Kraton Performance Polymers, Inc. (Exact name of registrant as specified in its charter)

Transcription

1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C Form 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): 12/01/2015 Commission File Number Kraton Performance Polymers, Inc Kraton Performance Polymers, Inc. (Exact name of registrant as specified in its charter) Kraton Performance Polymers, Inc. Delaware (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) John F. Kennedy Blvd., Suite 300 Houston, TX (Address of principal executive offices, including zip code) (Registrant s telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: Written communications pursuant to Rule 425 under the Securities Act (17 CFR ) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR a-12) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR d-2(b)) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR e-4(c))

2 Item 7.01 Regulation FD Disclosure. As previously reported, on September 27, 2015, Kraton Polymers LLC, a wholly owned subsidiary of Kraton Performance Polymers, Inc. ( Kraton ), entered into a definitive agreement (the Stock Purchase Agreement ) dated as of September 27, 2015, with AZC Holding Company LLC, a Delaware limited liability company, and Arizona Chemical Holdings Corporation, a Delaware corporation (the Company ). Pursuant to the Stock Purchase Agreement, Kraton will acquire all of the outstanding capital stock of the Company for a cash purchase price of $1.37 billion (the Arizona Chemical Acquisition ). Attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference in this Item 7.01 is selected information contained in a confidential information memorandum that Kraton expects to provide to certain banks and other financing sources in connection with the Arizona Chemical Acquisition. The information contained in this Current Report on Form 8-K, including the information contained in Exhibit 99.1, does not constitute an offer to sell, or the solicitation of an offer to buy, any securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful. Exhibit 99.1 and the information contained in this Item 7.01 contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include those relating to our business and our financing plans that are not historical in nature, including statements regarding the benefits, synergies and cost rationalizations of the proposed Arizona Chemical Acquisition, the expected method of financing the Arizona Chemical Acquisition, the expected timing and amount of operating cash flow we expect to generate after the closing of the Arizona Chemical Acquisition, future opportunities for the combined company and products, beliefs regarding strengthening relationships with customers, statements regarding market share or positioning, the expected timetable for completing the proposed Arizona Chemical Acquisition, the expected timing and amount of the repayment of indebtedness, future financial performance and any other statements regarding Kraton s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts. No assurance can be given that actual future results will not differ materially from those contained in the forward-looking statements in this Current Report on Form 8-K. Although Kraton believes that all such statements contained in this Current Report on Form 8-K are based on reasonable assumptions, these statements are not a guarantee of future performance and there are numerous variables of an unpredictable nature or outside of Kraton s control that could affect Kraton s future results and the value of its shares. Each investor must assess and bear the risk of uncertainty inherent in the forward-looking statements contained in this Current Report on Form 8-K. Please refer to Kraton s filings with the SEC for additional discussion of risks and uncertainties that may affect Kraton s actual future results. Kraton undertakes no obligation to update the forward-looking statements contained herein. Exhibit 99.1 includes financial measures of each of Kraton and the Company that are not calculated in accordance with accounting principles generally accepted in the United States ( GAAP ). Management believes that these non-gaap financial measures provide meaningful supplemental information that enhances management s, investors and prospective lenders ability to evaluate each of Kraton s and the Company s operating results and Kraton s ability to repay its obligations. These non-gaap financial measures are not intended to be used in isolation and should not be considered a substitute for any other performance measure determined in accordance with GAAP. Investors and potential investors are cautioned that there are material limitations associated with the use of non-gaap financial measures as an analytical tool, including that other companies may

3 calculate similar non-gaap financial measures differently than Kraton does, limiting their usefulness as a comparative tool. Kraton compensates for these limitations by providing specific information regarding the GAAP amounts excluded from the non-gaap financial measures. Kraton further compensates for the limitations of its use of non-gaap financial measures by presenting comparable GAAP measures. Investors and potential investors are encouraged to review the reconciliation of non-gaap financial measures contained within Exhibit 99.1 with Kraton s and the Company s GAAP financial measures. Exhibit 99.1 and the information contained in this Item 7.01 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act ), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Exchange Act. Item 8.01 Other Events. On December 1, 2015, Kraton Polymers LLC issued a press release announcing the commencement of a tender offer to purchase for cash any and all of its outstanding 6.75% Senior Notes due 2019 that were co-issued by Kraton Polymers Capital Corporation (the Notes ), and a concurrent solicitation of consents from the holders of the Notes to amend the indenture governing the Notes. The tender offer and consent solicitation will both expire at 11:59 P.M., EST on December 29, 2015, unless extended or earlier terminated. The press release announcing the tender offer and consent solicitation is filed herewith as Exhibit 99.2, and is incorporated by reference herein. Item 9.01 (d) Exhibit Exhibits Financial Statements and Exhibits. Description 99.1 Excerpts from confidential information memorandum Press Release dated December 1, 2015 titled Kraton Polymers LLC Announces Commencement of a Tender Offer and Consent Solicitation for 6.75% Senior Notes Due 2019.

4 SIGNATURES 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 hereunto duly authorized. Kraton Performance Polymers, Inc. Date: December 1, 2015 By: /s/ Stephen E. Tremblay Stephen E. Tremblay Executive Vice President and Chief Financial Officer

5 Confidential Excerpts from Confidential Information Memorandum December 2015 Kraton Performance Polymers, Inc. Exhibit 99.1

6 Confidential H. Forward-looking 1 This presentation includes statement forward-looking disclaimer future events and financial performance. Forward-looking statements that statements reflect Kraton are often Performance characterized Polymers, by the Inc. s use of ( our words or such Kraton ) as outlook, plans, beliefs, believes, expectations estimates, and current expects, views projects, with respect may, to, intends, among other plans things, anticipates, by discussions of strategy, plans intentions. or All could forward-looking cause actual results statements to differ in this materially presentation from those are made expressed based in on such management s forward-looking current statements. expectations The and statements estimates, in which this presentation involve known that and are not unknown historical risks, statements, uncertainties including and other statements important regarding factors the that benefits, amount of synergies operating and cash cost flow rationalizations we expect to of generate the proposed after the acquisition closing of of the Arizona Acquisition, Chemical future Holdings opportunities Corporation for the (the combined Acquisition ), company the and expected products, method beliefs of regarding financing strengthening the Acquisition, relationships the expected withtiming and customers, performance statements and any other regarding statements market regarding share or Kraton s positioning, future the expectations, expected timetable beliefs, for plans, completing objectives, the proposed financial conditions, Acquisition, assumptions the expected or timing future and events amount or performance of the repayment that are of not indebtedness, historical facts, future are financial looking statements within the meaning of the federal securities laws. Our expectations and assumptions regarding cost rationalizations, variable cost optimizations and reductions overhead may not materialize, forward- or the our combined costs to company achieve synergies may not materialize, may exceed which our estimates, would adversely any of which affect would our ability adversely to achieve affect our expected ability accretion. to achieve Our projected performance synergies. or that Our of Arizona expectations Chemical and assumptions Holdings Corporation regarding the could financial be adversely performance affected of by results other to risks differ and materially uncertainties, from those which expressed would adversely in forward-looking affect the ability statements of the is combined contained company Kraton s achieve filings expected with the results U.S. Securities and benefits. and Exchange Additional Commission, information concerning including but factors not limited that could to Kraton s cause actual recent annual report on Form 10-K and subsequent quarterly reports Form 10-Q and include, but are not limited to, risks related to the closing and benefits of Acquisition; conditions in the globalmost economy profitably and operate capital our markets; business; declines competition in raw in material our end-use costs; markets limitations from in other availability producers of of SBCs raw materials and from we producers need to of produce products our that products can be substituted the amounts for or our at products; the prices and necessary other factors for us to of effectively which we are and currently obligation unaware to update or deem such information immaterial. in Readers light of are new cautioned information not to or place future undue events. reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and we assume no

7 Confidential 2Unless Holdings otherwise Corporation. specified, Reference the term to TTM Kraton means refers the to Kraton last twelve Polymers months LLC ending this 9/30/15 Confidential for Kraton Information and the last Memorandum. twelve months The ended terms 9/30/15 Arizona for Chemical, Arizona Chemical. or AZC Throughout or Target, this refer memorandum, to Arizona Chemical and charts may not add up due to rounding. Kraton s fiscal year ends December 31, and results have been adjusted to reflect calendar year ends where noted. some tables A. On Transaction September 28, summary stock of privately held 2015, Arizona Kraton Chemical Performance a Polymers, cash purchase Inc. (NYSE: price of $1.37 KRA), billion a global (the producer Acquisition ). of highly-engineered polymers, announced that it had entered into a definitive agreement to acquire all of the capital Kraton synthetic Performance elastomers, Polymers, which Kraton Inc., invented through its and wholly-owned commercialized subsidiary over 50 years Kraton, ago. is Kraton a leading developed global producer the first of unhydrogenated styrenic block styrenic copolymers block ( SBCs ) copolymers and ( USBCs ) other engineered 1964 polymers. and the SBCs first hydrogenated are highly-engineered block copolymers ( HSBCs ) in the late 1960s. SBCs enhance the performance of numerous products by imparting greater flexibility, resilience, strength, durability and processability. Kraton s products styrenic found in many everyday applications, including personal care products such as disposable diapers and the rubberized grips of toothbrushes, razor blades and power tools. Kraton s products are also used to are tack and shear properties in a wide variety of adhesive products and to impart characteristics such as flexibility and durability in sealants and corrosion resistance in coatings. Kraton s paving and roofing impart applications Arizona Chemical provide is durability, a leading market-driven extending road global and roof specialty life. leading player in the global pine chemicals industry. Arizona chemicals Chemical refines company and that further manufactures upgrades and two sells primary high feedstocks, value performance crude tall products oil ( CTO ) primarily and crude derived sulfate from turpentine pine wood ( CST ), pulping both co-products of which and are is coproducts roads and of construction, the wood pulping coatings process, and oilfield into value-added chemicals. specialty chemicals. Arizona Chemical s end use market exposure is highly complementary with that of Kraton, particularly in markets such as adhesives, a Pro annual forma run-rate for the transaction Acquisition cost and synergies, for TTM expected September to be 30, achieved 2015, Kraton by the would end of have revenue and Adjusted EBITDA(1) of $1.89 billion and $420 million, respectively, including approximately $65 million in The Enhances Acquisition global of Arizona leader position Chemical in specialty is expected chemicals to provide with a number diverse global of key footprint benefits to Kraton: Highly Provides complementary diversification end of feedstock use markets and allowing overall supplier for expansion base of organic growth platforms ü Strong Opportunity and stable to capitalize free cash on flow significant profile with low risk significantly synergy opportunities increased scale and profit margins (1) See appendix for a complete reconciliation of GAAP financial measures to non -GAAP financial measures.

8 Confidential B. Company 3 Pro forma Kraton overview Pro forma business overview Revenue: Adjusted EBITDA(1): $1.89 billion, Arizona Chemical $420 million TTM 9/30/2015 (22.2% margin) Revenue: Adjusted EBITDA(1): $831 million, TTM 9/30/2015 $187 million (22.5% Specialty margin) Polymers Kraton Revenue: $1.06 billion, Adjusted EBITDA(1): $168 million TTM 9/30/2015 (15.8% margin) CariflexTM Roads & Construction Performance Products Adhesives Tires Chemical Products / Intermediates Application description HSBCs & end markets Polyisoprene USBCs rubber & polyisoprene rubber latex Rosin Terpenes esters & derivatives & dispersions Rosin Tall oil esters AMS resins fatty acid ( TOFA ) & derivatives Terpenes Rosins & derivatives TOFA Terpenes & & derivatives TOR derivatives Consumer Wire & cable products Disposable diapers plastic outer layers Medical Surgical applications Catheters gloves and condoms? Coatings Stoppers for IV bags and medical bottles Specialized Paving roofing footwear Labels Printing & plates tapes Personal Adhesive care Labels & applications Assemblytapes Packaging Pavement Paving & marking Additives roofing High performance reclaimed tires asphalt pavement? Winter All-season tires Coatings tires Fuel Oilfield additives chemicals / lubricants / fluids Mining Paper (1) See sizing appendix & spot for markets a complete reconciliation of GAAP financial measures to non -GAAP financial measures.

9 Confidential B. Company 4 Kraton is a leading overview global Kraton producer portfolio of SBCs overview first USBCs 1964 and the first HSBCs in and the late other 1960s. engineered Kraton s polymers. SBCs enhance SBCs are the highly-engineered performance of numerous synthetic products elastomers, by which imparting Kraton greater invented flexibility, and commercialized resilience, strength, over 50 durability years ago. and Kraton processability. developed the Kraton s are also used products to impart are found tack and in many shear everyday properties applications, in a wide variety including of adhesive personal products care products and to such impart as disposable characteristics diapers such and as flexibility the rubberized and durability grips of toothbrushes, in sealants and razor corrosion blades and resistance power in tools. coatings. Kraton s Kraton s products paving Kraton s and products roofing are applications organized into provide 3 main durability, groups: extending CariflexTM, road Specialty and roof Polymers life. geography TTM 9/30/2015 and Performance Products. Revenue Specialty by Polymers product 34% group TTM 9/30/2015 Asia 27% Europe 34% North America 34% South America 5% 39% Performance Cariflex 13% Products 53% For the TTM period ended which September are USBC 30, 2015, products, Kraton s are primarily revenue used and Adjusted in paving EBITDA(2) and roofing was applications, $1.1 billion personal and $168(1) care applications million, respectively. Performance Products account for 53% of revenues, totaling $567.9 million for TTM September 30, and adhesives applications. Specialty Polymers Products account are comprised for 34% of of HSBC revenues, products totaling which $358.0 are used million in lubricant for TTM additives, September polymer 30, modifications, personal care products as well as other high end applications. nitrosamines CariflexTM and products natural combine rubber proteins. the key qualities Cariflex products of natural are rubber, used in such medical as good and mechanical industrial applications. properties and hysteresis, with purity and clarity enhancements, good flow, low gel content, and absence of n Revenue Cariflex accounts for 13% of revenues, totaling $136.1 million for TTM September 30, Adjusted Sinopec EBITDA(1) Kraton USBC 15% global LCY market LG share Dynasol (2014) Other Kraton TSRC 29% Sinopec Kuraray Natural rubber Others latex Cariflex 11% Other synthetics HSBC Surgical global glove market share share Source: Management estimates. (2014) (1) 2012 See 2013 appendix 2014 TTM for a complete 9/30/2015reconciliation of GAAP financial measures to non -GAAP financial measures. $1,423 $1,292 $1,230 $1,062 $144 $141 $147 $ % % TTM 12.0% 9/30/ %

10 Confidential 5B. Portfolio Company composition overview Kraton business overview (cont d) Kraton s the value polymers of its product are typically portfolio formulated by emphasizing or compounded complex or with specialized other products polymers to achieve and innovations improved, that customer-specific yield higher margins performance than more characteristics commoditized in a variety products. of end Kraton use refers applications. to these Kraton complex seeks or specialized to maximize polymers For TTM or September innovations 30, as 2015, being 57% more of differentiated. In 2011, 47% of Kraton s revenue was from Kraton s differentiated revenue was grades derived while from in 2014, innovation-driven 56% of Kraton s and differentiated revenue was from products differentiated with 43% grades. derived Kraton from standard has continued products. grades and has a target of 61% of revenue from differentiated grades by to shift its portfolio to more differentiated product Volume Contribution share margin by grade share type by (%) 51% grade type (%) 47% 52% 57% 61% 53% 49% 48% 43% 39% Revenues 2014 from 2018 standard Target Differentiated vs. differentiated Standard 46% grades (%) 50% 54% 50% % 68% Target 2018 Target 36% 32% 2014

11 Confidential 6B. Initiatives Company overview Kraton business overview (cont d) Over implementing the years, Belpre Kraton IR has line successfully conversion, delivered and announcing on key initiatives, a world-scale including HSBC launching plant Taiwan, the Cariflex the Belpre franchise, Strategic implementing Energy Project, Price Right and the to semi-works enhance margins, plant. introducing These initiatives portfolio have shift all been as a long-term successful, strategy, demonstrated in the chart below. as 2007 Initiative Evidence Launched of CariflexTM success Cariflex revenue grew franchise 2008 to $139 million in 2014 Implemented Adjusted gross Price profit Right per ton enhance up from margins 2009 $453 in 2007 to $844 in 2014 Introduced Share of differentiated Portfolio shift revenue as a long-term up from 41% strategy 2010 in 2009 to 57% today Implemented Completion enabled Belpre IR $12M line cost conversion 2011 reduction Announced Mailiao is on world-scale schedule and HSBC on budget plant in for Taiwan 2012 startup 2H 2016 Announced Completion Belpre mid-2015 Strategic drives Energy $10M Project 2013 savings per year Announced Semi-works semi-works is delivering plant 2014 / 2015 new polymers to market in record time Announced Have realized cost $12 reset million initiative savings expect as of savings September to realize 30, 2015 $18 million and have in taken 2015 actions and $70 to million achieve by $ million of savings

12 Confidential Roads & Construction Adhesives 7% 29% Oilfield Chemicals 4% Mining Tires 1% 5% Coatings Fuel Additives 7% Metalworking 6% 57% Fluids & Lubricants 4% Inks 8% Flavors & Fragrances 4% Other Chemical Intermediates 14% Renewable Energy 11% Chemical Intermediates Adhesives Roads & Construction 32% Tires 5% 7 6% B. Revenue Company by end overview market (2014) Arizona Asia Chemical 13% Europe business 37% overview Arizona Chemical is a leading, market-driven, global specialty Americas chemicals 50% 39% Chemical refines and further upgrades two primary feedstocks, CTO and CST, company both that of which manufactures are co-products and sells of high the wood value performance pulping process, products into primarily value-added derived specialty from chemicals. pine wood pulping co-products. Arizona Arizona The Adhesives Chemical s Business business offers units rosin-based are Adhesives, tackifiers Roads for & packaging Construction, and pressure-sensitive Tires and Chemical adhesive Intermediates. AMS resins for bookbinding and pressure-sensitive adhesive applications and hot melt polyamides for applications, flexible packaging. terpene-based tackifiers for bookbinding, hygiene and pressure-sensitive adhesive applications, Adhesives The Roads accounted & Construction for 32% Business of revenues, offers totaling rosin esters $264.2 and million insoluble for maleics TTM September used in thermoplastic 30, properties of aged binder yields. road markings, TOFA used as emulsifiers for the asphalt paving market and bitumen additives to restore Roads The Tires & Construction Business offers accounted terpene-based for 6% products, of revenues, AMS-based totaling $52.8 tread enhancement million for TTM additives September and processing 30, exceptional compatibility with rubber compounds. aids, which among other attributes, cover rolling resistance, durability, wet grip enhancement and n Revenue Tires accounted for 5% of revenues, totaling $40.1 million for TTM September 30, Adjusted The Chemical EBITDA(1) mining, coatings, Intermediates metalworking Business fluids and offers lubricants, TOFA, inks dimer and acids, flavor TOR, and DTO fragrances. and terpene fractions into the chemical intermediates market, submarkets of which include fuel additives, oilfield chemicals, n Revenue Chemical by geography intermediates accounted for 57% of revenues, totaling $473.6 million for TTM September 30, TTM Revenue 9/30/2015 TTM 9/30/2015 by product group For $938 TTM $831 September , 2015, Arizona Chemical s revenue and Adjusted EBITDA(1) were $831 million and $187 million, respectively. $1,042 $ TTM $241 9/30/2015 $ % $ % $ % % 2014 TTM (1) See 9/30/2015 appendix for a complete reconciliation of GAAP financial measures to non -GAAP financial measures.

