompanying condensed consolidated statements of operations (unaudited).

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

20. DISCONTINUED OPERATIONS (Continued)

On
August 1, 2007 we completed the sale of our former North American polymers business assets. This disposition included our former polymers manufacturing assets located at four
U.S. sites: Odessa and Longview, Texas; Peru, Illinois; and Marysville, Michigan. In accordance with the amended and restated asset purchase agreement with Flint Hills Resources, we also shut down our
Mansonville, Quebec expandable polystyrene manufacturing facility in June 2007. The EBITDA of the North American polymers business was reported in our former Polymers segment and has been presented as
discontinued operations in the accompanying condensed consolidated statements of operations (unaudited).

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

During
the three and nine months ended September 30, 2009, we recorded an after tax loss from discontinued operations of $2 million each related primarily to the
revaluation of outstanding product exchange liabilities associated with our former base chemicals business and legal fees related to the arbitration of the insurance claims on the 2006 fire at our
former Port Arthur, Texas olefins manufacturing plant. During the three months ended September 30, 2008, we recorded after tax income from discontinued operations of $1 million related
principally to sales and use tax settlements and post-closing adjustments associated with our former base chemicals and polymers businesses. During the nine months ended
September 30, 2008, we recorded after tax income from discontinued operations of $5 million related primarily to sales tax settlements associated with our former base chemicals business.

21. NET INCOME (LOSS) PER SHARE

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

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

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

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

Three Months Ended
September 30,

Nine Months Ended
September 30,2009

2008

2009

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

$
(66
)
$
(22
)
$
50

$
(4
)Convertible notes interest expense, net of tax











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

$
(66
)
$
(22
)
$
50

$
(4
)Basic and diluted net (loss) income:Net (loss) income attributable to Huntsman Corporation

$
(68
)
$
(20
)
$
48

$
11Convertible notes interest expense, net of tax











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

$
(68
)
$
(20
)
$
48

$
11Shares (denominator):Weighted average shares outstanding


234.0


233.6


233.9


231.4Dilutive securities:Stock-based awards








4.2


Convertible notes conversion











Preferred stock conversion











Total dilutive shares outstanding assuming conversion


234.0


233.6


238.1


231.4


Additional
stock-based awards of 17.7 million and 7.4 million weighted average equivalent shares of stock were outstanding during the three months ended
September 30, 2009 and 2008, respectively, and additional stock-based awards of 6.5 million and 7.4 million weighted average equivalent shares of stock were outstanding during the
nine months ended September 30, 2009 and 2008, respectively. The preferred stock would have had a weighted average effect of 2.0 million shares of common stock for the nine months ended
September 30, 2008. In addition, the Convertible Notes would have converted into 31.8 million shares of common stock and interest expense, net of tax, of $5 million and
$14 million would have been included as an adjustment to the numerator of the diluted (loss) income per share calculation for the three months and nine months ended September 30, 2009,
respectively. However, these stock-based awards, the potential effect of the preferred stock conversion, and the assumed conversion of the Convertible Notes were not included in the computation of
diluted earnings per share for the respective periods mentioned because the effect would be anti-dilutive.

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

22. OPERATING SEGMENT INFORMATION

We derive our revenues, earnings and cash flows from the manufacture and sale of a wide variety of differentiated and commodity chemical products. During the first quarter of 2009, we
reorganized our operating segments to divide our former Materials and Effects segment into two separate segmentsour Advanced Materials segment and our Textile Effects segment. All segment
information for prior periods has been restated to reflect this change. We have reported our operations through five segments: Polyurethanes, Advanced Materials, Textile Effects, Performance Products
and Pigments. In a series of transactions completed in 2006 and 2007, we sold substantially all of our Polymers and Base Chemicals operations and have reported the results from these businesses in
discontinued operations. For more information, see "Note 20. Discontinued Operations." We have organized our business and derived our operating segments around differences in product lines.

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

Segment

ProductsPolyurethanes

MDI, PO, polyols, PG, TPU, aniline and MTBEAdvanced Materials

epoxy and other resin compounds and formulations; cross-linking, matting and curing agents; epoxy, acrylic and polyurethane-based adhesives and tooling resin formulationsTextile Effects

textile chemicals and dyesPerformance Products

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

titanium dioxideCorporate and Other(1)

styrene


(1)On
September 7, 2009, we announced the closure of our styrenics facility located in West Footscray, Australia. For more information, see
"Note 1. GeneralRecent DevelopmentsClosure of Australian Styrenics Operations."


Sales
between segments are transacted at amounts intended to reflect external market prices and are eliminated in consolidation. We use EBITDA to measure the financial performance of our
global business units and for reporting the results of our operating segments. This measure includes all operating items relating to the businesses. The EBITDA of operating segments excludes items
that

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22. OPERATING SEGMENT INFORMATION (Continued)

principally
apply to our Company as a whole. The revenues and EBITDA for each of our reportable operating segments are as follows (dollars in millions):

Three Months
Ended
September 30,

Nine Months
Ended
September 30,2009

2008

2009

2008Net Sales:Polyurethanes

$
869

$
1,096

$
2,164

$
3,259Advanced Materials


273


385


785


1,191Textile Effects


173


229


504


734Performance Products


540


741


1,522


2,097Pigments


262


280


712


886Corporate and Other


33


44


67


127Eliminations


(42
)

(44
)

(87
)

(127
)Total

$
2,108

$
2,731

$
5,667

$
8,167Huntsman Corporation:Segment EBITDA(1):Polyurethanes

$
137

$
89

$
249

$
369Advanced Materials


29


42


38


128Textile Effects


(25
)

4


(56
)

7Performance Products


82


81


200


185Pigments


4


15


(51
)

33Corporate and Other(2)


(116
)

(68
)

635


(185
)Subtotal


111


163


1,015


537Discontinued Operations(3)


(4
)

2


(4
)

8Total


107


165


1,011


545Interest expense, net


(65
)

(69
)

(178
)

(199
)Income tax expensecontinuing operations





(17
)

(449
)

(42
)Income tax benefit (expense)discontinued operations


2


(1
)

2


(3
)Depreciation and amortization


(112
)

(98
)

(338
)

(290
)Net (loss) income attributable to Huntsman Corporation

$
(68
)
$
(20
)
$
48

$
11


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

22. OPERATING SEGMENT INFORMATION (Continued)



September 30,
2009

December 31,
2008Total Assets:Polyurethanes

$
4,537

$
4,442Advanced Materials


1,460


1,308Textile Effects


699


750Performance Products


2,112


2,313Pigments


1,349


1,474Corporate and Other(2)


(1,447
)

(2,229
)Total

$
8,710

$
8,058




Three Months
Ended
September 30,

Nine Months
Ended
September 30,2009

2008

2009

2008Huntsman International:Segment EBITDA(1):Polyurethanes

$
137

$
89

$
249

$
369Advanced Materials


29


42


38


128Textile Effects


(25
)

4


(56
)

7Performance Products


82


81


200


185Pigments


4


15


(51
)

33Corporate and Other(2)


(114
)

(43
)

(196
)

(155
)Subtotal


113


188


184


567Discontinued Operations(3)


(4
)

2


(4
)

8Total


109


190


180


575Interest expense, net


(64
)

(68
)

(177
)

(199
)Income tax benefit (expense)continuing operations


19


(19
)

(135
)

(47
)Income tax benefit (expense)discontinued operations


2


(1
)

2


(3
)Depreciation and amortization


(107
)

(92
)

(321
)

(273
)Net (loss) income attributable to Huntsman International LLC

$
(41
)
$
10

$
(451
)
$
53


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

22. OPERATING SEGMENT INFORMATION (Continued)



September 30,
2009

December 31,
2008Total Assets:Polyurethanes

$
4,537

$
4,442Advanced Materials


1,460


1,308Textile Effects


699


750Performance Products


2,112


2,313Pigments


1,349


1,474Corporate and Other(2)


(2,289
)

(2,863
)Total

$
7,868

$
7,424


(1)Segment
EBITDA is defined as net (loss) income attributable to Huntsman Corporation or Huntsman International LLC, as appropriate, before interest,
income tax, depreciation and amortization, and certain Corporate and Other items.(2)Corporate
and Other includes the results of our Australian styrenics business, unallocated foreign exchange gains and losses, unallocated corporate
overhead, loss on accounts receivable securitization program, income (expenses) associated with the Terminated Merger and related litigation, loss on early extinguishment of debt, income (loss)
attributable to noncontrolling interests, unallocated restructuring costs, extraordinary gain on the acquisition of a business and non-operating income and expense.(3)The
operating results of our former polymers and base chemicals businesses are classified as discontinued operations, and, accordingly, the revenues of
these businesses are excluded for all periods presented. The EBITDA of our former polymers and base chemicals businesses are included in discontinued operations for all periods presented. For more
information, see "Note 20. Discontinued Operations."


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

The following condensed consolidating financial information (unaudited) of Huntsman International presents, in separate columns, financial information for the following: Huntsman
International (on a parent only basis), with its investment in subsidiaries recorded under the equity method; the guarantors of Huntsman International's debt on a combined, and where appropriate,
consolidated basis; and
non-guarantor subsidiaries on a combined, and where appropriate, consolidated basis. Additional columns present eliminating adjustments and consolidated totals as of September 30,
2009 and December 31, 2008 and for the three and nine months ended September 30, 2009 and 2008. There are no contractual restrictions limiting transfers of cash from Huntsman
International's guarantors to Huntsman International. Each Huntsman International guarantor is 100% owned by Huntsman International and has fully and unconditionally guaranteed Huntsman
International's debt on a joint and several basis.

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

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

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING BALANCE SHEETS (UNAUDITED)        AS OF SEPTEMBER 30, 2009        (Dollars in
Millions)

Parent
Company

Guarantors

Non-
guarantors

Eliminations

Consolidated
Huntsman
International
LLCASSETSCurrent assets:Cash and cash equivalents

$
618

$
2

$
168

$


$
788Restrictred cash








7





7Accounts and notes receivables, net


24


126


1,004





1,154Accounts receivable from affiliates


1,263


1,983


64


(3,278
)

32Inventories


58


153


907


(5
)

1,113Prepaid expenses


14


43


29


(28
)

58Deferred income taxes


9





18


(9
)

18Other current assets


40


5


101


(24
)

122Total current assets


2,026


2,312


2,298


(3,344
)

3,292Property, plant and equipment, net


445


913


2,037


2


3,397Investment in affiliates


4,287


1,057


115


(5,196
)

263Intangible assets, net


88


4


44





136Goodwill


(19
)

84


33


(4
)

94Deferred income taxes


169


66


133


(57
)

311Notes receivables from affiliates


61


998


9


(1,059
)

9Other noncurrent assets


45


133


188





366Total assets

$
7,102

$
5,567

$
4,857

$
(9,658
)
$
7,868LIABILITIES AND MEMBERS' EQUITYCurrent liabilities:Accounts payable

$
27

$
158

$
535

$


$
720Accounts payable to affiliates


1,680


783


858


(3,278
)

43Accrued liabilities


103


114


460


(52
)

625Deferred income tax


21


15


10


(10
)

36Note payable to affiliate


25











25Current portion of debt


50





147





197Total current liabilities


1,906


1,070


2,010


(3,340
)

1,646Long-term debt


3,684


12


96





3,792Notes payable to affiliates


525





1,064


(1,059
)

530Deferred income taxes


44





66





110Other noncurrent liabilities


185


171


658


(1
)

1,013Total liabilities


6,344


1,253


3,894


(4,400
)

7,091EquityHuntsman International LLC members' equity:Members' equity


3,111


4,453


2,046


(6,499
)

3,111Subsidiary preferred stock








1


(1
)

(Accumulated deficit) retained earnings


(1,888
)

