UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form
Mark One) | |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
OR | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Commission |
| Exact Name of Registrant as Specified in its Charter, |
| State of |
| I.R.S. Employer |
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Securities registered pursuant to Section 12(b) of the Act:
Registrant |
| Title of each class |
| Trading Symbol | Name of each exchange on which registered | |
Huntsman Corporation |
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Huntsman International LLC |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Huntsman Corporation | No ◻ | |
Huntsman International LLC | No ◻ |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Huntsman Corporation | No ◻ | |
Huntsman International LLC | No ◻ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Huntsman Corporation | Accelerated filer ◻ | Non-accelerated filer ◻ | Smaller reporting company | Emerging growth company | |
Huntsman International LLC | Large accelerated filer ◻ | Accelerated filer ◻ | Smaller reporting company | Emerging Growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Huntsman Corporation | ◻ | |
Huntsman International LLC | ◻ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Huntsman Corporation | Yes | No ⌧ |
Huntsman International LLC | Yes | No ⌧ |
On October 18, 2019,
This Quarterly Report on Form 10-Q presents information for two registrants: Huntsman Corporation and Huntsman International LLC. Huntsman International LLC is a wholly-owned subsidiary of Huntsman Corporation and is the principal operating company of Huntsman Corporation. The information reflected in this Quarterly Report on Form 10-Q is equally applicable to both Huntsman Corporation and Huntsman International LLC, except where otherwise indicated. Huntsman International LLC meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and, to the extent applicable, is therefore filing this form with a reduced disclosure format.
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED SEPTEMBER 30, 2019
TABLE OF CONTENTS
| Page | |||
4 | ||||
4 | ||||
Huntsman Corporation and Subsidiaries: | ||||
4 | ||||
5 | ||||
Condensed Consolidated Statements of Comprehensive Income (Loss) | 6 | |||
7 | ||||
9 | ||||
Huntsman International LLC and Subsidiaries: | ||||
11 | ||||
12 | ||||
Condensed Consolidated Statements of Comprehensive Income (Loss) | 13 | |||
14 | ||||
16 | ||||
Huntsman Corporation and Subsidiaries and Huntsman International LLC and Subsidiaries: | ||||
18 | ||||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 48 | |||
66 | ||||
67 | ||||
68 | ||||
68 | ||||
68 | ||||
69 | ||||
70 |
2
FORWARD-LOOKING STATEMENTS
Certain information set forth in this report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other projected financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions, divestitures, business separations, spin-offs, or other distributions, strategic opportunities, securities offerings, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; general economic and capital markets conditions; the timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that we intend or believe will or may occur in the future. In some cases, forward-looking statements can be identified by terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates” or “intends” or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements.
All forward-looking statements, including without limitation any projections derived from 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 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 whether because of new information, future events or otherwise, except as required by securities and other applicable law.
There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report. Any forward-looking statements should be considered in light of the risks set forth in “Part II. Item 1A. Risk Factors” below and “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018.
3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share and Per Share Amounts)
September 30, | December 31, | |||||
| 2019 |
| 2018 | |||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents(a) | $ | | $ | | ||
Accounts and notes receivable (net of allowance for doubtful accounts of $ | | | ||||
Accounts receivable from affiliates | | | ||||
Inventories(a) | | | ||||
Prepaid expenses | | | ||||
Other current assets(a) | | | ||||
Current assets held for sale | | | ||||
Total current assets | | | ||||
Property, plant and equipment, net(a) | | | ||||
Investment in unconsolidated affiliates | | | ||||
Intangible assets, net(a) | | | ||||
Goodwill | | | ||||
Deferred income taxes | | | ||||
Notes receivable from affiliate | | | ||||
Operating lease right-of-use assets | | — | ||||
Other noncurrent assets(a) | | | ||||
Noncurrent assets held for sale | — | | ||||
Total assets | $ | | $ | | ||
LIABILITIES AND EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable(a) | $ | | $ | | ||
Accounts payable to affiliates | | | ||||
Accrued liabilities(a) | | | ||||
Current portion of debt(a) | | | ||||
Current operating lease liabilities(a) | | — | ||||
Current liabilities held for sale | | | ||||
Total current liabilities | | | ||||
Long-term debt(a) | | | ||||
Deferred income taxes | | | ||||
Noncurrent operating lease liabilities(a) | | — | ||||
Other noncurrent liabilities(a) | | | ||||
Noncurrent liabilities held for sale | — | | ||||
Total liabilities | | | ||||
Commitments and contingencies (Notes 15 and 16) | ||||||
Equity | ||||||
Huntsman Corporation stockholders’ equity: | ||||||
Common stock $ | | | ||||
Additional paid-in capital | | | ||||
Treasury stock, | ( | ( | ||||
Unearned stock-based compensation | ( | ( | ||||
Retained earnings | | | ||||
Accumulated other comprehensive loss | ( | ( | ||||
Total Huntsman Corporation stockholders’ equity | | | ||||
Noncontrolling interests in subsidiaries | | | ||||
Total equity | | | ||||
Total liabilities and equity | $ | | $ | |
(a) |
See accompanying notes to condensed consolidated financial statements.