13 Kraton Confidential 8 III. Strategic rationale & key credit highlights

14 Confidential 9Strategic Enhances rationale global leader & key position credit highlights in specialty for chemicals the Acquisition Acquisition will create a global leader of high quality products with a diverse and innovations global footprint Enhance market leadership position, which will improve competitiveness across existing both the businesses highly-engineered allowing Kraton polymer to and expand non-hydrocarbon, into new markets renewable / product raw lines materials specialty chemicals spaces Significantly increases with Kraton s scope and business scale of operations. multiple end Pro use forma markets TTM September 30, 2015 revenue and Adjusted EBITDA of $1.89 billion and $420(1) million, respectively Complementary Opportunity to expand to Kraton s existing existing business business lines with through greater organic than growth 50% of and Arizona entry Chemical s into adjacent sales markets into end markets shared by Kraton Similar Diversification business of philosophy feedstocks and with supplier focus on base product differentiation and portfolio shift Reduces Unlike most Kraton s leading overall polymer exposure and chemistry to hydrocarbon-based technologies, feedstock threat from due low-cost to the non-hydrocarbon Asian entrants into renewable the pine nature chemicals of Arizona industry Chemical s is lower feedstocks Strong and stable free cash flow generation due the reduced availability of primary feedstock sources. Kraton Anticipated expects stable that margin ~$450 profile million (pro of its forma operating 20%+ cash Adjusted flow will EBITDA be used margins) to repay supported debt over by the large next proportion three years Modest and consistent capital expenditures of specialty / differentiated product offerings Intend Significant to use low significant risk synergy pro forma opportunities cash flows for debt repayment. Management has committed to reduce net leverage to target levels of approximately 3.1x by end of 2017 $65 Synergy million areas in include pre-tax general run-rate and synergies administrative expected redundancies, to be realized manufacturing by end of 2018 efficiencies, associated with lower the maintenance Acquisition Kraton has realized $12 million standalone cost savings as of September 30, 2015 and is on target to achieve spending its $70 and million logistics in annual among cost others reduction by 2018; separate and incremental to the $65 million in synergies savings initiative target and $50 million of working capital Experienced Seasoned management management team team Extensive experience driving with growth an average with a successful of approximately history 25 of debt years repayment of experience Demonstrated (1) See appendix record for a of complete cost reduction reconciliation and margin of GAAP improvement financial measures to non -GAAP financial measures.

15 Confidential Acquisition significantly 10 $1,062 PF TTM 9/30/2015 increases Adjusted the EBITDA(1) scale, profitability % margin and free cash flow profile of the pro forma Company PF TTM 9/30/2015 unlevered free cash flow(1)(2) % conversion PF TTM 9/30/2015 sales Kraton Arizona Pro forma Chemical $831 Kraton $1,893 Based $ % on run-rate pre-tax synergies ($65m) $ % $ % Based $ % on pre-tax run-rate synergies ($65m) $ % $ % PF 2014 ($ sales in millions) EMEA 34% by geography Americas 39% Asia Americas Pacific 47% 27% Europe Asia Pacific 41% Americas 42% 12% EMEA Asia Pacific 38% (1) See appendix 20% (2) Kraton capex excludes for a reconciliation KFPC JV of capex. GAAP financial measures to non -GAAP financial measures. The Arizona Acquisition Chemical will has create stable a historical combined Adjusted company EBITDA(1) with significantly and unlevered increased free scope cash and flow(1). scale of operations. With Post Acquisition, a strong record pro of forma 20+% TTM Adjusted September EBITDA(1) 30, 2015 margins sales would over the have past increased five years by and 78.3% to capital $1,893 expenditure million, and requirements, pro forma Arizona TTM September Chemical 30, will 2015 contribute Adjusted to further EBITDA(1) stabilize (including and improve estimated free cash synergies) flow. would Kraton s have post increased Acquisition by 150.0% pro forma to $420 TTM million. flow will be used repay debt over the next three September years. 30, 2015 unlevered free cash flow(1)(2) conversion would have improved from 61.9% to 75.7%, and Kraton expects that ~$450 million of its operating cash

16 Confidential 11 The Kraton s combination acquisition of Kraton of Arizona and Arizona Chemical Chemical will create creates a global a combined leader of company high quality with products an expanded innovations global footprint chemicals space. The combination will significantly increase the scope and scale of operations. Kraton expects that both the the Acquisition highly-engineered will enhance polymer its market and non-hydrocarbon, leadership position, renewable which raw will materials improve specialty competitiveness unparalleled in the across SBC existing and pine businesses chemicals allowing industry. Kraton Wesseling, to expand Germany into new Manufacturing markets and Facility product Berre, lines France as the incumbent Manufacturing market Facility leader, Belpre, with a OH combination Manufacturing of technical Facility capabilities Paulinia, Brazil and global Manufacturing footprint that is Facility acidulation Mailiao, capabilities Taiwan Pensacola, HSBC Plant FL Manufacturing under construction Facility through Panama KFPC City, JV FL Kashima, Manufacturing Japan JV Facility Manufacturing BLS acidulation Facility Dover, capabilities OH Manufacturing Niort, France Facility Manufacturing Savannah, Facility GA Manufacturing Sandarne, Sweden Facility Manufacturing BLS Facility largest kraft Oulu, pulp Finland supplies Manufacturing Facility Gersthofen, Germany Manufacturing Facility Arizona Kraton Kraton Corporate HQ Location Arizona refineries located in close proximity to some of the world s The are strategically combined company located in will proximity have a broad of raw manufacturing material sources. footprint Additionally, and production at the closing capabilities. of the At Acquisition, the closing there of the will Acquisition, be 10 innovation the combined R&D and company technical will support operate centers 14 manufacturing and 13 sales plants offices with to facilitate refineries that product The manufacturing development and and production capitalize footprint on sales opportunities. offices North America, Latin America, Europe will allow and Asia, revenue enabling diversity, the combined both geographically company to and seamlessly by end use serve market. its customers This global worldwide. manufacturing footprint will be complemented by a broad network of sales Note: BLS defined as Black Liquor Soap.

17 Confidential 12 Fuel Adhesives Additives 29% Coatings 7% / Lubricants 10% R&C Oilfield 7% Inks 8% Chemicals 3% Tires Flavors 5% Renewable & Fragrances 11% 3% Other Arizona 17% Adhesives Chemical s business is highly complementary to Kraton s with more than 50% of sales common to Kraton markets with no material competing products Revenues (% of 2014 by revenue) submarket Within include the rigid adhesives packaging, segment, tapes and Kraton labels. and Arizona Chemical have common customers, markets and applications. Kraton applications include diapers, tapes and labels, while Arizona Chemical applications Common Other markets markets to Kraton Arizona construction, Chemical s coatings end and use oilfield market chemicals exposure segments. is highly complementary with that of Kraton. Over 50% of common markets sales exist between the two companies, primarily across the adhesives, roads and Kraton s and acquisition Arizona Chemical of Arizona share Chemical a similar provides business an opportunity philosophy and to expand both place existing a strong business focus lines on product through differentiation organic growth and and portfolio entry into shift. adjacent markets. Roads Overlaps & across construction Chemical applications Kraton include and Arizona road marking Chemical s and roads asphalt & modification. construction segments include customers, markets and applications. Kraton applications include asphalt modification and road marking, while Arizona Fuel Oilfield additives chemicals / lubricants Within while Arizona the fuel Chemical additives applications / lubricants segment, include lubricants Kraton and and Arizona corrosion Chemical inhibitors have for common fuels and customers, oils. adjacent markets and applications. Kraton applications include viscosity modifiers for oils and lubricants, Kraton Chemical and applications Arizona Chemical s include corrosion oilfield chemicals inhibitors, segments emulsifiers, have and common thickening customers agents. and adjacent markets and applications. Kraton applications include viscosity modifiers in oil based fluids, while Arizona

18 Confidential 13 Combined Arizona Chemical 2014 key 2014 feedstock key feedstock spend as spend % of as COGS Kraton 2014 key feedstock spend as % of COGS% of COGS Butadiene, Other 48% Isoprene, Styrene 52% (1) CTO Other 44% (2) 56% Butadiene, CTO 17% Styrene, Isoprene 31% Other 52% Derivatives from crude renewable oil The Acquisition diversifies sources Kraton currently reliant on Kraton s butadiene, raw isoprene material and base styrene, with secure which and when reliable combined, access to comprise key renewable over 50% raw of materials feedstock sourcing The acquisition of Arizona Chemical will reduce Kraton s overall exposure to hydrocarbon-based feedstock through the spend renewable (as a nature percentage of Arizona of cost Chemical s of goods sold product COGS ). secure and reliable access to key renewable raw materials sourcing. technology offerings. Chemical, has including an exclusive any additional long-term CTO supply and contract CST production with International IP acquires Paper through ( IP ) future through organic developments The contract or stipulates acquisitions. that IP will supply all of the CTO and CST produced at IP s paper mills to Arizona by the pulp mills. maintains agreements with European pulp and paper manufacturers enabling exchange of Arizona Chemical s pitch for CTO. The pitch, or residue from the CTO refining process, is used as fuel Arizona one of only Chemical two industry has the participants knowledge and with manufacturing this capability. capabilities to process a variety of CTO feedstocks. BLS acidulation allows access to additional CTO supply and at a lower cost and Arizona Chemical is Arizona from its Chemical s top five suppliers CTO refineries the US are and strategically Europe, respectively. located in close proximity to some of the world s largest kraft pulping operations. Arizona Chemical s refineries are an average of 160 miles and 140 miles (1) (2) Includes other CST and variable other and variable fixed and production fixed production costs including costs. but not limited to process materials, labor, logistics, and ene rgy.

19 Confidential 14 (1) (2) See Kraton appendix adjusted for to a reconciliation incorporate 50% of GAAP of KFPC financial capex. measures to non -GAAP financial measures. Stable While Kraton returns and independent Arizona Chemical of commodity are exposed price volatility Kraton has demonstrated the ability to improve unit to commodity margins during price periods volatility, of raw each material company volatility has maintained by employing stable its returns Price in Right recent years strategy, despite which volatility includes in passing raw material through pricing. shifting the portfolio to more differentiated products. changes in raw material costs and Despite Chemical a lower has maintained commodity Adjusted price environment, EBITDA(1) including margins in a excess long TOFA of 20% market over the stemming recent years. from a record soybean harvest and a drop in the price of oil and natural gas, in addition to the stronger dollar, Arizona As $183 a result, both Kraton and Arizona Chemical have generated stable Adjusted EBITDA(1), margins and returns, independent of commodity prices. $128 $144 $141 $147 $168 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $0 $50 $100 $150 $200 $ TTM Average 9/30/2015 butadiene price ($mm) (cents/lb) Adjusted Average butadiene EBITDA $199 price ($/lb) $419 $241 $205 $192 $187 $0 $20 $40 $60 $80 $100 $120 $0 $100 $200 $300 $400 $500 $ TTM Average 9/30/2015 brent price ($mm) ($/bbl) Adjusted Average oil EBITDA Gross profit price / ton(1) (Brent $651 $/bbl) $ $ $ $ $ TTM 9/30/15 Adjusted Unlevered EBITDA FCF(1)(2) margin $164 21% $389 35% $207 23% $158 21% $157 20% $146 22%

20 Confidential 15 Well Kraton s defined acquisition synergy of opportunities Arizona Chemical Arizona expected Acquisition The combined company will leverage expertise within to Arizona result in Chemical $65 million and Kraton in pre-tax to reduce run-rate energy synergies consumption, realized by lower the supply chain network to lower overall logistics cost and reduce corporate and G&A overhead. maintenance spending, and improve productivity and yields in addition to optimizing Improvements over a three-year are period expected following to be realized closing by of end the Arizona of 2018 Chemical with $20 Acquisition. 25 million in 2016, and $50 60 million in The cost to achieve the expected synergies is expected to be approximately $50 million COGS G&A $25mm $40mm Reduce Leverage plant purchasing maintenance powerspending Optimize Production supply maximization chain to lower at higher logistics yield CTO costs Productivity initiatives including standardization, refineries Arizona Chemical operational improvements inventory reduction, capital efficiency improvements, and reduction of outside services (COGS) G&A Headcount Eliminate redundant reduction Leverage economies of costs Consolidation of space, scale cost savings initiative lower overview T&E, and professional fees Kraton These savings announced are expected a strategic to initiative be realized to through reset its initiatives competitive targeted cost position. as follows. Kraton expects $70 million in pre-tax annual run rate cost savings and $50 million of working capital reduction by Manufacturing Asset productivity optimization Complexity Overhead efficiency reduction Expand Leverage USBC Mailiao, at Berre, Taiwan, France, to optimize to improve global scale HSBC and capacity economics Belpre Implement boilers new and manufacturing over 20 other process operation Paulinia cost out to projects SKU reduction and new customer fulfillment practices simplify Cariflex supply chain Reduction Description in / selling, Status of administrative cost initiative and $24 research million costs of run-rate (110 basis cost point savings reduction based on as actions a share already of revenue taken: in 2018) $10 $8 million of from other Belpre manufacturing boiler project $6 million selling, administrative and cost research improvements $12 cost improvements $8 $4 Other $24 9/30/2015 $70 Realized Run-rate as of 9/30/2015 Incremental Boiler Project Total Remaining Target ($ millions) cost actions Improvements $20 25 expected to 1be realized by end of 2018 $50 million 60 million estimated by year cost 2 Plant maintenance 12% Reduce to achieve Total synergies energy costs 12% Logistics 11% Yield 15% Productivity 11% 39% $65 Note: mm % of Total Percentages represent management estimates.

21 Confidential 16 Expected $18 synergies and Kraton cost savings over time $25 $45 28 $ $70 $50 $18 60 $65 $45 $ E E $ E 2017E Kraton Arizona cost transaction savings ($ in millions) synergies By in combined 2018, Kraton cost is savings. expecting Kraton reach expects a target additional of $70 free million cash in flow reductions growth from from working its cost savings capital management initiative and improvement the full $65 million of up to of $50 transaction million by synergies are expected to be realized for a total of $135 million The $140 cumulative million by cost 2018, to achieve excluding synergies any working and Kraton capital cost impact. savings expected to be

22 Confidential 17 Strong Kraton and expects stable that free ~$450 cash million flow generation completion of Kraton Formosa Polymers of its operating Corporation cash JV flow plant will and be due used to repay the completion debt over the of several next three cost years. out and Capital innovation expenditure projects spending at the Belpre at Kraton Site. is Historical expected to capital decline expenditure over the next in several years was after by strategic investments: elevated ~$100 ~$40 million on semi-works KFPC JV Mailiao facility facility to be in Q1 complete 2014 in Q1 2016? ~$50 ~$14 million on Belpre boiler instrumentation project completed upgrade in Q NOLs Kraton s provide net leverage a tax shield with synergies the first is two targeted years to post-combination, be reduced from 4.2x with PF a total TTM notional 9/30/2015 value to of 3.1x $241 by million end of as 2017 of September and 2.5x by 30, the Unlevered free cash flow(1)(2) end of Anticipated 4.2x net leverage 4.3x 3.1x PF TTM 2.5x 2016E 9/30/ E 2018E ($ (1) in See millions) (2) Adjusted appendix to incorporate for a reconciliation 50% of KFPC of GAAP capex. financial measures to non -GAAP financial measures. (3) unchanged. Kraton normalized capex reflects management estimates of $155 million less midpoint of 2015 guidance of $55-60 million, averaged over remaining three years. Arizona Chemical capex (3) YTD period elevated by strategic investments by Kraton (4) $127 $64 $74 $58 $55 $76 $164$136 $390 $207 $158 $157 $148 $65 $58 $292 $453 $281 $216 $212 $ % $ % 73.1% 62.5% 62.4% 68.7% 81.3% PF TTM Kraton Arizona 9/30/2015 normalized Synergies Combined % conversion

23 Confidential management 18 Kraton is led by a seasoned team demonstrated know-how of cost management reduction team and with margin an improvement. average of approximately 25 years of experience, extensive track record in driving growth with a successful history of debt repayment and has a Kraton Stephen will E. Tremblay be adding Executive two members Vice from President the Arizona & Chief team Financial to its management Officer team post-acquisition. Kevin M. Fogarty President and Chief Executive Officer Holger Lothar P. R. Freund Jung Senior Senior Vice Vice President, President, Chief Chief Commercial Technology Officer Melinda S. Conley Chief Human Resources Officer James L. Simmons Vice President, General Counsel Corporate Officer J. Fernando C. Haddad Vice President Manufacturing & Supply Chain Secretary Damian Suzanne T. Pesgens Burke Chief Corporate Procurement Development Mark Santangelo Vice President, Operations & Supply Officer Chain

24 Confidential 19 Kraton Vice President, management Chief team Human (cont d) Resources Melinda Officer S. Conley including Vice President, Total Rewards for Dean Ms. Foods, Conley a multi-billion was appointed dollar Vice publicly-traded President, Human food Resources, and beverage in May company, with Prior responsibility to joining Kraton, for all from compensation 2006 to 2011, and benefits. Ms. Conley Ms. served Conley in earned various a B.A. capacities; Speech Communication and an M.A from the School of Labor and Employment Relations at the University of Illinois at Urbana-Champaign, and received her J.D. from Southern Methodist University. in James Vice President, L. Simmons served in various General capacities Counsel in Kraton s & Corporate legal department, Secretary Jay including Simmons most was recently named Vice as Deputy President, General General Counsel Counsel and Assistant and Corporate Secretary. Secretary Mr. Simmons in December earned B.A. Mr. and Simmons M.A. degrees joined from Kraton Stephen in January F. Austin 2010 and University and his J.D. degree from the University of Houston Law Center. State J. Vice Fernando President C. Manufacturing Haddad environmental, safety, & health. & Supply Prior to Chain joining Mr. Kraton, Haddad Mr. was Haddad named worked Vice President, as the Global Manufacturing Manufacturing & Supply & Supply Chain Chain April Director for He UOP, is responsible a Honeywell for Company, Kraton s global from manufacturing, 2013 to Mr. supply Haddad planning, holds and Bachelor of Science degree in Chemical Engineering from the State University of Campinas (Brazil) and a MBA from Faculdade Getulio Vargas (Brazil). a Damian Vice President, T. Burke he was a Senior Corporate Vice President Development for Development Mr. Burke and was Strategy appointed from Vice 2005 President to of Prior Corporate to Oldcastle, Development Mr. Burke in was a Mr. consultant Burke joined at Bain Kraton & Company. from Oldcastle, He started the his North career American at ExxonMobil, subsidiary serving of CRH in plc., a variety where roles in Europe and the United States. Mr. Burke earned a Master s degree in chemical engineering from University College London and an MBA from the Wharton School of the University of Pennsylvania. of Suzanne Vice President, Pesgens Chief materials Procurement (SRM) procurement Officer Ms. activity Pesgens, will currently report through Arizona Suzanne. Chemical s Global Director of Procurement will be promoted to VP and Chief Procurement Officer for the combined company. All non-strategic raw Mark Vice President, Santangelo Operations activities, encompassing & Supply Chain Arizona Mr. Santangelo, Chemical s existing Arizona Chemical s global manufacturing current VP, operations, Operations will and continue Supply to Chain, report will through continue Mark. in this capacity. All manufacturing, engineering, planning, EH&S and supply chain

25 Kraton Confidential 20 IV. Company overview

26 Kraton Confidential A. Description 21 Kraton is a leading of combined global producer business products primarily derived from pine of wood SBCs pulping and other co-products. engineered polymers. Arizona Chemical is a leading, market-driven, global specialty chemicals company that manufactures and sells high value performance The chart below revenue is an overview of the combined company and its business segments. Pro Arizona forma Chemical Adjusted EBITDA(1) Pro forma Kraton Revenue: $1.89 billion, Adjusted EBITDA(1): $420 million TTM 9/30/2015 (22.2% margin) Revenue: Adjusted EBITDA(1): $831 million, TTM 9/30/2015 (22.5% $187 margin) million Specialty CariflexTM Polymers Performance Adhesives Products Roads HSBCs& Construction Tires Chemical Intermediates Products: Application & End Markets Polyisoprene USBCs rubber latex Rosin Terpenes esters & derivatives & dispersions Rosin TOFA esters AMS resins & derivatives Terpenes Rosins & derivatives TOFA Terpenes & & derivatives TOR derivatives Kraton Revenue: Adjusted EBITDA(1): $1.06 billion, TTM 9/30/2015 (15.8% $168 margin) million $1,062 $1,423 $1,292 $1,230 $1,042 $992 $2,168$938 $831 $2,465 $2,284 $1,893 (1) See 2012 appendix 2013 for 2014 a complete PF TTM reconciliation 9/30/2015 Kraton of GAAP Arizona $144 financial measures to non -GAAP financial measures. $141 $192 $147 $168 $241 $205 $ % $ % $384 $346 $339 $ % 22.2% 2012 Arizona PF TTM 9/30/2015 Kraton Synergies Combined % margin

27 Confidential TTM 9/30/ CariflexTM Revenue Products Specialty / Functionality Polymers Performance Applications Products $136.1 $358.0 (13% (34% $567.9 million (53% of Polyisoprene rubber & polyisoprene total) Medical applications rubber latex Surgical Catheters gloves and condoms Stoppers Coatings for IV bags and medical bottles Specialized HSBCs footwear Consumer Wire & cable products Disposable diapers plastic outer layers Medical USBCs applications Paving Labels & tapes roofing Printing Personal plates Adhesive care B. Kraton applications Kraton is a overview first USBCs leading 1964 global and the producer first HSBCs of SBCs in and the late other 1960s. engineered polymers. SBCs are highly-engineered synthetic elastomers, which Kraton invented and commercialized over 50 years ago. Kraton developed the For Kraton s the TTM products period are ended organized September in the 30, following 2015, Kraton s groups: revenues and pro forma Adjusted EBITDA(1) were $1.1 billion and $168(1) million, respectively. Cariflex and clarity isoprene enhancements, rubber ( IR ) good and flow, isoprene low gel rubber content, latex and ( IRL ): absence a of synthetic nitrosamines alternative and natural to NR / rubber NRL, proteins. combines the key qualities of natural rubber, such as good mechanical properties and hysteresis, with purity Specialty power tools, Polymers: and automobile impart characteristics components; such impact as resistance improved for flow demanding characteristics engineered for many plastic industrial applications; and consumer flexibility sealant for wire and lubricating and cable plastic fluids; outer soft feel layers; in numerous stretch properties consumer in products disposable such diapers as razor and blades, incontinence products; resistance to ultraviolet light; processing stability and viscosity; and elevated temperature resistance. adult Performance surfaces; impact Products: resistance impart for characteristics consumer plastics; such and as resistance increased to processing temperature flexibility and weather in adhesive extremes applications, in roads and such roofing; as packaging resistance tapes to cracking, and labels, reduced and materials sound transmission used in disposable and better diapers. drainage in porous road Portfolio 55% composition 57% 45% Differentiated 43% TTM Standard 9/30/14 TTM 9/30/15 Revenue TTM 9/30/2015 by geography Revenue TTM 9/30/2015 by product group Asia South 27% America Europe 5% 34% 39% North Specialty America Polymers 34% Performance Products 53% 34% Cariflex (1) See appendix 13% for a complete reconciliation of GAAP financial measures to non -GAAP financial measures.

