Exhibit 99.3

 

Unaudited Pro Forma Financial Information

 

On June 30, 2006, we acquired the global textile effects (“Textile Effects”) business of Ciba Specialty Chemicals Inc. for approximately $172.1 million (CHF 215 million) in cash, of which $139.2 million was paid on June 30, 2006 and $32.9 million was paid on July 3, 2006. This purchase price is subject to a post-closing working capital adjustment that we expect will be finalized in the third quarter of 2006. We acquired the Textile Effects business in order to expand our differentiated chemicals business portfolio. The operating results of Textile Effects will be consolidated with our operating results beginning on July 1, 2006 and will be reported with our Advanced Materials operations as part of our new Materials and Effects segment.

 

The following unaudited financial information reflects the pro forma condensed consolidated statements of operations for the year ended December 31, 2005 and the six months ended June 30, 2006 of each of Huntsman Corporation and Huntsman International LLC, giving effect to the acquisition of the Textile Effects business as if this acquisition occurred at January 1, 2005. The pro forma adjustments, as described in the accompanying notes to the pro forma condensed consolidated statements of operations, are based upon available information and certain assumptions we believe are reasonable. The pro forma financial information should be read in conjunction with the consolidated financial statements for the year ended December 31, 2005 and the condensed consolidated financial statements for the six months ended June 30, 2006, which are included in the annual reports on Form 10-K and the quarterly report on Form 10-Q, respectively, of each of Huntsman Corporation and Huntsman International LLC. The pro forma information is not necessarily indicative of the results of operations of future periods or indicative of results that would have actually occurred had the transaction been completed as of January 1, 2005.

 

1


 

 

HUNTSMAN CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

YEAR ENDED DECEMBER 31, 2005

(In Millions, Except Per Share Amounts)

 

 

 

 

 

Acquisition

 

 

 

 

 

 

 

 

 

of

 

Other

 

 

 

 

 

Huntsman

 

Textile

 

Pro Forma

 

 

 

 

 

Corporation

 

Effects (a)

 

Adjustments

 

Pro Forma

 

Revenues

 

$

12,961.6

 

$

1,031.8

 

 

 

$

13,993.4

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

11,209.5

 

745.5

 

$

(40.4

)(b)

11,914.6

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

1,752.1

 

286.3

 

40.4

 

2,078.8

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

676.9

 

220.7

 

 

 

897.6

 

Research and development

 

95.5

 

23.4

 

 

 

118.9

 

Other operating expense

 

42.2

 

1.6

 

(1.6

)(b)

42.2

 

Restructuring, impairment and plant closing costs

 

123.6

 

506.2

(d)

 

 

629.8

 

Total expenses

 

938.2

 

751.9

 

(1.6

)

1,688.5

 

Operating income (loss)

 

813.9

 

(465.6

)

42.0

 

390.3

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(426.6

)

(0.8

)

 

 

(427.4

)

Loss on accounts receivable securitization program

 

(10.7

)

 

 

 

 

(10.7

)

Equity in income of unconsolidated affiliates

 

8.2

 

 

 

 

 

8.2

 

Loss on early extinguishment of debt

 

(322.5

)

 

 

 

 

(322.5

)

Other (expense) income

 

(0.1

)

6.5

 

 

 

6.4

 

Income (loss) from continuing operations before income taxes and minority interest

 

62.2

 

(459.9

)

42.0

 

(355.7

)

 

 

 

 

 

 

 

 

 

 

Income tax (expense) benefit

 

(23.5

)

1.6

 

(14.7

)(c)

(36.6

)

Minority interest in subsidiaries’ income

 

(1.7

)

(0.8

)

 

 

(2.5

)

Income (loss) from continuing operations

 

37.0

 

(459.1

)

27.3

 

(394.8

)

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

(43.1

)

 

 

 

 

(43.1

)

Loss from continuing operations available to common stockholders

 

$

(6.1

)

$

(459.1

)

$

27.3

 

$

(437.9

)

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share:

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

$

(0.03

)

 

 

 

 

$

(1.99

)

 

 

 

 

 

 

 

 

 

 

Weighted average shares

 

220.5

 

 

 

 

 

220.5

 

 

Notes to Pro Forma Adjustments

(a)          Reflects the operating results of Textile Effects translated into U.S. dollars using an average exchange rate of 1.2367.