(152
)

(676
)

828


(1,888
)Accumulated other comprehensive loss


(465
)

13


(421
)

408


(465
)Total Huntsman International LLC members' equity


758


4,314


950


(5,264
)

758Noncontrolling interests in subsidiaires








13


6


19Total equity


758


4,314


963


(5,258
)

777Total liabilities and equity

$
7,102

$
5,567

$
4,857

$
(9,658
)
$
7,868


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

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

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING BALANCE SHEETS (UNAUDITED)        AS OF DECEMBER 31, 2008        (Dollars in Millions)

Parent
Company

Guarantors

Non-
guarantors

Eliminations

Consolidated
Huntsman
International
LLCASSETSCurrent assets:Cash and cash equivalents

$


$
3

$
84

$


$
87Restricted cash








5





5Accounts and notes receivables, net


19


114


772





905Accounts receivable from affiliates


350


1,819


38


(2,192
)

15Inventories


103


198


1,207


(8
)

1,500Prepaid expenses


14


29


21


(19
)

45Deferred income taxes


9





21


(9
)

21Other current assets


61


2


92


(56
)

99Total current assets


556


2,165


2,240


(2,284
)

2,677Property, plant and equipment, net


477


924


2,062


3


3,466Investment in affiliates


4,883


1,367


118


(6,101
)

267Intangible assets, net


103





54





157Goodwill





87


9


(4
)

92Deferred income taxes


168


9


273


(58
)

392Notes receivable from affiliates


319


1,470


9


(1,789
)

9Other noncurrent assets


47


145


172





364Total assets

$
6,553

$
6,167

$
4,937

$
(10,233
)
$
7,424LIABILITIES AND EQUITYCurrent liabilities:Accounts payable

$
20

$
175

$
533

$


$
728Accounts payable to affiliates


1,567


265


375


(2,191
)

16Accrued liabilities


91


155


389


(75
)

560Deferred income tax





35


10


(10
)

35Note payable to affiliate


423











423Current portion of debt


39





166





205Total current liabilities


2,140


630


1,473


(2,276
)

1,967Long-term debt


3,303


12


127





3,442Notes payable to affiliates





282


1,513


(1,789
)

6Deferred income taxes


2


2


65





69Other noncurrent liabilities


211


175


635





1,021Total liabilities


5,656


1,101


3,813


(4,065
)

6,505EquityHuntsman International LLC members' equity:Members' equity


2,865


4,685


1,716


(6,401
)

2,865Subsidiary preferred stock





1


1


(2
)

(Accumulated deficit) retained earnings


(1,414
)

499


(111
)

(388
)

(1,414
)Accumulated other comprehensive income


(554
)

(119
)

(499
)

618


(554
)Total Huntsman International LLC members' equity


897


5,066


1,107


(6,173
)

897Noncontrolling interests in subsidiaries








17


5


22Total equity


897


5,066


1,124


(6,168
)

919Total liabilities and equity

$
6,553

$
6,167

$
4,937

$
(10,233
)
$
7,424


67

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

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

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)        THREE MONTHS ENDED SEPTEMBER 30, 2009        (Dollars in Millions)

Parent
Company

Guarantors

Non-
guarantors

Eliminations

Consolidated
Huntsman
International
LLCRevenues:Trade sales, services and fees

$
181

$
575

$
1,334

$


$
2,090Related party sales


52


100


169


(303
)

18Total revenues


233


675


1,503


(303
)

2,108Cost of goods sold


167


537


1,368


(306
)

1,766Gross profit


66


138


135


3


342Selling, general and administrative


27


30


157





214Research and development


12


8


16





36Other operating expense (income)


8


(18
)

10





Restructuring, impairment and plant closing costs


1





61





62Operating income (loss)


18


118


(109
)

3


30Interest (expense) income, net


(57
)

9


(16
)




(64
)Loss on accounts receivable securitization program


(1
)




(2
)




(3
)Equity in income (loss) of investment in affiliates and subsidiaries


25


(207
)

2


179


(1
)Loss on early extinguishment of debt


(21
)










(21
)Other expense








1





1Loss from continuing operations before income taxes


(36
)

(80
)

(124
)

182


(58
)Income tax (expense) benefit


(4
)

23








19Loss from continuing operations


(40
)

(57
)

(124
)

182


(39
)Loss from discontinued operations, net of tax


(1
)

(2
)

1





(2
)Net loss


(41
)

(59
)

(123
)

182


(41
)Net income attributable to noncontrolling interest














Net loss attributable to Huntsman International LLC

$
(41
)
$
(59
)
$
(123
)
$
182

$
(41
)


68

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

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

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)        THREE MONTHS ENDED SEPTEMBER 30, 2008        (Dollars in
Millions)

Parent
Company

Guarantors

Non-
guarantors

Eliminations

Consolidated
Huntsman
International
LLCRevenues:Trade sales, services and fees

$
237

$
757

$
1,709

$


$
2,703Related party sales


75


105


283


(435
)

28Total revenues


312


862


1,992


(435
)

2,731Cost of goods sold


262


773


1,778


(437
)

2,376Gross profit


50


89


214


2


355Selling, general and administrative


33


37


162


(1
)

231Research and development


12


8


19





39Other operating (income) expense


(35
)

38


(19
)




(16
)Restructuring, impairment and plant closing costs








3





3Operating income


40


6


49


3


98Interest (expense) income, net


(58
)

29


(39
)




(68
)Gain (loss) on accoutns receivable securitization program


2


(3
)

(6
)




(7
)Equity in income (loss) of investment in affiliates and subsidiaries


26


(7
)

3


(19
)

3Other (expense) income


(1
)




1


1


1Income from continuing operations before income taxes


9


25


8


(15
)

27Income tax benefit (expense)


1


(15
)

(5
)




(19
)Income from continuing operations


10


10


3


(15
)

8Income from discontinued operations, net of tax





1








1Income before extraordinary gain


10


11


3


(15
)

9Extraordinary gain on the acquisition of a business, net of tax








1





1Net income


10


11


4


(15
)

10Net income attributable to noncontrolling interest














Net income attributable to Huntsman International LLC

$
10

$
11

$
4

$
(15
)
$
10


69

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

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

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)        NINE MONTHS ENDED SEPTEMBER 30, 2009        (Dollars in
Millions)

Parent
Company

Guarantors

Non-
guarantors

Eliminations

Consolidated
Huntsman
International
LLCRevenues:Trade sales, services and fees

$
473

$
1,553

$
3,604

$


$
5,630Related party sales


132


263


424


(782
)

37Total revenues


605


1,816


4,028


(782
)

5,667Cost of goods sold


499


1,450


3,750


(764
)

4,935Gross profit


106


366


278


(18
)

732Selling, general and administrative


83


95


425





603Research and development


37


23


48





108Other operating (income) expense


(19
)

(33
)

43





(9
)Restructuring, impairment and plant closing costs


7


2


130





139Operating (loss) income


(2
)

279


(368
)

(18
)

(109
)Interest (expense) income, net


(155
)

29


(51
)




(177
)Loss on accounts receivable securitization program


(4
)

(3
)

(6
)




(13
)Equity in income of investment in affiliates and subsidiaries


(289
)

(555
)

5


840


1Loss on early extinguishment of debt


(21
)










(21
)Other (expense) income


(21
)




1


21


1Loss from continuing operations before income taxes


(492
)

(250
)

(419
)

843


(318
)Income tax benefit (expense)


42


(38
)

(139
)




(135
)Loss from continuing operations


(450
)

(288
)

(558
)

843


(453
)(Loss) income from discontinued operations, net of tax


(1
)

(3
)

2





(2
)Net loss


(451
)

(291
)

(556
)

843


(455
)Net loss attributable to noncontrolling interest








4





4Net loss attributable to Huntsman International LLC

$
(451
)
$
(291
)
$
(552
)
$
843

$
(451
)


70

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

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

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)        NINE MONTHS ENDED SEPTEMBER 30, 2008        (Dollars in
Millions)

Parent
Company

Guarantors

Non-
guarantors

Eliminations

Consolidated
Huntsman
International
LLCRevenues:Trade sales, services and fees

$
687

$
2,182

$
5,216

$


$
8,085Related party sales


291


321


862


(1,392
)

82Total revenues


978


2,503


6,078


(1,392
)

8,167Cost of goods sold


799


2,246


5,396


(1,386
)

7,055Gross profit


179


257


682


(6
)

1,112Selling, general and administrative


76


105


513


(1
)

693Research and development


38


23


57





118Other operating (income) expense


(9
)

6








(3
)Restructuring, impairment and plant closing costs








8





8Operating income


74


123


104


(5
)

296Interest (expense) income, net


(175
)

83


(107
)




(199
)Gain (loss) on accounts receivable securitization program


6


(9
)

(13
)




(16
)Equity in income (loss) of investment in affiliates and subsidiaries


105


(12
)

10


(93
)

10Other (expense) income


(7
)




1


7


1Income (loss) from continuing operations before income taxes


3


185


(5
)

(91
)

92Income tax benefit (expense)


49


(78
)

(18
)




(47
)Income (loss) from continuing operations


52


107


(23
)

(91
)

45Income (loss) from discontinued operations, net of tax


1


5


(1
)




5Income (loss) before extraordinary gain


53


112


(24
)

(91
)

50Extraordinary gain on the acquisition of a business, net of tax








10





10Net income (loss)


53


112


(14
)

(91
)

60Net income attributable to noncontrolling interest








(7
)




(7
)Net income (loss) attributable to Huntsman International LLC

$
53

$
112

$
(21
)
$
(91
)
$
53


71

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

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

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)        NINE MONTHS ENDED SEPTEMBER 30, 2009        (Dollars in Millions)

Parent
Company

Guarantors

Non-
Guarantors

Eliminations

Consolidated
Huntsman
International
LLCNet cash provided by operating activities

$
152

$
114

$
(39
)
$


$
227Investing activities:Capital expenditures


(5
)

(57
)

(78
)




(140
)Proceeds from sale of assets, net of adjustments





2


3





5Acquisition of business








(31
)




(31
)Investment in unconsolidated affiliates, net


(220
)

(70
)

19


271


Decrease in receivable from affiliate


8











8Other, net





4


(2
)




2Net cash used in investing activities


(217
)

(121
)

(89
)

271


(156
)Financing activities:Net repayments under revolving loan facilities








(10
)




(10
)Net borrowings of overdraft facilities








(14
)




(14
)Net repayments of short-term debt








(25
)




(25
)Repayments of long-term debt


(510
)




(18
)




(528
)Proceeds from long-term debt


864





10





874Intercompany borrowings








(50
)

50


Repayments of notes payable


(33
)




(19
)




(52
)Proceeds from notes payable


42





18





60Repayments of note payable to affiliate


(403
)










(403
)Proceeds from note payable to affiliate


529











529Dividends paid to parent


(23
)










(23
)Call premiums paid related to early extinguishment of debt


(14
)










(14
)Contribution from parent, net


236


6


315


(321
)

236Debt issuance cost paid


(5
)










(5
)Other, net








(1
)




(1
)Net cash provided by financing activities


683


6


206


(271
)

624Effect of exchange rate changes on cash








6





6Increase (decrease) in cash and cash equivalents


618


(1
)

84





701Cash and cash equivalents at beginning of period





3


84





87Cash and cash equivalents at end of period

$
618

$
2

$
168

$


$
788


72

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Table of Contents

HUNTSMAN CORPORATION AND SUBSIDIARIES

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

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

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

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES        CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)        NINE MONTHS ENDED SEPTEMBER 30, 2008        (Dollars in Millions)

Parent
Company

Guarantors

Non-
Guarantors

Eliminations

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

$
(152
)
$
369

$
(155
)
$


$
62Investing activities:Capital expenditures


(33
)

(121
)

(171
)




(325
)Proceeds from sale of assets, net of adjustments





(28
)

2





(26
)Investment in unconsolidated affiliates, net


(92
)

(37
)




92


(37
)Decrease in receivable from affiliates


(91
)

(268
)




268


(91
)Acquisiton of intangible assets








(9
)




(9
)Other, net








(7
)




(7
)Net cash used in investing activities


(216
)

(454
)

(185
)

360


(495
)Financing activities:Net borrowings under revolving loan facilities


358





12





370Net repayments of overdraft facilities








(3
)




(3
)Repayments of long-term debt








(7
)




(7
)Proceeds from long-term debt








24





24Intercompany borrowings








268


(268
)

Repayments of notes payable


(33
)




(2
)




(35
)Proceeds from notes payable


34





6





40Contribution from parent, net





81


11


(92
)

Other, net


(2
)










(2
)Net cash provided by financing activities


357


81


309


(360
)

387Effect of exchange rate changes on cash








(1
)




(1
)Decrease in cash and cash equivalents


(11
)

(4
)

(32
)




(47
)Cash and cash equivalents at beginning of period


11


6


137





154Cash and cash equivalents at end of period

$


$
2

$
105

$


$
107


73

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Table of Contents

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

FORWARD-LOOKING STATEMENTS

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

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

There
are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report.
Any forward-looking statements should be considered in light of the risks referenced in "Part II. Item 1A. Risk Factors" in this report and in "Part I.
Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2008.