28 Kraton Confidential B. Kraton overview 23 CariflexTM (cont d) allergies. IR and IRL are non-sbc synthetic substitutes for natural rubber and natural rubber latex. Cariflex does not contain the proteins present in natural rubber latex and are therefore not known to cause Revenue TTM 9/30/2015 by application Revenue TTM 9/30/2015 by geography Surgical Through glove Cariflex, market Kraton share (2014) Polyisoprene rubber latex is the also leading used in global condom supplier applications of polyisoprene and medical rubber components latex capturing such as approximately needle shields 11.0% and stoppers. of the surgical Cariflex glove products market avoid share natural globally. Applications rubber allergies associated with latex surgical gloves. Innovation Cariflex 11% over time Other Natural synthetics Kraton markets rubber latex enhancements, good its IR flow, and IRL low products gel content, under and the absence Cariflex of nitrosamines brand name. These and natural products rubber combine proteins. the key qualities of natural rubber, such as good mechanical properties and hysteresis, with purity and clarity IR medical (formed products, from polymerizing paints, coatings isoprene) and specialized is a high purity, footwear. non-sbc Isoprene product. rubber latex Kraton s (emulsion IR polymers of IR in are water) available is a as substitute bales of for rubber natural or as rubber latex. latex, Kraton particularly focuses its in IR applications polymers in with demanding high purity applications requirements, such such as as Kraton s medical, IRL healthcare, is specialized personal polyisoprene care and food latex contact with a operations. both of which were first developed by Kraton. IRL is controlled durable, tear structure resistant, and soft, low transparent chemical impurity and odorless. levels obtained addition, through the synthetic an anionic material polymerization is non-allergenic process and followed has superior by a proprietary consistency latex and processing other advantages step, natural rubber latex. IRL is predominately used in synthetic surgical gloves and condoms. Medical 93% Industrial 7% to Asia North 91% Europe America 8% 1% 100% 2013 TTM Standard 9/30/2015 Differentiated

29 Kraton Confidential 24 B. CariflexTM Kraton overview (cont d) (cont d) The be driven global by polyisoprene continued displacement rubber latex market of natural has rubber grown latex rapidly in surgical in recent glove, years. condom Demand and is driven medical by applications. the need for a high-performance, synthetic alternative to natural rubber latex. Kraton expects volume growth to Kraton commercial is targeting condom growth industry, CariflexTM and the niche in application a number of for applications transparent including rubber for surgical high end gloves, footwear. condoms, Electrical high insulation end footwear, gloves electrical are a niche, insulation high-margin gloves specialty and exam product gloves. with Kraton a 2 targets kiloton the global high addressable end and market. The addressable Exam gloves surgical are glove a potential market application is approximately for selected 65kT niches rubber in latex a large, (wet lower tons). cost The market main growth and Kraton driver believes for Cariflex s that this products is a longer-term are natural opportunity. concerns by providing superior haptics with exceptional purity standards. rubber allergy concerns and Cariflex products address these The condoms addressed government condom market health is programs roughly are 20kT not per likely annum, to purchase and is growing premium at products. 5?7% annually, However, with there polyisoprene large growth gaining opportunity market share as polyisoprene against natural rubber rubber. is still The below addressable 10% of market addressable is limited market to branded/retail Cariflex has steadily grown share in the US surgical glove market. Total unit volume demand for surgical gloves in the U.S. (all materials) has increased slightly. However, Cariflex is displacing today. materials (market share up over 20 percentage points since 2008). Additionally, Kraton has made strong in-roads overseas. Kraton believes more than 25% of sales of surgical gloves based upon Cariflex traditional international today. are Note: Growth Total opportunities addressable market estimates represent magnitude of market targeted, not expected future sales Other Natural Cariflex synthetics US surgical gloves sales by material (millions of pairs)

30 Kraton Confidential 25 B. Kraton overview (cont d) Specialty HSBC global Polymers market are share HSBCs (2014) that are applied in personal care, industrial, medical, lubricant additives, adhesives and coatings markets. Kraton As a part holds of its a leadership cost savings position initiative, HSBCs, Kraton plans and Kraton leverage has a its market Mailiao, share Taiwan of approximately facility to optimize 29% in global global HSBCs. Polymers business. HSBC. Mailiao will allow Kraton to serve differentiated and growing segments of the Specialty There characteristics continues such to be as strong ease of growth use, desired globally aesthetics, in HSBCs. haptics Kraton and believes managing demand total end for product its Specialty costs. Polymers portfolio is principally driven by customer-specific needs and by the ability to balance performance HSBC Mailiao market is positioned growth to has serve been growing concentrated global in demand, Asia, with particularly end use products for LMW shipped (low molecular globally. weight) Worldwide grades, capacity a market utilization not served has decreased by competitors. slightly as a number of new plants have come online in recent years. Applications Kraton TSRC 29% Sinopec Kuraray Others Specialty tools, and Polymers automobile impart components; characteristics impact such resistance as improved demanding flow characteristics engineered plastic for many applications; industrial flexibility and consumer for wire sealant and cable and lubricating insulation; fluids; stretch soft properties feel in in numerous disposable consumer diapers products and adult such incontinence as razor grips, products; power resistance Kraton believes to ultraviolet demand light; for its processing Specialty stability Polymers and portfolio viscosity; principally and elevated driven temperature by customer-specific resistance. haptics, and managing total end product costs. needs and by the ability to balance performance characteristics such as ease of use, desired aesthetics, Since achieve many customer of Kraton s and industry products established are highly approvals. engineered Kraton s and customized innovation formulations, led growth strategy they require focuses specialized on translating product the testing inherent and strengths validation, of production Kraton s product and process technologies evaluation. such This as flexibility, results in resilience, a long lead impact time to and Other moisture 27% resistance, and aesthetics (clarity and haptics) target opportunities where Kraton can expand and/or have the potential to create new market spaces for its solutions. Lube Polymod additives 14% 15% Personal Medical 9% care 10% Adhesive Cable gels & 7% coatings 7% Industrial Consumer 6% Asia 34% 5% Europe North 25% South America 40% application 1% Revenue by geography TTM TTM 9/30/2015

31 Kraton Confidential 26 B. Kraton overview (cont d) Performance Sinopec Products are USBCs that are used in the paving and roofing, labels, tapes, printing plates and personal care end use markets. Kraton LCY 15% LG Dynasol Other Revenue TTM 9/30/2015 by application Revenue TTM 9/30/2015 by geography USBC Applications global market share (2014) Kraton s In paving USBC and roofing polymers applications, are primarily Kraton s used styrene in paving butadiene and roofing, styrene personal ( SBS ) care polymer and adhesive grades applications. cracking, reduced sound transmission and better drainage in porous road surfaces. In personal care are applications, used to impart Kraton s performance SBS and characteristics SIS products such enable as resistance thin, stretchable to temperature films used and weather in diapers. extremes, In adhesive resistance to applications, Kraton believes Kraton s demand polymers for utilization are used of to SBC achieve based desired adhesives adhesive is primarily properties driven such by as the bond desire strength, for cost specific reduction adhesion, and higher consistent performance. performance to specification and processing speed. Innovation Paving 27% over time Roofing Personal 18% Packaging care & 20% Other 10% industrial adhesives 18% Industrial Asia 9% 7% Europe North 45% South America 38% 35% 38% 65% 62% 2013 TTM Differentiated 9/30/2015 Standard Through due butadiene its Performance price dynamics Products and business lower infrastructure unit, Kraton holds demand. a leadership Kraton s core position USBC in USBCs, markets in with Europe approximately and the Americas 15% of have the USBC remained global steady. market share by volume. USBC demand in Asia declined in 2014 Kraton Europe is and working North America to improve by its expanding global USBC its USBC cost capacity position in to Berre, better France. compete The against expansion exports will from allow Asia Kraton into its to core leverage markets. favorable Kraton feedstock plans to supply improve and its an competitive improved cost position structure in its to core more USBC effectively markets compete in against Source: Asian Management imports. estimates.

32 Kraton Confidential 27 C. Mailiao, Joint venture KFPC is Taiwan will provide a 50/50 the JV JV with with feedstocks Formosa Petrochemical and site services, Company and Kraton ( FPCC ) will purchase located in all Mailiao, the offtake Taiwan. from KFPC The project and market is part the of strategic products initiative for its own designed account. to improve profitability and enhance market position. FPCC The Construction JV will own and and plant operate commissioning a 30kT HSBC process plant is expected which will serve be completed differentiated in the and second growing half segments of The of the estimated specialty capital polymer cost business. million equity investment in 2013 ($42 million from Kraton) and $166 million syndicated loan agreement at the JV, of which $53 is million approximately is currently $200 drawn. million Kraton $210 guarantees million. 50% KFPC of KFPC is funded loan. with As $83 September 30, 2015, $102 million has been spent. The current estimated capital cost is reduced from initial estimate of $215 million. of Kraton Excellent anticipates on-site economics that Mailiao and will ample offer feedstock several distinct supply advantages: Close Expanded proximity capacity to in attractive differentiated Asian grades, markets, especially and positioned high value, to competitively low molecular serve weight Asia products and markets worldwide Provides Description platform of KFPC to develop Loan Agreement and launch further differentiated grades to serve faster growing segments On 2015 July exchange 17, 2014, rate), KFPC to provide executed additional a syndicated funding loan to agreement construct the (the HSBC KFPC facility Loan Agreement ) in Taiwan and in to the provide amount funding of 5.5 for billion working New capital Taiwanese requirements Dollars ( NTD ), and/or general or $166.3 corporate million purposes. (converted at the September 30, The Tranche KFPC B, Loan or $36.6 Agreement million is (converted comprised at of the a September NTD , billion 2015 Tranche exchange A, or rate), $129.7 to fund million working (converted capital at requirements the September and/or 30, general 2015 exchange corporate rate), purposes. to fund As KFPC s of September capital 30, expenditures, 2015, NTD and 1.7 a billion, NTD 1.21 or $52.6 billion million date). KFPC (converted may continue at the September to draw on 30, the 2015 loan exchange agreement rate) for was the drawn first 28 on months the KFPC following Loan Agreement. the first drawdown The facility date. period Subject of to the certain KFPC conditions, Loan Agreement KFPC is can five request years a from two-year January extension 17, 2015 of (the facility first drawdown the KFPC Loan Agreement. period of

33 Kraton Confidential 28 C. Mailiao, Joint venture Taiwan Description of KFPC (cont d) The total outstanding Loan principal Agreement amount (cont d) installments shall be in amount equal is to payable 10% of in the six outstanding semi-annual principal installments amount with and the the first final payment installment due on shall July be 17, in 2017 an amount and each equal subsequent to remaining payment 50% due of every the six outstanding months thereafter. principal amount. The first In five the extension period is granted, the final 50% of the outstanding principal amount shall be repaid in five equal semi-annual installments with the first installment due on the original final maturity date. the event The period KFPC as selected Loan Agreement by KFPC is subject the drawdown to a variable request interest or the rate interest composed period of notice), a fixed subject 0.8% margin to a floor plus of the 1.7%. three-month Interest is or payable six-month a fixing monthly rate basis. of the Taipei Interbank Offered Rate (depending on the interest The through KFPC 2016, Loan which Agreement will decrease contains to certain 2.0 to 1.0 financial 2017 covenants and 1.2 which to 1.0 change in 2018; during a minimum the term tangible of the KFPC net worth Loan requirement Agreement. of The $50.0 financial million covenants through include 2018, which a maximum will increase debt to to equity $100.0 ratio million of 3.0 in to 2019; 1.0 minimum interest coverage ratio of 2.5 to 1.0 commencing in 2016, which will increase to 5.0 to 1.0 in In each case, these covenants are calculated and tested on an annual basis. Formosa Petrochemical and a Corporation compliance with and Kraton the covenants Polymers under LLC the are KFPC the guarantors Loan Agreement. of the KFPC Loan Agreement with each guarantor guaranteeing 50% of the indebtedness on an unsecured basis. At September 30, 2015, KFPC was in Kashima, Kraton s Kashima Japan The Kashima facility manufacturing is located northeast facility is of owned Tokyo and on the operated main by island Kraton of Honshu JSR Elastomers at a JSR site K.K., that ( KJE ), includes a joint several venture synthetic between rubber Kraton facilities and and JSR butadiene Corporation. by rail, barge and truck connections. Production capacity is approximately 31 kilotons of USBCs, and Kraton is generally entitled 50% of this production and pursuant isoprene to its extraction joint venture units. agreement. This facility is serviced JSR the economic markets its interest portion of of the the joint production venture. under Kraton its and own JSR trademarks, each have and a right Kraton of first markets refusal its on portion the transfer of the of production the joint venture under the interests Kraton of brand the other. name although this amount may vary from time to time based on D. Kraton s Customers has customers had a long-standing are diversified relationship by industry with and many geography of its customers with more and than works 800 customers closely with in over them 60 to countries. customer base, with no single customer accounting for more than 10.0% of its revenue in 2014, and its top design 10 customers products that together meet represent application-specific approximately performance 31.7% of and its quality revenues requirements. in Because Kraton of have the technical a diverse expertise changing and to an investment alternative required vendor. develop many of Kraton s product formulations and the lead times required replace them, Kraton believes many of its customers would likely incur additional costs by

34 Kraton Confidential 29 E. Competition Kraton s also most competes significant against competitors a broad range in the of SBC alternative, industry non-sbc are: Asahi products Chemical, within Chi each Mei, of Dynasol its product Elastomers, groups. Corporation, Versalis, Voronezh and Zeon Corporation. Generally, however, Kraton believes, no individual competitor Kuraray competes Company, across Korea all Kumho of its product P.C., LCY, applications. LG Chemical, Sinopec, Taiwan Synthetic Rubber Kraton delivery. competes Kraton with believes other SBC its customers producers also and base against their producers supply decisions of non-sbc the competing supplier s materials, ability to primarily design and on produce the basis custom of price, products breadth and of product on the availability, of product technical quality support. and speed of service from order CariflexTM Kraton s rubber, as products well as polyurethane. primarily compete with natural rubber, conventional Ziegler Natta sourced solid IR, halo butyl rubber and several synthetic latex alternatives, notably neoprene, nitrile and polychloroprene latex Specialty Kraton s Specialty Polymers thermoplastic polyolefin, Polymers polyethylene products primarily terephthalate, compete polycarbonate, against a variety polyamide of chemical and ethylene-propylene-diene-monomer and non-chemical alternatives including, based products. but not limited Kraton believes to, thermoplastic demand for vulcanizate, its Specialty thermoplastic Polymers portfolio polyurethane, is principally PVC, driven Since many by customer-specific of Kraton s products needs are and highly by the engineered ability to balance and customized performance formulations, characteristics they such require as specialized ease of use, product desired testing aesthetics, and haptics, validation, and production managing total and process end product evaluation. costs. achieve customer and industry established approvals. Kraton s innovation led growth strategy focuses on translating the inherent strengths of its technologies such as flexibility, This results resilience, in a long impact lead time and to moisture Performance resistance, Products and aesthetics (clarity and haptics) target opportunities where it can expand and/or have the potential to create new market spaces for its solutions. In ethylene-propylene-diene-monomer, paving and roofing applications, the polyethylene, Performance atactic Products polypropylene segment primarily and unmodified compete asphalts. with chemicals Kraton such believes as styrene-butadiene that customer choice rubber for latex, these acetates, markets is polyphosphoric driven principally acids by and total thermoplastic end-product materials cost, like temperature possibility of performance, damage from bitumen weather, source ice and and water application. build-up Styrene-butadiene-styrene and therefore extending service ( SBS )-modified life. modified asphalt in asphalt roofing pavements applications enhance produces the strength stronger and and elasticity more durable of asphalt-based felts and shingles, paving compositions thus reducing over the extended temperature range, thus increasing resistance to wear, rutting and cracking and again extending service life. For example, Kraton s HiMA technology polymers provide better rut and cracking resistance an than allowing other pavements elastic binders, to withstand while achieving heavy traffic 25-40% loads reduction and varying road climate thickness conditions. without any major sacrifice of viscosity or temperature performance. Kraton believes this innovation will extend road life by In product personal cost care and applications, performance. Kraton s products primarily compete against low priced alternatives such as metallocenes. Kraton believes that customer choice for these markets is driven principally by total end- In consistent adhesives performance applications, to specification, Performance Products processing primarily speed, hot-melt compete application, with acrylics, resistance silicones to and water solvent-based and total end-product rubber systems. cost. The Kraton s choice SBCs between are compatible these materials with is many influenced other formulating by bond strength, ingredients. specific For adhesion, example, for utilization Kraton of has SBC expanded based adhesives its offering is primarily of formulated driven compounds by cost reduction for adhesives and higher for protective performance. films that provide improved adhesive performance with no residue or haze after removal. Kraton believe demand

35 Kraton Confidential F. Butadiene, Raw materials styrene procurement and isoprene (monomers) are the primary raw materials in manufacturing of Kraton s products. Butadiene Kraton sources is available global butadiene on the global requirements petrochemical through market a variety with approximately of contractual arrangements. eight producers For in example, the Americas, in France, 32 in Kraton Europe, has 61 a in contract Asia and with six LyondellBasell in the Middle East. effective through December 31, Styrene has contractual is available arrangements on the global with petrochemical terms ranging market from one with to approximately two years, subject 11 producers to renewal located conditions. in the Americas, 20 in Europe, 52 in Asia and five in the Middle East. In the U.S., Europe and Brazil. Kraton Isoprene available is in primarily the market produced place. and consumed captively by manufacturers for the production of IR, which is primarily used in the manufacturing of rubber tires, as a result, there is limited non-captive isoprene Kraton JSR on sources a commercial global supply isoprene basis requirements and from through alternative a variety suppliers of contractual as needed. arrangements. Kraton generally has terms ranging from one to two years, subject to renewal conditions. In Japan, Kraton sources from 30 Source: (1) Butadiene CMAI pricing as of 8/19/2015. from January 1999 through based July on Delivered Projected US Gulf pricing Coast from Spot August Average 2015 for North through America, December FOB South Korea Spot for Northeast Asia, and FOB Wes t Europe Spot for West Europe. Prices reflect historical levels Relative butadiene volatility(1) 01,000 2,000 3,000 4,000 5,000 Jan-99 Oct-00 Aug-02 May-04 Mar-06 Dec-07 Oct-09 Jul-11 May-13 Feb-15 Dec-16 $1,266 Butadiene, Other 48% Isoprene, Styrene 52% 0% Kraton 2014 key feedstock spend as % of COGS

