<Page>

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   -----------

                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the quarterly period ended June 30, 2002

                                       OR

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

                          Commission file number 1-9988

                        HUNTSMAN POLYMERS CORPORATION
            (Exact name of registrant as specified in its charter)

        DELAWARE                                                 75-2104131
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

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

        (Address of principal executive offices and telephone number)


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

Yes /X/  No / /

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

On August 14, 2002, 1,000 shares of the Common Stock, par value $0.01 per share,
of Huntsman Polymers Corporation were outstanding. As of such date, all such
shares were held by Huntsman Polymers Holding Corporation, an affiliate of
Huntsman Polymers Corporation. There is no established trading market for the
shares of Huntsman Polymers Corporation.

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

<Page>

                          HUNTSMAN POLYMERS CORPORATION
                       FORM 10-Q FOR THE QUARTERLY PERIOD
                             ENDED JUNE 30, 2002

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                            PAGE
<S>                                                                                                         <C>
PART I - FINANCIAL INFORMATION.................................................................................1
         Item 1.  Financial Statements.........................................................................1
                  Consolidated Balance Sheets..................................................................1
                  Consolidated Statements of Operations........................................................2
                  Consolidated Statements of Stockholder's Deficit.............................................3
                  Consolidated Statements of Cash Flows........................................................4
                  Notes to Consolidated Financial Statements...................................................5
         Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.......17
         Item 3.  Quantitative and Qualitative Disclosures About Market Risk..................................31
PART II - OTHER INFORMATION...................................................................................32
         Item 2.  Changes in Securities and Use of Proceeds...................................................32
         Item 3.  Defaults Upon Senior Securities.............................................................32
         Item 4.  Submission of Matters to a Vote of Security Holders.........................................32
         Item 6.  Exhibits and Reports on Form 8-K............................................................33
</Table>



   Some of the statements contained in this report are forward-looking in
nature. In some cases, you can identify forward-looking statements by
terminology such as "believes," "expects," "may," "will," "should" or
"anticipates" or the negative of such terms or other comparable terminology, or
by discussions of strategy. You are cautioned that our business and operations
are subject to a variety of risks and uncertainties, and, consequently, our
actual results may differ materially from those projected by any forward-looking
statements. Some of those risks and uncertainties are discussed below in "Item
2-Management's Discussion and Analysis of Financial Condition and Results of
Operations-Cautionary Statement for Forward-Looking Information" and elsewhere
in this report. We make no commitment to revise or update any forward-looking
statements in order to reflect events or circumstances after the date any such
statement is made.

<Page>

                          PART I. FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

HUNTSMAN POLYMERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                               June 30,              December 31,
                                                                 2002                    2001
                                                             ------------            ------------
<S>                                                          <C>                     <C>
                     ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                  $       -               $       -
     Accounts and notes receivable, net                             6,437                   7,778
     Accounts and advances receivable -
         Affiliates                                                30,605                  25,572
     Inventories                                                   40,081                  53,089
     Other current assets                                             405                   3,822
     Deferred income taxes                                          9,047                   8,845
                                                             ------------             -----------
         TOTAL CURRENT ASSETS                                      86,575                  99,106
Properties, plant and equipment, net                              364,966                 374,475
Intangible assets, net                                              5,772                   6,166
Other noncurrent assets                                            24,413                  27,664
                                                             ------------             -----------
         TOTAL ASSETS                                           $ 481,726               $ 507,411
                                                             ============             ===========

                 LIABILITIES AND
              STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
     Accounts payable                                           $  16,891               $  36,740
     Accounts payable - Affiliates                                  8,010                   7,652
     Accrued liabilities                                           41,355                  36,198
     Current portion of long-term debt                            174,882                 174,882
     Advance from affiliate                                        12,332                   6,070
     Current portion of long-term debt -
         Affiliates                                               338,191                 346,990
                                                             ------------             -----------
         TOTAL CURRENT LIABILITIES                                591,661                 608,532
Long-term debt:
     Affiliates                                                        -                       -
     Other                                                             -                       -
Deferred income taxes                                               9,047                   8,845
Other noncurrent liabilities                                       31,585                  29,976
                                                             ------------             -----------
         TOTAL LIABILITIES                                        632,293                 647,353
                                                             ------------             -----------

STOCKHOLDER'S DEFICIT:
     Common Stock, par value $0.01 per share;
     1 million shares authorized and 1,000
     shares issued and outstanding in 2002 and
     2001                                                              -                       -
     Additional paid-in capital                                   559,500                 559,500
     Retained deficit                                            (710,067)               (699,442)
                                                             ------------             -----------
         TOTAL STOCKHOLDER'S DEFICIT                             (150,567)               (139,972)
                                                             ------------             -----------

         TOTAL LIABILITIES AND STOCKHOLDER'S
         DEFICIT                                                $ 481,726               $ 507,411
                                                             ============             ===========
</Table>


         See accompanying notes to consolidated financial statements


                                       1
<Page>

HUNTSMAN POLYMERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                              Three Months         Three Months          Six Months          Six Months
                                                 Ended                Ended                Ended                Ended
                                             June 30, 2002        June 30, 2001        June 30, 2002       June 30, 2001
                                             -------------        -------------        -------------       -------------
<S>                                          <C>                  <C>                  <C>                 <C>
REVENUES:
     Trade sales and services                    $  15,146            $  34,386            $  29,770           $  82,815
     Affiliate sales                                95,843               90,908              190,199             187,249
                                             -------------        -------------        -------------       -------------
TOTAL REVENUES                                     110,989              125,294              219,969             270,064
COST OF GOODS SOLD                                (103,370)            (141,076)            (199,508)           (312,968)
                                             -------------        -------------        -------------       -------------
GROSS PROFIT (LOSS)                                  7,619              (15,782)              20,461             (42,904)
SELLING, GENERAL AND ADMINISTRATIVE                 (4,543)              (6,769)              (9,534)            (14,257)
PLANT CLOSING / RESTRUCTURING COSTS                      -              (29,847)                   -             (29,847)
                                             -------------        -------------        -------------       -------------
OPERATING INCOME (LOSS)                              3,076              (52,398)              10,927             (87,008)
Interest expense, net:
     Affiliate interest                             (4,847)              (6,119)              (9,824)            (13,079)
     Other interest                                 (6,122)              (5,263)             (11,728)            (10,525)
Other income (expense)                                   -                 (144)                   -                 (99)
                                             -------------        -------------        -------------       -------------
NET LOSS BEFORE INCOME TAXES                        (7,893)             (63,924)             (10,625)           (110,711)
Income tax benefit                                       -              (24,291)                   -             (41,410)
                                             -------------        -------------        -------------       -------------
NET LOSS                                         $  (7,893)           $ (39,633)           $ (10,625)          $ (69,301)
                                             =============        =============        =============       =============
</Table>

         See accompanying notes to consolidated financial statements


                                       2
<Page>

HUNTSMAN POLYMERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT (UNAUDITED)
(Dollars and Shares In Thousands)

<Table>
<Caption>
                                               Common Stock             Paid-in          Retained
                                           Shares        Amount         Capital          Deficit            Total
                                          --------      --------       ---------        ----------        ----------
<S>                                       <C>           <C>            <C>              <C>               <C>
Balance, January 1, 2002                       1         $   -          $559,500        $(699,442)        $(139,942)
Net loss                                       -             -                 -          (10,625)          (10,625)
                                          --------      --------       ---------        ----------        ----------
Balance, June 30, 2002                         1         $   -          $559,500        $(710,067)        $(150,567)
                                          ========      ========       =========        ==========        ==========
</Table>


           See accompanying notes to consolidated financial statements


                                       3
<Page>

HUNTSMAN POLYMERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                              Six Months              Six Months
                                                                 Ended                   Ended
                                                             June 30, 2002           June 30, 2001
                                                             -------------           -------------
<S>                                                          <C>                     <C>
OPERATING ACTIVITIES
Net loss                                                        $ (10,625)              $ (69,301)
Reconciliation to net cash used in operations:
     Depreciation and amortization                                 13,145                  36,072
     Deferred income taxes                                              -                 (42,070)
     Amortization of debt issuance costs                              434                     434
     Retirement of fixed assets                                         -                   8,989
     Changes in operating working capital:
         Receivables                                               (3,692)                 27,005
         Inventories                                               13,008                  (3,190)
         Other current assets                                       3,417                     984
         Accounts payable                                         (19,491)                (31,562)
         Other current liabilities                                  5,157                   3,304
         Deferred charges and other noncurrent
         assets                                                     2,817                   1,757
         Deferred credits and other noncurrent
         liabilities                                                1,609                     601
                                                             ------------            ------------
NET CASH PROVIDED BY (USED IN) OPERATIONS                           5,779                 (66,977)

INVESTING ACTIVITIES
Proceeds from sale of property                                          -                     577
Capital expenditures                                               (3,242)                 (6,655)
                                                             ------------            ------------
NET CASH USED IN INVESTING ACTIVITIES                              (3,242)                 (6,078)

FINANCING ACTIVITIES
Intercompany (repayment to) borrowing from                         (2,537)                 42,055
parent
Proceeds of capital contribution by parent                              -                  31,000
                                                             ------------            ------------
NET CASH (USED IN) PROVIDED BY FINANCING                           (2,537)                 73,055
         ACTIVITIES

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        -                       -

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                        -                       -
                                                             ------------            ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                      $       -               $       -
                                                             ============            ============

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest                                          $       -               $  10,275
Cash paid (refunded) for income taxes                           $       -               $       -
</Table>


         See accompanying notes to consolidated financial statements



                                       4
<Page>

HUNTSMAN POLYMERS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

   1. ORGANIZATION AND BASIS OF PRESENTATION

   DESCRIPTION OF BUSINESS

   Huntsman Polymers Corporation and its subsidiaries (collectively, the
"Company") manufacture products used in a wide variety of industrial and
consumer-related applications. The Company's principal products are polyethylene
(including low density polyethylene ("LDPE") and linear low density polyethylene
("LLDPE")), polypropylene and amorphous polyalphaolefin ("APAO").

   The Company is a wholly-owned subsidiary of Huntsman Polymers Holding
Corporation ("Parent" or "HPHC"). Huntsman Corporation owns all of the stock of
HPHC

   BASIS OF PRESENTATION

   The Company's consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The consolidated financial
statements do not include any adjustments relating to the recoverability and
classifications of recorded amounts of assets and liabilities that might be
necessary should the Company be unable to continue as a going concern. The
Company's ability to continue as a going concern depends on a number of
significant factors, including, but not limited to, the restructuring of
Huntsman Corporation's debt, the restructuring of the Company's 11 3/4% Senior
Notes due 2004 (the "Senior Notes"), obtaining additional debt and/or equity
financing and generating sufficient cash flows from operations to meet its
obligations.

   As of June 30, 2002, the Company's current liabilities exceeded current
assets by $505.1 million, due primarily to the classification of all of its
outstanding debt as a current liability as discussed below. The Company has
sustained net losses in each of the prior three years and its stockholder's
deficit is $150.6 million. Historically, the Company's primary source of funding
has been the intercompany loan agreement (the "Intercompany Loan Agreement")
from a subsidiary of Huntsman Corporation, the ultimate parent of the Company.
As of June 30, 2002, the Company has classified the outstanding borrowings under
the Intercompany Loan Agreement of $280.5 million as a current liability because
repayment may be accelerated by Huntsman Corporation's lenders. On December 1,
2001 and June 1, 2002, the Company failed to make interest payments on its
$174.9 million of Senior Notes. As a result of the failure to pay interest as
scheduled, the debt may be accelerated and has also been classified as a current
liability.

   As of June 30, 2002, Huntsman Corporation had borrowings of approximately
$1.5 billion outstanding under its senior secured credit facilities. As
collateral for its obligations under its bank credit facilities, Huntsman
Corporation has pledged its 100% ownership interest in HPHC, and HPHC has
pledged its 100% ownership interest in the Company. In addition, the Company and
HPHC are guarantors of Huntsman Corporation's obligations under its bank
credit facilities. The Company has granted security interests and liens on
substantially all of its assets to secure its obligations under its guaranty
to Huntsman Corporation's bank lenders, subject to certain limitations
provided for in the indenture governing the Senior Notes (the "Indenture").
The guaranty provides that the Company's maximum liability thereunder at any
time will not exceed the amount permitted to exist at such time under the
Indenture. At this time, because of the restrictions on incurring
indebtedness and making investments contained in the Indenture, the Company
does not have any liability under the guaranty.