OVERVIEW

Business

We are a global manufacturer of differentiated organic chemical products and of inorganic chemical products. Our products comprise a
broad range of chemicals and formulations, which we market globally to a diversified group of consumer and industrial customers. Our products are used in a wide range of applications, including those
in the adhesives, aerospace, automotive, construction products, durable and non-durable consumer products, electronics, medical, packaging, paints and coatings, power generation, refining,
synthetic fiber, textile chemicals and dye industries. We are a leading global producer in many of our key product lines, including MDI, amines, surfactants, epoxy-based polymer formulations, textile
chemicals, dyes, maleic anhydride and titanium dioxide. We had revenues for the nine months ended September 30, 2009 and 2008 of $5,667 million and $8,167 million, respectively.

We
currently operate in five segments: Polyurethanes, Advanced Materials, Textile Effects, Performance Products and Pigments. Our Polyurethanes, Advanced Materials, Textile Effects and
Performance
Products segments produce differentiated organic chemical products and our Pigments segment produces inorganic chemical products. In a series of transactions completed in 2006 and 2007, we sold
substantially all of our former Polymers and Base Chemicals operations. We report the results from these businesses as discontinued operations. For more information, see "Note 20. Discontinued
Operations" to our condensed consolidated financial statements (unaudited) included elsewhere in this report.

74

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Table of Contents

Outlook

During the third quarter of 2009, we saw improved demand in all of our divisions and remain encouraged by our monthly
year-over-year order pattern. We continue to see the positive results of decisions made over the past three years to expand our Asian operations and focus on more
differentiated chemistry while divesting of our commodity chemicals and plastics. This geographic expansion has allowed us to take advantage of markets less affected by the ongoing global recession.
Our focus on costs, pricing and working capital has allowed our operating results to steadily improve throughout the year. We are cautiously optimistic that the economic recovery will continue.

Our
liquidity significantly improved in the nine months ended September 30, 2009 as a result of the Texas Bank Litigation settlement and our ongoing efforts to manage working
capital. Our previously announced program to reduce fixed costs by more than $150 million is progressing on target. For more information, see "Liquidity and Capital Resources"
below.

RECENT DEVELOPMENTS

2009 Cost Reduction Initiatives

On January 22, 2009, we announced a company-wide initiative to reduce costs across all of our divisions and
functions. Including steps taken during the fourth quarter of 2008, we expect to reduce our full-time employees by approximately 1,250 positions or 10% by year-end 2009. We
further expect to reduce the number of full-time contractors working in our businesses by an additional 490 positions. Together, we expect these reductions to result in operating cost
savings of approximately $150 million.

As
part of this initiative, our Board of Directors approved and, on January 22, 2009, we announced plans to close our titanium dioxide plant located in Grimsby, U.K. The Grimsby
plant is our Pigments segment's oldest and least efficient manufacturing plant and had an annual production capacity of 40,000 tons of titanium dioxide. The plant, which had a net book value of
approximately $32 million at December 31, 2008, ceased pigment production during the first quarter of 2009. Approximately 200 full-time employees and contractors worked at
the plant. Annual operating cost savings resulting from the plant's closure is expected to be approximately $28 million.

"Stalking Horse" Bid To Acquire Tronox

On August 28, 2009, we entered into the Tronox Purchase Agreement, pursuant to which our wholly owned subsidiaries, Huntsman
Pigments LLC and Huntsman Australia R&D Company Pty Ltd, agreed to acquire certain assets of Tronox under Section 363 of Chapter 11 of the United States Bankruptcy Code as
well as certain assets and equity interest, including working capital, of Tronox's foreign subsidiaries, for an aggregate purchase price of approximately $415 million. We intend to finance
approximately fifty percent of the purchase price with debt. The assets to be acquired in connection with the Tronox Transaction include:



Tronox's
joint venture partner in Australia, Exxaro Resources Limited, has agreed to waive contractual restrictions on the transfer of Tronox's joint venture interests to us, including
applicable right of first refusal and change of control rights, in the event we are approved by the bankruptcy court as the buyer.

75

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Table of Contents

The
Tronox Purchase Agreement is subject to approval by the United States Bankruptcy Court for the Southern District of New York, in which the bankruptcy cases of Tronox Incorporated and
14 of its subsidiaries under Chapter 11 of the United States Bankruptcy Code are being jointly administered as In re Tronox Corporation, et al., Case No. 09-10156 (ALG). We
entered into the Tronox Purchase Agreement as a "stalking horse" bidder, and the Tronox Transaction is subject to Tronox's solicitation of higher or otherwise better offers pursuant to specified
bidding procedures and an auction process to be conducted under supervision of the bankruptcy court. We made a $12 million refundable deposit toward the purchase price on the date of the
execution of the Tronox Purchase Agreement and, to date, we have incurred $8 million in costs related to the Tronox Transaction. On September 16, 2009, the bankruptcy court approved the
bidding procedures and granted certain benefits and bid protections to us in our role as "stalking horse" bidder, including expense reimbursement up to $3 million. We have the option to amend
our bid should another bidder submit an offer that is greater than our bid described above. A decision to amend our bid will not be made unless and until a superseding bid is made. Under the bidding
procedures order, other potential bidders must, among other things, submit an irrevocable offer and a $15.45 million good faith deposit on or before December 1, 2009. On
November 2, 2009, we announced that the waiting period under the HSR Act has expired, which is a requirement to close on the Tronox Transaction.

The
Tronox Transaction is also subject to the satisfaction of various conditions specified in the Tronox Purchase Agreement. We can provide no assurance as to if or when the Tronox
Transaction will close; moreover, if the Tronox Transaction does not close, we can provide no assurance that we will receive all or part of any refundable deposit or expense reimbursement.

Closure of Australian Styrenics Operations

On September 7, 2009, we announced that we will close our styrenics facility located at West Footscray, Australia. We expect to
cease operation of the West Footscray
styrene plant at or near year end 2009, with subsequent closure of our polystyrene and expandable polystyrene plants in early 2010. During the third quarter of 2009, we recorded closure costs of
approximately $55 million ($25 million primarily in severance and a $30 million preliminary estimate of environmental remediation costs) and expect to incur other closure related
costs of approximately $15 million in 2010. We can provide no assurance that the eventual environmental remediation costs will not be materially different from our current estimate. Products
produced at the site represent less than 2% of our 2008 global sales. Our styrenics operations posted an operating loss of approximately $29 million in 2008. Our other operations in Australia,
including our RMAX® expandable polystyrene business, Performance Products, Polyurethanes, Textile Effects and Advanced Materials divisions, are not affected by the announcement and will
continue to operate in Australia.

Securitization of Accounts Receivable

As of September 30, 2009, our existing A/R Securitization Program consisted of commercial paper conduit programs with a
committed amount of approximately $575 million (U.S. dollar equivalents). As of September 30, 2009, the underlying effective capacity of the program was $402 million. As of
September 30, 2009, the receivables trust under our existing A/R Securitization Program had $258 million in U.S. dollar equivalents (comprised of $55 million and approximately
€139 million ($203 million)) in commercial paper outstanding.

Our
existing A/R Securitization Program was scheduled to mature on November 12, 2009. On October 16, 2009, we entered into a Termination and Release Agreement, pursuant to
which we terminated our existing A/R Securitization Program and replaced it with the U.S. and European programs. At that time, the receivables trust repaid the entire balance of commercial paper
outstanding under our existing A/R Securitization Program using proceeds received from the new programs. For more information, see "Liquidity and Capital ResourcesOff-Balance
Sheet ArrangementsReceivables Securitization" below.

76

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Table of Contents

RESULTS OF OPERATIONS

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

Huntsman Corporation

Three Months
Ended
September 30,



Nine Months
Ended
September 30,Percent
Change

Percent
Change2009

2008

2009

2008Revenues

$
2,108

$
2,731


(23
)%
$
5,667

$
8,167


(31
)%Cost of goods sold


1,771


2,381


(26
)%

4,948


7,068


(30
)%Gross profit


337


350


(4
)%

719


1,099


(35
)%Operating expenses


250


254


(2
)%

710


807


(12
)%Restructuring, impairment and plant closing costs


62


3


NM


139


8


NMOperating income (loss)


25


93


(73
)%

(130
)

284


NMInterest expense, net


(65
)

(69
)

(6
)%

(178
)

(199
)

(11
)%Loss on accounts receivable securitization program


(3
)

(7
)

(57
)%

(13
)

(16
)

(19
)%Equity in (loss) income of unconsolidated affiliates


(1
)

3


NM


1


10


(90
)%(Expenses) income associated with the Terminated Merger and related litigation


(2
)

(26
)

(92
)%

835


(35
)

NMLoss on early extinguishment of debt


(21
)




NM


(21
)




NMOther income


1


1





1


1


(Loss) income from continuing operations before income taxes


(66
)

(5
)

NM


495


45


NMIncome tax expense





(17
)

NM


(449
)

(42
)

969
%(Loss) income from continuing operations


(66
)

(22
)

200
%

46


3


NM(Loss) income from discontinued operations, net of tax


(2
)

1


NM


(2
)

5


NMExtraordinary gain on the acquisition of a business, net of tax





1


NM





10


NMNet (loss) income


(68
)

(20
)

240
%

44


18


144
%Net loss (income) attributable to noncontrolling interests











4


(7
)

NMNet (loss) income attributable to Huntsman Corporation


(68
)

(20
)

240
%

48


11


336
%Interest expense, net


65


69


(6
)%

178


199


(11
)%Income tax expense from continuing operations





17


NM


449


42


969
%Income tax (benefit) expense from discontinued operations


(2
)

1


NM


(2
)

3


NMDepreciation and amortization


112


98


14
%

338


290


17
%EBITDA(1)

$
107

$
165


(35
)%
$
1,011

$
545


86
%Net cash provided by operating activities










$
907

$
46


NMNet cash used in investing activities











(164
)

(400
)

(59
)%Net cash provided by financing activities











214


309


(31
)%


77

---



Table of Contents

Huntsman International

Three Months
Ended
September 30,



Nine Months
Ended
September 30,Percent
Change

Percent
Change2009

2008

2009

2008Revenues

$
2,108

$
2,731


(23
)%
$
5,667

$
8,167


(31
)%Cost of goods sold


1,766


2,376


(26
)%

4,935


7,055


(30
)%Gross profit


342


355


(4
)%

732


1,112


(34
)%Operating expenses


250


254


(2
)%

702


808


(13
)%Restructuring, impairment and plant closing costs


62


3


NM


139


8


NMOperating income (loss)