36 Kraton Confidential 31 G. Kraton s Research research and development products. Approximately and development +25% of revenue program is is covered designed by to patents develop and new trade products secrets. and applications, provide technical service to customers, develop and optimize process technology, and assist in marketing new The services Kraton s its research South American and development customers. activities Kraton s are application primarily conducted and technical in laboratories service laboratories in Houston, in Shanghai, Texas, and China, Amsterdam, and Tsukuba, Netherlands. Japan, Kraton provide also support own to a laboratory its Asian customers. in Paulinia, In Brazil, addition, that Kraton provides hastechnical technical In 2014, Kraton service successfully staff located launched in Mont St. a semi-works Guibert, Belgium. including the reduction of customer qualification lead facility times. located Kraton at also its anticipates production utilizing facility in the Belpre, semi-works Ohio. facility Kraton to believes produce this small will commercial accelerate polymer quantities development for customers efforts which, and commercialization prior to the launch of products works facility were satisfied by the Belpre, Ohio production assets. Utilizing semi-works facility for such smaller quantities is more economical than producing small quantities on the larger-scale Belpre its semi- production Kraton s professionals lines. The semi-works perform research facility using will scientific take a shorter application time to equipment market, therefore, located primarily reducing investment at its Houston, risk, Belpre, has a shorter Amsterdam, product and development Shanghai research cycle, and and can development produce HSBCs, facilities. USBCs, At all and of its Cariflex major research products. and determine development optimal facilities, formulations. Kraton develops new product samples for its customers and provide guidance its manufacturing organization. Application equipment is used to evaluate polymers and compounds to Kraton and breakthrough believes a balanced polymer chemistry approach to and research process and technology development to ensure investment long-term is critical sustainability, to drive steady and works progress on incremental on innovation. innovation Kraton to creates process custom and optimize polymers, polymers which are to new defend polymers, core markets, to grow and its application core market development New to translate Kraton s technology to grow a number of accounts. Existing New Technologies Customers/Markets New polymers Polymers Breakthrough to grow core markets New 5-10 polymer projects typically chemistry active & process technology to ensure long-term sustainability 2-5 Incremental projects innovation typically active Process Application and polymer development optimization to defend core markets Translate technology to grow number of accounts >30 projects typically active

37 Kraton Confidential 32 G. Kraton Research has created and development custom polymers (cont d) environmental concerns. Kraton has focused in a number on incremental of situations. innovation Kraton created in fine HSBC tuning solutions USBC polymers to replace for PVC diaper content applications, in wire and & cable allowing applications, down gauging effectively of film, matching thereby performance reducing costs, while and addressing development in tailor-made protective film compounds for use automotive, electronic and construction applications. application Kraton s applications key are technology early in the projects adoption have curve, contributed Kraton over $200 expects million these investments its revenues to in drive further Kraton growth. announced a portfolio of projects in 2012, and many of them have delivered on expectations. Many Going PVC replacement forward, Kraton volume intends growth to rebalance (indexed) its investment allocation to better serve its customer needs and maximize returns. Personal Protective care film performance volume growth volume (indexed) growth (indexed) 1.0x 8.7x ( x Launch) 12.1x ( x Launch) 6.8x (2006 R&D investment Launch) Selective investments allocation in breakthrough (%) Semiworks allows greater productivity technologies Expanded application of existing technology at lower to costs 28% drive improved returns 35% 22% 23% 31% 30% 19% 10% Historic Future allocation allocation Incremental Application innvocation Custom players development Breakthrough

38 Confidential 33 H. As Cost part of competitiveness its strategy, Kraton program approximately $70.0 million is pre-tax working run on rate improving cost savings its cost and structure approximately through $50.0 various million initiatives. of working For example, capital reduction Kraton is by currently the end implementing of These a cost number savings of initiatives are expected which to be it expects achieved will by yield manufacturing asset productivity, optimization, including including lower energy through costs Kraton s associated expansion with recently of USBC installed at its nature Berre, gas France, boilers; facility and the leveraging of Kraton s facility located in Mailiao, Taiwan to optimize global HSBC; complexity overhead efficiency reduction; improvements and In the first nine months of 2015, Kraton through realized reduction approximately in selling, administrative $12.0 million and of cost research reductions costs. Manufacturing optimization and Kraton expects to realize $18.0 million of total cost savings in the twelve months ended December 31, Expand Asset productivity USBC Berre and leverage Mailiao to optimize global HSBC production Belpre Complexity boilers reduction and over 20 projects to reduce production costs Reduced Overhead complexity efficiency through integrated Cariflex line, SKU reduction and new fulfillment practices 110 $70m basis CAPEX point reduction of SAR as a share of revenue in 2018 $23m $93m in total OPEX $70m run rate cost cost to achieve $50m reduction in working savings Investment capital Cost Outcomes competitiveness program

39 Kraton Confidential H. Cost competitiveness 34 Manufacturing optimization program (cont d) Kraton s production plan and to once optimize the Berre its manufacturing facility is expanded, include it the will start improve up of their Kraton s new competitiveness Mailiao facility and in Europe the expansion and North of America. their Berre facility. The Mailiao plant start-up will help Kraton optimize its global HSBC Long-term The cracking butadiene of heavy price feeds advantage results in in a Europe North America is structurally short of butadiene, long-term while butadiene Europe price is structurally advantage for long. Kraton In the in long-term, Europe. higher. freight should drive the price difference, but over the past three years, the differential has been substantially For Wesseling. Kraton in the Americas, the disadvantage is exacerbated by Belpre s location, and a closed Brazilian market. Whereas the structural advantage in Europe is further enhanced by on-site economics at Berre and United Western States Europe ethylene ethylene industry industry feedslate Ethane feedslate Propane Naphtha Other Ethane Propane Naphtha Other Start-up Opportunity of Mailiao to build facility Consolidate grade production on the original to reduce Mailiao type changes business and case Sequencing of transitions will minimize customer impactcapture efficiencies across our global HSBC footprint Overview Rationale Leverages Mailiao s cost favorable position onsite will economics Expansion of Berre facility allow Kraton to serve Asian markets and export markets more competitively Improve Displace scale higher and cost economics production at Berre LyondellBasell has demonstrated at its other ongoing sites This change in outlook creates an opportunity commitment for further investments to Berre A Berre expansion is the most capital effective way to improve Kraton s in Berre worldwide to improve SBC cost its cost position position Leverages Project site, structurally low?cost butadiene

40 Kraton Confidential H. Cost competitiveness 35 Asset productivity program (cont d) Kraton boilers is with continuing new natural to drive gas fueled cost efficiency, boilers will through result optimization in $10 million of in its cost manufacturing savings (annually), facilities. as Kraton well as is meeting currently new upgrading emissions the requirements. boilers at its Belpre manufacturing facility. The replacement of cool burning Belpre The Belpre boiler boiler project 1950s era cool burning project boilers has helped were replaced Kraton meet by clean, regulatory efficient requirements natural gasand created sustained value Overview Rationale Boiler $10M in upgrade run?rate needed cost savings to meet driven new emissions by fuel savings requirements and lower (MACT maintenance legislation) Over SKU 95% elimination reduction of NOx emissions 30% Overview reduction of SKUs through numerous initiatives (e.g. grade consolidation, reduced packaging options) Rationale Reduces Make to inventory order vs. make and type to stock changes; simplifies product handling Moving The purpose some of grades this project to a make?to?order is further reduce fulfillment Kraton s system Complexity reduction inventory Kraton and operating believes costs. that a Kraton broad expects complexity that reduction this complexity program reduction will help program it meet could customer reduce needs working more capital efficiently. by up Streamlining to $50 million production (in addition processes to operating and eliminating cost reductions). SKUs in certain areas will reduce working capital Simplify Implement Paulina new proprietary manufacturing process process Extensive piloting of new technology technology completedto simplify supply chain and provide for cost effective future expansions Expected Most capital completion efficient in option 2017 Considerable efficiency gains to captured meet future through growth simplified needs Simplify Kraton s supply chain and operations manufacturing process and improved logistics Eliminating Giving potential multiple for new process product steps development Project

41 Kraton Confidential I. Geographic 36 has a broad footprint Kraton s total production manufacturing capacity footprint as of September and production 30, 2015 capabilities. was approximately Kraton s 416 sales kilotons. network Production spans over capacity 60 countries, at Kraton s five R&D facilities centers can and vary provides greatly global depending technical upon support. conditions. Kraton manufactures its polymers at five manufacturing facilities globally, including its flagship facility in Belpre, Ohio, as well as facilities Germany, France, feedstock, Brazil, product and Japan. mix and The operating Japan is operated by unconsolidated manufacturing joint venture. facility in Facility Wesseling, location Germany Products USBC Capacity 96 kilotons Owned Owned(2) / Leased Belpre, Ohio HSBC / USBC / IR 192 kilotons Owned(1) Berre, Paulinia, France Brazil HSBC IRL / USBC kilotons Owned(2) Kashima, Japan USBC 15 kilotons Owned(3)

42 Kraton Confidential J. Kraton Estimated believes Current ECRC Replacement is a better gauge Cost ( ECRC ) of business explained Note: Positive numbers reflect when FIFO > ECRC. performance which reflects then-current market conditions. 37 (1) ECRC See overview appendix for a complete reconciliation of GAAP financial measures to non -GAAP financial measures. Rationale Kraton timing calculates of raw material the carrying purchases value of vs. inventory sale using first in, first out ( FIFO ) methodology in accordance with US GAAP; however this methodology does not properly reflect the business performance due Kraton therefore, revalues ending the time inventory of sale, to reflect evaluates the the total estimated cost of such current inventory cost of as raw if materials it was valued from using fluctuations the estimated in the underlying current replacement commodity costpricing The Adjusted revaluation EBITDA reflects is net current of the replacement spread between costs FIFO and results and ECRC in the spread between FIFO and ECRC In reported periods gross of declining profit and raw EBITDA material will costs, be higher reported under gross FIFO profit than and under EBITDA ECRC will be lower under FIFO than under estimated current replacement costs. Conversely, in periods of rising raw material costs, Vital Ensures component sales prices Price are established Right strategy More reflective of the actual underlying against economics replacement cost of raw material not FIFO inventory value Matches ECRC provides revenues the to pricing current diligence feedstock to pricing ensure to market more accurately sales prices reflect match margins current over input time; costs, ECRC thereby better preserving matches unit revenue margins to current over time COGS based on market conditions Cash Historical flows ECRC generally spreads(1) follow ECRC adjustments as the GAAP P&L impact is offset by working capital (9.5) (8.5) (17.6) (30.5) 66.3 (30.7) (40.1) (9.3) YTD 2014 Cumulative 9/30/15 ($ Although in millions) the spread can be large over the short term, the cumulative spread for the period 2001 to 9/30/15 is $38 million.

43 V. Arizona Chemical overview Confidential 38

44 A. Arizona Arizona Chemical s Chemical products overview products. For example, Arizona are Chemical s used in targeted products end are markets used consisting as tackifiers of in adhesives, certain classes roads of & industrial construction adhesives and tires, to confer where the customers critical have grip unique to the needs bonded to surfaces enhance and the performance as a tread enhancer characteristics tires of to their grip performance, resulting in increased fuel efficiency of automobiles. These targeted end markets are complemented by a portfolio of chemical intermediates (comprising TOFA, tall oil rosin ( TOR ), enhance distilled wet tall process, oil ( DTO ), primarily dimer as a renewable acid, and CST energy derivatives) in buy-sell that arrangements balance Arizona with pulp Chemical mills with to procure steady CTO. profit margins and stable cash flows. Arizona Chemical also sells pitch, a by-product of its refining and upgrading Business Arizona Chemical overview CTO through distillation involved into in four refining fractions: two TOR, co-products TOFA, of DTO the pine and pitch. wood (kraft) TOR and pulping TOFA process, can namely further upgraded CTO and through CST, and selected in upgrading chemical related transformation fractions in steps a downstream into rosin resins process. and Arizona dimer acids, Chemical respectively. separates Arizona the form Chemical of upgraded also products refines CST such into as rosin various resins, terpene dimer constituents, acids and terpene including resins, alpha as well and beta-pinene, as the form and of upgrades chemical a intermediates portion of the such terpene as TOR, fractions TOFA into and resins. DTO. Arizona Chemical sells products to customers in The Arizona following Chemical chart value describes chain the materials produced by Arizona Chemical through the refining and upgrading of CTO and CST and the markets and submarkets into which those materials are sold. Raw Packaging materials(1) Fractions(2) Major upgrades / derivatives Markets & products Key submarkets Adhesives TOFA Dimer Acids Polyamide Tapes (28% Rosin Esters 38%) Assembly Resins Products: Rosin Dispersions Labels DTO Lighter Terpene Resins Hot Melt Polyamides AMS Resins (3% Paving 9%) Roads & Construction Pavement Marking Products: Roofing Refining Rosin Esters Rosin / Resins TOFA Dispersions Crude Tall Oil Insoluble Dispropor- Maleics Bitumen Additives TOR ( CTO ) Tires High Winter Performance & All-Season (18% Products: 35%) Tires tionated Resins Insoluble Mills Polyterpenes AMS Resins TOFA Maleic Terpene Phenolics Pulp Heavier Upgraded Rosins Crude Chemical Sulfate Intermediates Pitch Turpentine ( CST ) (20% 45%) Fuel Additives Oilfield Products: Chemicals TOFA Coatings Mining Terpene Refining TOR & Lubricants Fractions Dimer DTO Inks Acids Metalworking Fluids Terpene Flavors Fraction& Fragrances Resins Renewable AMS AMS Energy: Adhesives Roads Resins & Pitch Construction Renewable Tires Fuels Source: Third party sources. Chemical Intermediates (1) (2) CTO Percentages and CST of each comprise material 72% resulting and 2% from of raw CTO materials refining purchases, vary depending respectively. harvested and the geographic region which the trees grow. on various factors, including the species of pine tre e from which CTO is derived, the time of Confidential the year the pine trees are 39

45 A. Revenue Arizona by Chemical product group overview Revenue (cont d) TTM 9/30/2015 TTM 9/30/2015 Revenue by geography Tires Asia Renewable Energy by end market 5% Roads Chemical & Intermediates 13% Other Intermediates Chemical 11% Construction 57% Americas 14% 29% Adhesives 6% 37% 50% 4% Europe Roads & 39% Construction Flavors & Fragrances Inks 8% Tires 7% Adhesives 32% Lubricants Metalworking Coatings Fluids 1% Fuel & Additives Mining 5% 4% Oilfield 7% 6% Chemicals Arizona Chemical is the global world s leader leading pine supplier chemicals of pine-based 4% the end markets it serves. Arizona Chemical s industry-leading positioning specialty chemicals is driven with by its strong scale, market global positions scope, and and best-inclass consisting solutions of both that pulp-based drive value (kraft for its process) customers and with gum-based a strong (tree track tapping) record specialty of execution. chemicals. Pine chemicals In adhesives, is an Arizona industry focus in Chemical the #1 global is the supplier #1 global of pine-based supplier of pavement pine-based marking tackifiers binders with and approximate the leading global 20% market supplier share. of high Arizona performance Chemical tire is tread also enhancement Estimated global resins share in the of pine tire end based market, chemicals with CTO an estimated processing global capacity market (kt) share of 25%. Georgia Respol / Arizona DRTPacific 652 Forchem 22% Chemical 327 Harima Lawter Ingevity All others Arizona Forchem Ingevity Pacific Respol Lawter/ Georgia Harima DRT Arizona pine chemicals Chemical s industry. scale, combined with its capability to reliably service an increasingly international client base, is a unique advantage that it enjoys over its regionally-focused, smaller competitor base in the Arizona customers Chemical s without a scaled heavy distribution reliance distributors. network has Furthermore, allowed it to scale secure allowed and serve Arizona a fragmented Chemical customer leverage base product for all product development streams, activities as most across products business the units pine and chemicals provide industry end-to-end are product sold directly solutions to markets. Arizona Chemical s scale delivers manufacturing efficiencies and advantages over other smaller competitors. in its Unlike Customers most also leading value polymer Arizona and Chemical s chemistry ability technologies, to manage threat a complex, from low-cost vertically Asian integrated entrants supply into the chain pine that chemicals encompasses industry activities is lower ranging due to from the reduced management availability of a logistics of primary network feedstock of feedstock sources. of products to end customers. to distribution Arizona strong presence Chemical s in the vertically market-facing integrated downstream business process; model provides this is a additional critical component scale benefits, of Arizona enabling Chemical s it to be a business significant strategy participant to develop in each high of value-added its high growth, solutions high value to customers end markets. who value Arizona the Chemical distinctivehas a properties Source: Management of Arizona Chemical s estimates and TOFA, third party TOR sources. and related Note: derivatives. Confidential Ingevity formerly known as Mead Westvaco. 40

46 A. Arizona Arizona Chemical s Chemical significant overview (cont d) in all co-product markets. competitive advantages are based on its ability to access strategic raw materials, significant expertise built on many years of best-in-class operation, and the necessity to participate Access supply to agreements, raw material and feedstock, is not generally including available CTO, is a the significant open market. bottleneck Arizona in Chemical the pine chemicals is uniquely industry. positioned Substantially in the global all of pine the chemicals global supply feedstock of CTO market. is consumed To ensure by long-term refiners or supply sold pursuant stability, to Arizona long-term Chemical Arizona Chemical continues enhances to negotiate relationship new long-term with feedstock contracts providers for its strategic by providing raw materials. material supply and allows Arizona logistic support, recovery engineering expertise, enhancing pulp mill yield and operating efficiency. This service increases raw Chemical Arizona Chemical to maintain has longer an exclusive term supply long-term relations supply with contract suppliers with who International value this Paper partnership. Chemical agreed to purchase from through 2027 at favorable terms, pursuant to which International Paper agreed to sell to Arizona Chemical, and Arizona International produced any Paper, additional all of the new CTO mill and that CST produces produced CTO at or International BLS that International Paper s existing Paper pulp constructs mills. Pursuant or acquires to a the majority supply interest contract, in. Arizona Chemical also has the option to purchase all of the CTO and BLS International Arizona Chemical Paper maintains is Arizona strong Chemical s relationships largest CTO with major and CST pulp supplier. and paper For manufacturers needs that are around not met the by world. International order Paper, directly with pulp mills to maximize recovery yield and quality. to ensure efficiency with suppliers, Arizona Chemical employs recovery engineers who work CTO increase costs will are be expected supplied to from increase the due to supply and demand pressure. Procured CTO volumes are projected to increase approximately 10% from 2015 to 2020 to support increased sales. The majority of this Temple supply agreement Inland mills with which International were acquired by International Paper. These mills currently supply other CTO refiners based on contracts that were in place prior to the acquisition. Under Arizona Chemical s CTO Paper, be supplied this CTO by existing supply contracts. will become Within available the CTO to Arizona industry, Chemical, Arizona beginning Chemical s in kilotons and will of be CTO fully capacity phased worldwide in by represents CTO needs approximately in 2016 and 40% 2017, of prior global to CTO the increased capacity, supply positioning from Arizona Temple Inland, Chemical will as Chemical a leading is refiner a leading of pine producer chemicals globally in the of TOFA world. and As a TOR, result, which Arizona Geographic Scope are derived from CTO. General Ingevity Americas Forchem * Europe Lawter * AsiaDRT Polymers * Source: Limited Management presence in estimates market Confidential and third party sources. 41