                                       5
<Page>

   During 2001, Huntsman Corporation was not in compliance with certain
financial covenants contained in its bank credit facilities. As a result,
Huntsman Corporation entered into discussions with its bank lenders regarding
a comprehensive restructuring of its debt. Effective as of December 20, 2001,
Huntsman Corporation and its bank lenders entered into forbearance, waiver
and amendment agreements (collectively, as amended, the "Amendment
Agreement"). Under the Amendment Agreement, substantially all existing
defaults and some future defaults were waived and the bank lenders agreed to
forbear exercising certain rights and remedies until March 15, 2002 (the
"Forbearance Period"). The Forbearance Period has been extended until October
15, 2002. In addition, in connection with extending the Forbearance Period,
Huntsman Corporation's bank lenders have agreed to postpone an amortization
payment due under one of its credit facilities to October 15, 2002.

   Matlin Patterson Global Opportunities Partners L.P. ("GOP") (formerly known
as CSFB Global Opportunities Partners, L.P.) and Consolidated Press Holdings
Limited ("CPH") have collectively purchased, in the aggregate, approximately 88%
of the outstanding Senior Notes and Senior Subordinated Notes due 2007 of
Huntsman Corporation (the "HC Subordinated Notes"). In June 2002, Huntsman
Corporation reached agreements with GOP and CPH to restructure its debt.

   On July 15, 2002, Huntsman Corporation solicited the consent of its existing
bank lenders seeking, among other things, their consent to a plan to restructure
Huntsman Corporation's debt (the "Proposed Restructuring"), without the
intervention of a bankruptcy court, that would involve the following:

   -  Members of the Huntsman family who own equity interests in Huntsman
      Corporation and any of its subsidiaries, together with certain affiliated
      entities that own equity interests, (collectively, the "Huntsman Family")
      would contribute all their equity interests in Huntsman Corporation and
      its subsidiaries to a new entity ("Huntsman Holdings") in exchange for
      equity interests in Huntsman Holdings.

   -  As of June 30, 2002, GOP and CPH held, in the aggregate, $746
      million principal and accrued interest of the HC Subordinated Notes and
      the Senior Notes, of which $155 million was of the Senior Notes. Subject
      to certain conditions, GOP and CPH have agreed to convert these notes,
      directly or indirectly, into shares of Huntsman Corporation. These notes
      would then be canceled.  The Huntsman Corporation shares received would be
      exchanged, directly or indirectly, for equity interests in Huntsman
      Holdings.

   -  Amendments to Huntsman Corporation's current bank credit facilities
      which would be comprised of the following:

      -  A term loan facility maturing in 2007 which would be secured by a
         second lien on substantially all the assets of Huntsman Corporation and
         its domestic restricted subsidiaries; and

      -  A $275 million priority revolving credit facility maturing in 2006 (the
         "Priority Facility"). Subject to certain conditions, Deutsche Bank
         Securities Inc. and Deutsche Bank Trust Company Americas have agreed to
         underwrite the Priority Facility. The Priority Facility would replace
         Huntsman Corporation's existing $150 million supplemental accounts
         receivable facility (the "HC Supplemental Credit Agreement"), fund
         certain payments at closing and be available for general corporate
         purposes. The Priority Facility would be limited by a borrowing base
         consisting of eligible accounts receivable and inventory and would have
         a first lien on substantially all the assets of Huntsman Corporation
         and its domestic restricted subsidiaries.

   -  The reinstatement of the approximately $59 million in principal amount of
      HC Subordinated Notes and approximately $37 million in principal amount of
      Senior Notes not held by GOP and CPH. The non-payment of interest defaults
      on these notes would be cured by paying


                                       6
<Page>

      approximately $5 million of interest that has accrued on the Senior Notes
      since December 2001 and approximately $5 million of interest that has
      accrued on the HC Subordinated Notes since January 2002.

   -  Pursuant to previously adopted amendments to the indentures governing the
      HC Subordinated Notes and the Senior Notes which will become effective
      upon completion of the Proposed Restructuring, most of the restrictive
      covenants in these indentures would be eliminated. This would permit,
      among other things, the following:

      -  a subsidiary of Huntsman Corporation to pledge all of the equity of
         Huntsman Specialty Chemicals Corporation ("Huntsman Specialty"), and
         enter into a senior secured guaranty in favor of Huntsman Corporation's
         bank lenders; Huntsman Specialty to pledge a 30% membership interest
         stake that it holds in Huntsman International Holdings LLC and enter
         into a senior secured guaranty in favor of the bank lenders.

      -  the Company to guarantee, on a full senior secured basis, Huntsman
         Corporation's bank debt without the senior secured debt limitations
         formerly contained in the Indenture.

   The Proposed Restructuring has been designed to avoid a "change of control"
under the indentures governing the HC Subordinated Notes or the Senior Notes.

   Huntsman Corporation is in the process of seeking the consent of all of
its bank lenders (the "100% consent") which is necessary to achieve the
Proposed Restructuring on an out-of-court basis and is confident that it will
obtain the 100% Consent from its bank lenders before October 15, 2002.
However, there can be no assurance that Huntsman Corporation will obtain the
100% Consent. In the event Huntsman Corporation does not obtain the 100%
Consent, it may seek to achieve the Proposed Restructuring by filing a
prepackaged plan of reorganization (the "Plan") in a Chapter 11 proceeding
under the United States Bankruptcy Code ("Chapter 11 Cases"). Pursuant to its
agreement with GOP, Huntsman Corporation is required to file Chapter 11 Cases
on or after October 15, 2002 if it has not received the 100% Consent to the
Proposed Restructuring.

   If the Proposed Restore during is effected, Huntsman Corporation's bank
credit facilities would be restructured as specified above. The key changes to
the existing bank credit facilities would be as follows:

   -  the existing loans would be continued as a $938 million Term Loan A and a
      $450 million Term Loan B, with the latter anticipated to be refinanced
      with a high-yield debt financing on a post-closing basis,

   -  the term loans would be extended to March 31, 2007,

   -  the amortization schedule would be modified,

   -  the interest rate would be increased,

   -  the financial covenants would be modified, and

   -  the bank lenders would be granted additional credit support, including
      additional guaranties and collateral.

   In connection with the Proposed Restructuring, the shareholders of Huntsman
Corporation may form a Delaware corporation ("Equity Holdings") to hold all the
outstanding stock of Huntsman Corporation (and Huntsman Corporation may be
converted into a limited liability company). Equity Holdings would then
guarantee the HC Subordinated Notes held by GOP and CPH. Thereafter, for federal
income tax planning reasons, Equity Holdings may commence a proceeding in the
Delaware Court of Chancery


                                       7
<Page>

under Section 102(b)(2) of the Delaware General Corporation Law. The action
would seek the court's sanction of Equity Holdings' compromise of its guarantee
obligations in the manner contemplated by certain agreements among Huntsman
Corporation, GOP and CPH. There can be no assurance that Equity Holdings will
undertake such a proceeding or that the court would grant Equity Holdings'
application. If filed, such a procedding in the Delaware Court of Chancery
will not affect Huntsman Corporation's obligations to its creditors, other
than GOP and CHP. Cunsummation of the Proposed Restructuring is not
conditioned on the initiation of any such proceeding or upon the court
granting any application therewith.

   The Company currently expects that cash generated by its business will
provide it with sufficient liquidity to allow it to continue its operations for
the near term. The Company anticipates that it will continue to fund its
operations in this manner until Huntsman Corporation completes the Proposed
Restructuring out-of-court or until Huntsman Corporation files the Chapter 11
Cases. Accordingly, the Company intends to meet its operating and capital needs
in 2002 through a combination of:

   -  improved operating performance resulting from improved industry conditions
      and the reduction of fixed costs in connection with our operational
      restructuring;

   -  borrowings under the Intercompany Loan Agreement, to the extent
      permitted;

   -  sales of inventory to Huntsman Corporation as permitted under the HC
      Supplemental Credit Agreement and the Amendment Agreement; and

   -  targeted reductions in working capital and reduced capital expenditures.

   There can be no assurance that Huntsman Corporation will be able to
successfully complete the Proposed Restructuring.

   INTERIM FINANCIAL STATEMENTS

   The accompanying consolidated financial statements of the Company are
unaudited. However, in management's opinion, all adjustments, consisting only of
normal recurring adjustments necessary for a fair presentation of results of
operations, financial position and cash flows for the periods shown, have been
made. Results for interim periods are not necessarily indicative of those to be
expected for the full year. These consolidated financial statements should be
read in conjunction with the audited consolidated financial statements and notes
to consolidated financial statements included in the Company's annual report on
form 10-K for the year ended December 31, 2001.

   2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   PRINCIPLES OF CONSOLIDATION

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

   USE OF ESTIMATES

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

   CASH AND CASH EQUIVALENTS

   For purposes of the statements of cash flows, the Company considers cash in
checking accounts and cash in short-term highly liquid investments with an
original maturity of three months or less to be cash and cash equivalents.


                                       8
<Page>

   INVENTORIES

   Inventories are stated at the lower of cost or market, with cost determined
using the average cost method.

   PROPERTY, PLANT AND EQUIPMENT

   Property, plant and equipment are stated at cost. Depreciation is provided
utilizing the straight line method over the estimated useful lives of the
assets. Plant and equipment have useful lives ranging from 3 to 15 years, and
buildings have useful lives ranging from 15 to 20 years. Upon disposal of
assets, the cost and related accumulated depreciation are removed from the
accounts and the resulting gain or loss is included in other income.

   INTANGIBLE ASSETS

   Intangible assets are stated at cost (fair value at the time of acquisition)
and are amortized using the straight-line method over the estimated useful lives
or over the life of the related agreement, ranging from five to fifteen years.

   OTHER ASSETS

   Other assets consist primarily of spare parts, capitalized loan fees and
turnaround costs. Capitalized loan fees are amortized using the straight-line
method over the term of the related debt, ranging from five to ten years.

   Periodic maintenance and repairs applicable to major units of manufacturing
facilities are accounted for on the prepaid basis by capitalizing the costs of
the turnaround and amortizing the costs over the estimated period until the next
turnaround.

   CARRYING VALUE OF LONG-TERM ASSETS

   The Company evaluates the carrying value of long-term assets based upon
current and anticipated undiscounted cash flows, and recognizes an impairment
when such estimated cash flows will be less than the carrying value of the
asset. Measurement of the amount of impairment, if any, is based upon the
difference between carrying value and fair value. For more information, see
"Note 9-Restructuring Costs and Impairment Charges."

   DERIVATIVES AND HEDGING ACTIVITIES

   The Company has no financial instruments or other contracts that are
derivatives.

   INCOME TAXES

   The Company uses the asset and liability method of accounting for income
taxes. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
and tax reporting purposes.

   OTHER LONG-TERM LIABILITIES

   Other long-term liabilities include accrued pension and other post-retirement
benefits, environmental reserves, insurance reserves and other liabilities.


                                       9
<Page>

   FOREIGN CURRENCY TRANSLATION

   The Company has no subsidiaries outside the United States.

   REVENUE RECOGNITION

   The Company generates revenue through sales in the open market, raw material
conversion agreements and long-term supply contracts. The Company recognizes
revenue when it is realized or realizable and earned, which is generally upon
shipment of product in fulfillment of a customer order.

   RESEARCH AND DEVELOPMENT

   Research and development costs are expensed as incurred.

   ENVIRONMENTAL EXPENDITURES

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

   RECLASSIFICATIONS

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

   RECENT FINANCIAL ACCOUNTING STANDARDS

   On January 1, 2002, the Company adopted SFAS No. 142, "GOODWILL AND OTHER
INTANGIBLE ASSETS." SFAS No. 142 changes the accounting for goodwill and
intangible assets with indefinite lives from an amortization method to an
impairment-only approach. With the adoption of SFAS No. 142, the Company
reassessed the useful lives of all acquired intangible assets. Based on the
assessment, no adjustments were made to the amortization period of intangible
assets. As discussed below in "Note 9-Restructuring Costs and Impairment
Charges," the Company recorded an impairment charge in 2001 which reduced
recorded goodwill to zero. As a result, the adoption of SFAS No. 142 had no
impact on the Company's financial statements. The pro forma effect on net loss,
assuming the change in this accounting principle was applied retroactively to
January 1, 2001, would not be significant.

   In October 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 144, "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS."
This statement establishes a single accounting model for the impairment or
disposal of long-lived assets. As required by SFAS No. 144, the Company adopted
this new accounting standard on January 1, 2002. Adoption of this pronouncement
did not have a material effect on the Company's financial statements.


                                       10
<Page>

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

   In June 2002, the FASB issued SFAS No. 146, "ACCOUNTING FOR COSTS ASSOCIATED
WITH EXIT OR DISPOSAL ACTIVITIES." SFAS No. 146 requires recording costs
associated with exit or disposal activities at their fair values when a
liability has been incurred.  Under previous guidance, certain exit costs were
accrued upon management's commitment to an exit plan, which is generally before
an actual liability has been incurred.  Adoption of this statement is required
effective January 1, 2003.  The Company has not yet completed its evaluation of
the impact of adopting this statement.