30


98


(69
)%

(109
)

296


NMInterest expense, net


(64
)

(68
)

(6
)%

(177
)

(199
)

(11
)%Loss on accounts receivable securitization program


(3
)

(7
)

(57
)%

(13
)

(16
)

(19
)%Equity in (loss) income of unconsolidated affiliates


(1
)

3


NM


1


10


(90
)%Loss on early extinguishment of debt


(21
)




NM


(21
)




NMOther income


1


1





1


1


(Loss) income from continuing operations before income taxes


(58
)

27


NM


(318
)

92


NMIncome tax benefit (expense)


19


(19
)

NM


(135
)

(47
)

187
%(Loss) income from continuing operations


(39
)

8


NM


(453
)

45


NM(Loss) income from discontinued operations, net of tax


(2
)

1


NM


(2
)

5


NMExtraordinary gain on the acquisition of a business, net of tax





1


NM





10


NMNet (loss) income


(41
)

10


NM


(455
)

60


NMNet loss (income) attributable to noncontrolling interests











4


(7
)

NMNet (loss) income attributable to Huntsman International LLC


(41
)

10


NM


(451
)

53


NMInterest expense, net


64


68


(6
)%

177


199


(11
)%Income tax (benefit) expense from continuing operations


(19
)

19


NM


135


47


187
%Income tax (benefit) expense from discontinued operations


(2
)

1


NM


(2
)

3


NMDepreciation and amortization


107


92


16
%

321


273


18
%EBITDA(1)

$
109

$
190


(43
)%
$
180

$
575


(69
)%Net cash provided by operating activities










$
227

$
62


266
%Net cash used in investing activities











(156
)

(495
)

(68
)%Net cash provided by financing activities











624


387


61
%


NMNot
Meaningful


78

---



Table of Contents

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

Huntsman Corporation

Three Months
Ended
September 30,

Nine Months
Ended
September 30,2009

2008

2009

2008Foreign exchange gains (losses)unallocated

$
6

$
4

$
15

$
(6
)Loss on accounts receivable securitization program


(3
)

(7
)

(13
)

(16
)Amounts included in discontinued operations


(4
)

2


(4
)

8Loss on early extinguishment of debt


(21
)




(21
)

Acquisition expenses


(8
)




(9
)

(Expenses) income associated with the Terminated Merger and related litigation


(2
)

(26
)

835


(35
)Extraordinary gain on the acquisition of a business





1





10Gain on sale of businesses/assets


1





1


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








(2
)

Advanced Materials


2





(13
)

Textile Effects


(3
)

(2
)

(12
)

(3
)Performance Products











Pigments


(4
)




(47
)

(1
)Corporate and Other


(57
)

(1
)

(65
)

(4
)Total restructuring, impairment and plant closing costs


(62
)

(3
)

(139
)

(8
)Total

$
(93
)
$
(29
)
$
665

$
(47
)


Huntsman International

Three Months
Ended
September 30,

Nine Months
Ended
September 30,2009

2008

2009

2008Foreign exchange gains (losses)unallocated

$
6

$
4

$
15

$
(6
)Loss on accounts receivable securitization program


(3
)

(7
)

(13
)

(16
)Amounts included in discontinued operations


(4
)

2


(4
)

8Loss on early extinguishment of debt


(21
)




(21
)

Acquisition expenses


(8
)




(9
)

Extraordinary gain on the acquisition of a business





1





10Gain on sale of businesses/assets


1





1


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








(2
)

Advanced Materials


2





(13
)

Textile Effects


(3
)

(2
)

(12
)

(3
)Performance Products











Pigments


(4
)




(47
)

(1
)Corporate and Other


(57
)

(1
)

(65
)

(4
)Total restructuring, impairment and plant closing costs


(62
)

(3
)

(139
)

(8
)Total

$
(91
)
$
(3
)
$
(170
)
$
(12
)


(1)EBITDA
is defined as net income (loss) attributable to Huntsman Corporation or Huntsman International LLC, as appropriate, before interest, income
taxes, depreciation and amortization.


79

---



Table of Contents

We
believe that EBITDA enhances an investor's understanding of our financial performance and our ability to satisfy principal and interest obligations with respect to our indebtedness. However, EBITDA
should not be considered in isolation or viewed as a substitute for net income, cash flow from operations or other measures of performance as defined by GAAP. Moreover, EBITDA as used herein is not
necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the method of calculation. Our management uses EBITDA to assess financial performance
and debt service capabilities. In assessing financial performance, our management reviews EBITDA as a general indicator of economic performance compared with prior periods. Because EBITDA excludes
interest, income taxes, depreciation and amortization, EBITDA provides an indicator of general economic performance that is not affected by debt restructurings, fluctuations in interest rates or
effective tax rates, or levels of depreciation and amortization. Accordingly, our management believes this type of measurement is useful for comparing general operating performance from period to
period and making certain related management decisions. EBITDA is also used by securities analysts, lenders and others in their evaluation of different companies because it excludes certain items that
can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company's capital structure, debt levels and credit
ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take
advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies.
Finally, companies employ productive assets of different ages and utilize different methods of acquiring and depreciating such assets. This can result in considerable variability in the relative costs
of productive assets and the depreciation and amortization expense among companies. Our management
also believes that our investors use EBITDA as a measure of our ability to service indebtedness as well as to fund capital expenditures and working capital requirements. Nevertheless, our management
recognizes that there are material limitations associated with the use of EBITDA in the evaluation of our Company as compared to net income, which reflects overall financial performance, including the
effects of interest, income taxes, depreciation and amortization. EBITDA excludes interest expense. Because we have borrowed money in order to finance our operations, interest expense is a necessary
element of our costs and ability to generate revenue. Therefore, any measure that excludes interest expense has material limitations. EBITDA also excludes taxes. Because the payment of taxes is a
necessary element of our operations, any measure that excludes tax expense has material limitations. Finally, EBITDA excludes depreciation and amortization expense. Because we use capital assets,
depreciation and amortization expense is a necessary element of our costs and ability to generate revenue. Therefore, any measure that excludes depreciation and amortization expense has material
limitations. Our management compensates for the limitations of using EBITDA by using it to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the
business rather than GAAP results alone. Our management also uses other metrics to evaluate capital structure, tax planning and capital investment decisions. For example, our management uses credit
ratings and net debt ratios to evaluate capital structure, effective tax rate by jurisdiction to evaluate tax planning, and payback period and internal rate of return to evaluate capital investments.
Our management also uses trade working capital to evaluate its investment in accounts receivable and inventory, net of accounts payable.


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

80

---



Table of Contents

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

Huntsman Corporation

Nine Months
Ended
September 30,Percent
Change2009

2008EBITDA

$
1,011

$
545


86
%Depreciation and amortization


(338
)

(290
)

17
%Interest expense, net


(178
)

(199
)

(11
)%Income tax expense from continuing operations


(449
)

(42
)

969
%Income tax benefit (expense) from discontinued operations


2


(3
)

NMNet income attributable to Huntsman Corporation


48


11


336
%Net (loss) income attributable to noncontrolling interests


(4
)

7


NMNet income


44


18


144
%Extraordinary gain on the acquisition of a business, net of tax





(10
)

NMEquity in income of unconsolidated affiliates


(1
)

(10
)

(90
)%Dividends received from unconsolidated affiliates





11


NMDepreciation and amortization


338


290


17
%(Gain) loss on disposal of assets


(2
)

4


NMLoss on early extinguishment of debt


21





NMNoncash restructuring, impairment and plant closing costs


5


3


67
%Noncash interest expense


14


2


600
%Deferred income taxes


311


15


NMNet unrealized (gain) loss on foreign currency transactions


(8
)

16


NMOther, net


23


21


10
%Changes in operating assets and liabilities


162


(314
)

NMNet cash provided by operating activities

$
907

$
46


NM


81

---



Table of Contents

Huntsman International

Nine Months
Ended
September 30,Percent
Change2009

2008EBITDA

$
180

$
575


(69
)%Depreciation and amortization


(321
)

(273
)

18
%Interest expense, net


(177
)

(199
)

(11
)%Income tax expense from continuing operations


(135
)

(47
)

187
%Income tax benefit (expense) from discontinued operations


2


(3
)

NMNet (loss) income attributable to Huntsman International LLC


(451
)

53


NMNet (loss) income attributable to noncontrolling interests


(4
)

7


NMNet (loss) income


(455
)

60


NMExtraordinary gain on the acquisition of a business, net of tax





(10
)

NMEquity in income of unconsolidated affiliates


(1
)

(10
)

(90
)%Dividends received from unconsolidated affiliates





11


NMDepreciation and amortization


321


273


18
%(Gain) loss on disposal of assets


(2
)

4


NMLoss on early extinguishment of debt


21





NMNoncash restructuring, impairment and plant closing costs


5


3


67
%Noncash interest expense


24


2


NMDeferred income taxes


125


20


525
%Net unrealized (gain) loss on foreign currency transactions


(8
)

16


NMOther, net


18


21


(14
)%Changes in operating assets and liabilities


179


(328
)

NMNet cash provided by operating activities

$
227

$
62


266
%


NMNot
Meaningful


Three Months Ended September 30, 2009 Compared with Three Months Ended September 30, 2008

For the three months ended September 30, 2009, the net loss attributable to Huntsman Corporation was $68 million on
revenues of $2,108 million, compared with a net loss attributable to Huntsman Corporation of $20 million on revenues of $2,731 million for the 2008 period. For the three months
ended September 30, 2009, the net loss attributable to Huntsman International LLC was $41 million on revenues of $2,108 million, compared with net income attributable to
Huntsman International LLC of $10 million on revenues of $2,731 million for the 2008 period. The decrease of $48 million in net loss attributable to Huntsman Corporation
and the decrease of $51 million in net income attributable to Huntsman International LLC resulted from the following items:



82

---



Table of Contents



83

---



Table of Contents



Segment Analysis

Three Months
Ended
September 30,Percent
Change2009

2008RevenuesPolyurethanes

$
869

$
1,096


(21
)%Advanced Materials


273


385


(29
)%Textile Effects


173


229


(24
)%Performance Products


540


741


(27
)%Pigments


262


280


(6
)%Corporate and Other


33


44


(25
)%Eliminations


(42
)

(44
)

(5
)%Total

$
2,108

$
2,731


(23
)%Huntsman CorporationSegment EBITDAPolyurethanes

$
137

$
89


54
%Advanced Materials


29


42


(31
)%Textile Effects


(25
)

4


NMPerformance Products


82


81


1
%Pigments


4


15


(73
)%Corporate and Other


(116
)

(68
)

71
%Subtotal


111


163


(32
)%Discontinued operations


(4
)

2


NMTotal

$
107

$
165


(35
)%Huntsman InternationalSegment EBITDAPolyurethanes

$
137

$
89


54
%Advanced Materials


29


42


(31
)%Textile Effects


(25
)

4


NMPerformance Products


82


81


1
%Pigments


4


15


(73
)%Corporate and Other


(114
)

(43
)

165
%Subtotal


113


188


(40
)%Discontinued operations


(4
)

2


NMTotal

$
109

$
190


(43
)%


84

---



Table of Contents



Average Selling
Price

Sales VolumesCurrent Year-Over-Prior Year (Decrease) IncreasePolyurethanes


(27
)%

9
%Advanced Materials


(7
)%

(24
)%Textile Effects


(17
)%

(9
)%Performance Products(1)


(27
)%

(2
)%Pigments


(10
)%

5
%




Current Quarter-Over-Prior Quarter Increase (Decrease)Polyurethanes


5
%

19
%Advanced Materials


8
%

(2
)%Textile Effects


(9
)%

7
%Performance Products(1)


1
%

9
%Pigments


2
%

2
%


(1)Excludes
revenues and sales volumes from tolling arrangements. NMNot
meaningful


Polyurethanes

The decrease in revenues in our Polyurethanes segment for the three months ended September 30, 2009 as compared to the same
period in 2008 was primarily due to overall lower average selling prices and lower MDI sales volumes. Average MDI selling prices decreased due to competitive pressures, lower raw material costs and
effects of the movement of the U.S. dollar against the Euro. Global MDI sales volumes decreased as the effects of the worldwide economic slowdown continue to affect demand. PO and MTBE sales volumes
increased relative to the 2008 period, which was impacted by the 2008 U.S. Gulf Coast storms, and average selling prices decreased in response to lower raw material costs. The increase in EBITDA in
our Polyurethanes segment primarily resulted from higher MTBE margins and sales volumes and the negative effects in the 2008 period caused by the 2008 U.S. Gulf Coast storms, offset in part by lower
MDI sales volumes.