47 A. Products Arizona and Chemical applications overview (cont d) The derivatives. functions The that following Arizona table Chemical s highlights products key applications deliver to end and customers the unique can attributes be categorized of the broadly Arizona as Chemical s either performance-enhancing products. Arizona Chemical components has increasingly or intermediate participated building in markets blocks in that the most synthesis highly of value downstream attributes. these Product Adhesives applications Roads & Construction and attributes Revenue(1) $264 million (32%) $53 Tires million Chemical (6%) Intermediates (% Total) $40 million (5%) $474 million (57%) Key products Rosin dispersions esters & Rosin TOFA esters & derivatives AMS resins Terpenes TOFA & derivatives Terpenes & derivatives Rosins & derivatives TOR Terpenes & derivatives Submarkets Assembly Paving Labels & roofing Winter tapes Pavement tires marking Fuel High additives performance / tires Coatings All-Season Packaging Additives tires lubricants for reclaimed / fluids asphalt pavement Mining Oilfield chemicals Inks Flavors Paper sizing & fragrances markets & spot Applications for rigid packaging EVA based binders hot properties melts Pavement additivemarking Enhances wet grip Key performance Rosin Emulsifiers ester dispersions and Reclaimed asphalt Improved fuel economy Emulsifiers for Tackifier PSA s for paving tapes (RAP) and Asphalt adhesion emulsifiers Lubricity promoters Surface treatment labels Estimated market tires) 3% on 2% submarket) 8% (high performance 1% 5% (depending growth ( 15~ 20)(2) (1) Confidential Revenue data as of TTM September 30, (2) Based on management estimates. 42

48 A. Adhesives Arizona Chemical overview (cont d) Arizona book binding, Chemical and supplies graphics. rosin esters, rosin dispersions, terpene resins, hot melt polyamides and AMS resins for packaging tapes and labels, selected niche applications (for example, automotive filters), and Product Rosin Esters % Upgraded 100% Packaging Application tapes Description block copolymer-based tackifier Selected & labels niche EVA applications and block (automotive copolymer-based Hot Melt tackifier Polyamides Rosin Dispersions 100% filters, 100% etc.) Tapes Ready & to labels use adhesive Water-based Book tackifier binding, Terpene graphics Resins and niche 100% AMS Packaging Resins tapes 100% & applications labels EVA Highend Total tackifier and Pine-based Business tackifier Unit global 100% Arizona Chemical is the global market leader share adhesion performance of its rosin ester in and pine-based specialty tackifiers, terpene product with a lines. 20% share of the market. Arizona Chemical s leading position among global pine-based tackifier suppliers is buttressed by the superior Arizona that combine Chemical superior has adhesion global market performance shares of with approximately increased adhesive 20% in stability, rosin esters which and would 25% of reduce terpene operational resins for productivity adhesive applications. disruptions Arizona for customers. Chemical is solidifying this position by innovating new tackifiers Applications Arizona recycled Chemical s content corrugated adhesives where are used bonding the is very packaging difficult. submarket, Arizona where Chemical the use also of supplies pine-based tackifiers tackifiers as well are preferred as finished due adhesives to their outstanding into assembly adhesion applications to corrugated where hot packaging melts are materials, used in wood, particularly automotive, high bookbinding, where excellent and adhesion baby diaper performance manufacturing. is required In the in highly assembly demanding, submarket, high Arizona temperature Chemical environments. markets a specialized Arizona Chemical hot melt also adhesive supplies known tackifiers hot into melt flooring polyamide applications that is employed where the in use specialty of tackifiers applications expanding due to regulatory drivers limiting the use of solvent adhesives. is also Revenue Other Asia by Pacific submarket FY 2014 Revenue by geography FY % Packaging 6% Tapes Europe & Labels Americas 17% Confidential 52% 39% 55% Assembly Adhesives 25% 43

49 A. Roads Arizona & Construction Chemical overview (cont d) Arizona markings Chemical road and produces pavement TOFA, marking rosin and esters additives & insoluble used asphalt maleics paving. and bitumen additives as intermediate materials for asphalt emulsifiers in paving, binders and tackifiers used for thermoplastic pavement Product TOFA 0% % Upgraded Paving Intermediate Application material Description Rosin Esters & Insoluble Road and pavement for asphalt Binder emulsifiers Total Business Unit 88% Pine chemical-based pavement and marking tackifier binders used for market thermoplastic share pavement Maleics 100% marking markings Bitumen Additives 100% Asphalt paving Additive used in asphalt paving Arizona products Chemical in this submarket. provides rosin Arizona Chemical binders has for an the approximately thermoplastic 30% pavement share marking of the pine submarket, chemical-based with a pavement long history marking of supporting binders market. and a thorough understanding of the performance needs of its customers Though increasing the expertise asphalt paving bitumen submarket chemistry a and new aged focus materials, area for Arizona a comprehensive Chemical, understanding it has built a strong of the market position needs, in performance innovative additives product solutions that rejuvenate and a aged growing asphalt patent materials. portfolio. This position is supported by its Applications In and the adhesion pavement of glass marking beads. submarket, One of the Arizona performance Chemical s characteristics rosin esters most act as often binders mentioned, in thermoplastic particularly pavement in higher markings. value markets, The submarket is retroreflectivity, requires pavement which optimizes markings the to reflective meet stringent nature specifications of the pavement for marking durability on products. dark and rainy roads, thereby creating a safer driving experience. Arizona Chemical s rosin ester and insoluble maleic product offerings provide superior performance over time, as compared to other competing The focusing largest on growth market opportunities dynamics and within needs the related roads to & the construction use of recycled business materials unit in are these focused applications, the asphalt Arizona paving Chemical submarket, will continue where Arizona to develop Chemical products plans that to enable expand asphalt the portfolio mix producers of bitumen and additives. road owners By have more economical and higher performance asphalt roads. Adoption of bitumen additives, specifically the first product for use with high Reclaimed Asphalt Pavement ( RAP ) roads, has begun in the U.S. to and other Europe. countries, The specifically focus on these in Asian regions and fit South Arizona American Chemical s urban existing areas. market segmentation best and are most malleable to adoption. As the business grows, Arizona Chemical will explore opportunities in Revenue Americas by Asia submarket Pacific 37% FY % Paving Revenue 12% by Pavement geography Marking FY % Other 87% 1% EMEA Confidential 44

50 A. Tires Arizona Chemical overview (cont d) Arizona road surface. Chemical The performance provides TOFA, of the DTO tread and compound disproportionated determines rosin the main soap-based performance processing characteristics aids that are of a incorporated tire wet braking into one and key handling part of the and tire, influences the tread, vehicle which fuel is the economy key contact through point rolling, between abrasion the tire and the resistance Arizona Chemical s and tire durability. manufacture of high tread performance enhancement winter offerings and all-season are marketed tires. Arizona under the Chemical s SYLVATRAXXTM tread enhancement name and products serve to are enhance based on the three wet main grip of technology tire treads platforms: without sacrificing polyterpene, durability terpene and phenolic fuel economy and AMS in resin-based the tread Arizona enhancers. retaining Chemical s the key performance processing properties aids serve of to the enhance materials. the binding process between the reinforcing fibers and the rubber / polymer matrix. These products allow the tire to bind in a uniform, effective manner, while Performance Arizona US Focus /k g Terpenes $ AMS Price Modified HC Basic High Volumes HC Product AMS resins % Upgrade 100% Application Description Tread Upgraded enhancement Rosins 100% additive that improves tread and Polyterpenes 100% Tread enhancers tack performance while balancing durability and fuel economy Terpene phenolics 100% Adhesion Total Business promoter Unit and 92% emulsifier used to reinforce TOFA 0% Processing aids fibers with rubber and polymer matrix Other 48% Source: Confidential Third party sources. 45

51 A. Tires Arizona (cont d) Chemical overview (cont d) Pine Over chemical-based 15 years ago, Arizona pavement Chemical marking became binders one market of the share established a leadership position regionally in the European first market, companies where to winter supply tire tread requirements enhancement for resins wet grip to the improvement tire industry, first and developed won early and qualifications where the low-friction, with innovative low rolling tire manufacturers. resistance green Arizona tires Chemical silica have seen the fastest growth. with high Arizona for high Chemical performance is the tires market is estimated leader in to tread be approximately enhancement 20% resins to and 25%. now supplies six out of the top eight leading global tire manufacturers. Arizona Chemical s global market share in tread enhancing resins Applications Within Chemical the targets tire market, all season Arizona and Chemical winter tires, focuses where primarily wet-grip on performance the low friction, is critical. silica-based, Arizona Chemical green tire provides market, where specialty most chemical of the tires additives are classified that are incorporated as high performance into one and key ultra-high part of the performance. tire, the tread, Arizona the key contact point between the tire and the road surface. The performance of the tread compound determines the main performance characteristics of a tire wet braking and handling and influences which vehicle is fuel Tread economy enhancement through additives rolling, represent abrasion a resistance growing submarket and tire durability. provide superior wet grip performance, while still achieving aimed rolling at resistance the formulation and durability of improved performance. tread compounds Processing necessary aids are the to meet second increased submarket tire of performance focus. Growing specifications. requirements Arizona for additives Chemical s exist additives adhesion performance and newest generation of low-friction green tires with high silica / silane content products are needed, but are difficult to produce without an additive. where tread The Higher increased fuel efficiency growth rate standards for high from performance automotive and OEMs ultra-high based performance on legislated tire efficiency markets has targets three are main translated drivers: manufacturers achieve rolling resistance gains. into specifications for low rolling resistance tires. Silica integration into tires has helped tire? tire More purchasing stringent decisions. safety requirements Tire manufacturers for wet braking are focused based on on meeting regulated consumer tire label preferences, grading systems. particularly Tire for grading winter systems tires, and provide target an an objective A or B rating ranking wet of tire grip brands (where for a EU rating consumers of A is best and and influence G is worst consumers measuring wet grip performance). for? Revenue Consumer by submarket preference FY long 2014 lasting, Revenue more by geography durable tires, FY especially 2014 in the U.S. Asia Processing Pacific Aids 29% Americas 25% Europe 18% 46% Tread Enhancement Additives 82% Confidential 46

52 A. Chemical Arizona Intermediates Chemical overview (cont d) The coatings, chemical metalworking intermediates fluids business & lubricants, unit serves inks, various flavors submarkets & fragrances, with paper a wide chemicals product and offering other and submarkets. provides value across several different applications, including fuel additives, oilfield chemicals, mining, Product Coatings, % fuel Upgraded additives, Application mining and Description TOFA 0% Key component additives oilfield additive DTO 0% Metalworking fluids and chemicals lubricants Dimer Emulsifier Acids 100% Flavor Oilfield & fragrance chemicals, and other coatings industrial and inks Terpene High Fractions performance 5% adhesion Building TOR blocks Chain for fragrances 62% Paper, applications inks, rubber and chewing gum Performance Total Applications Business Unit 31% Arizona products Chemical s are used as chemical high performance intermediates adhesion are used in oilfield in a variety chemicals, of applications: coatings and TOFA inks; products TOR chain are used products as a are key applied component as performance in additives additives in coatings, paper, fuel additives, inks, rubber mining and chewing and oilfield gum; chemicals; DTO products dimer are acid as emulsifiers metalworking fluids and lubricants; and terpene fractions are used as building blocks for fragrances and other industrial applications. used Chemical on growing intermediates high premium play a submarkets strategic role and in customers balancing in the targeted refinery submarkets fractions, overall including growth fuel is additives, interdependent mining on and the oilfield. growth Arizona and product Chemical balance anticipates in the other to continue markets and to serve regions. lower Arizona premium Chemical s markets such focus asis coatings, Other growth based opportunities on the availability for chemical of refinery intermediates fractions. those of competing chemistries. exist through regional growth (especially in China), fuel additive applications and new markets that value distinct properties of pine-based chemicals over Revenue Inks Asia by Pacific submarket 17% 18% FY 2014 Other Revenue 31% by geography FY 2014 Coatings 15% 3% Europe Americas Fuel 52% Additives Mining 6% Metalworking Fluids & 30% Oilfield Flavors Chemicals & Fragrances Lubricants 13% 7% Confidential 8% 47

53 A. Chemical Arizona Intermediates Chemical overview (cont d) (cont d) Fuel Lubricity Additives fatty acids, additives specific in TOFA diesel, grades which provide prevent an gripping advantage of in fuel handling injectors and and having pumps, a lower are based cloud on point, vegetable which and allows animal usage derived at lower fatty temperatures. acids and synthetic derivatives such as poly methacrylates. Compared to other TOFA increasing was and developed Arizona and Chemical s patented business as a lubricity has grown additive there. by Total In the SA U.S., and the has application been widely of used TOFA as Europe. a fuel In additive other parts is being of the restricted world, by including different China specifications, and Russia, but the offers use of additional lubricity upside improvers should is rapidly restriction be removed. The customer base for fuel additives consists of additive companies, independent or as part of downstream oil and gas players. the Oilfield The oilfield Chemicals dimers compete chemicals with other submarket fatty acids is attractive in this market, to Arizona mainly Chemical oleic acids. as it offers TOFA a rapidly is considered growing superior market to and oleic Arizona acids, Chemical as it provides is recognized better solubility as a qualified in drilling supplier. muds Arizona as well Chemical s as a higher TOFA surface and activity TOFA-based emulsifying power. The customer base encompasses specialized drilling mud suppliers with only a few major players. and Mining Arizona agents and Chemical s antifoams interest mineral the ores. mining Unsaturated market is fatty specific acids to like the TOFA production and oleic and acid use of are flotation mainly used agents in in specific mines. types In the of mining phosphate submarket, ore mining. long Arizona chain fatty Chemical s acids and TOFA their derivatives is often preferred serve mainly over oleic as flotation lower viscosity and higher affinity with the ore extract allow higher recovery yield. The customer base is represented by a combination of specialized mining chemical suppliers and mining companies. acid, as Coatings The performance coatings advantage submarket, in specifically alkyd resins alkyd enables resins, it to represents secure a price a large premium market over for unsaturated various substitutes. fatty acids, From which a functional serve as binders perspective, in solvent-based TOFA is superior paints as to well other as competing hybrid chemistries, coatings. Arizona as it provides Chemical s reactivity and compatibility versus other components. The customer base for better TOFA Metalworking is represented Fluids by & both Lubricants alkyd resin producers as well as integrated coating companies. DTO is also sold into the coatings market to enhance abrasion and mechanical resistance. Producers encompasses of bio-based chain saw, lubricants aluminum use rolling, ester and two amide cycle derivatives engine, marine, of TOFA, fiber spinning, monomer greases acid, dimers, and metal isostearic forming acids applications. and hydroxystearic Metalworking acids fluids as raw require materials. products The metalworking with emulsification, fluids and dispersion, lubricants biocidal submarket anticorrosion properties. The use of DTO, a mixture of TOFA and rosin acids, and a fraction of the CTO refining process, offers these properties. and The Confidential metalworking fluids and lubricants customer base is represented by leading lubricant companies that are active in the metalworking fluids and lubricants submarket. 48

54 A. Chemical Arizona Intermediates Chemical overview (cont d) (cont d) Inks Binders rosin or are rosin a critical toluene component solutions. of These printing can be ink, produced as they from hold gum the pigment rosin or to TOR. the printed Over the surface past several and influence years, Arizona ink attributes, Chemical such has as actively gloss, drying changed speed, its position viscosity in and the color market intensity. from a resin Ink resins supplier are to based a TOR on (solution) customer base supplier. in inks This mainly pivot is comprised in line with of the ink current suppliers. and future strategy to optimize margins by securing the most profitable outlet for excess TOR volumes, while minimizing costs. Arizona Chemical s Flavors In the flavors & Fragrances advantage over and other fragrances CST and submarket, gum turpentine-based Arizona Chemical competitors. is focused Arizona providing Chemical s pinenes-based strategy is to supply. optimize Arizona the value Chemical of the has CST a strong, feedstock secure, positions long-term and the CST pinene feedstock production supply not position used in that higher provides value an markets, such as tires and adhesives. upgrade Other U.S. paper submarkets industry, include synthetic paper rubber, chemicals, where where upgraded TOR rosins is used are in used the production as emulsifiers, of fortified and home rosin and and industrial paper sizing applications, for the detergents. These and other submarkets are largely managed and served through distribution channels the U.S., Europe and such Asia. as the use of TOFA as an intermediate in the production of surfactants and TOFA Alkyd summary Application resins used as binders in solvent-based paints and hybrid coatings Lubricity additive for low sulfur diesel Flotation Functional and additive antifoam drilling agents in muds phosphate in the oil mining Alkyd resins: Scandinavian TOFA offers low level and gas of saturation industry low cloud point, which allows low sulfur diesel to meet lubricity resulting and handling faster specifications curing while Performance low levels Attributes of palmitic PVC and stearic additives: acid U.S. results TOFA in improved offers high hardness iodine value Fuel additive: versus oleic Scandinavian acid, which TOFA results offers greater surface activity Mining: U.S. TOFA provides oleic and linoleic ratio for selectivity with phosphate ore Oilfield: TOFA offers higher reactivity in emulsifier production for drilling muds. TOFA s in content provides better end use performance rosin End Coatings Markets Fuel additives Mining Oilfield Alkyd resins chemicals Substitutes and fuel additives outlets: soybean oil Source: Mining Third and oil party & gas sources. outlets: oleic acid Confidential 49

55 A. Chemical Arizona Intermediates Chemical overview (cont d) (cont d) TOFA Arizona summary Chemical s (cont d) diesel fuel, preventing TOFA engine products fuel pump represent wear. approximately 40% of the approximately 500 KT global supply of TOFA. TOFA is a key component in additive packages to improve the lubricity of low-sulfur The additives chemical to aid also the enables heat resistance producers of of PVC phosphate and is used and phosphoric in alkyd paints, acid to primarily run their for plants decorative more profitably coatings, helping through to use bring as a durability flotation reagent and gloss. in apatite Arizona mining. Chemical s Furthermore, TOFA-based TOFA products, is a component such as in SYLFAT performance 2LT avenues TOFA, for growth, improve including: lubricity (i) and emerging are used economies in regions adopting where good lower low diesel temperature emission properties standards are already required, in force as well developed as being used nations, as a (ii) rheology increase modifier in exploration in drilling and muds. fracking Management of oil and gas is targeting resources, several rise in standard of living emerging regions leading to the use of alkyd paints that are used in decorative coatings for durability and gloss characteristics. and (iii) a Arizona applications. Chemical s For example, TOFA Arizona is similar to that of regional CTO-based competitors, but Arizona Chemical is the only company producing two grades of TOFA which deliver specific benefits to a wider array of Chemical s Arizona Chemical s Scandinavian-based North American LT grade grade delivers is higher low in temperature oleic acid and properties, is preferable critical for in use cold in mining temperature and as climates, PVC stabilizer. whereas Compared due to its lower to competing viscosity, chemistries, higher affinity TOFA with is the preferred ore, and in coatings resulting versus enhanced soybean recovery oil due yields. to its In higher oil and unsaturation, gas, TOFA is better preferred reactivity, over oleic flexibility acid given and compatibility. its easier handling, In mining, better TOFA solubility is preferred in organic over media, oleic as acid well Dimer as acids higher summary surface activity and emulsifying power. Performance Production Attributes of polyamide Preferred resins for in epoxy the oil coatings, and gas outlet flexographic given superior inks and functionalities high performance over Application substitutes adhesive Oilfield applications chemicals Building block for corrosion inhibitors and emulsifiers in the oil and gas industry End InksMarkets Coating Substitutes Dimer acids are Other obtained fatty acid by treating derivatives flexographic inks, and high performance TOFA adhesive at elevated applications. temperatures In addition, in the presence dimer acids of a are catalyst. building Arizona blocks Chemical s in the production UNIDYME of corrosion dimer inhibitors acids are used and for emulsifiers the production for the of production polyamide and resins recovery for epoxy of petroleum coatings, and rapeseed natural and gas. cottonseed Arizona oil, Chemical and other produces producers approximately of TOFA-based 20% of dimers. the 170 Arizona KT market Chemical for dimer is the acids only in producer the world. of dimer Major acids competitors that is both in this backward-integrated area include producers to CTO of dimer and forward-integrated acid from other feedstocks polyamides. such as Arizona Chemical Chemical competes is against a producer vegetable of TOFA-based fatty acid materials dimers which by providing are preferred superior in the functionalities North American including exploration easier and handling, production better market solubility of the in oil organic and gas media, industry and for higher drilling surface muds. activity In this and submarket, emulsifying Arizona Source: Third party sources. power. Confidential 50