3. INVENTORIES

   Inventories consist of the following (dollars in thousands):

<Table>
<Caption>
                                                  June 30, 2002         December 31, 2001
                                                  -------------         -----------------
<S>                                               <C>                   <C>
         Raw materials                               $ 7,988                 $ 9,007
         Work in progress                              7,494                   5,790
         Finished goods                               24,599                  38,292
                                                    --------                --------
         Total                                       $40,081                 $53,089
                                                    ========                ========
</Table>

4. PROPERTY, PLANT AND EQUIPMENT

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

<Table>
<Caption>
                                                  June 30, 2002         December 31, 2001
                                                  -------------         -----------------
<S>                                               <C>                   <C>
         Land                                      $   1,008               $   1,008
         Buildings                                    98,818                  98,791
         Plant and equipment                         490,224                 502,871
         Construction in progress                      2,674                   2,937
                                                   ---------               ---------
                                                     592,724                 605,607
         Less accumulated depreciation              (227,758)               (231,132)
                                                   ---------               ---------
         Property, plant and equipment, net        $ 364,966               $ 374,475
                                                   =========               =========
</Table>


5. INTANGIBLE ASSETS

   Intangible assets, net of accumulated amortization, are (dollars in
thousands):

<Table>
<Caption>
                                                  June 30, 2002         December 31, 2001
                                                  -------------         -----------------
<S>                                               <C>                   <C>
         Technology Licenses                         $ 8,115                 $ 8,115
         Less accumulated amortization                (2,343)                 (1,949)
                                                     -------                 -------
         Intangible assets, net                      $ 5,772                 $ 6,166
                                                     =======                 =======
</Table>


   In the third quarter of 2001, goodwill was written off as part of plant
closing and restructuring costs. For additional information, see "Note
9-Restructuring Costs and Impairment Charges" below.

   Estimated future amortization expense for intangible assets through December
31, 2006 is as follows (dollars in millions):

<Table>
<Caption>
                                                       Annual Expense
                                                       --------------
<S>                                                    <C>
         2002 through 2004                                  $0.8
         2005 through 2006                                  $0.7
</Table>


                                       11
<Page>

6. LONG-TERM DEBT

   Long-term debt consists of the following (dollars in thousands):

<Table>
<Caption>
                                                                  June 30, 2002         December 31, 2001
                                                                  -------------         -----------------
<S>                                                               <C>                   <C>
           Affiliates:
                Intercompany borrowings                              $ 268,206               $ 279,055
                Advance from affiliates                                 12,332                   6,070
                Capital lease - affiliates                              69,985                  67,935
                                                                     ---------               ---------
                    Total affiliates                                   350,523                 353,060
                Less:  Current portion                                (350,523)               (353,060)
                                                                     ---------               ---------
                   Total long-term debt - affiliates                         -                       -
           Other - 11 3/4% Senior Notes due 2004                       174,882                 174,882
                Less:  Current portion                                (174,882)               (174,882)
                                                                     ---------               ---------
                   Total long-term debt - other                              -                       -
                                                                     ---------               ---------
                Total                                                $       -               $       -
                                                                     =========               =========
</Table>

   INTERCOMPANY BORROWING

   As of June 30, 2002, the Company owed $280.5 million under the
Intercompany Loan Agreement that it maintains with Huntsman Group Holdings
Finance Corporation ("HGHFC"), a subsidiary of Huntsman Corporation. The
intercompany loans accrue interest at the prime rate (4.75% at June 30, 2002)
plus a margin of 0.75% and are payable upon demand. The Intercompany Loan
Agreement is the Company's principal source of financing. The Company's
ability to borrow under the Intercompany Loan Agreement is subject to the
limitations imposed by the Indenture. In addition, under Huntsman
Corporation's bank credit arrangements, the Company's ability to obtain
additional financing under the Intercompany Loan Agreement has been
significantly limited.

   CAPITAL LEASE

   On March 8, 1997, the Company entered into a Capital Lease Agreement with the
Estherwood Corporation to finance the construction of the Company's flexible
polyolefins ("FPO") facility at Odessa, Texas. On August 27, 1997, the Capital
Lease Agreement was amended and Estherwood Corporation assigned all of its
rights under the agreement to HGHFC. The principal economic terms of the Capital
Lease Agreement were not altered. Interest accrues on the unpaid lease amount
($50 million at June 30, 2002) at the prime rate plus an applicable margin (0.5%
to 2.0%) or at a Eurocurrency rate (as defined in the Capital Lease Agreement)
plus an applicable margin (1.5% to 3.0%). On September 30, 2002, the maturity
date of the Capital Lease Agreement, the Company is obligated to pay the unpaid
lease amount as well as all interest owed on that amount. The Company has the
option at the end of the lease period to acquire the facility for a nominal
amount. The Capital Lease Agreement is secured by all of the fixed assets
associated with the FPO facility, which facility has been written off by the
Company.

   On December 12, 2001, the Capital Lease Agreement was amended and HGHFC
assigned all of its rights under the agreement to Huntsman Corporation. The
principal economic terms of the Capital Lease Agreement were not altered.
Although there can be no assurance that the Company will obtain an extension,
the Company is currently in discussions with Huntsman Corporation concerning an
extension of the maturity date of the Capital Lease Agreement.

   SENIOR NOTES

   The 11 3/4% Senior Notes due 2004 rank PARI PASSU in right of payment with
all senior unsecured borrowings of the Company, including a portion of the
borrowings under the Intercompany Loan Agreement. The Senior Notes rank senior
in right of payment to any subordinated indebtedness of the Company. Interest is
payable on the Senior Notes semiannually on June 1 and December 1 at an annual
interest rate of 11 3/4%. The Company is not required to make mandatory
redemption or sinking fund payments with respect to the Senior Notes.


                                       12
<Page>

   The Indenture governing the Senior Notes contains certain covenants that,
among other things, limit the ability of the Company to incur additional
indebtedness and to repurchase subordinated indebtedness, incur or suffer to
exist certain liens, pay dividends, make certain investments, sell significant
fixed assets and engage in mergers and consolidations. As discussed above in
"Note 1-Organization and Basis of Presentation," concurrent with the completion
of the Proposed Restructuring, GOP has consented to an amendment to the
Indenture that would eliminate virtually all restrictive covenants contained in
the Indenture.

   On December 1, 2001 and June 1, 2002, the Company failed to make interest
payments on the Senior Notes. As a result of the failure to make interest
payments, the debt may be accelerated and has been classified as a current
liability.

7. COMMITMENTS AND CONTINGENCIES

   The Company has various purchase commitments for materials and supplies
entered into in the ordinary course of business. These agreements extend from 2
to 6 years and the purchase price is generally based on market prices.

   On August 30, 2001, following arbitration and court proceedings and
mediation, the Company settled a dispute with S&B Engineers and Constructors,
Ltd. ("S&B") for a total amount of $22.1 million. Under the terms of the
settlement agreement, the Company paid S&B $10.0 million on September 14, 2001.
In accordance with agreements with its lenders, Huntsman Corporation paid S&B
$6.1 million on December 31, 2001, taking a partial assignment of the mechanics'
lien securing the Company's obligations to S&B. On April 2, 2002, Huntsman
Corporation paid S&B $6.3 million, the remaining portion under the settlement
agreement including interest, and at that time took a complete assignment of the
mechanic's lien. The Company currently owes Huntsman Corporation $12.4 million
with respect to this matter, which is secured by such mechanics' lien that
covers the Company's polypropylene facility. This amount is shown as an advance
from affiliates.

   The Company is also a party to various lawsuits arising in the ordinary
course of business and does not believe that the outcome of any of these
lawsuits will have a material adverse effect on the Company's financial
position, results of operations or cash flows. The Company continually reviews
its estimates of potential contingent liabilities. However, no assurance can be
given that all potential liabilities arising out of the Company's present or
past operations have been identified or fully assessed or that the amounts that
might be required to resolve such matters will not be significant to the
Company.

8. ENVIRONMENTAL MATTERS

   GENERAL

   The operation of chemical manufacturing plants, the distribution of chemical
products and the related production of by-products and wastes, entail risk of
adverse environmental effects. The Company is subject to extensive federal,
state, local and foreign laws, regulations, rules and ordinances relating to
pollution, the protection of the environment and the generation, storage,
handling, transportation, treatment, disposal and remediation of hazardous
substances and waste materials. In the ordinary course of business, the Company
is subject continually to environmental inspections and monitoring by
governmental enforcement authorities. The Company may incur substantial costs,
including fines, damages and criminal or civil sanctions, or experience
interruptions in its operations for actual or alleged violations arising under
any environmental laws. In addition, production facilities require operating
permits that are subject to renewal, modification and, in some circumstances,
revocation. Violations of permit requirements can also result in restrictions or
prohibitions on plant operations, substantial fines and civil or criminal
sanctions. The Company's operations involve the generation, handling,
transportation, use and disposal of numerous hazardous substances. Changes in
regulations regarding the generation, handling, transportation, use and disposal
of hazardous substances could inhibit or interrupt operations and have a
material adverse effect on business. From time to time, these operations may
result in


                                       13
<Page>

violations under environmental laws, including spills or other releases of
hazardous substances to the environment. In the event of a significant incident,
the Company could incur material costs to address and remediate the incident. In
addition, following any such incident, the Company may incur higher costs to
implement measures to prevent future incidents. Given the nature of the
Company's business, there can be no assurance that violations of environmental
laws will not result in restrictions imposed on the Company's operating
activities, substantial fines, penalties, damages or other costs. In addition,
potentially significant expenditures could be necessary in order to comply with
existing or future environmental laws.

   The Company has established financial reserves relating to environmental
restoration and remediation programs, which the Company believes are sufficient
for known requirements. Liabilities are recorded when site restoration and
environmental remediation and clean-up obligations are either known or
considered probable and can be reasonably estimated. These liabilities are based
upon all available facts, existing technology, past experience, and cost-sharing
arrangements (as to which, the Company considers the viability of other
parties). A total of $6.7 million has been accrued related to environmental
matters as of June 30, 2002. The Company does not anticipate that any future
costs, in excess of those that have been accrued by the Company, will be
material to results of operations or financial position as a result of
compliance with current environmental laws and regulations.

   The Company may also incur future costs for capital improvements and general
compliance under environmental laws, including costs to acquire, maintain and
repair pollution control equipment. Environmental capital spending is estimated
at $2.9 million for 2002. Generally, the Company expects to incur between $1.5
million and $6.0 million annually in capital spending to address the
requirements of environmental laws. However, the Company cannot ensure that
material capital expenditures beyond those currently anticipated will not be
required under environmental laws.

   The Company carries pollution legal liability insurance to address many
potential environmental liabilities from its operations. Such coverage is
subject to customary terms, limits, exclusions and deductibles. The Company also
carries pollution legal liability and closure and post-closure insurance on
certain facilities at its Odessa, Texas facility, which are regulated by the
Texas Natural Resources Conservation Commission (the "TNRCC"). This insurance
satisfies the requirements of the TNRCC governing the operation of these
facilities.

   CERCLA MATTERS

   The Company, along with many other companies, has been named as a potentially
responsible party under the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 ("CERCLA"), in connection with past disposal of waste
at certain sites. The Company believes that its financial reserves are
sufficient for its known requirements.

   TNRCC FLARE INVESTIGATION

   By letter dated January 28, 1999, the TNRCC notified the Company of
allegations that the Company's olefins plant may have violated its air permit by
emitting visible smoke from its process/emergency flare in late December 1998
and early January 1999. During that period, the olefins plant was in the midst
of start up after extensive construction. As required by Texas law, the Company
had given prior notice to the TNRCC of the start up and that excess emissions
might result. The TNRCC investigated this matter after receiving numerous
complaints from residents of a subdivision near the Odessa facility. In
addition, since January 1999, the Company's Odessa facility experienced upsets
on several occasions that led to flaring or excess emissions which the TNRCC
claims were in violation of state law. The TNRCC sought penalties for all
alleged violations. On January 30, 2002, the claims asserted by the TNRCC were
settled in an agreed order. In the order, the Company denied any liability, but
agreed to a $140,000 penalty, $70,000 of which was paid to the State and $70,000
of which was paid to the City of Odessa to fund a supplemental environmental
project.


                                       14
<Page>

   As a result of the start-up flaring during late December 1998 and early
January 1999, certain complaining citizens hired counsel to consider bringing
legal action to recover damages alleged to have been caused by that flaring.
Five such actions have been filed. Three of the filed cases, involving over
4,200 plaintiffs, have been settled. Many of those plaintiffs have now filed an
action against certain of the Company's contractors and design engineers, one of
whom has sought indemnity against the Company. The remaining filed cases involve
a total of about 192 claimants. Although counsel to the Company believes that it
has strong defenses to the remaining suits, it is too early to predict the
outcome of such litigation.