Advanced Materials

The decrease in revenues in our Advanced Materials segment for the three months ended September 30, 2009 compared to the same
period in 2008 was due to lower sales volumes and lower average selling prices. Sales volumes decreased across all regions as a result of the worldwide economic slowdown. Average selling prices in our
base resins market decreased in response to lower raw material costs while average selling prices in our formulations and specialty components markets decreased primarily as a result of the strength
of the U.S. dollar against major European currencies. The decrease in EBITDA was primarily due to lower sales volumes, partially offset by lower raw material and operating costs. During the three
months ended September 30, 2009 and 2008, our Advanced Materials segment recorded a restructuring and plant closing credit of $2 million and nil, respectively. For more information
concerning restructuring activities, see "Note 5. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated financial statements (unaudited) included elsewhere in this
report.

85

---



Table of Contents

Textile Effects

The decrease in revenues in our Textile Effects segment for the three months ended September 30, 2009 compared to the same
period in 2008 was due to lower average selling prices and lower sales volumes. Average selling prices decreased primarily as a result of the strength of the U.S. dollar against major European
currencies, the Indian rupee, the Brazilian real and the Mexican peso. Sales volumes decreased primarily due to lower demand for apparel and home textile products, as well as specialty textiles
products in the Americas and Europe as well as mill closures in these regions with the worldwide economic slowdown. The decrease in EBITDA was primarily due to lower sales volumes partially offset by
continued fixed cost reductions. During the three months ended September 30, 2009 and 2008, our Textile Effects segment recorded restructuring and plant closing charges of $3 million and
$2 million, respectively.

Performance Products

The decrease in revenues in our Performance Products segment for the three months ended September 30, 2009 compared to the same
period in 2008 was due to lower average selling prices and lower sales volumes. The decrease in average selling prices was driven principally by lower raw material costs and by the strengthening of
the U.S. dollar against major European currencies and the Australian dollar. Sales volumes decreased primarily because of lower demand for surfactants. Nevertheless, the impact of lower sufactants
sales volumes was largely offset by improved sales across other product areas as the 2008 period was impacted by the 2008 U.S. Gulf Coast storms. EBITDA increased due to the effect of higher margins
as raw material costs fell faster than selling prices, partially offset by lower sales volumes and commissioning expenses for our new maleic anhydride facility.

Pigments

The decrease in revenues in our Pigments segment for the three months ended September 30, 2009 compared to the same period in
2008 was due to lower average selling prices, offset by higher sales volumes. Average selling prices decreased primarily as a result of lower selling prices in Europe and Asia and due to the strength
of the U.S. dollar against major European currencies. Sales volumes increased primarily due to higher demand in Europe. The decrease in EBITDA in our Pigments segment was primarily due to lower
selling prices, higher restructuring, impairment and plant closing costs and to acquisition costs incurred in the 2009 period in connection with the proposed Tronox Transaction, offset in part by
lower raw material and energy costs. For more information concerning the proposed Tronox Transaction, see "Note 1. GeneralRecent Developments"Stalking Horse" Bid To
Acquire Tronox" to our condensed consolidated financial statements (unaudited) included elsewhere in this report. During the three months ended September 30, 2009 and 2008, our Pigments segment
recorded restructuring, impairment and plant closing charges of $4 million and nil, respectively. For more information concerning restructuring activities, see "Note 5. Restructuring,
Impairment and Plant Closing Costs" to our condensed consolidated financial statements (unaudited) included elsewhere in this report.

Corporate and OtherHuntsman Corporation

Corporate and Other includes the results of our Australian styrenics business, unallocated foreign exchange gains and losses,
unallocated corporate overhead, loss on accounts receivable securitization program, (expenses) income associated with the Terminated Merger and related litigation, loss on early extinguishment of
debt, net income (loss) attributable to noncontrolling interests, unallocated restructuring costs, extraordinary gain on the acquisition of a business and non-operating income and expense.
For the three months ended September 30, 2009, EBITDA from Corporate and Other items decreased by $48 million to a loss of $116 million from a loss of $68 million for the
same period in 2008. The decrease in EBITDA from Corporate and Other resulted partially from a $56 million

86

---



Table of Contents

increase
in restructuring charges ($57 million in the 2009 period versus $1 million in the 2008 period) primarily related to the announced closure of our styrenics operations at West
Footscray, Australia. For more information concerning restructuring activities, see "Note 5. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated financial
statements (unaudited) included elsewhere in this report. Also contributing to lower EBITDA was a $21 million charge in 2009 due to early extinguishment of debt. These decreases to EBITDA were
partially offset by a $24 million decrease in expenses associated with the Terminated Merger and related litigation ($2 million expense in the 2009 period compared to $26 million
expense in the 2008 period). For more information see "Note 18. (Expenses) Income Associated with the Terminated Merger and Related Litigation" to our condensed consolidated financial
statements (unaudited) included elsewhere in this report. Additionally, the decrease in EBITDA was offset by a $2 million increase in unallocated foreign exchange gains ($6 million in
gains in the 2009 period versus $4 million in gains in the 2008 period) and a $4 million reduction in costs associated with our A/R Securitization Program.

Corporate and OtherHuntsman International

Corporate and Other includes the results of our Australian styrenics business, unallocated foreign exchange gains and losses,
unallocated corporate overhead, loss on accounts receivable securitization program, loss on early extinguishment of debt, net income (loss) attributable to noncontrolling interests, unallocated
restructuring costs, extraordinary gain on the acquisition of a business and non-operating income and expense. For the three months ended September 30, 2009, EBITDA from Corporate
and Other items decreased by $71 million to a loss of $114 million from a loss of $43 million for the same period in 2008. The decrease in EBITDA from Corporate and Other resulted
partially from a $56 million increase in restructuring charges ($57 million in the 2009 period versus $1 million in the 2008 period) primarily related to the announced closure of
our styrenics operations at West Footscray, Australia. For more information concerning restructuring activities, see "Note 5. Restructuring, Impairment and Plant Closing Costs" to our condensed
consolidated financial statements (unaudited) included elsewhere in this report. Also contributing to
lower EBITDA was a $21 million charge in 2009 due to early extinguishment of debt. These decreases to EBITDA were partially offset by a $2 million increase in unallocated foreign
exchange gains ($6 million in gains in the 2009 period versus $4 million in gains in the 2008 period) and a $4 million reduction in costs associated with our A/R Securitization
Program.

Nine Months Ended September 30, 2009 Compared with Nine Months Ended September 30, 2008

For the nine months ended September 30, 2009, net income attributable to Huntsman Corporation was $48 million on revenues
of $5,667 million, compared with net income attributable to Huntsman Corporation of $11 million on revenues of $8,167 million for the 2008 period. For the nine months ended
September 30, 2009, the net loss attributable to Huntsman International LLC was $451 million on revenues of $5,667 million, compared with net income attributable to
Huntsman International LLC of $53 million on revenues of $8,167 million for the 2008 period. The increase of $37 million in net income attributable to Huntsman Corporation
and the decrease of $504 million in net income attributable to Huntsman International LLC was the result of the following items:



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Segment Analysis

Nine Months
Ended
September 30,Percent
Change2009

2008RevenuesPolyurethanes

$
2,164

$
3,259


(34
)%Advanced Materials


785


1,191


(34
)%Textile Effects


504


734


(31
)%Performance Products


1,522


2,097


(27
)%Pigments


712


886


(20
)%Corporate and Other


67


127


(47
)%Eliminations


(87
)

(127
)

(31
)%Total

$
5,667

$
8,167


(31
)%Huntsman CorporationSegment EBITDAPolyurethanes

$
249

$
369


(33
)%Advanced Materials


38


128


(70
)%Textile Effects


(56
)

7


NMPerformance Products


200


185


8
%Pigments


(51
)

33


NMCorporate and Other


635


(185
)

NMSubtotal


1,015


537


89
%Discontinued operations


(4
)

8


NMTotal

$
1,011

$
545


86
%Huntsman InternationalSegment EBITDAPolyurethanes

$
249

$
369


(33
)%Advanced Materials


38


128


(70
)%Textile Effects


(56
)

7


NMPerformance Products


200


185


8
%Pigments


(51
)

33


NMCorporate and Other


(196
)

(155
)

26
%Subtotal


184


567


(68
)%Discontinued operations


(4
)

8


NMTotal

$
180

$
575


(69
)%




Average
Selling
Price

Sales
VolumesCurrent Year-Over-Prior Year DecreasePolyurethanes


(27
)%

(9
)%Advanced Materials


(8
)%

(28
)%Textile Effects


(10
)%

(24
)%Performance Products(1)


(22
)%

(8
)%Pigments


(7
)%

(14
)%


(1)Excludes
revenues and sales volumes from tolling arrangements. NMNot
meaningful


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Polyurethanes

The decrease in revenues in our Polyurethanes segment for the nine months ended September 30, 2009 as compared to the same
period in 2008 was primarily due to overall lower average selling prices and lower MDI sales volumes. Average MDI selling prices decreased primarily due to competitive pressures, lower raw material
costs and the effects of the movement of the U.S. dollar against the Euro. MDI sales volumes decreased due to lower demand in all regions and across all major markets as a result of the worldwide
economic slowdown. MTBE sales volumes increased relative to the 2008 period, which was impacted by the 2008 U.S. Gulf Coast storms, while average selling prices decreased in response to lower raw
material costs. The decrease in EBITDA in the Polyurethanes segment was primarily the result of lower MDI sales volumes and margins, partially offset by higher MTBE margins.

Advanced Materials

The decrease in revenues in our Advanced Materials segment for the nine months ended September 30, 2009 compared to the same
period in 2008 was due to lower sales volumes and lower average selling prices. Sales volumes decreased across all regions as a result of the worldwide economic slowdown. Average selling prices in our
base resins market decreased in response to lower raw material costs while average selling prices in our formulations and specialty components markets decreased primarily as a result of the strength
of the U.S. dollar against major European currencies. The decrease in EBITDA was primarily due to lower sales volumes and higher restructuring costs, partially offset by lower raw material and
operating costs. During the nine months ended September 30,
2009 and 2008, our Advanced Materials segment recorded restructuring and plant closing charges of $13 million and nil, respectively. For more information concerning restructuring activities,
see "Note 5. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated financial statements (unaudited) included elsewhere in this report.