(b)         To eliminate depreciation and amortization expense related to Textile Effects. Because the fair value of the acquired assets and liabilities assumed exceeded the acquisition price, the valuation of the long-lived assets was reduced to zero in purchase accounting.

(c)          Reflects the income tax impacts of the pro forma adjustments assuming a 35% effective tax rate.

(d)         This amount includes $472 million in impairments of long-lived assets and goodwill that were recorded by the Textile Effects business during 2005.  Because the value of long-lived assets and goodwill was reduced to zero in purchase accounting, we would not expect such impairments to recur.

 

2


 

HUNTSMAN CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

SIX MONTHS ENDED JUNE 30, 2006

(In Millions, Except Per Share Amounts)

 

 

 

 

 

Acquisition

 

 

 

 

 

 

 

of

 

 

 

 

 

Huntsman

 

Textile

 

 

 

 

 

Corporation

 

Effects (a)

 

Pro Forma

 

Revenues

 

$

6,531.6

 

$

546.5

 

$

7,078.1

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

5,695.0

 

374.5

 

6,069.5

 

 

 

 

 

 

 

 

 

Gross profit

 

836.6

 

172.0

 

1,008.6

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

357.3

 

121.5

 

478.8

 

Research and development

 

53.3

 

13.2

 

66.5

 

Other operating income

 

(93.9

)

—

 

(93.9

)

Restructuring, impairment and plant closing costs

 

17.0

 

22.3

 

39.3

 

Total expenses

 

333.7

 

157.0

 

490.7

 

Operating income

 

502.9

 

15.0

 

517.9

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(181.4

)

(1.7

)

(183.1

)

Loss on accounts receivable securitization program

 

(8.1

)

—

 

(8.1

)

Equity in income of unconsolidated affiliates

 

2.1

 

—

 

2.1

 

Other income

 

0.1

 

—

 

0.1

 

Income from continuing operations before income taxes and minority interest

 

315.6

 

13.3

 

328.9

 

 

 

 

 

 

 

 

 

Income tax expense

 

(32.7

)

(5.0

)

(37.7

)

Minority interest in subsidiaries’ (income) loss

 

(0.7

)

1.7

 

1.0

 

Income from continuing operations

 

$

282.2

 

$

10.0

 

$

292.2

 

 

 

 

 

 

 

 

 

Basic income per share:

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.28

 

 

 

$

1.32

 

 

 

 

 

 

 

 

 

Weighted average shares

 

220.6

 

 

 

220.6

 

 

 

 

 

 

 

 

 

Diluted income per share:

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.21

 

 

 

$

1.25

 

 

 

 

 

 

 

 

 

Weighted average shares

 

233.1

 

 

 

233.1

 

 

Notes to Pro Forma Adjustments

(a)   Reflects the operating results of Textile Effects translated into U.S. dollars using an average exchange rate of 1.2095. There were no other pro forma adjustments.

 

3


 

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

YEAR ENDED DECEMBER 31, 2005

(Dollars in Millions)

 

 

 

 

 

Acquisition

 

 

 

 

 

 

 

Huntsman

 

of

 

Other

 

 

 

 

 

International

 

Textile

 

Pro Forma

 

 

 

 

 

LLC

 

Effects (a)

 

Adjustments

 

Pro Forma

 

Revenues

 

$

12,961.6

 

$

1,031.8

 

 

 

$

13,993.4

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

11,190.4

 

745.5

 

$

(40.4

)(b)

11,895.5

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

1,771.2

 

286.3

 

40.4

 

2,097.9

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

677.7

 

220.7

 

 

 

898.4

 

Research and development

 