   ADDITIONAL ENVIRONMENTAL ISSUES

   As a result of a third-party environmental audit of the Company's Odessa
operations starting in November 2000, the Company voluntarily disclosed to the
United States Environmental Protection Agency ("EPA") and the TNRCC certain
potential violations of environmental law. EPA and the TNRCC have evaluated
those disclosures to determine whether the disclosures qualify for penalty
mitigation under federal policy and state law. EPA has proposed a civil penalty
of about $8,500.

   As a result of an inspection of the Odessa facility in April 1997 and
follow-up information requests from EPA, an enforcement action alleging Clean
Air Act violations has been threatened by the United States Department of
Justice. A tentative settlement involving civil penalties in the amount of
$475,000 for this case in addition to the $8,500 discussed in the preceding
paragraph has been tentatively reached subject to final review by the Company
and the negotiation of final settlement language acceptable to all parties.

9. RESTRUCTURING COSTS AND IMPAIRMENT CHARGES

   The Company incurred restructuring costs and impairment charges of $525.4
million during the second, third and fourth quarters of 2001. The restructuring
costs were recorded in two phases.

   -  Phase I, which resulted in a charge of $29.8 million during the second
      quarter of 2001, was the result of the closure of the Company's styrene
      production unit and the concurrent cost restructuring and elimination
      initiative, both of which were announced on April 23, 2001. The program
      included a workforce reduction at the Odessa facility of 97 regular
      employees. Approximately $5.2 million was accrued for termination
      benefits, all of which had been paid as of September 30, 2001.
      Additionally, decommissioning costs of $2.6 million for the styrene unit,
      $4.8 million in non-cancelable lease charges, an $8.9 million write-down
      of the styrene unit fixed assets and a $7.6 million write-off of unusable
      material and supplies inventory were recorded in connection with Phase I.
      Phase I was substantially completed by the end of the third quarter of
      2001.

   -  Phase II of the restructuring was announced by the Company on July 31,
      2001 and resulted in a total charge of $110.2 million in the third quarter
      of 2001. This phase encompassed the closure of the polypropylene Line 1
      unit (representing 30% of total polypropylene production at the time), the
      write-off of the FPO unit which had been under evaluation for alternative
      product use, and the further elimination of redundant costs in the
      maintenance, technical services and overhead cost structure. This program
      has resulted in the discharge of 93 regular employees at the Odessa
      facility. Approximately $5.9 million was accrued for termination benefits.
      Additionally, $68.7 million related to the write-off of fixed assets,
      $33.8 million related to the write-off of goodwill, $0.2 million for the
      polypropylene unit decommissioning, $0.6 million in non-cancelable lease
      charges and $1.0 million related to the write-off of unusable supplies
      inventory were recorded in connection with Phase II. Phase II is
      substantially complete.

   Under SFAS No. 121, "ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
FOR LONG-LIVED ASSETS TO BE DISPOSED OF," companies must review the carrying
amount of long-lived assets and certain


                                       15
<Page>

intangibles, including related goodwill, whenever events or changes in
circumstances indicate that the carrying amount of an asset or a group of assets
may not be recoverable.

   The Company recorded an asset impairment charge of $385.4 million in the
fourth quarter of 2001 related to its property, plant and equipment. During
2001, the Company experienced significant declines in sales prices and operating
cash flow. The declining results were primarily due to lower sales prices,
coupled with difficulty in passing on raw material and energy costs to
customers. The lower sales prices were primarily due to decreased demand in
industrial and consumer related applications, which resulted in increased
competition and reduced operating rates. The lower operating rates had a
significant effect on margins, and margins were not expected to improve until
after 2003 unless industry-wide plant capacity declines. Additionally,
opportunities for new applications of the Company's products did not materialize
at a rate necessary to offset the declining margins on current products. In
early October 2001, as a result of the above factors and as part of the
Company's restructuring efforts, the Company performed a review of its remaining
polyethylene, polypropylene and APAO businesses. During this time, Huntsman
Corporation engaged a financial advisor and investment banker to assist it and
its domestic, restricted subsidiaries in identifying and exploring strategic
alternatives, including developing out-of-court or court-sanctioned financial
restructuring plans. In February 2002, the financial advisor provided a
valuation report to the Company's management which indicated an impairment of
the Company's assets. As a result, in the fourth quarter of 2001, the Company
assessed certain fixed assets for impairment as required under SFAS No. 121.

   The Company performed an evaluation of the recoverability of its assets as
described in SFAS No. 121. Management concluded from the results of this
evaluation that a significant impairment of long-lived assets had occurred. An
impairment charge was required because the estimated fair value of these assets
was less than their carrying value. The fair value of the Company's net assets
was determined by discounting estimated future cash flows using a discount rate
commensurate with the risks involved. Fair value estimates, by their very
nature, rely upon considerable management judgment; accordingly, actual results
may vary significantly from the Company's estimates.

   The restructuring costs and impairment charges were recorded against the
following accounts: $463.0 million against property, plant and equipment; $33.8
million against goodwill; $5.4 million against inventories; and $23.2 million
against cash and accrued liabilities.

   A summary of the combined Phase I and II costs follows (dollars in
thousands):

<Table>
<Caption>
                                                                                                        Restructuring
                                                                                                         Liabilities
                                                                                                              at
                                               Total               Non-Cash              Cash             June 30,
                                              Charge               Charges             Payments             2002
                                             --------             ----------          ----------        -------------
<S>                                          <C>                  <C>                 <C>               <C>
Work force reduction                         $ 11,038              $      -            $ 7,699             $3,339
Styrene unit decommissioning/
   demolition                                   2,601                     -              1,064              1,537
Polypropylene Line 1 decommissioning              200                     -                 92                108
Non-cancelable lease costs                      5,348                     -              1,361              3,987
Property and equipment                        463,038               463,038                  -                  -
Goodwill                                       33,788                33,788                  -                  -
Provision for unusable supply
   inventory                                    8,565                 5,436              2,494                635
Other charges                                     823                     -                823                  -
                                             --------              --------            -------             ------
Total restructuring costs                    $525,401              $502,262            $13,533             $9,606
</Table>


   Cash expenditures relating to workforce reductions and plant decommissioning
will be substantially completed by the end of the third quarter of 2002. Cash
outlays related to non-cancelable railcar leases will be completed by 2008. The
Company currently expects pretax savings in operating expenses will approximate
$34 million on an annualized basis by December 2003.

10.  RECENT EVENTS

FAILURE TO PAY INTEREST

     We did not make the December 1, 2001 and June 1, 2002 interest payments due
on our 11 3/4% Senior Notes due 2004 (the "Senior Notes"). Also, our ultimate
parent corporation, Huntsman Corporation, did not make the January 1 and July 1,
2002 interest payments due on its Senior Subordinated Notes due 2007 (the "HC
Subordinated Notes"). The failure to make these interest payments within 30 days
of the respective due dates constituted an event of default under the Senior
Notes and the HC Subordinated Notes. For more information, see "--Liquidity and
Capital Resources--Debt" and "--Financial Restructuring" below.

PROPOSED RESTRUCTURING OF HUNTSMAN CORPORATION AND THE COMPANY

     During 2001, Huntsman Corporation was not in compliance with certain
financial covenants contained in its bank credit facilities. As a result,
Huntsman Corporation entered into discussions with its bank lenders regarding a
comprehensive restructuring of its debt. Effective as of December 20, 2001,
Huntsman Corporation and its bank lenders entered into forbearance, waiver and
amendment agreements (collectively, as amended, the "Amendment Agreement").
Under the Amendment Agreement, substantially all existing defaults and some
future defaults were waived and the bank lenders agreed to forbear exercising
certain rights and remedies until March 15, 2002 (the "Forbearance Period"). The
Forbearance Period has been extended until October 15, 2002. In addition, in
connection with extending the Forbearance Period, Huntsman Corporation's bank
lenders have agreed to postpone an amortization payment due under one of its
bank credit facilities to October 15, 2002.

     Huntsman Corporation is in the process of seeking to complete the proposed
restructuring described in "--Liquidity and Capital Resources--Financial
Restructuring" below on an out-of-court basis before October 15, 2002. This will
require the consent of all of Huntsman Corporation's bank lenders (the "100%
Consent"). As of August 14, 2002, significantly more than a majority of the bank
lenders have approved the terms of the out-of-court restructuring. Huntsman
Corporation is hopeful that it will complete the restructuring on an
out-of-court basis but there can be no assurance that Huntsman Corporation will
obtain the 100% Consent and be able to complete the proposed restructuring on an
out-of-court basis. If Huntsman Corporation is unable to secure the 100%
Consent, Huntsman Corporation may seek to achieve the proposed restructuring by
filing a prepackaged plan of reorganization in a Chapter 11 proceeding under the
United States Bankruptcy Code. Huntsman Corporation must satisfy certain
statutory requirements in order for its prepackaged plan of reorganization to be
confirmed. Huntsman Corporation believes that, as of August 14, 2002, it has
sufficient votes from its bank lenders to permit it to seek confirmation of a
prepackaged plan of reorganization should it not obtain the 100% Consent.
However, there can be no assurance that the prepackaged plan of reorganization
would be confirmed.

     GOP and CPH have collectively purchased, in the aggregate, approximately
88% of the outstanding HC Subordinated Notes and Senior Notes. In June 2002,
Huntsman Corporation reached agreements with GOP and CPH to restructure its
debt. In addition, pursuant to its agreement with GOP, Huntsman Corporation
could be required by GOP to file a Chapter 11 proceeding under the United States
Bankruptcy Code on or after October 15, 2002 if it has not received the 100%
Consent to the out-of-court restructuring and it has obtained irrevocable votes
in favor of the prepackaged plan of reorganization from at least two-thirds in
principal amount and a majority of its bank lenders. Huntsman believes that, as
of August 14, 2002, it has obtained these votes. For more information, see
"--Liquidity and Capital Resources--Debt" and "--Financial Restructuring" below.

ISSUANCE OF PATENT TO COMPETITOR

     On April 2, 2002, a United States patent was issued to one of our
competitors. This patent contains claims to certain processes for manufacturing
copolymers. We, together with our counsel, have evaluated the scope, validity
and enforceability of this patent, and we do not believe the issuance of this
patent will have a material impact on our business.

                                       16
<Page>

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

GENERAL

   Huntsman Polymers Corporation and its subsidiaries (collectively, the
"Company," "our," "us" or "we") manufacture chemical products used in a wide
variety of industrial and consumer-related applications. Our principal products
are polyethylene (including low density polyethylene ("LDPE") and linear low
density polyethylene ("LLDPE")), polypropylene and amorphous polyalphaolefin
("APAO").

   The markets in which we compete are generally cyclical markets that are
sensitive to relative changes in supply and demand as well as general economic
conditions. Historically, these products have experienced alternating periods of
tight supply, rising prices and increased profits followed by periods of large
capacity additions resulting in oversupply, lower selling prices and lower
profits. Certain of our products, such as APAO, are generally less sensitive to
economic cycles. In addition, our polyethylene and polypropylene businesses are
geared toward higher value-added, specialty grades, which are less sensitive to
cyclical swings experienced by commodity grades.

   Our sales of polyethylene, polypropylene and APAO are made to Huntsman
Corporation. These products are sold at market prices with payment terms of net
30 days from the end of the month. This arrangement allows receivables from the
resale by Huntsman Corporation of these products to be included in its
supplemental accounts receivable credit facility.

   The principal raw materials that we purchase for the polyethylene,
polypropylene and APAO businesses consist of ethane and propane extracted from
natural gas liquids and propylene (all of which are referred to as
"feedstocks"). We believe that the feedstock supplies available in Odessa, Texas
are currently adequate for our requirements.

RECENT EVENTS

FAILURE TO PAY INTEREST

   We did not make the December 1, 2001 and June 1, 2002 interest payments due
on our 11 3/4% Senior Notes due 2004 (the "Senior Notes"). Also, our ultimate
parent corporation, Huntsman Corporation, did not make the January 1 and July 1,
2002 interest payments due on its Senior Subordinated Notes due 2007 (the "HC
Subordinated Notes"). The failure to make these interest payments within 30 days
of the respective due dates constituted an event of default under the Senior
Notes and the HC Subordinated Notes. For more information, see "-Liquidity and
Capital Resources-Debt" and "-Financial Restructuring" below.