Textile Effects

The decrease in revenues in our Textile Effects segment for the nine months ended September 30, 2009 compared to the same period
in 2008 was due to lower sales volumes and lower average selling prices. Sales volumes decreased primarily due to lower demand for apparel and home textile products, as well as specialty textiles
products, in all regions as a result of the worldwide economic slowdown. Average selling prices decreased primarily as a result of the strength of the U.S. dollar against major European currencies,
the Indian rupee and the Brazilian real, as local currency selling prices were higher in Asia and the Americas. The decrease in EBITDA was primarily due to lower sales volumes and higher restructuring
costs, partially offset by lower raw material and fixed costs. During the nine months ended September 30, 2009 and 2008, our Textile Effects segment recorded restructuring and plant closing
charges of $12 million and $3 million, respectively. For more information concerning restructuring activities, see "Note 5. Restructuring, Impairment and Plant Closing Costs" to
our condensed consolidated financial statements (unaudited) included elsewhere in this report.

Performance Products

The decrease in revenues in our Performance Products segment for the nine months ended September 30, 2009 compared to the same
period in 2008 was due to lower average selling prices and lower sales volumes. The decrease in average selling prices was driven principally by lower raw material costs and the strengthening of the
U.S. dollar against major European currencies and the Australian dollar. Sales volumes decreased primarily because of lower demand for all product lines as a result of the worldwide economic slowdown.
EBITDA increased due to higher margins as raw material costs fell faster than selling prices, partially offset by the effect of lower sales volumes.

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Pigments

The decrease in revenues in our Pigments segment for the nine months ended September 30, 2009 compared to the same period in
2008 was due to lower average selling prices and lower sales volumes. Average selling prices decreased primarily as a result of the strength of the U.S. dollar against major European currencies, as
local currency selling prices in Asia and North America were higher. Sales volumes decreased primarily due to lower demand in Europe, North America and Asia as a result of the worldwide economic
slowdown. The decrease in EBITDA in our Pigments segment was primarily due to lower sales volumes, higher restructuring, impairment and plant closing costs and in response to acquisition costs
incurred in the 2009 period in connection with the proposed Tronox Transaction. For more information, see "Note 1. GeneralRecent Developments"Stalking Horse" Bid To
Acquire Tronox" to our condensed consolidated financial statements (unaudited) included elsewhere in this report. During the nine months ended September 30, 2009 and 2008, our Pigments segment
recorded restructuring, impairment and plant closing charges of $47 million and $1 million, respectively. For more information concerning restructuring activities, see "Note 5.
Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated financial statements (unaudited) included elsewhere in this report.

Corporate and OtherHuntsman Corporation

Corporate and Other includes the results of our Australian styrenics business, unallocated foreign exchange gains and losses,
unallocated corporate overhead, loss on accounts receivable securitization program, income (expenses) associated with the Terminated Merger and related litigation, net income (loss) attributable to
noncontrolling interests, unallocated restructuring costs, extraordinary gain on the acquisition of a business and non-operating income and expense. For the nine months ended
September 30, 2009, EBITDA from Corporate and Other items increased by $820 million to income of $635 million from a loss of $185 million for the same period in 2008 The
increase in EBITDA from Corporate and Other for the nine months ended September 30, 2009 resulted primarily from a $870 million increase in income (expenses) associated with the
Terminated Merger and related litigation ($835 million of income in the 2009 period compared to $35 million of expense in the 2008 period). For more information, see "Note 18.
(Expenses) Income Associated with the Terminated Merger and Related Litigation" to our condensed consolidated financial statements (unaudited) included elsewhere in this report. Additionally, the
increase in EBITDA was due to a $21 million increase in unallocated foreign exchange gains ($15 million in gains in the 2009 period versus $6 million in losses in the 2008
period), an $11 million decrease in net income attributable to noncontrolling interests, and a $3 million reduction in costs associated with our A/R Securitization Program
($13 million of costs in the 2009 period versus $16 million of costs in the 2008 period). These increases to EBITDA were partially offset by higher restructuring charges of
$61 million ($65 million in the 2009 period versus $4 million in the 2008 period) primarily related to the announced closure of our styrenics operations at West Footscray,
Australia. For more information concerning restructuring activities, see "Note 5. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated financial statements
(unaudited) included elsewhere in this report. Additionally, EBITDA decreased due to $21 million of costs associated with the early extinguishment of debt in 2009 and a $10 million gain
on the Textile Effects Acquisition in the 2008 period. For more information
regarding extraordinary gain associated with the Textile Effects Acquisition, see "Note 3. Business CombinationsTextile Effects Acquisition" to our condensed consolidated financial
statements (unaudited) included elsewhere in this report.

Corporate and OtherHuntsman International

Corporate and Other includes the results of our Australian styrenics business, unallocated foreign exchange gains and losses,
unallocated corporate overhead, loss on accounts receivable securitization

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program,
income (expenses) associated with the Terminated Merger and related litigation, net income (loss) attributable to noncontrolling interests, unallocated restructuring costs, extraordinary gain
on the acquisition of a business and non-operating income and expense. For the nine months ended September 30, 2009, EBITDA from Corporate and Other items decreased by
$41 million to a loss of $196 million from a loss of $155 million for the same period in 2008. The decrease in EBITDA primarily resulted from higher restructuring charges of
$61 million ($65 million in the 2009 period versus $4 million in the 2008 period) primarily related to the announced closure of our styrenics opearations at West Footscray,
Australia. For more information concerning restructuring activities, see "Note 5. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated financial statements
(unaudited) included elsewhere in this report. Additionally, EBITDA decreased due to $21 million of costs associated with the early extinguishment of debt in 2009 and a $10 million gain
on the Textile Effects Acquisition in the 2008 period. For more information regarding the extraordinary gain associated with the Textile Effects Acquisition, see "Note 3. Business
CombinationsTextile Effects Acquisition" to our condensed consolidated financial statements (unaudited) included elsewhere in this report. These decreases in EBITDA were partially offset
by higher EBITDA resulting from a $21 million increase in unallocated foreign exchange gains ($15 million in gains in the 2009 period versus $6 million in losses in the 2008
period), an $11 million decrease in net income attributable to noncontrolling interests, and a $3 million reduction in costs associated with our A/R Securitization Program
($13 million of costs in the 2009 period versus $16 million of costs in the 2008 period).

LIQUIDITY AND CAPITAL RESOURCES

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

Cash

Net cash provided by operating activities for the nine months ended September 30, 2009 and 2008 was $907 million and
$46 million, respectively. The increase in cash provided by operating activities was primarily attributable to settlement proceeds received in connection with the Texas Bank Litigation
Settlement Agreement and by a $476 million favorable variance in operating assets and liabilities changes for the nine months ended September 30, 2009 as compared with the same period in
2008. These increases to cash provided by operating activities were offset in part by a decrease in operating income as described in "Results of Operations" above.

Net
cash used in investing activities for the nine months ended September 30, 2009 and 2008 was $164 million and $400 million, respectively. During the nine months
ended September 30, 2009 and 2008, we paid $140 million and $325 million, respectively, for capital expenditures. This reduction in capital expenditures was largely attributable
to higher 2008 spending on various projects, including the maleic anhydride expansion at our Geismar, Louisiana site, as well as the expansion at our Greatham, U.K. titanium dioxide facility. During
the nine months ended September 30, 2009, we paid $31 million for the Baroda acquisition. For more information, see "Note 3. Business CombinationsBaroda Acquisition"
to our condensed consolidated financial statements (unaudited) included elsewhere in this report. During the nine months ended September 30, 2009 and 2008, we received $5 million and
$2 million, respectively, from the sale of assets. During the nine months ended September 30, 2008, we made payments of $28 million related to certain expenditures for the rebuild
of our former Port Arthur, Texas facility, resulting in an adjustment to the sales proceeds received in connection with the 2007 U.S. Base Chemicals Disposition. See "Note 20. Discontinued
Operations" to our condensed consolidated financial statements (unaudited) included elsewhere in this report. During the nine months ended September 30, 2008, we contributed $44 million
to our ethyleneamines joint venture in Saudi Arabia and paid $9 million for the acquisition of intangible assets.

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Net
cash provided by financing activities for the nine months ended September 30, 2009 was $214 million as compared with $309 million of net cash provided by
financing activities in the 2008 period. This decrease in net cash provided by financing activities was primarily due to higher borrowings in the nine months ended September 30, 2008 on our
Revolving Facility. During the nine months ended September 30, 2009 we issued the 2016 Senior Notes and obtained Term Loan C in connection with the Texas Bank Litigation Settlement Agreement.
During this period, we also redeemed in full the $296 million outstanding principal amount 11.625% senior secured notes due October 2010 and the $198 million outstanding principal amount
11.5% senior notes due July 2012.



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

September 30,
2009

December 31,
2008

Increase
(Decrease)

Percent
ChangeCash and cash equivalents

$
1,619

$
657

$
962


146
%Restricted cash


7


5


2


40
%Accounts receivable, net


1,157


913


244


27
%Inventories


1,113


1,500


(387
)

(26
)%Prepaid expenses


59


45


14


31
%Deferred income taxes


18


21


(3
)

(14
)%Other current assets


107


99


8


8
%Total current assets


4,080


3,240


840


26
%Accounts payable


747


747





Accrued liabilities


632


617


15


2
%Deferred income taxes


36


36





Current portion of debt


198


205


(7
)

(3
)%Total current liabilities


1,613


1,605


8


Working capital

$
2,467

$
1,635

$
832


51
%


Our
working capital increased by $832 million as a result of the net impact of the following significant changes:



Direct and Subsidiary Debt

Our direct debt and guarantee obligations consist of the following: our Convertible Notes; our guarantees of certain debt of HPS and
SLIC (our Chinese MDI joint ventures); our guarantee of certain debt of the Saudi Joint Venture; certain indebtedness incurred from time to time to finance certain insurance premiums; and our
guarantee of certain obligations of Huntsman International in its capacity as a contributor and servicer guarantor under the U.S. A/R Program. Substantially all of our other debt has been incurred by
our subsidiaries (primarily Huntsman International); such subsidiary debt is nonrecourse to us and we have no contractual obligation to fund our subsidiaries' respective operations.

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TRANSACTIONS AFFECTING OUR DEBT

Senior Credit Facilities

As of September 30, 2009, our Senior Credit Facilities consisted of (i) the $650 million Revolving Facility;
(ii) the $1,524 million Term Loan B; and (iii) the $500 million ($442 million carrying value) Term Loan C. As of September 30, 2009, we had no borrowings
outstanding under our Revolving Facility, and we had approximately $33 million (U.S. dollar equivalents) of letters of credit and bank guarantees issued and outstanding under our Revolving
Facility. The Revolving Facility matures in August 2010, Term Loan B matures in 2014 and Term Loan C matures in 2016; provided, however, that the maturities of the Revolving Facility and the Dollar
Term Loans will accelerate if we do not repay or refinance all but $100 million of our outstanding debt securities on or before three months prior to the maturity dates of such debt securities.

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

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



The
Waiver is effective from April 16, 2009 through June 30, 2010.

As
consideration for the Waiver, Huntsman International agreed to increase the interest paid on the Revolving Facility by 225 basis points from LIBOR plus 1.75% to LIBOR plus 4% and to
increase the applicable unused fee by 25 basis points from 0.5% to 0.75%. In addition, during the Waiver period, Huntsman International agreed not to:



Pursuant
to the Texas Bank Litigation Settlement Agreement, we entered into the Amendment. The Amendment created Term Loan C.

At
the present time, borrowings under the Revolving Facility, Term Loan B and Term Loan C bear interest at LIBOR plus 4%, LIBOR plus 1.75% and LIBOR plus 2.25%, respectively. However,
the

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applicable
interest rate of Term Loan B is subject to a reduction to LIBOR plus 1.5% upon achieving certain secured leverage ratio thresholds.