56 A. Chemical Arizona Intermediates Chemical overview (cont d) (cont d) TOR TOR chain Application used as component in inks and paper chemicals, rubber and chewing gum base Performance Rosin soap Attributes derivatives used as emulsifiers in rubber polymerization Easier handling of TOR supplied in hot bulk End Emulsifiers Markets in rubber polymerization TOR: paper, inks and chewing gum Substitutes Rosin soap derivatives: Gum rosin (for rubber Arizona Chemical s SYLVAROS TOR) and tall other oil rosins surfactant are used systems in all (for major rosin rosin soaps) gum. Derivatives of tall oil rosin include solution resinates, used in manufacture applications of gravure for the ink manufacture resins in the of publication resins for adhesives, industry, inks, and disproportionated pavement marking, rosin emulsifiers soaps, used for as rubber, process size control for paper agents and for chewing polymerization of unsaturated hydrocarbons in the manufacture of synthetic rubber. Arizona Chemical differentiates itself from competition through supply stability with scale through multiple sites, logistical the capabilities DTO and the option to supply in hot bulk, which provides customers manufacturing efficiencies. Application Multifunctional Primarily component used as in an metalworking emulsifier for fluids metalworking providing fluids chemicals Metalworking Fluids emulsifying, dispersing, biocidal Performance Attributes and anticorrosion properties Replaces less environmentally friendly hydrocarbon-based End Lubricants Markets Substitutes DTO is one of Varying, the fractions depending resulting on the from application the CTO including refining process, vegetable consisting oils and of petroleum a mixture sulphonates Chemical s DTO products include SYLVATAL distilled tall oils, which account approximately of TOFA 21% and rosin of the acids. 80 KT Arizona metalworking fluids & lubricants, where Arizona Chemical s product offers performance attributes and, in many cases, replaces global less market environmentally for DTO. Arizona friendly Chemical s hydrocarbon-based DTO is primarily chemicals. used as an emulsifier for Terpene Used as fractions solvents and building disinfectants blocks in the manufacture of fragrances, camphor, perfumes, terpineol, Application terpene resin derivatives and insecticides Used in the institutional and industrial market as cleaners, Strength End Markets Stable Flavor supply & Fragrance and large logistics infrastructure Substitutes Terpene fractions: gum turpentine and synthetic derived material Arizona CST: gum Chemical turpentine Source: Third party supplies sources. terpene fractions alpha-pinene and beta-pinene mainly to the fragrance industry as raw material. Arizona Chemical also sells CST directly to global flavor and fragrance producers. Confidential 51

57 B. Customer Customers including tire relationships tread enhancement, are generally fuel long-standing additives for oil a & number mining of require reasons. extensive A customer s testing familiarity and lead times with to a supplier be qualified is an and important approved determinant by the customer. in serving value-added end markets. Several applications Consequently, Arizona Chemical s Arizona blue Chemical chip customer has strong, base is long-standing characterized customer by its low relationships, concentration with and eight stability. out of Today, its top Arizona 10 customers Chemical having serves been approximately with Arizona 550 Chemical customers for over in 6810 countries. years. dependent on any single account, with its top customer representing less than 10% of revenue and the top 10 customers (excluding renewable energy) generating approximately 40%. Arizona Customer Chemical relationships is not overly generally stable and long-standing, with most of the top 10 customers having relationships spanning 10 years or more. are Arizona that operate Chemical more regionally leverages its but global are also key important account management to Arizona Chemical s capability business to better serve success. market Smaller leading adhesive adhesive formulators formulators are further and tape serviced and label through producers. distributors This team due also to the services high degree smaller of adhesive end user formulators has a strong distribution channel in both established and developing regions. fragmentation. Arizona producers, Chemical s road builders roads and & asphalt construction emulsifier business manufacturers. unit maintains Arizona strong Chemical relationships maintains with deep customers relationships including with thermoplastic key customers pavement throughout marking the U.S. and coating and producers, asphalt mix producers, roofing membrane Europe. asphalt paving Sales are value typically chain. made Arizona directly Chemical with will customers, continue without to evaluate the use the of distribution third party strategy distributors. as the Arizona roads & Chemical construction is also business developing unit expands relationships and matures. with key influencers, road owners and regulators in the Arizona customers Chemical technical uses and a purchasing key account teams. approach In addition, in working Arizona with the Chemical leading ships global globally tire customers. these For accounts U.S. and factories European-based located in different customers, countries. Arizona Chemical coordinates on a global basis directly with the For The customers distributors with for headquarters tires have specialized based in support Asia, Arizona activities Chemical related uses to the a distribution tires market. network Arizona organized Chemical by has country, full transparency but with coordinated on volume levels key account sold to management the final customer with its and distributors has reports and integrated the final in customer. reporting systems. In three key countries for tire manufacturers (Japan, its internal Korea Asia that and are China) coordinated Arizona with Chemical the distributor. provides a The high support degree includes of direct Arizona technical Chemical support for technical several expertise large, priority and management customers in Since the customer base for chemical intermediates varies by submarket, region, application and typical size of customers, with joint growth initiatives. Arizona key accounts Chemical in select transacts submarkets, their business Arizona through Chemical third uses party a direct channel sales partners, effort to who maximize were chosen value based and customer on their focus. penetration Arizona of select Chemical s submarkets chemical and intermediates supply chain business capabilities. unit For maintains larger blue long chip and customers stable and relationships Confidential with its diverse range of blue chip customers. The customers and distributors conduct business in both contract and spot transactions. 52

58 C. In certain Competing instances, chemistries prices are part determined the functionality by those provided of competing by pine chemistries, chemicals with can be many obtained variables through impacting the use ease of substitute of substitution chemistries, and consumer such as preference. vegetable & animal oils and hydrocarbon derivatives. As such, pine chemical Kraft-based These factors pine differ chemical by region products and often compete represent with a complex number of interplay different of chemistries. variables such The as selection i) level of of functional one chemistry performance, over another ii) the for availability, any particular reliability application and in cost an of end logistics, market depends iii) value on in a use, multitude iv) supplier of factors. relationship TOR-based products and track used record, as adhesive v) environmental tackifiers footprint compete associated directly with with gum the rosin technology resins and hydrocarbon-derived vi) pricing differences. feedstocks, such as naphtha. resins such as C5 and C9. These compounds are a by-product of hydrocarbon refining of liquid In Main certain suppliers markets, for TOFA natural products oils, fats can and compete oleo chemicals with various include unsaturated ADM, BASF-Cognis, vegetable oils Cargill, and fatty Emery, acids, KLK, such as Oleon those and derived Vantage. from Key soybean, suppliers rapeseed, of petrochemical sunflower or derivatives tallow. ExxonMobil, while for fine chemicals BASF and DSM-Roche are relevant for each of Arizona Chemical s end markets and regions. are Arkema-Cray Valley, Eastman and The Arizona table Chemical s below provides product an advantages. overview of the various end markets for pine chemicals and the potential substitutes, as well as Major End market end markets Arizona overview Adhesives Rosin resins Chemical Gum rosin offering resins Competing Improved chemistries strength, versatility Arizona Chemical and stability product Terpene advantages Environmentally sustainable product relative to hydrocarbon-based Dispersions resins resins AMS Hydrocarbon-based resins Pavement resins Rosin Improved resins Gum adhesion Polyamides Hydrocarbon resins Improved color stability Solvent-based coatings Improved adhesion Environmentally sustainable Paving TOFA rosin Bitumen resins Improved Significant durability environmental and gasoline and performance resistance marking Bitumen additives Oleic acids Higher recycled content Aromatic HC oils Easier handling and safety compared to HC alternatives Vegetable oils Roofing Rosin resins Bitumen Improved adhesion of benefits roofing Terpene resins Hydrocarbon-based resins Environmentally sustainable Tires Terpene Hydrocarbon-based resins Improved wet grip characteristics with superior property balance AMS resins membrane acid Environmentally sustainable product relative to hydrocarbon-based TOFA resins Rosin resins Improved stability with good adhesion Disproportionated rosins Fuel additives TOFA Fuel additive substitutes Stearic derived profile in from drilling Improves muds engine Dimer durability acids Mining vegetable TOFA oils Vegetable Easier handling oils Superior Oilfield mineral TOFA recovery Various and vegetable selectivity oils rates Better for corrosion specific ores protection Monomer and acids emulsifying Oleic acids properties CTO and chemicals distillate DTO blends Oleic Various acids Better fatty acids, viscosity vegetable TOR Gum oil rosin mixtures Environmentally Coatings TOFA sustainable Binder TOR resin solution substitutes resinates Durability Hydrocarbon or hardness resins of finished Handling coating benefits DTO Polyamides Other unsaturated Hybrid resins vegetable Gloss oils, and fatty scratch Improved resistance drying Polyurethane time Dimer for acids polyamides acids or dimer acids Inks Confidential 53

59 C. Hydrocarbons Competing chemistries (cont d) Arizona The pricing Chemical of hydrocarbon offers various resins products, used in adhesives particularly applications in the adhesives is largely market, dependent that compete on the supply with hydrocarbon-based and demand balance resins. the ethylene cracking choices of naphtha of resin formers and their corresponding pricing. This availability is heavily impacted by (liquid- Naptha-based based), hydrocarbon ethane or propane. various other markets. The refining availability yields of raw these materials products called is impacted resin formers, dramatically which when are C5 refiners and C9. incorporate These compounds higher levels are of further natural processed gas in ethylene into tackifiers production, used in resulting adhesives, in lower pavement yields marking, of resin tires, formers. inks This and dynamic Refining has trends a significant for hydrocarbons influence differ on supply by region. demand In the for U.S. resin hydrocarbon formers directly refiners impacting have tended tackifier to shift market away pricing. and the associated proliferation of gas feedstocks. This tightened the supply of C5 and C9, leading to increased from prices liquid for feedstocks these products, such and as naphtha, thus represents toward natural a positive gas, economic linked to driver advances for Arizona in shale Chemical. gas drilling Specifically, also led to the outcome oil prices of in shortening 2015 have hydrocarbon declined, pricing resin-former C5 supply. resins has Conversely, continued in to Asia, increase an due expansion to tightness in naphtha-based in overall supply. refining In capacity Europe, has the occurred relocation to of meet refining economic capacity growth out of in the domestic region. This market will has in improved supply of result C5 feedstocks and C9. has As not the been quality diverted and availability to higher quality of these resin tackifiers derivatives, improves which within are required the region, for they adhesives. will be available for exporting to the rest of the world. However, currently the downstream processing of naphtha Gum Products rosin do gum turpentine obtained by fractions manually with tapping CST fractions. individual However, pine trees the are characteristics referred to as of gum CTO, products CST and and gum-based include gum products rosin and vary. gum turpentine. Gum rosin products compete with TOR, a product derived from CTO, as The largest process global of supplier manually and, tapping to a lesser individual extent, pine Indonesia, trees is labor Brazil intensive, more and recently as such, Vietnam. the majority of global production of gum rosin and gum turpentine originates from emerging economies such as China, the Gum growth rosin China pricing is has driving been up trending labor costs, upward, resulting with supply in increased and demand gum rosin dynamics prices. for As gum tapping rosin becomes products less evolving economically due to the viable agricultural in China, nature global and supply heavy is reliance expected on to manual tighten. labor These for trends harvesting. have Economic observed in other former, major gum-producing countries, such as the U.S., historically been Portugal China s gum and Spain. increase in domestic rosin production Chinese consumption. volume in 2013 With was local at recent demand historical for gum lows, rosin 30% relatively lower stable, than recent this tightened peak production supply volumes has decreased in China s During exports. 2014, Due production to these volumes factors, gum increased rosin modestly, prices sharply mostly increased offset by in an 2013 Chinese and labor 2014 costs. and have stabilized in a range of 2,100 2,500 $/MT. Prices of gum rosin are expected to continue to fluctuate in these price ranges, increasing over the longer term, broadly in line with growth in Gum Confidential rosin pricing is an important indicator for Arizona Chemical, as it competes with tall oil rosin in certain applications. 54

60 C. Vegetable Competing oils chemistries (cont d) Unsaturated chemicals, customers vegetable oils selection and fatty of TOFA acids, over such competing as those derived vegetable from oils soybean, depends rapeseed, on several sunflower factors. or These tallow, dynamics can compete include with the TOFA use of vegetable in some applications. oils in nutritional As with applications, other competing changes chemistries in land use to strategies pine policies, the relatively higher volatility in pricing due to seasonal weather impacts, the globalization of the oils and fats markets, and the emergence of alternative uses for vegetable oils such as biofuels. TOFA and tends reactivity, to be better priced flexibility a premium and compatibility, to vegetable oils, lower such viscosity as soybean and oil, easier due handling. to its differentiated Factors such performance as higher global characteristics. demand for Depending calories on emerging the application, markets these and renewable can include energy higher directives levels of and unsaturation, subsidies in better U.S. and Europe tend to support higher prices for vegetable oils. On the other hand, the global soybean supply and demand balance remains heavily oversupplied due to bumper harvests in the Arizona Key rosin Chemical s chain pricing sustainable drivers performance continues to be supported by positive industry trends TOR intensive pricing / higher is primarily value crops impacted and China by availability labor costs, and the pricing major of production substitute cost, products. continue For to gum escalate. rosin, The China C5/C9 production supply continues is insufficient to drop to fill due supply to labor gap force caused constraints by lower and farmers switching to less labor Chinese ($ / MT) gum rosin production. $4, % Rosin $3,000 $0 75% 225% Esters $2, % $1, % 04 Arizona Rosin 07 Esters 08 09(indexed) C5 Hydrocarbons Q1 Q2 Gum Q Rosin 2015 Esters 2015 Key TOFA chain pricing drivers Hydrogenated Hydrocarbons TOFA pricing in industrial reflects applications. the aggregate Soybean of pricing oil consumed in different primarily applications. in food Soybean applications oil and and Oleic to a Acid lesser are extent primary in biofuels substitutes and to and lower biofuel demand due to lower oil prices. Longer-term demand fundamentals, supporting higher prices, remain intact industrial and demand applications. in food applications Recent pricing continues declines to increase impacted while by record higher planting oil prices / harvest support increased use in biofuels. Coatings is impacted by pricing of fatty acids such as soybean oil and oleic acid. Other segments (i.e., oilfield, fuel additives) are linked to value-in-use compared with blends will of TOFA fatty and acids. soybean/oleic Future Arizona alternatives. Chemical shifts to higher value segments will reduce the correlations between ($ 300% / MT) acid 200% $3, % $2,800 $2, % oil 50% fatty $1, % $1,000 $400 Source: 0% Management Tall estimates and 09 third 10 party sources Q1 Q2 Q Arizona TOFA (indexed) Oleic Acid Soybean Oil Confidential 55

61 C. Historical Competing Adjusted chemistries EBITDA(1) (cont d) Arizona profitable Chemical pine chemical has demonstrated manufacturing. a sustained Within each ability market, to deliver Arizona profitable Chemical results proactively even in times manages of changing the balances market (i.e., conditions procurement, by executing operations on and the commercial value-added activities) strategy while to maximize building profitability on its long across history the of value largest chain. global In pine each chemicals of the years manufacturer, cited, Arizona coupled Chemical with delivered a market-driven similar culture, Adjusted can EBITDA(1) choose and results optimize by the using best strategic markets and to participate tactical levers in at to any manage given the time business each for global the long-term. region to manage Arizona profitability Chemical, as across the the Arizona entire Chemical s product set. has delivered annual continued productivity focus improvements on cost reduction of 2.5% and of productivity total costs, improvement or approximately has $20 supported million a sustainable per year, and step expects change to in continue profitability to do in so. addition In addition, to the strong market growth focus in shift. emerging Since 2009, market Arizona sales has Chemical enhanced Chemical s capability to manage global balances most effectively. Arizona Chemical s refined strategic focus has enabled it to pursue additional growth markets, while driving margin growth. further In 30%. 2011, The Arizona run-up in pricing had was an caused increase by extreme in revenue tightness due to across price increases competing across chemistries almost all & products competitor by CTO/CST approximately Since 2010, Arizona Chemical s has demonstrated sustained ability to produce ~$200 million of Adjusted EBITDA(1) supply through shortages, the transformation. creating asymmetric upside opportunity. The $419chart below illustrates the new level of sustainable Adjusted EBITDA(1) performance Arizona Chemical has established. $241 35% $192 $199 $187 $205 $93 9% TTM $94 23% 23% 21% 21% 20% $67 12% 8% 2007 Adj. EBITDA Adj EBITDA margin TTM 9/30/2015 (1) Confidential See appendix for a complete reconciliation of GAAP financial measures to non -GAAP financial measures. 56

62 D. Arizona Raw materials A key component Chemical of holds Arizona a competitive Chemical s advantage procurement with strength its access is to its secure contract supplies with International of high quality Paper, CTO which and CST. Chemical a stable and secure source of high quality CTO and CST. Under the contract, Arizona Chemical s CTO provides pricing Arizona Furthermore, the contract allows Arizona is indexed to a basket of fossil fuels including natural gas, heavy fuel oil and coal. Chemical In addition access to its to relationship the entire CTO with and International CST volumes Paper, produced Arizona by Chemical International maintains Paper. strong Supply relationships of CTO and with CST other is finite, major pulp and pricing and paper is relatively manufacturers inelastic, around putting the world, a premium ensuring on effective stability sourcing of access efforts. feedstock supply. In Europe, agreements also allow Arizona Chemical to exchange its pitch by-product for CTO. The exchange allows Arizona Chemical to maximize CTO supply and sell its pitch by-product to its critical suppliers, who in turn use pitch as a renewable fuel source for their milling operation. to Arizona Chemical is operates the world s two BLS largest acidulation buyer and units processor located of black its Savannah, liquor soap Georgia ( BLS ), and which Panama is produced City, Florida from sites. CTO. contracts. These units are a key part of the CTO procurement strategy, as they provide access to additional raw material from In addition, pulp mills Arizona that do Chemical not have has in-house four toll BLS acidulation acidulation sites capacity. that are under long-term Relationships helps pulp mills with improve feedstock their suppliers operations are by further increasing enhanced the by yield Arizona of BLS Chemical s and CTO, technical while increasing expertise their in feedstock revenue recovery. and improving Arizona the Chemical efficiency possesses of their mill industry-leading operations. recovery engineering expertise, which In storage addition capacity to improving and excessive CTO quantities recovery, Arizona of BLS or Chemical CTO on-site also maintains can disrupt pulping extensive operations. logistics network This requires and works extensive closely information with pulp sharing mills to including transport projected BLS and pulping CTO in rates, a timely shut-down manner. coordination Mills have and limited transport scheduling. CTO in North Europe America are traditionally are driven correlated by a variety with of the influences price of oil, including with contract commodity prices prices based for on oil, the natural average gas heavy and fuel coal, oil as price well from as the the supply previous and demand quarter. Heavy balance. crude prices. Generally, oil price changes impact European CTO prices on a quarterly lag. fuel oil prices are highly correlated with Brent Confidential 57

63 VII. Financial overview Confidential 58

64 A. Kraton Pro forma pro forma financials and has been resilient financial through performance a volatile is commodity summarized price below. environment. Despite the The decline combined revenue company due has to decreasing demonstrated raw a material proven prices, track record the combined of substantial company free cash would flow have generation. maintained consistent Adjusted EBITDA(1) Revenue 22.2% $2,465 Adjusted $2,284 EBITDA(1) $1,423 $1,292 $1,230 $2,168 $1,062 $1,042 $144 $141 $1,893 $ % $ % 15.6% $420 $992 $384 $938 $346 $65 $831 $339 $241 $187 $205 $ Capital 2013 expenditures(2) 2014 PF TTM Unlevered free 2014 cash flow(1)(2) PF TTM 9/30/2015 9/30/2015 Kraton Arizona Kraton Arizona Synergies Combined % margin 73.1% 6.9% 75.5% 69.1% 68.7% 64.3% 5.7% 5.4% 5.9% 62.5% $ % $ % 5.4% $65 $47 $35 4.8% $39 $216 $148 $212 $158 $130 $157$131 $127 $207 $103 $34 $6 $28 $22 $70 $64 $77 $74 $70 $58 $55 $ Combined 2013 without 2014 PF KFPC TTM 2012 % conversion PF TTM Kraton 9/30/2015 Kraton 9/30/2015 KFPC Arizona Arizona Synergies Combined % of sales Combined % conversion Combined without KFPC % of sales Note: (1) See Dollars appendix in millions for a complete unless reconciliation otherwise noted. (2) Adjusted to incorporate 50% of KFPC. Confidential of GAAP financial measures to non -GAAP financial measures. 59