PROPOSED RESTRUCTURING OF HUNTSMAN CORPORATION AND THE COMPANY

   During 2001, Huntsman Corporation was not in compliance with certain
financial covenants contained in its bank credit facilities. As a result,
Huntsman Corporation entered into discussions with its bank lenders regarding a
comprehensive restructuring of its debt. Effective as of December 20, 2001,
Huntsman Corporation and its bank lenders entered into forbearance, waiver and
amendment agreements (collectively, as amended, the "Amendment Agreement").
Under the Amendment Agreement, substantially all existing defaults and some
future defaults were waived and the bank lenders agreed to forbear exercising
certain rights and remedies until March 15, 2002 (the "Forbearance Period"). The
Forbearance Period has been extended until October 15, 2002. In addition, in
connection with extending the Forbearance Period, Huntsman Corporation's bank
lenders have agreed to postpone an amortization payment due under one of its
bank credit facilities to October 15, 2002.

   Huntsman Corporation is in the process of seeking to complete the proposed
restructuring described in "-Liquidity and Capital Resources-Financial
Restructuring" below on an out-

                                       17
<Page>

of-court basis before October 15, 2002. This will require the consent of all
of Huntsman Corporation's bank lenders (the "100% Consent"). Huntsman
Corporation has received significan support from its bank lenders for the
out-of-court restructuring. Huntsman Corporation is confident that it will
complete the restructuring on an out-of-court basis but there can be no
assurance that Huntsman Corporation will obtain the 100% Consent and be able
to complete the proposed restructuring on an out-of-court basis.

   If Huntsman Corporation is unable to secure the 100% Consent, Huntsman
Corporation may seek to achieve the proposed restructuring by filing a
prepackaged plan of reorganization in a Chapter 11 proceeding under the
United States Bankruptcy Code. Huntsman Corporation must satisfy certain
statutory requirements in order for its prepackaged plan of reorganization to
be confirmed. Huntsman Corporation believes that, as of August 14, 2002, it
has sufficient votes from its bank lenders to seek confirmation of a
prepackaged plan of reorganization on or before October 15, 2002 should it
not obtain the 100% consent. However, there can be no assurance that the
prepackaged plan of reorganization would be confirmed.

   Matlin Patterson Global Opportunities Partners L.P. ("GOP") (formerly
known as CSFB Global Opportunities Partners, L.P.) and Consolidated Press
Holdings Limited ("CPH") have collectively purchased, in the aggregate,
approximately 88% of the outstanding HC Subordinated Notes and Senior Notes.
In June 2002, Huntsman Corporation reached agreements with GOP and CPH to
restructure its debt. In addition, pursuant to its agreement with GOP,
Huntsman Corporation could be required by GOP to file a Chapter 11 proceeding
under the United States Bankruptcy Code on or after October 15, 2002 if it
has not received the 100% Consent to the out-of-court restructuring and it
has obtained irrevocable votes in favor of the prepackaged plan of
reorganization from at least two-thirds in principal amount and a majority in
number of its bank lenders. Huntsmen believes that, as of August 14, 2002, it
has obtained these votes. For more information, see "--Liquidity and Capital
Resources--Debt" and "--Financial Restructuring" below.

ISSUANCE OF PATENT TO COMPETITOR

   On April 2, 2002, a United States patent was issued to one of our
competitors. This patent contains claims to certain processes for manufacturing
copolymers. We, together with our counsel, have evaluated the scope, validity
and enforceability of this patent, and we do not believe the issuance of this
patent will have a material impact on our business.

RESTRUCTURING COSTS AND IMPAIRMENT CHARGES

   We incurred restructuring costs and impairment charges of $525.4 million
during the second, third and fourth quarters of 2001. The restructuring costs
were recorded in two phases.

   -  Phase I, which resulted in a charge of $29.8 million during the second
      quarter of 2001, was the result of the closure of our styrene production
      unit and the concurrent cost restructuring and elimination initiative,
      both of which were announced on April 23, 2001. The program included a
      workforce reduction at our Odessa facility of 97 regular employees.
      Approximately $5.2 million was accrued for termination benefits, all of
      which had been paid as of September 30, 2001. Additionally,
      decommissioning costs of $2.6 million for the styrene unit, $4.8 million
      in non-cancelable lease charges, an $8.9 million write-down of the styrene
      unit fixed assets and a $7.6 million write-off of unusable material and
      supplies inventory were recorded in connection with Phase I. Phase I was
      substantially completed by the end of the third quarter of 2001.

   -  Phase II of the restructuring was announced by the Company on July 31,
      2001 and resulted in a total charge of $110.2 million in the third quarter
      of 2001. This phase encompassed the closure of the polypropylene Line 1
      unit (representing 30% of total polypropylene production at the time), the
      write-off of the FPO unit which had been under evaluation for alternative
      product use, and the further elimination of redundant costs in the
      maintenance, technical services and overhead cost structure. This program
      has resulted in the discharge of 93 regular employees at our Odessa
      facility. Approximately $5.9 million was accrued for termination benefits.
      Additionally, $68.7 million related to the write-off of fixed assets,
      $33.8 million related to the write-off of goodwill, $0.2 million for the
      polypropylene unit decommissioning, $0.6 million in non-cancelable lease
      charges and $1.0 million related to the write-off of unusable supplies
      inventory were recorded in connection with Phase II. Phase II is
      substantially complete.

   Under SFAS No. 121, "ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
FOR LONG-LIVED ASSETS TO BE DISPOSED OF," companies must review the carrying
amount of long-lived assets and certain intangibles, including related goodwill,
whenever events or changes in circumstances indicate that the carrying amount of
an asset or a group of assets may not be recoverable.


                                       18
<Page>

   We recorded an asset impairment charge of $385.4 million in the fourth
quarter of 2001 related to our property, plant and equipment. During 2001, we
experienced significant declines in sales prices and operating cash flow. The
declining results were primarily due to lower sales prices, coupled with
difficulty in passing on raw material and energy costs to customers. The lower
sales prices were primarily due to decreased demand in industrial and consumer
related applications, which resulted in increased competition and reduced
operating rates. The lower operating rates had a significant effect on margins,
and margins are not expected to improve until after 2003 unless industry-wide
plant capacity declines. Additionally, opportunities for new applications of our
products did not materialize at a rate necessary to offset the declining margins
on current products. In early October 2001, as a result of the above factors and
as part of our restructuring efforts, we performed a review of our remaining
polyethylene, polypropylene and APAO businesses. During this time, Huntsman
Corporation engaged a financial advisor and investment banker to assist it and
its domestic subsidiaries, including the Company, in identifying and exploring
strategic alternatives, including developing out of court or court sanctioned
financial restructuring plans. In February 2002, the financial advisor provided
a valuation report to our management which indicated an impairment of our
assets. As a result, in the fourth quarter of 2001, we assessed certain fixed
assets for impairment as required under SFAS No. 121.

   We performed an evaluation of the recoverability of our assets as described
in SFAS No. 121. Management concluded from the results of this evaluation that a
significant impairment of long-lived assets had occurred. An impairment charge
was required because the estimated fair value of these assets was less than
their carrying value. The fair value of our net assets was determined by
discounting estimated future cash flows using a discount rate commensurate with
the risks involved. Fair value estimates, by their very nature, rely upon
considerable management judgment; accordingly, actual results may vary
significantly from our estimates.

   The restructuring costs and impairment charges were recorded against the
following accounts: $463.0 million against property, plant and equipment; $33.8
million against goodwill; $5.4 million against inventories; and $23.2 million
against cash and accrued liabilities.

   A summary of the combined Phase I and II costs follows (dollars in
thousands):

<Table>
<Caption>
                                                                                                        Restructuring
                                                                                                         Liabilities
                                                                                                             at
                                               Total               Non-Cash              Cash             June 30,
                                              Charge               Charges             Payments             2002
                                             --------             ----------          ----------        -------------
<S>                                          <C>                  <C>                 <C>               <C>
Work force reduction                         $ 11,038              $      -            $ 7,699             $3,339
Styrene unit decommissioning/
   demolition                                   2,601                     -              1,064              1,537
Polypropylene Line 1 decommissioning              200                     -                 92                108
Non-cancelable lease costs                      5,348                     -              1,361              3,987
Property and equipment                        463,038               463,038                  -                  -
Goodwill                                       33,788                33,788                  -                  -
Provision for unusable supply
   Inventory                                    8,565                 5,436              2,494                635
Other charges                                     823                     -                823                  -
                                             --------              --------            -------             ------
Total restructuring costs                    $525,401              $502,262            $13,533             $9,606
</Table>

   Cash expenditures relating to workforce reductions and plant
decommissioning will be substantially completed by the end of the third
quarter of 2002. Cash outlays related to non-cancelable railcar leases will
be completed by 2008. We currently expect pretax savings in operating
expenses will approximate $34 million on an annualized basis by December 2003.


                                       19
<Page>

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THREE MONTHS ENDED JUNE 30, 2001

   REVENUES

   Our revenues decreased $14.3 million to $111.0 million for the second quarter
of 2002 from $125.3 million for the same period in 2001. The major factors
contributing to the decrease in revenues were the permanent closure of our
styrene plant along with reduced sales in olefins due to lower pricing and fewer
by-product sales. These decreases were partially offset by higher revenues in
all the polymer businesses due mainly to improved volumes as the economy
improved and customers rebuilt inventories. The styrene plant closure resulted
in a reduction of sales of $14.5 million. Olefins sales revenue decreased $8.1
million, due primarily to lower by-product sales due to lower ethylene
production and feedstock mix. Polyethylene sales revenue increased $6.3 million
as sales volume improved 36% due to improved customer demand. Polypropylene
sales revenue increased $1.7 million due to improved pricing and a 5%
improvement in volumes. The additional sales were due to improved customer
demand caused by pre-buying as a result of the closure of Line 1 effective May
25, 2002.

   GROSS PROFIT (LOSS)

   Our gross profit increased $23.4 million to profit of $7.6 million for the
second quarter of 2002 from a loss of $15.8 million in the second quarter of
2001. The increase in gross profit was mainly due to the decrease in raw
material and energy pricing attributable to lower natural gas prices, as well as
reduced indirect fixed costs, both of which outpaced the drop in our selling
prices. The indirect fixed cost savings are the direct result of our program to
reduce fixed costs through job eliminations and consolidations. Olefins gross
profit increased $8.5 million and polyethylene gross profit increased $8.1
million, each because raw material and energy costs improved more than our
selling prices declined. Polypropylene gross profit increased $4.0 million due
to a temporary surge in demand caused by customers pre-buying as a result of our
Line 1 closure and due to reduced manufacturing costs. In addition, gross profit
improved $3.7 million due to the permanent closure of our styrene and FPO
facilities.

   SELLING, GENERAL AND ADMINISTRATIVE

   Our selling, general and administrative expenses decreased $2.3 million to
$4.5 million for the three months ended June 30, 2002 from $6.8 million for the
same period in 2001. The decrease in selling, general and administrative
expenses was mainly due to reduced costs resulting from plant closure and
restructuring costs incurred during 2001 described below.


                                       20
<Page>

   INTEREST EXPENSE, NET

   Interest expense, net in second quarter 2002 decreased $0.4 million to $11.0
million from $11.4 million in second quarter 2001, as a result of reductions in
market interest rates, partially offset by an increase in average outstanding
balances on affiliate debt and accrued interest on the unpaid interest on the
Senior Notes. The average amount of debt outstanding and the average interest
rate for the Senior Notes, the affiliate capital lease and the intercompany
borrowing for second quarter 2002 and 2001 were as follows:

<Table>
<Caption>
                                         Senior Notes          Affiliate Capital Lease       Intercompany Borrowing
                                         ------------          -----------------------       ----------------------
<S>                                      <C>                   <C>                           <C>
Three Months Ended June 30,
   2002
Average Amount of Debt                      $174.9                     $69.5                        $280.5
Average Interest Rate                        11.75%                     5.50%                         6.00%
Three Months Ended June 30,
   2001
Average Amount of Debt                      $174.9                     $65.4                        $262.4
Average Interest Rate                        11.75%                     7.83%                         8.33%
</Table>

   INCOME TAX BENEFIT

   Our income tax benefit decreased $24.3 million for the three months ended
June 30, 2002 from the same period in 2001. In 2002, the income tax benefit is
fully offset by a valuation allowance which reduces the benefit to zero.

   NET LOSS

   The Company's net loss decreased $31.7 million to $7.9 million for the second
quarter of 2002 from $39.6 million for the same period in 2001. The decreased
net loss is a result of the reasons stated above.

SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO SIX MONTHS ENDED JUNE 30, 2001

   REVENUES

   Our revenues decreased $50.1 million to $220.0 million for the six months
ended June 30, 2002 from $270.1 million for the same period in 2001,
primarily due to the permanent closure of our styrene plant and a decrease in
sales prices and volumes in by-product sales. The styrene plant closure
resulted in a reduction of sales of $31.7 million. Olefins sales revenue
decreased $26.0 million to $34.8 million, due primarily to lower by-product
sales resulting from lower ethylene production and feedstock slates.
Polypropylene sales revenue increased $9.4 million to $47.2 million due to
improved pricing and increased volumes. The additional sales were due to
improved customer demand caused by pre-buying as a result of the closure of
Line 1 effective May 25, 2002.

   GROSS PROFIT (LOSS)

   Our gross profit increased $63.4 million to profit of $20.5 million for the
six months ended June 30, 2002 from a loss of $42.9 million in the same period
in 2001. The increase in gross profit was mainly due to the decrease in raw
material and energy pricing attributable to lower natural gas prices, and
reduced indirect fixed costs outpacing the drop in our selling prices. The
indirect fixed cost savings are the direct result of our program to reduce fixed
costs through job eliminations and consolidations. Olefins gross profit
increased $18.3 million and polyethylene gross profit increased $16.2 million,
each because raw materials and energy costs improved more than our selling
prices declined. Polypropylene gross profit increased $15.3 million due to
pre-buying as a result of our Line 1 closure and lower raw material and
manufacturing costs. Gross profit increased $11.2 million due to the permanent
closure of the styrene and FPO units. APAO gross profit increased $1.5 million
due primarily to lower raw material costs and product mix.


                                       21
<Page>

   SELLING, GENERAL AND ADMINISTRATIVE

   Our selling, general and administrative expenses decreased $4.8 million to
$9.5 million for the six months ended June 30, 2002 from $14.3 million for the
same period in 2001. The decrease in selling, general and administrative
expenses was mainly due to reduced costs resulting from plant closure and
restructuring costs incurred during 2001 described below.

   INTEREST EXPENSE, NET

   Interest expense, net in the six months ended June 30, 2002 decreased $2.0
million to $21.6 million from $23.6 million in the six months ended June 30,
2001 as a result of reductions in market interest rates, partially offset by an
increase in average outstanding balances on affiliate debt and accrued interest
on the unpaid interest on the Senior Notes. The average amount of debt
outstanding and the average interest rate for the Senior Notes, the affiliate
capital lease and the intercompany borrowing for the six months ended June 30,
2002 and 2001 were as follows:

<Table>
<Caption>
                                         Senior Notes          Affiliate Capital Lease       Intercompany Borrowing
                                         ------------          -----------------------       ----------------------
<S>                                      <C>                   <C>                           <C>
Six Months Ended June 30, 2002
Average Amount of Debt                      $174.9                     $69.0                        $282.1
Average Interest Rate                        11.75%                     5.50%                        6.00%
Six Months Ended June 30, 2001
Average Amount of Debt                      $174.9                     $64.9                        $255.0
Average Interest Rate                        11.75%                     8.54%                        9.04%
</Table>

   INCOME TAX BENEFIT

   Our income tax benefit decreased $41.4 million for the six months ended June
30, 2002 from the same period in 2001. In 2002, the income tax benefit is fully
offset by a valuation allowance which reduces the benefit to zero.

   NET LOSS

   The Company's net loss decreased $58.7 million to $10.6 million for the six
months ended June 30, 2002 from $69.3 million for the same period in 2001. The
decreased net loss is a result of the reasons stated above.

LIQUIDITY AND CAPITAL RESOURCES

CASH

   Net cash provided by operating activities in the six months ended June 30,
2002 was $5.8 million, as compared to $67.0 million used in operating
activities in the same period in 2001. This $72.8 million change is primarily
attributable to a $63.4 million improvement in gross profit over the same
period in 2001, as explained above, partially offset by a corresponding
decrease in the Company's income tax benefit for the same period.
Depreciation was also lower in the first half of 2002 as compared to the same
period in 2001 due to the impairment charge taken on fixed assets at the end
of 2001.

   Operating working capital increased $2.8 million in the six months ended June
30, 2002 as compared to a decrease of $1.1 million in the same period in 2001.
The net change of $3.9 million is primarily the result of

   -  a $30.7 million net negative change in receivables resulting from
      increasing sales in 2002 versus declining sales in 2001;


                                       22
<Page>

   -  a net positive change in inventories of $16.2 million due to improved
      supply chain management versus a modest build up of product in 2001; and

   -  a net favorable change in accounts payable of $12.1 million due to a less
      dramatic decline in raw material and energy costs in 2002 versus 2001.

   Net cash used in investing activities for the six months ended June 30, 2002
was $3.2 million, as compared to $6.1 million used in the same period in 2001.
This decrease was attributable to a decrease in the Company's capital
expenditures.

   Net cash used in financing activities for the six months ended June 30, 2002
was $2.5 million, as compared to $73.1 million provided by financing activities
in the same period in 2001. The net change of $75.6 million is primarily
attributable to the fact that we received no capital contributions from Huntsman
Corporation in the first half of 2002, compared to $31.0 million contributed in
the same period in 2001. Also, we generated positive operating cash flow in 2002
and repaid $2.5 million on our intercompany borrowings as compared to $42.1
million of borrowings received in the same period in 2001.

DEBT

   As of June 30, 2002, we owed $280.5 million under the Intercompany Loan
Agreement that we maintain with HGHFC, $174.9 million under our Senior Notes and
$70.0 million pursuant to a capital lease with Huntsman Corporation.

   On September 30, 2002, the maturity date of the Capital Lease Agreement,
the Company is obligated to pay the unpaid lease amount as well as all
interest owed on that amount. The Company has the option at the end of the
lease period to acquire the facility for a nominal amount. The Capital Lease
Agreement is secured by all of the fixed assets associated with the FPO
facility, which we have written off.

   On December 12, 2001, the Capital Lease Agreement was amended and HGHFC
assigned all of its rights under the agreement to Huntsman Corporation. The
principal economic terms of the Capital Lease Agreement were not altered.
Although there can be no assurance that the Company will obtain an extension,
the Company is currently in discussions with Huntsman Corporation concerning an
extension of the maturity date of the Capital Lease Agreement.

   As of June 30, 2002, Huntsman Corporation had borrowings of approximately
$1.5 billion outstanding under its bank credit facilities. As collateral for
its obligations under its bank credit facilities, Huntsman Corporation has
pledged its 100% ownership interest in our Parent, and our Parent has pledged
its 100% ownership interest in the Company. In addition, we and our Parent
are guarantors of Huntsman Corporation's obligations under its bank credit
facilities. We have granted security interests and liens on substantially all
of our assets to secure our obligations under our guaranty to Huntsman
Corporation's lenders, subject to certain limitations in effect until such
time as all of the Senior Notes have been indefeasibly repaid, redeemed or
repurchased in full. The guaranty provides that our maximum liability
thereunder at any time will not exceed the amount permitted to exist at such
time under the indenture governing the Senior Notes (the "Indenture"). At
this time, because of the restrictions on incurring indebtedness and making
investments contained in the Indenture, we do not have any liability under
the guaranty.

   During 2001, Huntsman Corporation was not in compliance with certain
financial covenants contained in its bank credit facilities. As a result,
Huntsman Corporation entered into discussions with its bank lenders regarding
a comprehensive restructuring of its debt. Effective as of December 20, 2001,
Huntsman Corporation and its bank lenders entered into the Amendment
Agreement. Under the Amendment Agreement, substantially all existing defaults
and some future defaults were waived and the bank lenders agreed to forbear
exercising certain rights and remedies during the Forbearance Period. The
Forbearance Period has been extended until October 15, 2002. In addition, in
connection with

                                       23
<Page>

extending the Forbearance Period, Huntsman Corporation's bank lenders have
agreed to postpone an amortization payment due under one of its bank credit
facilities to October 15, 2002.

   Unless Huntsman Corporation's debt is restructured before October 15, 2002 or
the Forbearance Period is further extended by the bank lenders, Huntsman
Corporation's lenders could pursue certain remedies under the credit facilities,
including accelerating the debt due, enforcing our guaranty and the guaranty of
our Parent, foreclosing on the pledge of the equity of our Parent and the
Company, and foreclosing on the security interests and liens on the assets
securing our obligations under the guaranty to the extent we have any liability
under the guaranty at the time of the foreclosure and subject to the limitations
on the security interests and liens referred to above.

   The acceleration by Huntsman Corporation's lenders of the debt under Huntsman
Corporation's credit facilities would cause an acceleration of our obligations
under the Intercompany Loan Agreement. As a result, as of June 30, 2001, we
reclassified the intercompany borrowings portion of affiliate debt as a current
liability. We have granted security interests and liens on substantially all of
our assets to secure our obligations under the Intercompany Loan Agreement,
subject to certain limitations currently set forth in the Indenture.
Acceleration of the debt under Huntsman Corporation's credit facilities and of
our obligations under the Intercompany Loan Agreement would constitute an event
of default under the Senior Notes, which could result in an acceleration of our
obligations under the Senior Notes by the trustee or the holders of at least 25%
in principal amount of the then outstanding Senior Notes.

   A foreclosure on the pledge of our equity or the equity of our Parent would
constitute a "change of control" under the Indenture. If a "change of control"
occurs, each holder of the Senior Notes would have the right to require our
Company to purchase all or any part of the Senior Notes held by such holder at
an offer price in cash equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest thereon to the date of purchase. Under such
circumstances, there can be no assurance that we would have sufficient funds to
purchase all or part of the Senior Notes.

   Huntsman International Holdings LLC ("Huntsman International Holdings") and
Huntsman International LLC ("Huntsman International") have not guaranteed or
provided any other credit support to the obligations of Huntsman Corporation
under its credit facilities or under the HC Subordinated Notes. Neither events
of default under Huntsman Corporation's credit facilities or its Senior
Subordinated Notes nor the exercise of any remedy by the lenders thereunder will
cause any cross-defaults or cross-accelerations under the outstanding high-yield
notes of Huntsman International Holdings or Huntsman International or the senior
secured credit facilities of Huntsman International, except insofar as
foreclosure on the stock of Huntsman Specialty Chemicals Holdings Corporation
("HSCHC"), pledged to secure the obligations of Huntsman Corporation under its
credit facilities, would constitute a "change in control" under the senior
secured credit facilities of Huntsman International and would give certain put
rights to the holders of the high-yield notes of Huntsman International Holdings
and Huntsman International

FINANCIAL RESTRUCTURING

   GOP and CPH have collectively purchased, in the aggregate, approximately 88%
of the outstanding HC Subordinated Notes and Senior Notes. In June 2002,
Huntsman Corporation reached agreements with GOP and CPH to restructure its
debt.

   On July 15, 2002, Huntsman Corporation solicited the consent of its existing
bank lenders seeking, among other things, their consent to a plan to restructure
Huntsman Corporation's debt (the "Proposed Restructuring"), without the
intervention of a bankruptcy court, that would involve the following:

   -  Members of the Huntsman family who own equity interests in Huntsman
      Corporation and any of its subsidiaries, together with certain affiliated
      entities that own such equity interests, (collectively, the "Huntsman
      Family") would contribute all their equity interests in Huntsman
      Corporation and its subsidiaries to a new entity ("Huntsman Holdings")
      in exchange for equity interests in Huntsman Holdings.


                                       24
<Page>

   -  As of June 30, 2002, GOP and CPH held, in the aggregate, $746 million
      principal and accrued interest of the HC Subordinated Notes and the Senior
      Notes, of which $155 million was of the Senior Notes. Subject to certain
      conditions, GOP and CPH have agreed to convert these notes, directly or
      indirectly, into shares of Huntsman Corporation. These notes would then be
      canceled. The Huntsman Corporation shares received would be exchanged
      directly or indirectly for equity interests in Huntsman Holdings.

   -  Amendments to Huntsman Corporation's current bank credit facilities which
      would be comprised of the following:

      -  a term loan facility maturing in 2007 which would be secured by a
         second lien on substantially all the assets of Huntsman Corporation and
         its domestic restricted subsidiaries; and

      -  a $275 million priority revolving credit facility maturing in 2006 (the
         "Priority Facility"). Subject to certain conditions, Deutsche Bank
         Securities Inc. and Deutsche Bank Trust Company Americas have agreed to
         underwrite the Priority Facility. The Priority Facility would replace
         Huntsman Corporation's existing $150 million supplemental accounts
         receivable facility (the "HC Supplemental Credit Agreement"), and fund
         certain payments at closing and would be available for general
         corporate purposes. The Priority Facility would be limited by a
         borrowing base consisting of eligible accounts receivable and world
         inventory and would have a first lien on substantially all the assets
         of Huntsman Corporation and its domestic restricted subsidiaries.