4
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Amounts)
Three months | Nine months | |||||||||||
| ended |
| ended | |||||||||
September 30, | September 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Revenues: | ||||||||||||
Trade sales, services and fees, net | $ | | $ | | $ | | $ | | ||||
Related party sales | | | | | ||||||||
Total revenues | | | | | ||||||||
Cost of goods sold | | | | | ||||||||
Gross profit | | | | | ||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative | | | | | ||||||||
Research and development | | | | | ||||||||
Restructuring, impairment and plant closing (credits) costs | ( | | ( | | ||||||||
Merger costs | — | | — | | ||||||||
Other operating expense, net | | — | | | ||||||||
Total operating expenses | | | | | ||||||||
Operating income | | | | | ||||||||
Interest expense | ( | ( | ( | ( | ||||||||
Equity in income of investment in unconsolidated affiliates | | | | | ||||||||
Fair value adjustments to Venator investment | ( | — | ( | — | ||||||||
Loss on early extinguishment of debt | — | — | ( | ( | ||||||||
Other income, net | | | | | ||||||||
Income from continuing operations before income taxes | | | | | ||||||||
Income tax expense | ( | ( | ( | ( | ||||||||
(Loss) income from continuing operations | ( | | | | ||||||||
Income (loss) from discontinued operations, net of tax | | ( | | | ||||||||
Net income (loss) | | ( | | | ||||||||
Net income attributable to noncontrolling interests | ( | ( | ( | ( | ||||||||
Net income (loss) attributable to Huntsman Corporation | $ | | $ | ( | $ | | $ | | ||||
Basic (loss) income per share: | ||||||||||||
(Loss) income from continuing operations attributable to Huntsman Corporation common stockholders | $ | ( | $ | | $ | | $ | | ||||
Income (loss) from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax | | ( | | | ||||||||
Net income (loss) attributable to Huntsman Corporation common stockholders | $ | | $ | ( | $ | | $ | | ||||
Weighted average shares | | | | | ||||||||
Diluted (loss) income per share: | ||||||||||||
(Loss) income from continuing operations attributable to Huntsman Corporation common stockholders | $ | ( | $ | | $ | | $ | | ||||
Income (loss) from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax | | ( | | | ||||||||
Net income (loss) attributable to Huntsman Corporation common stockholders | $ | | $ | ( | $ | | $ | | ||||
Weighted average shares | | | | | ||||||||
Amounts attributable to Huntsman Corporation common stockholders: | ||||||||||||
(Loss) income from continuing operations | $ | ( | $ | | $ | | $ | | ||||
Income (loss) from discontinued operations, net of tax | | ( | | | ||||||||
Net income (loss) | $ | | $ | ( | $ | | $ | |
See accompanying notes to condensed consolidated financial statements.
5
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Millions)
Three months | Nine months | |||||||||||
ended | ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2019 |
| 2018 |
| 2019 |
| 2018 | |||||
Net income (loss) | $ | | $ | ( | $ | | $ | | ||||
Other comprehensive (loss) income, net of tax: | ||||||||||||
Foreign currency translations adjustments | ( | ( | ( | ( | ||||||||
Pension and other postretirement benefits adjustments | | | | | ||||||||
Other, net | ( | — | ( | ( | ||||||||
Other comprehensive (loss) income, net of tax | ( | ( | | ( | ||||||||
Comprehensive income (loss) | | ( | | | ||||||||
Comprehensive income attributable to noncontrolling interests | ( | ( | ( | ( | ||||||||
Comprehensive income (loss) attributable to Huntsman Corporation | $ | | $ | ( | $ | | $ | |
See accompanying notes to condensed consolidated financial statements.
6
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In Millions, Except Share Amounts)
Huntsman Corporation Stockholders' Equity | ||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||
Shares | Additional | Unearned | other | Noncontrolling | ||||||||||||||||||||||
Common | Common | paid-in | Treasury | stock-based | Retained | comprehensive | interests in | Total | ||||||||||||||||||
| stock |
| stock |
| capital |
| stock |
| compensation |
| earnings |
| loss |
| subsidiaries |
| equity | |||||||||
Balance, January 1, 2019 | |
| $ | |
| $ | |
| $ | ( |
| $ | ( |
| $ | |
| $ | ( |
| $ | |
| $ | | |
Net income | — | — | — | — | — | | — | | | |||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | | | | |||||||||||||||||
Issuance of nonvested stock awards | — | — | | — | ( | — | — | — | — | |||||||||||||||||
Vesting of stock awards | | — | | — | — | — | — | — | | |||||||||||||||||
Recognition of stock-based compensation | — | — | | — | | — | — | — | | |||||||||||||||||
Repurchase and cancellation of stock awards | ( | — | — | — | — | ( | — | — | ( | |||||||||||||||||
Stock options exercised | | — | | — | — | — | — | — | | |||||||||||||||||
Treasury stock repurchased | ( | — | — | ( | — | — | — | — | ( | |||||||||||||||||
Dividends declared on common stock ($ | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||
Balance, March 31, 2019 | | | | ( | ( | | ( | | | |||||||||||||||||
Net income | — | — | — |