2016 Senior Notes

Pursuant to the Texas Bank Litigation Settlement Agreement, Huntsman International entered into the Note Purchase Agreement dated
June 22, 2009 with the Banks, pursuant to which the Banks purchased $600 million aggregate principal amount of the 2016 Senior Notes from Huntsman International.

The
2016 Senior Notes are senior unsecured obligations of Huntsman International and are guaranteed by certain subsidiaries named as guarantors.

The
2016 Senior Notes bear interest at the rate of 5.5% per year payable semi-annually on June 30 and December 31, beginning on December 31, 2009. The
2016 Senior Notes will mature on June 30, 2016. Huntsman International may redeem the 2016 Senior Notes in whole at any time or in part from time to time, upon not less than 30 nor more than
60 days' notice, at a redemption price equal to the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the date of redemption. The 2016 Senior Notes are governed by
an indenture imposing certain limitations on the ability of Huntsman International and its subsidiaries to, among other things, incur additional indebtedness, pay dividends or make certain other
restricted payments, enter into certain transactions with affiliates, create dividend or other payment restrictions affecting restricted subsidiaries and merge
or consolidate with any other person, sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of their assets or adopt a plan of liquidation.

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

As
of September 30, 2009, we had outstanding $600 million ($430 million carrying value) of 2016 Senior Notes with an effective interest rate of 11.73%.

Redemption of Notes

On July 23, 2009, Huntsman International redeemed in full all of its $296 million 11.625% senior secured notes due
October 2010. The total redemption payment, excluding accrued interest was $305 million, which included principal of $296 million and a call premium of approximately $9 million.

On
August 3, 2009, Huntsman International redeemed in full all of its $198 million 11.5% senior notes due July 2012. The total redemption payment, excluding accrued
interest was $204 million, which included principal of $198 million and a call premium of $6 million.

Other Debt (India)

In connection with the Baroda acquisition, a portion of the purchase price was funded through local financing and from liquidity
available from our subsidiaries located in India. As of September 30, 2009, our local Indian entities had combined debt outstanding of approximately $19 million (U.S. dollar
equivalents). This debt is comprised of various facilities including approximately $9 million (U.S. dollar equivalents) in working capital facilities that are callable on demand and a five year
term loan facility of approximately $10 million (U.S. dollar equivalents). See "Note 3. Business CombinationsBaroda Acquisition" to our condensed consolidated financial
statements (unaudited) included elsewhere in this report."

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Other Debt (Insurance)

During the third quarter of 2009, we incurred other debt related to the financing of our insurance premiums in connection with our
annual renewal in July 2009. As of September 30, 2009, the outstanding amount of financed insurance premiums was $29 million, all of which was classified as current. The insurance
premium financing is secured by the prepaid insurance premiums.

COMPLIANCE WITH COVENANTS

We
are in compliance with the financial covenants contained in the agreements governing our debt instruments, including our Senior Credit Facilities, our A/R
Securitization Program and the indentures governing our notes. Our Revolving Facility under our Senior Credit Facilities contains one financial maintenance covenantthe Leverage Covenant.
As of September 30, 2009, Huntsman International maintained an adequate cushion for the Leverage Covenant. Huntsman International also maintained adequate headroom with respect to the financial
covenants under the A/R Securitization Program.

Short-Term and Long-Term Liquidity

We depend upon our cash, credit facilities, A/R Securitization Programs and other debt instruments to provide liquidity for our
operations and working capital needs. As of September 30, 2009, we had $2,412 million of combined cash and unused borrowing capacity, consisting of $1,626 million in cash and
restricted cash, $617 million in availability under our Revolving Facility, $25 million in availability under our European overdraft facility and $144 million in availability
under our existing A/R Securitization Program.

During
the second quarter of 2009, we received settlement proceeds pursuant to the Texas Bank Litigation Settlement Agreement, including $632 million of cash (that included
reimbursement of $12 million of our litigation costs). In addition, Huntsman International received $600 million for the 2016 Senior Notes and $500 million pursuant to the Term
Loan C financing.

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

In
the third quarter of 2009, we paid cash taxes in the amount of $129 million primarily related to the Texas Bank Litigation settlement.

As
of December 31, 2008 we had $1,291 million of combined cash and unused borrowing capacity. Excluding the impact of the Texas Bank Litigation settlement, related taxes
and the resulting redemptions of our notes in 2009, our liquidity as of September 30, 2009comprised of cash and unused borrowing capacityhas remained relatively flat
in spite of the impact of the worldwide recession on earnings. This was largely due to effective working capital management, reduced capital expenditures and minimal scheduled debt maturities.

Our
liquidity can be significantly impacted by various factors. Concerning changes in working capital components for the nine months ended September 30, 2009, our accounts
receivable and inventory, net of accounts payable, decreased by approximately $224 million, as reflected in our condensed consolidated statement of cash flows (unaudited) included elsewhere in
this report. Our inventories decreased by $424 million largely as a result of improved inventory management efforts and reduced inventory costs. In addition, during the nine months ended
September 30, 2009, amounts

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outstanding
under our existing A/R Securitization Program decreased by $188 million (from $446 million as of December 31, 2008 to $258 million as of September 30,
2009). The reduction in amounts outstanding under our existing A/R Securitization Program was largely due to our decreased need to utilize the program as a result of our significant cash balances. We
expect volatility in our working capital components to continue.

On
September 7, 2009, we announced that we will close our styrenics facility located at West Footscray, Australia. We expect to cease operation of the West Footscray styrene plant
at or near year end 2009, with subsequent closure of our polystyrene and expandable polystyrene plants in early 2010. During the
third quarter of 2009, we recorded closure costs of approximately $55 million ($25 million primarily in severance and a $30 million preliminary estimate of environmental
remediation costs) and expect to incur other closure related costs of approximately $15 million in 2010. We can provide no assurance that the eventual environmental remediation costs will not
be materially different from our current estimate. The closure costs are expected to be funded as they are incurred over the next several years, with severance costs to be paid primarily through 2010.
We have implemented various other restructuring programs and, together with the Australian restructuring, we expect to spend approximately $93 million over the next twelve months. During the
nine months ended September 30, 2009, we spent $85 million related to current restructuring initiatives. For a discussion of restructuring, impairment and plant closing costs, see
"Note 5. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated financial statements (unaudited) included elsewhere in this report.

On
April 29, 2006, we experienced fire damage at our Port Arthur, Texas facility. This facility has been subsequently rebuilt and sold. In connection with this fire damage, we
have received partial insurance proceeds to date of $365 million. We have claimed an additional approximately $242 million plus interest as of September 30, 2009 as presently due
and owing and unpaid under our insurance policy. Binding arbitration to settle this claim began on November 2, 2009. Collections on this insured loss, if any, will represent additional income
for us upon final settlement, and will be used to repay secured debt in accordance with relevant provisions of our debt agreements. See "Note 14. Commitments and ContingenciesPort
Arthur Plant Fire Insurance Litigation" and "Note 17. Casualty Losses and Insurance RecoveriesPort Arthur, Texas Plant Fire" to our condensed consolidated financial statements
(unaudited) included elsewhere in this report.

During
the nine months ended September 30, 2009, we made contributions to our pension and postretirement benefit plans of $115 million. During the remainder of 2009, we
expect to contribute an additional amount of $35 million to these plans.

On
August 28, 2009, we entered into the Tronox Purchase Agreement, pursuant to which our wholly owned subsidiaries, Huntsman Pigments LLC and Huntsman Australia R&D Company
Pty Ltd, agreed to acquire certain assets of Tronox under Section 363 of Chapter 11 of the United States Bankruptcy Code as well as certain assets and equity interest, including
working capital, of Tronox's foreign subsidiaries, for an aggregate purchase price of approximately $415 million. We intend to finance approximately fifty percent of the purchase price with
debt. (For more information regarding the Tronox Transaction, see "Recent Developments"Stalking Horse" Bid To Acquire Tronox."

As
of September 30, 2009, we currently have $198 million classified as current portion of debt. As of September 30, 2009, current portion of debt consists of various
short term facilities, including but not limited to our HPS draft discounting facility in China with $41 million outstanding, our Australian credit facilities with $38 million
outstanding and certain other short term facilities totaling $52 million. Although we cannot provide assurances, we intend to renew, repay or extend the majority of these short-term facilities
in the current period.

Our
$650 million Revolving Credit Facility matures in August 2010. As of September 30, 2009, we had no borrowings outstanding under our Revolving Facility, and we had
approximately $33 million

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(U.S.
dollar equivalents) of letters of credit and bank guarantees issued and outstanding under our Revolving Facility. In the near future we intend to substantially reduce the size of this facility.

Capital Expenditures

We incurred capital expenditures of $140 million for the nine months ended September 30, 2009 as compared with
$325 million in the 2008 period. This decrease of $185 million is largely attributable to higher 2008 spending on various projects including the maleic anhydride facility at our Geismar,
Louisiana site, as well as the expansion at our Greatham, U.K. titanium dioxide facility.

We
expect to finance our capital expenditure commitments through a combination of cash flows from operations and financing arrangements. We expect to spend, in total, approximately
$200 million on capital projects in 2009.

Off-Balance Sheet Arrangements

Receivables Securitization

As of September 30, 2009, our existing A/R Securitization Program consisted of commercial paper conduit programs with a
committed amount of approximately $575 million (U.S. dollar equivalents). As of September 30, 2009, the underlying effective capacity of the program was $402 million. As of
September 30, 2009, the receivables trust under our existing A/R Securitization Program had $258 million in U.S. dollar equivalents (comprised of $55 million and approximately
€139 million ($203 million)) in commercial paper outstanding.

Our
existing A/R Securitization Program was scheduled to mature on November 12, 2009. On October 16, 2009, we entered into a Termination and Release Agreement, pursuant to
which we terminated our existing A/R Securitization Program and replaced it with the U.S. and European programs described below. At that time, the receivables trust repaid the entire balance of
commercial paper outstanding under our existing A/R Securitization Program using proceeds received from the new programs.

U.S. Accounts Receivable Securitization Program

On October 16, 2009, Huntsman International entered into a new accounts receivable securitization program using Huntsman
Receivable Financing II LLC, the U.S. SPE, for our U.S. originator subsidiaries.

The
maximum funding availability under the U.S. A/R Program is $250 million which is divided between two facilities: a $125 million three-year facility and a
$125 million two-year facility. The amount of actual availability under the U.S. A/R Program is subject to change based on the level of eligible receivables sold. Availability is
further subject to changes in the credit ratings of Huntsman International's customers, customer concentration levels, and certain characteristics of the accounts receivable being transferred. The
yield on the three-year facility is based on the LIBOR rate (as defined in the applicable agreement) plus a margin rate of 3.75% per annum and, in the case of the two-year
facility, if funded by commercial paper, the CP Rate (as defined in the applicable agreement) plus a margin rate of 3.50% per annum. In addition, the U.S. SPE is obligated to pay commitment fees to
the lenders based on the amount of each lender's commitment.

The
U.S. A/R Program contains various customary affirmative and negative covenants and also contains customary default and termination provisions, which provide for acceleration of
amounts owed under the U.S. A/R Program upon the occurrence of certain specified events, including, but not limited to, failure by the U.S. SPE to pay interest and other amounts due, defaults on
certain indebtedness, certain judgments, change in control, certain events negatively affecting the overall credit quality of transferred accounts receivable, bankruptcy and insolvency events, and
failure of our Company to

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maintain
the $400 million Liquidity Requirement. We guarantee certain obligations of Huntsman International in its capacity as contributor and servicer guarantor under the U.S. A/R Program.