   -  The reinstatement of the approximately $59 million in principal amount of
      HC Subordinated Notes and approximately $37 million in principal amount of
      Senior Notes not held by GOP and CPH. The non-payment of interest defaults
      on these notes would be cured by paying approximately $5 million of
      interest that has accrued on the Senior Notes to be reinstated since
      December 2001 and approximately $5 million of interest that has accrued on
      the HC Subordinated Notes to be reinstated since January 2002.

   -  Pursuant to previously adopted amendments to the indentures governing the
      HC Subordinated Notes and the Senior Notes which will become effective
      upon completion of the Proposed Restructuring, most of the restrictive
      covenants in these indentures would be eliminated. This would permit,
      among other things, the following:

      -  subsidiary of Huntsman Corporation to pledge all of the equity of
         Huntsman Specialty Chemicals Corporation ("Huntsman Specialty"), and
         enter into a senior secured guaranty in favor of Huntsman Corporation's
         bank lenders; Huntsman Specialty to pledge a 30% membership interest
         stake that it holds in Huntsman International Holdings LLC and enter
         into a senior secured guaranty in favor of the bank lenders.

      -  our Company to guarantee, on a full senior secured basis, Huntsman
         Corporation's bank debt without the senior secured debt limitations
         formerly contained in the Indenture.

   The Proposed Restructuring has been designed to avoid a "change of control"
under the indentures governing the HC Subordinated Notes or the Senior Notes.

   Huntsman Corporation is in the process of seeking the 100% Consent necessary
to achieve the Proposed Restructuring on an out-of-court basis and is
confident that it will obtain the 100% Consent from its bank lenders before
October 15, 2002. However, there can be no assurance that Huntsman
Corporation will obtain the 100% Consent. In the event Huntsman Corporation
does not obtain the 100%

                                       25
<Page>

Consent, it may seek to achieve the Proposed Restructuring by filing a
prepackaged plan of reorganization (the "Plan") in a Chapter 11 proceeding
under the United States Bankruptcy Code ("Chapter 11 Cases"). Pursuant to its
agreement with GOP, Huntsman Corporation could be required to file Chapter 11
Cases on or after October 15, 2002 if it has not received the 100% Consent to
the Proposed Restructuring and it has obtained irrevocable rates in favor of
the prepackaged plan of reorganization from at least two-thirds in principal
amount and a majority of its bank lenders. Huntsman Corporation believes
that, as of August 14, 2002, it has obtained these votes.

   If the Proposed Restructuring is effected, Huntsman Corporation's bank credit
facilities would be restructured as specified above. The key changes to the
existing bank credit facilities would be as follows:

   -  the existing loans would be continued as a $938 million Term Loan A and a
      $450 million Term Loan B, with the latter anticipated to be refinanced
      with a high-yield debt financing on a post-closing basis;

   -  the term loans would be extended to March 31, 2007;

   -  the amortization schedule would be modified;

   -  the interest rate would be increased;

   -  the financial covenants would be modified; and

   -  the bank lenders would be granted additional credit support, including
      additional guaranties and collateral.

POTENTIAL DELAWARE CHANCERY COURT PROCEEDING

   In connection with the Proposed Restructuring, the shareholders of
Huntsman Corporation may form a Delaware corporation ("Equity Holdings") to
hold all the outstanding stock of Huntsman Corporation (and Huntsman
Corporation may be converted into a limited liability company). Equity
Holdings would then guarantee the HC Subordinated Notes held by GOP and CPH.
Thereafter, for federal income tax planning reasons, Equity Holdings may
commence a proceeding in the Delaware Court of Chancery under Section
102(b)(2) of the Delaware General Corporation Law. This action would seek the
court's sanction of Equity Holdings' compromise of its guarantee obligations
in the manner contemplated by certain agreements among Huntsman Corporation,
GOP and CPH. There can be no assurance that Equity Holdings will undertake
such a proceeding or that the court would grant Equity Holdings' application.
If filed, such a proceeding in the Delaware Court of Chancery will not affect
Huntsman Corporation's obligations to its creditors, other than GOP
and CPH. Consummation of the Proposed Restructuring is not conditioned on the
initiation of any such proceeding or upon the court granting any application
in connection therewith.

LIQUIDITY

   We currently expect that cash generated by our business will provide us with
sufficient liquidity to allow us to continue our operations for the near term.
We anticipate that we will continue to fund our operations in this manner until
Huntsman Corporation completes the Proposed Restructuring out-of-court or until
it files the Chapter 11 Cases. Accordingly, we intend to meet our operating and
capital needs in 2002 through a combination of:

   -  improved operating performance resulting from improved industry conditions
      and the reduction of fixed costs in connection with our operational
      restructuring;

   -  borrowings under the Intercompany Loan Agreement, to the extent
      permitted;

   -  sales of inventory to Huntsman Corporation as permitted under the HC
      Supplemental Credit Agreement and the Amendment Agreement; and

   -  targeted reductions in working capital and reduced capital expenditures.


                                       26
<Page>

   There can be no assurance that Huntsman Corporation will be able to
successfully complete the Proposed Restructuring, whether in-court or
out-of-court. If the Proposed Restructuring or a similar restructuring is not
completed, there would be a material adverse effect on our liquidity.

CAPITAL EXPENDITURES

   Capital expenditures for the six months ended June 30, 2002 were $3.2
million, as compared to $6.7 million for the six months ended June 30, 2001. We
expect to spend approximately $10 million during 2002 on capital projects.

ENVIRONMENTAL MATTERS

   GENERAL

   Our capital expenditures relating to environmental matters for the six months
ended June 30, 2002 and 2001 were approximately $0.6 and $0.2 million,
respectively. Capital costs relating to environmental matters in 2002 are
expected to total approximately $2.9 million. Generally, we expect to incur
between $1.5 million and $6.0 million annually in capital spending to address
the requirements of environmental laws. Nevertheless, capital expenditures
relating to environmental matters are subject to evolving regulatory
requirements and will depend on the timing of the promulgation of specific
standards which impose requirements on our operations. As a result, capital
expenditures beyond those currently anticipated may be required under applicable
environmental laws.

   The operation of chemical manufacturing plants, the distribution of chemical
products and the related production of by-products and wastes, entail risk of
adverse environmental effects. We are subject to extensive federal, state, local
and foreign laws, regulations, rules and ordinances relating to pollution, the
protection of the environment and the generation, storage, handling,
transportation, treatment, disposal and remediation of hazardous substances and
waste materials. In the ordinary course of business, we are subject continually
to environmental inspections and monitoring by governmental enforcement
authorities. We may incur substantial costs, including fines, damages and
criminal or civil sanctions, or experience interruptions in its operations for
actual or alleged violations arising under any environmental laws. In addition,
our production facilities require operating permits that are subject to renewal,
modification and, in some circumstances, revocation. Violations of permit
requirements can also result in restrictions or prohibitions on our plant
operations, substantial fines and civil or criminal sanctions. Our operations
involve the generation, handling, transportation, use and disposal of numerous
hazardous substances. Changes in regulations regarding the generation, handling,
transportation, use and disposal of hazardous substances could inhibit or
interrupt operations and have a material adverse effect on our business. From
time to time, these operations may result in violations under environmental
laws, including spills or other releases of hazardous substances to the
environment. In the event of a significant incident, we could incur material
costs to address and remediate the incident. In addition, following any such
incident, we may incur higher costs to implement measures to prevent future
incidents. Given the nature of our business, there can be no assurance that
violations of environmental laws will not result in restrictions imposed on our
operating activities, substantial fines, penalties, damages or other costs. In
addition, potentially significant expenditures could be necessary in order to
comply with existing or future environmental laws.

   We have established financial reserves relating to environmental restoration
and remediation programs, which we believe, are sufficient for known
requirements. Liabilities are recorded when site restoration and environmental
remediation and clean-up obligations are either known or considered probable and
can be reasonably estimated. These liabilities are based upon all available
facts, existing technology, past experience, and cost-sharing arrangements (as
to which, we consider the viability of other parties). A total of $6.7 million
has been accrued related to environmental matters as of June 30, 2002. We do not
anticipate that any future costs, in excess of those that have been accrued,
will be material to our results of operations or financial position as a result
of compliance with current environmental laws and regulations.


                                       27
<Page>

   We carry pollution legal liability insurance to address many potential
environmental liabilities from our operations. Such coverage is subject to
customary terms, limits, exclusions and deductibles. We also carry pollution
legal liability and closure and post-closure insurance on certain facilities at
our Odessa, Texas facility, which are regulated by the Texas Natural Resources
Conservation Commission (the "TNRCC"). This insurance satisfies the requirements
of the TNRCC governing the operation of these facilities.

   POTENTIAL LIABILITIES

   We, along with many other companies, have been named as a potentially
responsible party under the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 ("CERCLA"), in connection with past disposal of waste
at certain sites. We believe that our financial reserves are sufficient for our
known requirements.

   By letter of April 24, 2002, from counsel for Agrium U.S. Inc., Nu-West
Industries, Inc., and Nu-West Mining, Inc., we were put on notice of a potential
contribution claim against our Company for site investigation, remediation and
other costs and fees relating to closure of a former industrial site in
Georgetown Canyon, Bear Lake County, Idaho. The potential claim allegedly arises
out of the allegation that El Paso Natural Gas Products Company owned mining
claims and lots at the site during the 1960s. The site was apparently known as
the Idaho Phosphate Works. We have retained counsel and are evaluating the
potential claim. Whether we have any liability for the costs and fees at issue
is unclear. Moreover, what the potential magnitude of the investigative and
remedial and related costs will be is unknown since we know of no comprehensive
site investigation having been done to date. By letter of August 2, 2002, Agrium
notified us that a proposed consent judgment has been proposed to Agrium by the
Idaho Attorney General. Under that consent judgment, Agrium would have to
perform a site investigation and remedial action relating to any contaminants
found to be at actionable levels on the site.

   We were sued on December 6, 2001, by Lyondell Chemical Company and Atlantic
Richfield Company in the United States District Court for the Eastern District
of Texas, for contribution with regard to remediation expenses at the Turtle
Bayou (Petro Chemical Systems, Inc.) superfund site in Liberty County, Texas.
Based upon the facts known to us, we believe that our Company has one or more
complete defenses to the suit and that even if the court rejects those defenses,
the percentage contribution we would likely be required to pay would not be
material to our financial condition. Nevertheless, the potential exists for
significant liability in such a case because of joint and several liability.

   In December of 2000, the New Mexico Environmental Bureau's Oil Conservation
Division ("OCD") gave notice that it is alleging that we may be a responsible
party in the cleanup of an abandoned refinery located in Bloomfield, New Mexico.
Although the site is contaminated and was evaluated in about 1990 under the
state's superfund program and the federal superfund program, it was not pursued
under either of those programs. The site was previously owned by El Paso Energy,
El Paso Products and Kimbell and McNutt. We notified the OCD that we have never
had an ownership interest in the site and do not believe that we acquired any
liability relating to the site from its previous owners. In addition, the State
of New Mexico contacted Rexene Corporation about the site in 1990, had notice of
the Rexene bankruptcy in 1991-1992, made a claim against Rexene regarding
another site, but did not make a claim in the bankruptcy proceeding regarding
this site. Consequently, even if the OCD had a claim against Rexene at one time,
the claim may have been extinguished by the bankruptcy. However, if a court
ultimately finds that OCD does have an actionable claim, the potential exists
for significant remediation liability.

   By letter dated January 28, 1999, the TNRCC notified us of allegations that
our olefins plant may have violated its air permit by emitting visible smoke
from its process/emergency flare in late December 1998 and early January 1999.
During that period, the olefins plant was in the midst of start up after
extensive construction. As required by Texas law, we had given prior notice to
the TNRCC of the start up and that excess emissions might result. The TNRCC
investigated this matter after receiving numerous complaints from residents of a
subdivision near the Odessa facility. In addition, since January 1999, our
Odessa facility experienced upsets on several occasions that led to flaring or
excess emissions which the


                                       28
<Page>

TNRCC claims were in violation of state law. The TNRCC sought penalties for all
alleged violations. On January 30, 2002, the claims asserted by the TNRCC were
settled in an agreed order. In the order, we denied any liability, but agreed to
a $140,000 penalty, $70,000 of which was paid to the State and $70,000 of which
was paid to the City of Odessa to fund a supplemental environmental project.

   As a result of the start-up flaring during late December 1998 and early
January 1999, certain complaining citizens hired counsel to consider bringing
legal action to recover damages alleged to have been caused by that flaring.
Five such actions have been filed. Three of the filed cases, involving over
4,200 plaintiffs, have been settled. Many of those plaintiffs have now filed an
action against certain of our contractors and design engineers, one of whom has
sought indemnity against us. The remaining filed cases involve a total of about
192 claimants. Although our counsel believes that we have strong defenses to the
remaining suits, it is too early to predict the outcome of such litigation.