95.5

 

23.4

 

 

 

118.9

 

Other operating expense

 

42.2

 

1.6

 

(1.6

)(b)

42.2

 

Restructuring, impairment and plant closing costs

 

123.6

 

506.2

(d)

 

 

629.8

 

Total expenses

 

939.0

 

751.9

 

(1.6

)

1,689.3

 

Operating income (loss)

 

832.2

 

(465.6

)

42.0

 

408.6

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(425.6

)

(0.8

)

 

 

(426.4

)

Loss on accounts receivable securitization program

 

(10.7

)

 

 

 

 

(10.7

)

Equity in income of unconsolidated affiliates

 

8.2

 

 

 

 

 

8.2

 

Loss on early extinguishment of debt

 

(167.3

)

 

 

 

 

(167.3

)

Other (expense) income

 

(0.2

)

6.5

 

 

 

6.3

 

Income (loss) from continuing operations before income taxes and minority interest

 

236.6

 

(459.9

)

42.0

 

(181.3

)

 

 

 

 

 

 

 

 

 

 

Income tax (expense) benefit

 

(42.8

)

1.6

 

(14.7

)(c)

(55.9

)

Minority interest in subsidiaries’ income

 

(1.7

)

(0.8

)

 

 

(2.5

)

Income (loss) from continuing operations

 

$

192.1

 

$

(459.1

)

$

27.3

 

$

(239.7

)

 

Notes to Pro Forma Adjustments

(a)          Reflects the operating results of Textile Effects translated into U.S. dollars using an average exchange rate of 1.2367.

(b)         To eliminate depreciation and amortization expense related to Textile Effects. Because the fair value of the acquired assets and liabilities assumed exceeded the acquisition price, the valuation of the long-lived assets was reduced to zero in purchase accounting.

(c)          Reflects the income tax impacts of the pro forma adjustments assuming a 35% effective tax rate.

(d)         This amount includes $472 million in impairments of long-lived assets and goodwill that were recorded by the Textile Effects business during 2005.  Because the value of long-lived assets and goodwill was reduced to zero in purchase accounting, we would not expect such impairments to recur.

 

4


 

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

SIX MONTHS ENDED JUNE 30, 2006

(Dollars in Millions)

 

 

 

 

 

Acquisition

 

 

 

 

 

Huntsman

 

of

 

 

 

 

 

International

 

Textile

 

 

 

 

 

LLC

 

Effects (a)

 

Pro Forma

 

Revenues

 

$

6,531.6

 

$

546.5

 

$

7,078.1

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

5,687.7

 

374.5

 

6,062.2

 

 

 

 

 

 

 

 

 

Gross profit

 

843.9

 

172.0

 

1,015.9

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

355.8

 

121.5

 

477.3

 

Research and development

 

53.3

 

13.2

 

66.5

 

Other operating income

 

(93.9

)

—

 

(93.9

)

Restructuring, impairment and plant closing costs

 

17.0

 

22.3

 

39.3

 

Total expenses

 

332.2

 

157.0

 

489.2

 

Operating income

 

511.7

 

15.0

 

526.7

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(183.7

)

(1.7

)

(185.4

)

Loss on accounts receivable securitization program

 

(8.1

)

—

 

(8.1

)

Equity in income of unconsolidated affiliates

 

2.1

 

—

 

2.1

 

Other income

 

0.1

 

—

 

0.1

 

Income from continuing operations before income taxes and minority interest

 

322.1

 

13.3

 

335.4

 

 

 

 

 

 

 

 

 

Income tax expense

 

(78.8

)

(5.0

)

(83.8

)

Minority interest in subsidiaries’ (income) loss

 

(0.7

)

1.7

 

1.0

 

Income from continuing operations

 

$

242.6

 

$

10.0

 

$

252.6

 

 

Notes to Pro Forma Adjustments

(a)   Reflects the operating results of Textile Effects translated into U.S. dollars using an average exchange rate of 1.2095. There were no other pro forma adjustments.

 

5