65 B. Summary Kraton consolidated historical and historical pro forma and financials ($ in thousands) pro forma financial data Historical Twelve Pro Forma Combined Nine (in thousands) Months Months Year Ended Ended Ended Nine Months Ended December September September Year Ended December 31, September 30, 31, 30, 30, (unaudited) Data: (unaudited) Consolidated Statements of Operations Revenues Gross Profit $ 1,423, , ,832 $ 1,292, ,067 $ 1,230, , ,807 $ 954, ,936 $ 786, ,717 $ 2,168, ,724$ 1,407,306 $ 1,893,092 Cost of Goods Sold 1,191,680 1,066, , , ,542 1,660,547 1,047,589 1,426,368 Operating Research and Expenses amortization of development identifiable 31,011 intangibles 32,014 64,554 31,370 63,182 23,736 66,242 23,345 49,630 44,179 46,852 31, ,797 42,132106,417 Selling, 142,777 general Impairment and administrative of long-lived 98,555 assets 105,558 5, ,209 4,731 78,872 77,488 4,731210,076 2,125 6, ,958 Litigation 176,152 Expense Depreciation and 10,110 12,894 19,904 Insurance Recoveries (80,210) (12,894) (93,104) Total operating expenses 199, , , , , , , ,717 Interest Expense, Net 29,303 15,750 30,470 15,750 24,594 15,750 18,667 Income 17,975 (Loss) Before 131,671 Income 98,051 Taxes 130,759 3,115 Earnings (4,862) of 6,328 Unconsolidated 22,396 (3,580) Joint 25,239 Venture (27,230) (1) (530) 25,854 (530) Income (407) (324) Tax Expense (273) (407) (Benefit) (273) 19,306 (356) Loss (3,887) on Extinguishment 5,118 3,405 4,135 of Debt 9,792 (6,352) 20,498 Consolidated (loss) attributable Net Income to Kraton (Loss) $ (16,191) (16,191) $ (618) (975) $ 1,210 2,41918,991 $ 19,849 (7,715) $ (6,574) 15,447 $ 16,656 (20,878) $ 5,356 (19,737) Net $ loss 6,848 attributable to noncontrolling interest (357) (1,209) (858) (1,141) (1,209) (1,141) (1,492) Net income Other Capital Financial expenditures Data EBITDA (3) $ 96,972 (2) $ $ 88,790 69,944 $ $ 97,164 76,758 $ $ 90,693 70,108 $ $ 61,247 50,263 $ $ 303,707 44,147 Pro Forma $ 177,238 $ 299,390 Adjusted EBITDA (4) (5) $ 143,842 $ 140,906 $ 147,194 $ 115,491 $ 116,773 $ 338,887 $ 269,960 $ 420,015 Historical As of December Combined (in thousands) 31, As of September 30, (unaudited) Balance Sheet (unaudited) Cash and cash Data debt $ 350,989 equivalents $ 351,872 $ 175, ,938 $ 53,818 1,802,493 $ 63,799 $ 41,708 Property, plant and equipment $ 414,257 $ 451,765 $ 493,711 $ 877,132 Total assets $ 1,194,797 $ 1,082,452 $ 1,064,399 $ 2,941,131 Total Confidential 60

66 B. Summary Kraton consolidated historical and historical pro forma and financials pro forma (cont d) (1) Represents our 50% joint venture interest in financial Kraton JSR data Elastomers (cont d) (2) Excludes capital expenditures incurred by KFPC, our 50/50 joint venture K.K., with which FPCC. is accounted for using the equity method of accounting. (3) EBITDA represents net income before interest, expense taxes, depreciation our debt; and amortization. Limitations for EBITDA as an analytical tool include the following: - EBITDA does included not reflect herein the should significant not be used depreciation for purposes and amortization of assessing expense compliance associated or non-compliance with our long-lived with financial assets; includes adjustments, such as extraordinary, non-recurring or one-time charges, proforma cost savings, certain non-cash covenants items, turnaround under our costs, debt agreements. and other items The calculation included in of the EBITDA definition of the EBITDA debt agreements agreements; and other companies our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure. in the debt (4) cost Although ( ECRC ) we of report our inventory our financial and results cost of using goods the sold. first We in maintain first out ( FIFO ) our perpetual basis inventory of accounting, our as global part of enterprise our pricing resource strategy, planning we measure system, our where business the carrying performance value using of our the inventory estimated is determined current replacement FIFO. At the beginning of each month, we determine the estimated current cost of our raw materials for that particular month, and using the same perpetual inventory system that we use to manage inventory using therefore costs of goods sold under FIFO, we revalue our ending inventory to reflect the total cost of such inventory as if it was valued using ECRC. The result of this revaluation from FIFO creates the and spread ECRC. between FIFO and ECRC. With inventory valued under FIFO and ECRC, we then have the ability report cost of goods sold and therefore Adjusted EBITDA under both our FIFO convention and (5) performance. Adjusted EBITDA We explain is EBITDA how each net adjustment of the impact is derived of the and spread why between believe the it FIFO is helpful basis and of accounting appropriate and in ECRC the reconciliation and net of below. the impact You of are items encouraged we do not to evaluate consider each indicative adjustment of our and ongoing the reasons operating it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to the limitations applicable to EBITDA described above, as well as the following limitations: due to volatility we consider raw material prices, Adjusted EBITDA may, and often does, vary substantially from EBITDA, net income and other performance measures, including net income calculated accordance with GAAP; and in covenants Adjusted under EBITDA our debt may, agreements. and often will, vary significantly from EBITDA calculations under the terms of our debt agreements and should not be used for assessing compliance non-compliance with financial - Our Because presentation of these of and non-gaap other limitations, financial EBITDA measures and Adjusted the adjustments EBITDA made should therein not should be considered not be construed as a measure of inference discretionary that our cash future available results to us will to be invest unaffected in the by growth unusual of our or non-recurring business. future we may incur expenses or charges similar to the adjustments made in the presentation of our non-gaap financial measures. items, and in the We Kraton compensate Interim Financial for these limitations Statements by included relying elsewhere primarily in on this our offering GAAP circular. results and using EBITDA and Adjusted EBITDA only as supplemental measures. See the Kraton Audited Financial Statements and the Confidential 61

67 B. Unaudited Kraton historical pro forma and condensed pro forma combined financials balance (cont d) Pro Forma Pro Forma ( $ in thousands) Kraton Arizona sheet as Adjustments of September Combined 30, 2015 ASSETS Cash and Current cash equivalents assets: 14, ,634 Inventories $ of 63,799 materials $ 44,439 and supplies $ (66,530) 11,345 $ 41,708 6,913 Receivables, 18,258 Insurance net of allowances receivable 110,803 93,104 97,572 93, ,375 Deferred Other income receivables taxes 6,976 8, (8,710) 7,525 Due Inventories from related of products party 264,105 3,506 (3,506) 96,842 Other current assets 27,275 13,261 5,047 50,015 Adjustment from deferred financing costs 4,432 Total current assets 484, ,983 (47,667) 794,619 Property, plant and equipment, less accumulated depreciation amortization 493,711 expenses 239, ,000144,242 Goodwill 877, ,542 Intangible 654,542 assets, Investment less accumulated in unconsolidated amortization joint 43,360 venture 64,730 11,725 (64,730) 519,360 11,725 Adjustment Debt issuance from costs removal 6,992 of Arizona 43,404 Chemical s 50,396 Deferred historical income intangible taxes 2,973 asset 6,150 $ 692,507 9,123 $ 1,184,225 Other long-term $ 2,941,131 assets 21,335 24,465 (1,311) 24,234 Adjustment to eliminate deferred financing costs from Arizona Chemical s other long term assets balance (20,255) Total assets $ 1,064,399 LIABILITIES liabilities: AND EQUITY Current Adjustment portion from of deferred long-term financing debt and costs short (1,714) term borrowings Adjustment $ to 139 eliminate $ 6,286 liabilities $ 3,942 $ not 10,367 assumed Accounts with the payable purchase trade of 64,169 Arizona 77,322 Chemical 4,759 (5,229) 146,250 Accrued Other liabilities payables and for litigations accruals 66,604 93,665 44,429 (1,567) 93,665102,523 income taxes 1,549 4,205 5,880 11,634 Due to related party 15,396 4,759 (4,759) 15,396 Total current liabilities 147, ,666 1, ,835 Long-term debt, net of current portion 404, ,941 Deferred 613, ,128 1,792,126 Adjustment Deferred to eliminate income liabilities taxes 12,693 not assumed 46,017 with 198,394 the purchase 257,104 of Pension Arizona liabilities Chemical (7,088) 39,616 Total (39,616) liabilities Deferred 668,456 income 1,112,014 8, ,723 (8,281) 2,578,193 Other long-term liabilities 103,107 13,493 39,616 Equity: Stockholders Preferred stock equity: Common stock 305 (138,005) (77,208) 77, (138,005) Additional Total paid stockholders in capital equity 347,462 (deficit) 755 (755) 360, ,462 (419,507) Retained 386,502 earnings 327,849 (deficiency) Noncontrolling 151,092 (343,054) interest 35, , ,087 35,089 Accumulated Total equity other 395,943 comprehensive (419,507) 386,502 loss Total liabilities and equity $ 1,064,399 $ 692,507 $ 1,184,225 $ 2,941, ,938 Confidential 62

68 B. Unaudited Kraton historical pro forma and condensed pro forma combined financials statements (cont d) ($ in thousands) of operations for the nine months ended September 30, 2015 Pro Revenue Forma $ 786,349 Pro Forma $ 620,957 Kraton Arizona $ $ 1,407,306 Adjustments Cost Combined reclassify Arizona Chemical s plant closure costs 3,136 of Adjustment goods sold to 624,542 reclassify 436,039 Arizona 1,587 Chemical s 1,047,589 foreign Adjustment currency to exchange reclassify loss Arizona (gain) Chemical s and other income depreciation (208) and Gross amortization profit 161,807 (17,507) 184,918 Adjustment 12, ,717 to Operating administrative expenses: expenses Research (8,574) and Adjustment development to remove 23,345 the 8,574 effect 31,919 of one-time Selling, transaction general costs and administrative directly related 77,488 to the 78,205 Arizona (5,288) Chemical 132,958 Acquisition Adjustment incurred to reclassify by Kraton Arizona and Arizona Chemical s Chemical selling, (7,310) general Adjustment and to Adjustment remove the from effect removal of management of Arizona fees Chemical s and out of historical pocket expenses intangible paid asset to amortization the owners of expenses Arizona 21,578 Chemical Adjustment (1,563) Plant to reclassify closure Arizona 5,953 Chemical s (5,953) Depreciation depreciation and and amortization 46,852 22,795 Adjustment 14, ,417 reclassify Arizona Chemical s plant closure costs 692 Impairment of long-lived assets 2,125 2,125 Litigation expense 12,894 12,894 Insurance recoveries (12,894) (12,894) Total operating to expenses Loss (gain) 147,685 on interest 84,158 rate 41,576 caps/swaps, 273,419 net Interest 7,003 expense, (7,003) net Foreign 17,975 35,928 currency 44,148 exchange 98,051 loss Earnings (gain), net of unconsolidated (107) 107 Other joint venture income (273) (101) 101 (273) Income Loss on (loss) extinguishment before income of debt taxes (3,580) 15,750 58,037 15,750 (81,687) (1,141) (27,230) (1,141) Income Net tax income expense (loss) (benefit) $ (6,574) 4,135 $ 39,934 18,103 $ (28,590) (53,097)(6,352) $ (19,737) Consolidated net income (loss) (7,715) 39,934 (53,097) (20,878) Net income (loss) attributable to noncontrolling interest Confidential 63

69 B. Unaudited Kraton historical pro forma and condensed pro forma combined financials statements (cont d) ($ in thousands) of operations for the year ended December 31, 2014 Pro Revenue Forma $ 1,230,433 Pro Forma $ Kraton 938,050 Arizona $ $ Adjustments 2,168,483 Cost Combined Adjustment to reclassify Arizona Chemical s depreciation of and goods amortization sold 993,366 (24,659) 677,587 Adjustment 14,687 1,660,547 to reclassify Adjustment Arizona Chemical s to eliminate foreign liabilities currency not assumed exchange with loss the (gain) purchase and other of Arizona income Chemical (2,550) Gross 2, , ,463 10, ,936 Operating expenses: Research and development 31,370 12,809 44,179 Selling, general and administrative 104, ,532 (8,997) 210,076 Adjustment to reclassify profit Arizona and Arizona Chemical s Chemical selling, (711) general Adjustment and administrative to remove the expenses effect of management (12,809) Adjustment fees and out to remove of pocket the expenses effect of one-time paid to the transaction owners of costs Arizona directly Chemical related (2,148) to the Arizona Depreciation Chemical and amortization Acquisition 66,242 incurred by 19,333 Kraton 146,797 of long-lived Adjustment assets 4,731 from removal 4,731 of Arizona Litigation Chemical s expense historical 10,110 intangible 10,110 asset Insurance amortization recoveries expenses (80,210) 27,566 Adjustment (80,210) Total to reclassify operating Arizona expenses Chemical s 206,552 60,432 depreciation 68,699 and 335,683 amortization Interest 33,656 expense, Impairment 24,594 42,825 64, ,671 Earnings of unconsolidated joint venture (407) (407) Loss on extinguishment of debt 7,860 7,890 15,750 Loss (gain) on interest rate caps/swaps, net 3,579 net (3,579) 49,966 (45,292) Foreign 9,792 currency Consolidated exchange net loss income (gain), (loss) net 1,210 (1,208) 98,351 1,208 (84,114) Other 15,447 income Net income (1,342) (loss) 1,342 attributable Income (loss) to noncontrolling before income interest taxes 6,328 (1,209) 148,317 (1,209) (129,406) Net 25,239 income Income (loss) $ tax 2,419 expense $ 98,351 (benefit) $ 5,118 (84,114) Confidential $ 16,656 64

70 B. Unaudited Kraton historical pro forma and condensed pro forma combined financials statements (cont d) ($ in thousands) of operations for the twelve months ended September 30, 2015 Pro Revenue Forma $ 1,062,388 Pro Forma $ Kraton 830,704 Arizona $ $ Adjustments 1,893,092 Cost Combined reclassify Arizona Chemical s plant closure costs 3,136 Adjustment of goods sold to 856,491 reclassify 589,245 Arizona 2,116 Chemical s 1,426,368 foreign Adjustment currency exchange to reclassify loss Arizona (gain) and Chemical s other income depreciation (1,207) and Gross amortization profit 205,897 (23,413) 241,459 Adjustment 19, ,724 to Operating administrative expenses: expenses Research (11,153) and Adjustment development to 30,979 remove the 11,153 effect 42,132 of one-time Selling, transaction general costs and administrative directly related 102,825 to the Arizona 101,955 Chemical (7,313) 176,152 Acquisition Adjustment incurred to by reclassify Kraton and Arizona Arizona Chemical s selling, (8,021) general Adjustment and to Adjustment remove the from effect removal of management of Arizona fees Chemical s and out of historical pocket expenses intangible paid asset to amortization the owners of expenses Arizona 28,562 Chemical Adjustment (2,141) Plant to reclassify closure Arizona 5,953 Chemical s (5,953) Depreciation depreciation and and amortization 63,464 30,726 Adjustment 19, ,777 reclassify Arizona Chemical s plant closure costs 692 Impairment of long-lived assets 4,731 2,125 6,856 Litigation expense 19,904 19,904 Insurance recoveries (93,104) (93,104) Total operating to expenses Loss (gain) 201,999 on interest 34,708 rate 58,010 caps/swaps, 294,717 net Interest 10,287 expense, (10,287) net 23,902 Foreign 48,355 currency 58,502 exchange 130,759 loss Earnings (gain), of net unconsolidated (982) 982 Other joint venture income (356) (225) 225 (356) Income Loss on (loss) extinguishment before income of debt taxes (19,648) 15, ,316 15,750 (103,814) (1,492) 25,854 Net income Income (loss) tax attributable expense (benefit) to Kraton 5,848 $ 50,985 (24,004)(36,335) $ 98,33120,498 $ (67,479) Consolidated $ 6,848 net income (loss) (25,496) 98,331 (67,479) 5,356 Net income (loss) attributable to noncontrolling interest (1,492) Confidential 65

71 C. Three Management s Months Ended discussion September and 30, analysis 2015 of Compared financial to condition Three Months and results Ended of September operations Kraton Financial Overview 30, 2014 Sales Revenue volume was $269.0 was 81.0 million kilotons in the in the third third quarter quarter of 2015 of 2015 compared compared to $319.0 to 80.7 kilotons in in the the third third quarter quarter of of Adjusted Gross profit gross was profit $67.8 million in was the third $68.8 quarter of in 2015 the third compared quarter to of $ million in the to third $64.8 quarter of in Adjusted EBITDA (non-gaap) was $42.4 million in the third quarter of 2015 compared to $39.4 million in the the third third quarter quarter of of respectively. For the third quarter of 2015 compared to the third quarter of 2014, foreign currency fluctuations had a negative impact on adjusted gross profit and adjusted EBITDA of $2.4 million and $1.0 million, For Audited a reconciliation Financial Statements. of Adjusted gross profit and Adjusted diluted earnings per share to GAAP measures, see the Kraton Revenue $23.9 million was $269.0 negative million effect for from the currency three months movements, ended September revenue declined 30, 2015 $26.0 compared million, to or $ %, million attributable for the to lower three months average ended selling September prices resulting 30, 2014, from a lower decrease raw of material $50.0 million costs. Sales or 15.7%. volumes Excluding were 81.0 the kilotons With respect for the to revenue third quarter for each of 2015 of our compared product groups: to 80.7 kilotons for the third quarter of negative Cariflex effect revenue of currency was $34.0 fluctuations million accounted for the three for months $2.1 million ended of September the decline. 30, The 2015 remaining compared $3.8 to $40.0 million, million or 9.6%, for the of the three decline months was ended primarily September due to 30, lower 2014, sales a decline volume. of Sales $5.9 million, volume decreased or 14.8%. compared The to Cariflex record product sales volume group. for this product group in the third quarter of 2014 primarily due to lower sales into surgical glove applications associated with variability in customer order patterns which are typical in the - revenue Specialty decline, Polymers $4.7 revenue million was is associated $86.8 million with the for negative the three effect months of ended currency September fluctuations, 30, 2015 and the compared balance to of $98.7 the decline million is primarily for the three due months to lower ended average September selling prices 30, resulting Of the from $11.9 lower million, raw material or 12.1%, Compared to the third quarter of 2014, sales volumes increased modestly due to growth in industrial, consumer, and cable gel applications partially offset by lower volumes into lubricant additives. costs. - revenue Performance decline, Products $17.1 million revenue is was associated $148.0 million with the for negative the three effect months of currency ended September fluctuations, 30, and 2015 the compared balance of to the $180.1 decline million is primarily for the due three to months lower average ended September selling prices 30, resulting Of from the $32.1 lower million, raw material or 17.8%, With respect to sales volume, we experienced strong demand for our paving applications, largely in North America, where we experienced share gains and higher sales of differentiated grades. These sales volume costs. gains Confidential were offset by lower sales into roofing applications in Europe and lower sales into less differentiated pressure sensitive and construction adhesive applications. 66