   As a result of a third-party environmental audit of our Odessa operations
starting in November 2000, we voluntarily disclosed to the United States
Environmental Protection Agency ("EPA") and the TNRCC certain potential
violations of environmental law. EPA and the TNRCC have evaluated those
disclosures to determine whether the disclosures qualify for penalty mitigation
under federal policy and state law. EPA has proposed a civil penalty of about
$8,500.

   As a result of an inspection of the Odessa facility in April 1997 and
follow-up information requests from EPA, an enforcement action alleging Clean
Air Act violations has been threatened by the United States Department of
Justice. A tentative settlement involving civil penalties in the amount of
$475,000 for this case in addition to the $8,500 discussed in the preceding
paragraph has been tentatively reached subject to final review by us and the
negotiation of final settlement language acceptable to all parties.

CHANGES IN FINANCIAL CONDITION

<Table>
<Caption>
Selected Cash Flow Information (in                 June 30, 2002            December 31, 2001         Difference
   thousands)                                      -------------            -----------------         ----------
<S>                                                <C>                      <C>                       <C>
Cash and cash equivalents                            $        -                $        -             $       -
Accounts and notes receivable, net                        6,437                     7,778                (1,341)
Accounts and advances receivable -Affiliates             30,605                    25,572                 5,033
Inventories                                              40,081                    53,089               (13,008)
Other current assets                                        405                     3,822                (3,417)
Deferred income taxes                                     9,047                     8,845                   202
                                                     ----------                ----------             ---------
   Total current assets                                  86,575                    99,106               (12,531)

Accounts payable                                     $   16,891                $   36,740             $ (19,849)
Accounts payable-Affiliates                               8,010                     7,652                   358
Accrued liabilities                                      41,355                    36,198                 5,157
Current portion of long-term debt                       174,882                   174,882                     -
Advance from affiliate                                   12,332                     6,070                 6,262
Current portion of long-term debt-Affiliate             338,191                   346,990                (8,799)
                                                     ----------                ----------             ---------
   Total current liabilities                            591,661                   608,532               (16,871)

Working capital                                      $ (505,086)               $ (509,426)            $   4,340

Affiliate borrowings                                 $        -                $        -             $       -
Other - 11 3/4% Senior Notes due 2004                         -                         -                     -
                                                     ----------                ----------             ---------
   Total long-term debt                              $        -                $        -             $       -
</Table>

   At June 30, 2002, our net working capital position was a negative $505.1
million, as compared to a negative $509.4 million at December 31, 2001,
resulting in an increase of $4.3 million. The $4.3 million increase is primarily
the result of positive operating cash flow in the second quarter of 2002. The
primary reason for the negative working capital reflected above is the Company's
long-term debt of $525.4 and $527.9 million as of June 30, 2002 and December 31,
2001, respectively, being reclassified as current for the reasons discussed in
"-Liquidity and Capital Resources-Debt" above.


                                       29
<Page>

   We generally maintain a daily cash balance of approximately zero because of
our participation in a consolidated Huntsman Corporation cash management system
wherein Huntsman Corporation's domestic subsidiaries' daily cash surpluses and
deficits are generally swept to Huntsman Corporation. In the past, we have used
the Intercompany Loan Agreement as our primary source of financing. However, as
noted in "-Liquidity and Capital Resources-Debt" above, pursuant to the
Amendment Agreement and the HC Supplemental Credit Agreement, there are
limitations that will prevent us from obtaining additional equity investments
from Huntsman Corporation and will limit our ability to obtain other financing
under the Intercompany Loan Agreement.

CAUTIONARY STATEMENT FOR FORWARD-LOOKING INFORMATION

   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," "will," "should," or "anticipates," or the negative of such terms or
other comparable terminology, or by discussions of strategy. We may also make
additional forward-looking statements from time to time. All such subsequent
forward-looking statements, whether written or oral, by us or on our behalf, are
also expressly qualified by these cautionary statements.

   All forward-looking statements, including without limitation, management's
examination of historical operating trends, are based upon our current
expectations and various assumptions. Our expectations, beliefs and projections
are expressed in good faith and we believe there is a reasonable basis for them,
but, there can be no assurance that management's expectations, beliefs and
projections will result or be achieved. All forward-looking statements apply
only as of the date made. We undertake no obligation to publicly update or
revise forward-looking statements 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. The following are among the factors that could
cause actual results to differ materially from the forward-looking statements.
There may be other factors, including those discussed elsewhere in this report,
that may cause our actual results to differ materially from the forward-looking
statements. Any forward-looking statements should be considered in light of the
risk factors specified in our 2001 annual report on Form 10-K, some of which are
summarized below.

   -  Our financial condition, and the current financial condition of Huntsman
      Corporation, create a number of serious risks and uncertainties for our
      business, and the failure by Huntsman Corporation to complete the Proposed
      Restructuring would likely have material adverse effects on our business.

   -  Our failure to pay interest on our Senior Notes within 30 days of the
      December 1, 2001 and June 1, 2002 constituted an event of default under
      the Senior Notes and could result in an acceleration of the obligations
      thereunder.

   -  Our financial circumstances, including without limitation the issues noted
      under "-Changes in Financial Condition" above and the receipt of our
      independent auditor's "going concern" qualification in the audit opinion
      on our Consolidated Financial Statements for the year ended December 31,
      2001 may have an adverse effect on our business.

   -  A "change of control" could be triggered by certain events affecting
      Huntsman Corporation.


                                       30
<Page>

   -  The markets for our products are cyclical, and, currently, several of our
      markets are experiencing periods of oversupply, causing depressed pricing
      for our products in these markets.

   -  The prices for a large portion of our raw materials are similarly
      cyclical, and we may not be able to pass on increases in the cost of raw
      materials to our customers.

   - The industries in which we operate are highly competitive.

   -  We are subject to extensive federal, state, local and foreign laws,
      regulations, rules and ordinances relating to pollution, protection of the
      environment and the use or cleanup of hazardous substances and wastes.

   -  Terrorist attacks, such as the attacks in New York and Washington, D.C.,
      on September 11, 2001, and other attacks or acts of war may adversely
      affect the markets in which we operate, our operations and our
      profitability.

   - We also face a number of other uncertainties, including:

      -  changes in economic conditions,

      -  inability to obtain new customers or retain existing ones,

      -  changes in product mix and utilization of production facilities,

      -  significant changes in our relationship with our employees and the
         adverse effects of labor disputes or grievances, should they occur,

      -  unavailability of, and substantial delays in, transportation of raw
         materials and products,

      -  significant changes in tax rates or policies or in rates of
         inflation or interest,

      -  changes in management or control of the Company, and

      -  changes in accounting principles and/or the application of such
         principles to the Company.

RECENT FINANCIAL ACCOUNTING STANDARDS

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

   In June 2002, the FASB issued SFAS No. 146, "ACCOUNTING FOR COSTS ASSOCIATED
WITH EXIT OR DISPOSAL ACTIVITIES." SFAS No. 146 requires recording costs
associated with exit or disposal activities at their fair values when a
liability has been incurred. Under previous guidance, certain exit costs were
accrued upon management's commitment to an exit plan, which is generally before
an actual liability has been incurred. Adoption of this statement is required
effective January 1, 2003. We have not yet completed our evaluation of the
impact of adopting this statement.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   The Company has interest and market risk with respect to certain intercompany
debt, which bears interest at floating rates. The Company's remaining Senior
Notes bear interest at fixed rates.

   The Company's exposure to foreign currency market risk is minimal because
sales prices for the Company's products are typically denominated in U. S.
dollars.


                                       31
<Page>

   The Company is exposed to commodity price market risk. The Company's exposure
to changing commodity prices may be limited by the fact that substantially all
raw materials are acquired at posted or market related prices, and, generally,
sales prices for the Company's finished products are at market prices which
reflect changes in underlying commodity prices. Nevertheless, the Company may be
negatively impacted in markets where economic conditions do not permit it to
pass on increased raw material costs to its customers. The Company typically
does not enter into fixed-price long-term contracts. The Company also typically
does not hedge against commodity price market risk.

   The following table summarizes the Company's fixed and variable rate debt
obligations by contractual maturity date as of June 30, 2002:

<Table>
<Caption>
Debt (Dollars in Thousands)                   2002           2004          Thereafter         Total      Fair Value
---------------------------                 --------       --------        ----------        -------     ----------
<S>                                         <C>            <C>             <C>               <C>         <C>
Fixed Rate.............................           -        174,882                 -         174,882       108,427
     Average interest rate.............           -          11.75%                -           11.75%            -
Variable Rate..........................      69,985              -           280,538         350,523       350,523
     Average interest rate (Prime rate
       plus 0.5% to 2.0%)..............        5.50%             -              6.00%           5.90%            -
</Table>

                           PART II - OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

   On June 14, 2002, GOP, which at that time held 78.9% of the outstanding
Senior Notes, consented to, and our Company and HSBC Bank USA, as trustee,
entered into, an Amended and Restated Indenture, dated as of June 14, 2002,
which will eliminate substantially all the restrictive covenants set forth in
the Indenture governing the Senior Notes upon completion of the Proposed
Restructuring.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

   In the fourth quarter of 2001, we did not make the December 1, 2001 interest
payment due on our Senior Notes. During the second quarter of 2002, we did not
make the June 1, 2002 interest payment due on our Senior Notes. Our failure to
make these scheduled interest payments within 30 days of the due date
constitutes an event of default under the Senior Notes. Our next scheduled
interest payment on the Senior Notes is due December 1, 2002. The payment of
interest on the Senior Notes would result in a termination of the Forbearance
Period under the Amendment Agreement; therefore it is unlikely that we will make
the upcoming interest payments on our Senior Notes. See "Item 2-Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources-Debt" and "-Financial Restructuring."
As of the date of this report, the total amount of interest in arrears on the
Senior Notes is $23.1 million. The total outstanding principal amount of the
Senior Notes is $174.9 million.

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

   During the second quarter 2002, the Company solicited the consent of GOP,
which at that time held, and currently holds, 78% of the outstanding Senior
Notes, and, on June 14, 2002, GOP consented to an Amended and Restated
Indenture, dated as of June 14, 2002, which will eliminate substantially all the
restrictive covenants set forth in the Indenture governing the Senior Notes upon
completion of the Proposed Restructuring.


                                       32
<Page>

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

   (a)  Exhibits

        10.1  Amended and Restated Indenture between Huntsman Polymers
              Corporation (formerly Rexene Corporation) and the trustee named
              therein, dated as of June 14, 2002 (filed as Exhibit 10.1 to the
              Company's report filed on Form 8-K on June 17, 2002 and
              incorporated herein by reference)

        10.2  Term Sheet Agreement, dated June 14, 2002 (filed as Exhibit 10.2
              to the Company's report filed on Form 8-K on June 17, 2002 and
              incorporated herein by reference)

        99.1  Certification of Chief Executive Officer

        99.2  Certification of Chief Financial Officer

   (b)  Reports Submitted on Form 8-K:

        We filed a report on Form 8-K on June 17, 2002 to report that we did not
make the June 1, 2002 interest payment on our Senior Notes and that we had
obtained the consent of the largest holder of the Senior Notes to amend and
restate Indenture governing the Senior Notes.

        We filed a report on Form 8-K on July 2, 2002 to report that, on June
28, 2002, Huntsman Corporation's bank lenders had agreed to extend the
Forbearance Period until August 15, 2002. We also reported that the Amendment
Agreement contained a condition that would cause the Forbearance Period to
terminate if Huntsman Corporation makes any interest payments on the HC
Subordinated Notes or if the Company makes any interest payments on its
outstanding Senior Notes. We further reported that Huntsman Corporation was then
in discussions with its lenders concerning an amendment and restatement of its
bank credit facilities.


                                       33
<Page>

                                   SIGNATURE

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


                                    HUNTSMAN POLYMERS CORPORATION


                                    /s/ J. Kimo Esplin
                                    -------------------------------------
                                    J. KIMO ESPLIN
                                    Senior Vice President and
                                    Chief Financial Officer
                                    (Authorized Signatory and Principal
                                    Financial and Accounting Officer)


Date:  August 14, 2002


                                       34
<Page>


                                Exhibit Index


        10.1  Amended and Restated Indenture between Huntsman Polymers
              Corporation (formerly Rexene Corporation) and the trustee named
              therein, dated as of June 14, 2002 (filed as Exhibit 10.1 to the
              Company's report filed on Form 8-K on June 17, 2002 and
              incorporated herein by reference)

        10.2  Term Sheet Agreement, dated June 14, 2002 (filed as Exhibit 10.2
              to the Company's report filed on Form 8-K on June 17, 2002 and
              incorporated herein by reference)

        99.1  Certification of Chief Executive Officer

        99.2  Certification of Chief Financial Officer