We
expect that receivables transferred under the U.S. A/R Program will qualify as sales through December 31, 2009. However, upon adoption of new accounting guidance in 2010, we
believe that the receivables transferred will no longer meet the criteria for derecognition and amounts outstanding will
be accounted for as secured borrowings. For more information, see "Note 2. Recently Issued Accounting Pronouncements" to our condensed consolidated financial statements (unaudited) included
elsewhere in this report.

European Accounts Receivable Securitization Program

Also on October 16, 2009, Huntsman International entered into a second new accounts receivable securitization program using
Huntsman Receivables Financial LLC, the EU SPE, for our European originator subsidiaries for a term of two years.

The
maximum funding availability under the EU A/R Program is €225 million (approximately $329 million). The amount of actual availability under the EU A/R
Program is subject to change based on the level of eligible receivables sold. Availability is further subject to changes in the credit ratings of the originators' customers and country, customer
concentration levels, and certain characteristics of the accounts receivable being transferred. The yield is based on GBP LIBOR, USD LIBOR or EURIBOR (each as defined in the applicable agreement) plus
a margin rate of 3.75% per annum if funded by commercial paper. In addition, the EU SPE is obligated to pay a commitment fee to the lender based on the amount of the lender's commitment.

The
EU A/R Program contains various customary affirmative and negative covenants and also contains customary default and termination provisions, which provide for acceleration of amounts
owed under the EU A/R Program upon the occurrence of certain specified events, including, but not limited to, failure by the EU SPE to pay interest and other amounts due, defaults on certain
indebtedness, certain judgments, change in control, certain events negatively affecting the overall credit quality of transferred accounts receivable and bankruptcy and insolvency events and a cross
acceleration provision tied to the Liquidity Requirement.

We
expect that receivables transferred under the EU A/R Program will qualify as sales through December 31, 2009. However, upon adoption of new accounting guidance in 2010, we
believe that the receivables transferred will no longer meet the criteria for derecognition and amounts outstanding will be accounted for as secured borrowings. For more information, see
"Note 2. Recently Issued Accounting Pronouncements" to our condensed consolidated financial statements (unaudited) included elsewhere in this report.

Guarantees

On September 19, 2003, SLIC obtained secured financing for the construction of production facilities. SLIC obtained various
committed loans in the aggregate amount of approximately $230 million (U.S. dollar equivalents). As of September 30, 2009, there were $61 million and RMB 759 million
(approximately $111 million) in outstanding borrowings under these facilities. The interest rate on these facilities is LIBOR plus 0.48% for U.S. dollar borrowings and 90% of the Peoples Bank
of China rate for RMB borrowings. The loans are secured by substantially all the assets of SLIC and will be paid in 16 semiannual installments (of which 11 installments remain), which began on
June 30, 2007. We unconditionally guarantee 35% of any amounts due and unpaid by SLIC under the loans described above (except for the VAT facility which is not guaranteed). Our guarantee
remains in effect until SLIC has met certain conditions. The conditions outstanding include completion of the building and equipment mortgage registrations, which are progressing as planned, and
maintaining a debt service coverage ratio of at least 1:1 at the time such registrations are completed. We have estimated

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that
the fair value of this guarantee is nil as of the closing of the transaction and, accordingly, no amounts have been recorded.

Our
unconsolidated Saudi Joint Venture obtained various loan commitments in the aggregate amount of approximately $195 million (U.S. dollar equivalents) of which
$166 million was drawn and outstanding as of September 30, 2009. We have provided certain guarantees of approximately $14 million for these commitments and our guarantees will
terminate upon completion of the project and satisfaction of certain other conditions. We have estimated that the fair value of such guarantees was nil as of the closing date of this transaction and,
accordingly, no amounts have been recorded.

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

Restructuring, Impairment and Plant Closing Costs

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

Legal Proceedings

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

Environmental, Health and Safety Matters

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

Recently Issued Accounting Pronouncements

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

Critical Accounting Policies

Our critical accounting policies are presented in Management's Discussion and Analysis of Financial Condition and Results of Operations
included in our Current Report on Form 8-K filed on July 30, 2009.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of September 30, 2009, we had approximately $101 million notional amount (in U.S. dollar equivalents) outstanding in
forward foreign currency contracts. For more information, see "Note 8. Derivative Instruments and Hedging Activities" to our condensed consolidated financial statements (unaudited) included
elsewhere in this report. Otherwise, there are no material changes to our market risks from those disclosed in our Current Report on Form 8-K filed on July 30, 2009.

ITEM 4.    CONTROLS AND PROCEDURES

Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of
our disclosure controls and procedures (as defined in Rules 13a-15(e)

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and
15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of September 30, 2009. Based on this evaluation, our chief executive officer and chief financial
officer have concluded that, as of September 30, 2009, our disclosure controls and procedures were effective, in that they ensure that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms, and
(2) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

No
changes to our internal control over financial reporting occurred during the nine months ended September 30, 2009 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). However, we can only give
reasonable assurance that our internal controls over financial reporting will prevent or detect material misstatements on a timely basis. Ineffective internal controls over financial reporting could
cause investors to lose confidence in our reported financial information and could result in a lower trading price for our securities.

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PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

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

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

For
more information, see "Note 14. Commitments and Contingencies" and "Note 15. Environmental, Health and Safety Matters" to our condensed consolidated financial
statements (unaudited) included elsewhere in this report.

ITEM 1A.    RISK FACTORS

Any of the following risks could materially and adversely affect our business, results of operations and financial condition. For
additional risk factors, see "Part I. Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2008.

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

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



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

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The acquisition of Tronox may not be successfully completed on the terms set forth in the Tronox Purchase Agreement or at all.

The consummation of the Tronox Transaction is subject to bankruptcy court approval of the Tronox Purchase Agreement and Tronox's
solicitation of higher or otherwise better offers pursuant to specified bidding procedures and an auction process to be conducted under supervision of the bankruptcy court. Tronox may terminate the
Tronox Purchase Agreement if the bankruptcy court approves an alternative transaction. Tronox may also terminate the Tronox Purchase Agreement prior to the entry of a sale order by the bankruptcy
court to seek a restructuring transaction. If the Tronox Purchase Agreement is not approved by the bankruptcy court or otherwise terminated, the acquisition contemplated by the Tronox Transaction will
not be consummated. We may elect to revise the terms of our offer, including increasing the purchase price if other bidders submit higher offers as part of the auction process, in order to avoid
termination, however, we can provide no assurances that a revised offer would be accepted or approved.

In
addition, the Tronox Transaction is subject to customary closing conditions and regulatory and third party approvals. If these conditions and approvals are not satisfied or waived,
the Tronox Transaction will not be consummated. In addition, we and Tronox may agree to terminate the Tronox Purchase Agreement at any time without completing the acquisition. Further, in certain
circumstances, we or Tronox may terminate the Tronox Purchase Agreement without the other party's agreement and without completing the acquisition. Please refer to the Tronox Purchase Agreement filed
as Exhibit 10.1
to our Current Report on Form 8-K filed with the SEC on August 31, 2009 for a complete listing of all items that must be effected prior to and at the closing of the Tronox
Transaction.

If
the acquisition contemplated by the Tronox Transaction is not completed for any reason, we may be subject to additional risks, including:



We have not provided any financial information with respect to Tronox or any pro forma information reflecting the potential acquisition of Tronox in this report.

Pursuant to applicable SEC rules, this report does not include any financial information with respect to the assets and entities to be
acquired pursuant to the Tronox Transaction. In addition, in accordance with applicable SEC rules we are not required to provide and have not provided any pro forma information giving effect to the
Tronox Transaction. Tronox's financial condition and results of operations disclosed for periods prior to its entry into bankruptcy are of limited utility to investors in our common stock in assessing
the potential impact of the acquisition of Tronox on our financial condition because (i) we are only purchasing certain assets and assuming certain liabilities of Tronox and (ii) on
May 4, 2009, Tronox filed a Current Report on Form 8-K under Item 4.02 disclosing that its previously filed financial statements should no longer be relied upon.

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

ISSUER PURCHASES OF EQUITY SECURITIES

The
following table presents shares of restricted stock granted under our Stock Incentive Plan that we withheld upon vesting to satisfy our tax withholding
obligations during the three months ended

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September 30,
2009. We have no publicly announced plans or programs to repurchase our common stock.

Period

Total Number
of Shares
Purchased

Average Price
Paid per Share

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

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




$






August


414


6.24





September











Total


414

$
6.24








ITEM 6.    EXHIBITS

4.1

Indenture, dated as of July 6, 2009, by and among Huntsman International LLC, the subsidiary guarantors named therein and Wilmington Trust FSB, a federal savings bank, as trustee (incorporated by reference to
Exhibit 4.1 to our current report on Form 8-K filed on July 8, 2009)4.2

Form of 51/2% Senior Note due 2016 (incorporated by reference to Exhibit 4.2 to our current report on Form 8-K filed on July 8, 2009)4.3

Form of Guarantee (incorporated by reference to Exhibit 4.3 to our current report on Form 8-K filed on July 8, 2009)4.4

Amended and Restated Indenture, dated as of September 10, 2009, by and among Huntsman International LLC, the subsidiary guarantors named therein and Wilmington Trust FSB, a federal savings bank, as trustee
(incorporated by reference to Exhibit 4.1 to our current report on Form 8-K filed on September 14, 2009)10.1

Asset and Equity Purchase Agreement dated as of August 28, 2009 by and among Tronox Incorporated, a Delaware corporation, Tronox LLC, a Delaware limited liability company, Tronox Pigments (Savannah)
 Inc., a Georgia corporation, Tronox Worldwide LLC, a Delaware limited liability company, Tronox Western Australia Pty. Ltd., a Western Australia company, Tronox Pigments (Netherlands) B.V., a Dutch limited liability company,
Huntsman Pigments LLC, a Delaware limited liability company, Huntsman Australia R&D Company Pty. Ltd., an Australian company and Huntsman Corporation, a Delaware corporation (incorporated by reference to Exhibit 10.1 to our current
report on Form 8-K filed on August 31, 2009)31.1

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

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

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

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


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their
behalf by the undersigned thereunto duly authorized.

Dated:
November 4, 2009

HUNTSMAN CORPORATION
HUNTSMAN INTERNATIONAL LLCBy:

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

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


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EXHIBIT INDEX

4.1

Indenture, dated as of July 6, 2009, by and among Huntsman International LLC, the subsidiary guarantors named therein and Wilmington Trust FSB, a federal savings bank, as trustee (incorporated by reference to
Exhibit 4.1 to our current report on Form 8-K filed on July 8, 2009)4.2

Form of 51/2% Senior Note due 2016 (incorporated by reference to Exhibit 4.2 to our current report on Form 8-K filed on July 8, 2009)4.3

Form of Guarantee (incorporated by reference to Exhibit 4.3 to our current report on Form 8-K filed on July 8, 2009)4.4

Amended and Restated Indenture, dated as of September 10, 2009, by and among Huntsman International LLC, the subsidiary guarantors named therein and Wilmington Trust FSB, a federal savings bank, as trustee
(incorporated by reference to Exhibit 4.1 to our current report on Form 8-K filed on September 14, 2009)10.1

Asset and Equity Purchase Agreement dated as of August 28, 2009 by and among Tronox Incorporated, a Delaware corporation, Tronox LLC, a Delaware limited liability company, Tronox Pigments (Savannah)
 Inc., a Georgia corporation, Tronox Worldwide LLC, a Delaware limited liability company, Tronox Western Australia Pty. Ltd., a Western Australia company, Tronox Pigments (Netherlands) B.V., a Dutch limited liability company,
Huntsman Pigments LLC, a Delaware limited liability company, Huntsman Australia R&D Company Pty. Ltd., an Australian company and Huntsman Corporation, a Delaware corporation (incorporated by reference to Exhibit 10.1 to our current
report on Form 8-K filed on August 31, 2009)31.1

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

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

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

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


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