72 C. Three Management s Months Ended discussion September and 30, analysis 2015 of Compared financial to condition Three Months and results Ended of September operations 30, Kraton 2014 (cont d) Cost of Goods goods sold Sold primarily driven by was a $32.0 $201.2 million million reduction for the in three raw months material ended costs, September and a $ , million 2015 compared positive effect to $255.1 from million currency for fluctuations. the three months In addition, ended cost September of goods 30, sold decreased The $53.9 $3.7 million, or associated 21.1%, decrease with costwas reduction Profit initiatives and $1.6 million due to lower turnaround partially offset by a $1.4 million increase related to modestly higher sales volumes. Gross 20.0% profit for the was three $67.8 months million ended for September the three months 30, 2015 ended and September 2014, respectively. 30, 2015 compared to $63.8 million for the three months ended September 30, Gross profit as a percentage of revenue was 25.2% and Operating Research and Expenses 2.1%. development expenses were $7.6 million for the three months ended September 30, 2015 compared to $7.4 million for the three months ended September 30, 2014, an increase of $0.2 million, or Selling, million, general or 64.4%. and This administrative increase was expenses primarily were due $26.9 to $5.0 million million for of the transaction three months and ended acquisition September related 30, costs 2015 incurred compared in the to $16.4 third quarter million 2015, for the a $4.2 three million months reduction ended September the accrual 30, 2014, for fees an increase related to of the $10.5 terminated positive effect Combination from currency Agreement fluctuations with and the LCY a $1.0 Parties million in decrease the third associated quarter of with 2014, cost and reduction a $2.9 million initiatives. increase variable employee compensation costs. These increases were partially offset by a $1.0 million Depreciation primarily due and to a amortization $0.7 million was positive $16.1 effect million from for currency the three fluctuations. months ended September 30, 2015 compared to $16.6 million for the three months ended September 30, 2014, a decrease of $0.4 million or 2.5%, Interest expense, net was $6.2 million for the three months ended September 30, 2015 compared to $6.1 million for the three months ended September 30, 2014, an increase of $0.1 million or 0.9%. Income September tax 30, expense 2015 was and $ , million respectively. and $1.1 Our million effective for tax the rate three differed months from ended the September U.S. corporate 30, 2015 statutory and 2014, tax rate respectively. of 35.0% primarily Our effective due to tax the rate mix was of 27.7% pre-tax and income 6.4% or for loss the earned three months in foreign ended losses generated in the U.S. tax jurisdiction for which a full valuation allowance has been provided. jurisdictions and We of $97.4 record million a valuation and $90.4 allowance million, when respectively, it more likely has been than provided not that for some net portion, operating or loss all, of carryforwards the deferred and tax other assets deferred will not tax be assets. realized. We As increased of September our valuation 30, 2015 allowance and December by $2.7 31, million 2014, a for valuation the three allowance ended September 30, 2015 primarily related to current period net operating losses the U.S. tax jurisdiction. We decreased our valuation allowance by $4.4 million for the three months ended September months 2014, of which $2.5 million represents utilization of net operating losses in the current period and $1.9 million relates to the assessment of our ability to utilize net operating losses in future periods. Excluding 30, the Confidential change in our valuation allowance, our effective tax rate would have been a 3.4% expense and a 31.7% expense for the three months ended September 30, 2015 and 2014, respectively. 67

73 C. Nine Management s Months Ended discussion September and 30, analysis 2015 Compared of financial to condition Nine Months and results Ended of September operations 30, 2014 Kraton (cont d) Revenue effect from was currency $786.3 movements million for accounted the nine months for $72.7 ended million September of the 30, decrease The compared remaining to $954.4 $95.3 million, for or the 10.0%, nine months decline was ended due September to lower average 30, 2014, selling a decrease prices of amounting $168.0 million $86.3 or million 17.6%. The driven negative average raw material costs and $9.0 million due to lower sales volumes. Sales volumes were kilotons for the nine months ended September 30, 2015, a decrease of 1.8 kilotons compared to the nine by lower months With respect ended to September revenue for 30, each Cariflex revenue was $102.1 million of our product for the groups: sales volumes increased nine months ended September 30, 2015 compared to $104.6 million for the nine months ended September 30, 2014, a decrease of $2.5 million or 2.4%. Cariflex 5.2% than offset compared by a to $6.6 the million nine months negative ended effect September from currency 30, 2014, fluctuations driven primarily and a decline by higher of $2.0 sales million into surgical associated glove with applications. lower selling The prices $6.1 resulting million from positive lower impact isoprene on revenue costs. Excluding from higher the sales negative volume impact was from more currency - Specialty fluctuations, Polymers revenue was would $263.1 have million increased for $4.1 the million, nine months or 3.9%. revenue decrease, $15.9 million was associated with the negative effect ended of currency September fluctuations. 30, 2015 The compared balance to of $317.6 the decline million was for due the to nine lower months average ended selling September prices resulting 30, from Of lower the $54.5 raw material million, costs or 17.2%, 5.5% decrease in sales volumes. The decrease in sales volume was largely due to lower sales into lubricant additive applications associated with inventory reduction measures by a significant customer, and, and to a lesser extent, lower sales into personal care applications. Partially offsetting these declines were higher sales into industrial, medical, and cable gel applications. a - revenue Performance decrease, Products $50.2 revenue million was $420.9 associated million with for the the negative nine months effect of ended currency September fluctuations, 30, 2015 and compared the balance of $531.9 the decline million was for primarily the nine due months to lower ended average September selling 30, prices resulting Of the $111.1 from lower million, raw or material 20.9%, costs. driven Sales by higher volume sales increased into paving modestly, applications despite in the North previously America disclosed and personal seven care kilotons applications, of lost production largely offset at our by lower Wesseling sales and into Berre roofing facilities applications in the second in Europe quarter and adhesives The applications. net increase in sales volume was Cost of Goods goods sold Sold largely driven by a $63.4 was $624.5 million million positive for effect the nine from months currency ended fluctuations, September a $ , 2015 million compared reduction to $761.4 in raw million material for costs, the nine a $7.1 months million ended decrease September due to 30, lower sales The volumes, $136.9 and million, a $7.5 or million 18.0%, decrease was related disruption to cost from reduction a small fire initiatives. our Berre, In addition, France, cost facility of goods that occurred sold decreased in the first by $11.9 quarter million of due These to the decreases absence of were the partially weather-related offset by production $5.0 million downtime of higher at our turnaround Belpre, Ohio, costs primarily facility and driven an operating six-year turnaround at our Berre, France, facility, $2.5 million of higher costs related to an inventory write-down resulting from an operational issue at our Belpre, Ohio, facility and $10.6 million by of a higher statutory manufacturing costs that are primarily timing related. other Gross Profit and 20.2% profit for was the $161.8 nine months million ended for the September nine months 30, ended 2015 and September 2014, respectively. 30, 2015 compared to $193.0 million for the nine months ended September 30, Gross profit as a percentage of revenue was 20.6% Confidential 68

74 C. Nine Management s Months Ended discussion September and 30, analysis 2015 Compared of financial to condition Nine Months and results Ended of September operations 30, 2014 Kraton (cont d) Operating Research and Expenses 1.6%. This decrease development was primarily expenses driven were $23.3 by a $1.4 million million for the positive nine months effect from ended currency September fluctuations, 30, 2015 and compared a $1.3 million to $23.7 decrease million related for the to nine cost months reduction ended initiatives. September These 30, decreases 2014, a decrease were partially of $0.4 offset million, by aor $1.2 Selling, million general increase and administrative variable employee expenses compensation were $77.5 million and $0.8 for million the nine of months higher costs ended associated September with 30, the 2015 new compared semi-works to $78.9 facility. million or 1.8%. This decrease was primarily due to a $3.0 million positive effect from currency fluctuations, a $3.0 million reduction million in transaction for the nine and months acquisition ended related September costs, 30, a $ , million a decrease decrease of $1.4 cost reduction initiatives, and $0.9 million of lower marketing costs. from These Depreciation decreases and were amortization partially offset was $46.9 by a $5.9 million million for the increase nine months in employee ended related September costs, 30, primarily 2015 compared variable to compensation, $49.6 million and for a the $2.3 nine million months increase ended in September professional 30, fees. primarily due to a $1.9 million positive effect from currency fluctuations. 2014, a decrease of $2.8 million or 5.6%, Interest expense, decrease is primarily net was due $18.0 to higher million capitalized for the interest nine months related ended to ongoing September capital 30, projects 2015 compared in the nine to months $18.7 million ended September for the nine 30, months 2015 ended compared September with the 30, nine 2014, months a decrease ended of September $0.7 million 30, or 3.7%. The Income tax September 30, expense 2015 was and $ , million respectively. and $3.4 Our million effective for tax the rate nine differed months from ended the September U.S. corporate 30, 2015 statutory and 2014, tax rate respectively. of 35.0% primarily Our effective due to tax the rate mix was of (115.5)% pre-tax income and 15.2% or loss for earned the nine months foreign jurisdictions ended losses generated in the U.S. tax jurisdiction for which a full valuation allowance has been provided, as well as permanent differences, uncertain tax positions and return to provision adjustments. and We of $97.4 record million a valuation and $90.4 allowance million, when respectively, it more likely has been than provided not that for some net portion, operating or loss all, of carryforwards the deferred and tax other assets deferred will not tax be assets. realized. We As increased of September our valuation 30, 2015 allowance and December by $7.0 31, million 2014, a for valuation the nine allowance ended September 30, 2015, which includes $8.1 million related to current period net operating losses, partially offset by a $1.1 million decrease related to changes in other comprehensive income (loss). months decreased our valuation allowance by $4.6 million for the nine months ended September 30, 2014, of which $2.7 million represents utilization of net operating losses in the current period and $1.9 million We relates expense to for the the assessment nine months of our ended ability September to utilize 30, net operating losses in future periods. Excluding the change in our valuation allowance, our effective tax rate would have been a 110.5% benefit and a 35.8% 2015 Confidential and 2014, respectively. 69

75 C. Year Management s Ended December discussion 31, 2014 and Compared analysis of to financial Year Ended condition December and 31, results 2013 of operations Kraton (cont d) Revenue excluding was an $11.4 $1,230.4 million million negative for the effect year from ended currency December fluctuations) 31, 2014 compared with $51.3 to million $1,292.1 of million the decline for the attributable year ended to December lower average 31, selling 2013, a prices decline associated of $61.7 with million lower or average 4.8% (a raw decline material of $50.3 costs. million Sales volumes or 3.9% declined impact on 7.9 kilotons period-over-period or 2.5% from change in kilotons revenue, for as the year revenue ended impact December from lower 31, 2013 sales to volume kilotons in our Performance the year Products ended December business 31, was more The than decrease offset by in the total revenue sales volume contribution did not from have increased a material volume in the higher revenue ton CariflexTM and Specialty Polymers businesses. sales With - Cariflex respect revenue to revenue was $138.6 for each million of our for product the year groups: $25.4 million or 21.9% excluding a $2.8 million negative ended December effect from 31, currency 2014 compared fluctuations) to $116.0 was due million to a 24.1% for the increase year ended in sales December volumes 31, led by The sales $22.6 into surgical million or glove 19.5% applications, revenue increase and to (an a lesser increase extent, of increased - Specialty sales Polymers into condom revenue and was medical $412.4 stopper million markets. for the year The ended revenue December contribution 31, 2014 from compared higher sales to $412.0 volume million was partially for the offset year ended by lower December average 31, selling prices The due $0.4 to million lower isoprene or 0.1% costs. increase of $1.5 million or 0.4% excluding a $1.1 million negative effect from currency fluctuations) was due to a 4.6% increase in sales volume, which was offset by lower average selling revenue prices increase reflective (an lower raw material costs. The increase sales volume was primarily due to growth in lubricant additives, cable gels, and polymer modification applications partially offset by lower volume into personal care of applications. - decline Performance of $76.5 Products million revenue or 10.0% was excluding $678.9 million a $7.5 for million the year negative ended effect December from currency 31, 2014 fluctuations) compared to was $762.9 due million to a 6.2% for reduction the year ended in sales December volumes 31, and, to a The lesser $84.0 extent, million lower or average 11.0% selling revenue prices decline driven (a lower butadiene and isoprene costs. The decline in sales volume was primarily due to lower paving and roofing volumes in Europe, lower paving volumes in Asia Pacific and lower volumes into packaging & by industrial Goods adhesives Soldapplications. Cost $66.0 of goods reduction sold was $993.4 in raw material million for costs the (including year ended a December period over 31, period 2014 benefit compared of $21.5 to $1,066.3 million million due to the for the spread year between ended December FIFO and 31, ECRC), an The $18.6 $72.9 million million decrease or 6.8% from decrease lower was sales primarily volumes, driven and anby a $11.1 Belpre, million Ohio, facility decrease and due an to operating foreign currency disruption fluctuations. from a small Partially fire at offsetting our Berre, these France, decreases facility were in the $9.9 first million quarter of of costs 2014 associated and increases with in the other weather-related variable and production manufacturing downtime costs. at our Gross Profit December profit 31, was $237.1 Gross million profit for as a the percentage year ended of December revenue was 31, 19.3% 2014 compared and 17.5% to for $225.8 the years million ended for December the year ended 2014 and 2013, respectively. 31, Confidential 70

76 C. Year Management s Ended December discussion 31, 2014 and Compared analysis of to financial Year Ended condition December and 31, results 2013 of (cont d) operations Kraton (cont d) Operating Research and Expenses to lower professional development fees and expenses maintenance were $31.4 costs million partially for offset the year by higher ended employee December related 31, 2014 costs. compared Research to and $32.0 development million for expenses the year ended were 2.5% December of revenue 31, 2013, for both a decrease of the years of $0.6 ended million December or 2.0% 31, primarily 2014 anddue Selling, The decrease general was and primarily administrative due to a expenses $1.3 million were decrease $104.2 million in employee for the related year ended costs, December a $1.0 million 31, 2014 decrease compared in professional to $105.6 fees million and a for $0.8 the million year ended decrease December in information 31, 2013, technology a decrease of costs. $1.3 These million decreases or 1.3%. partially offset by a $1.7 million increase in restructuring related costs and a $0.4 million increase in transaction and acquisition related costs. Selling, general and administrative expenses were 8.5% and 8.2% were revenue for the years ended December 31, 2014 and 2013, respectively. of Depreciation capital expenditures. and amortization was $66.2 million for the year ended December 31, 2014 compared to $63.2 million for the year ended December 31, 2013, an increase of $3.1 million or 4.8%, largely due to We impairment incurred charges impairments for the of year long-lived ended assets of $4.7 million for the year ended December 31, 2014 related to engineering and design, information technology, and other long-lived assets. We did not incur any December 31, Interest expense, due to charges aggregating net was $24.6 $5.8 million for incurred the year in ended connection December with our 31, March 2014 compared 2013 refinancing to $30.5 and million to lower for the outstanding year ended indebtedness December 31, in , a decrease of $5.9 million or 19.3%. The decrease was primarily Income Our income tax expense tax provision (benefit) December 31, 2014 and 2013, was a respectively. $5.1 million Our expense effective and tax a $3.9 rates million differed benefit from the for U.S. the years corporate ended statutory December tax 31, rate 2014 of 35.0%, and 2013, primarily respectively. due to the Our mix effective of pre-tax rate income was 80.9% or loss and earned 79.9% in certain for the jurisdictions years ended and Income the change tax expense in our (benefit) valuation (cont d) allowance. We $90.4 record a valuation and $90.0 allowance million, when respectively, it is more has likely been than provided not that for some net operating portion or loss all carryforwards of the deferred and tax other assets deferred will not tax be assets. realized. We As increased of December our valuation 31, 2014 allowance and December by $0.4 31, million 2013, in a valuation 2014, which allowance includes of a current $9.8 million year operating increase income related and to changes $1.8 million in other related comprehensive to assessment income of (loss), our ability partially to offset utilize by net a operating $9.4 million loss decrease carryforwards to the income future tax periods. provision. We decreased The $9.4 our million valuation is comprised allowance of by $7.6 $0.4 million million related in 2013, to which million includes related to a $0.5 current million year operating decrease due losses, to changes offset by in a other $10.1 comprehensive million benefit income related (loss), to the partially tax effect offset unrealized by a $0.1 pension million gains. increase We to consider the income the reversal tax provision. of deferred The tax $0.1 liabilities million is within comprised the net of operating $10.2 loss expense carryforward and an 81.4% period, benefit projected for the future years taxable ended income December and 31, tax 2014 planning and 2013, strategies respectively. in making this assessment. Excluding the change in our valuation allowance, our effective tax rates would have been a 229.0% Confidential 71

77 C. Year Management s Ended December discussion 31, 2013 and Compared analysis of to financial Year Ended condition December and 31, results 2012 of operations Kraton (cont d) Revenue December amounted 31, to The $1,292.1 $131.0 million on or sales 9.2% volumes revenue of decline (a kilotons decline of for $121.7 the year million ended December or 8.6% excluding 31, 2013 a compared $9.3 million to $1,423.1 negative million effect from on sales currency volumes fluctuations) of was kilotons largely for due the to year a reduction ended product sales prices associated with lower average raw material costs of $110.4 million and a $10.3 million negative effect associated with revenue mix. in global With Cariflex revenue respect to revenue was for $116.0 each million of our product for the groups: $14.8 million or 14.0% excluding a $4.7 year negative ended December effect from 31, currency 2013 compared fluctuations) to $105.9 reflects million a 13.5% for increase the year in ended sales volumes, December mainly 31, in the The surgical $10.1 million glove market or 9.5% and revenue other medical increase applications. (an increase of - of Specialty $51.3 million Polymers or 11.0% revenue excluding was $412.0 a $1.0 million million for negative the year effect ended from December currency 31, fluctuations) 2013 compared was to due $464.3 to lower million sales for volumes the year and ended lower December average selling 31, prices, The reflective $52.3 million of lower or 11.3% average revenue raw materials decline costs. (a decline The - Performance decline in Products sales volume revenue was was primarily $762.9 due million to lower for the sales year in personal ended December care, cable 31, gels, 2013 polymer compared modification to $850.8 million and industrial for the applications. decline of $84.2 million or 9.9% excluding a $3.6 million negative effect from currency fluctuations) was due lower average year selling ended prices December indicative 31, of lower The average $87.8 raw million material or 10.3% costs, revenue primarily decline butadiene, (a partially respect to offset paving by and increased roofing sales volumes, volume. although The increase first half in sales 2013 volume sales volumes was primarily were down due 15.1% to increased compared sales to into the paving first and of roofing, 2012, primarily personal care, due to and the packaging effect of poor & industrial weather conditions adhesives applications. North With America 1.0% year and on Europe, year. second half 2013 sales volumes were up 14.7% due to improved demand compared to the second half of As a result, overall sales volume for paving and roofing applications increased With HiMA respect paving to applications. innovation sales, we experienced growth in personal care applications and improved demand for our Cost of Goods goods sold Sold an $119.6 million reduction was $1,066.3 in raw million material for costs, the year $5.4 ended million December reduction 31, 2013 due to compared changes to in $1,191.7 foreign currency million exchange for the year rates, ended a $4.6 December million 31, reduction The due $125.4 to sales million mix, and or the 10.5% absence decrease net was charges driven amounting largely by to cost $2.3 of goods million sold recorded were increased 2012, costs which from related the to production a property downtime tax dispute related in France, to the storm-related MACT legislation charges, of restructuring $3.5 million, and increased other charges turnaround and the costs LyondellBasell of $2.5 million, settlement. and other Partially increases offsetting cost of these goods decreases sold. Gross Profit December profit 31, was 2012, $225.8 a decrease million of for $5.6 the million year ended or 2.4%. December Gross 31, profit 2013 as compared a percentage to $231.4 of revenue million was for 17.5% the year and 16.3% ended Confidential for the years ended December 31, 2013 and 2012, respectively. 72

78 C. Year Management s Ended December discussion 31, 2013 and Compared analysis of to financial Year Ended condition December and 31, results 2012 of (cont d) operations Kraton (cont d) Operating Research and Expenses due to an increase development in employee expenses related were costs $32.0 partially million offset for by the decreased year ended lease December expense 31, for 2013 our research compared and to development $31.0 million facilities. for the year Research ended and December development 31, 2012, expenses an increase were 2.5% of $1.0 and million 2.2% of or revenue 3.2% primarily ended December 31, 2013 and 2012, respectively. for the years Selling, The increase general was and primarily administrative due to $9.2 expenses million were $105.6 professional million fees for related the year to the ended terminated December Combination 31, 2013 compared Agreement to $98.6 with the million LCY for Parties, the year a $1.1 ended million December increase 31, in 2012, costs an associated increase of with $7.0 the million joint venture or 7.1%. FPCC and a $1.0 million increase in other professional fees, partially offset by a $1.0 million decrease employee related costs, lower legal expenses of $1.1 million, and the absence of a with % retirement and 6.9% of plan revenue settlement for the charge years of ended $1.1 December million and 31, a 2013 $0.6 million and 2012, charge respectively. associated with the resolution of a property tax dispute in France during Selling, general and administrative expenses were Depreciation We did not incur and amortization any impairment was charges $63.2 million of long-lived for the assets year ended for the December year ended 31, December 2013 compared 31, 2013 to compared $64.6 million to a $5.4 for the million year ended charge December for the year 31, ended 2012, December a decrease 31, of $ million or 2.1%. Interest expense, expense associated net with was lower $30.5 outstanding million for indebtedness the year ended was December more than 31, offset 2013 by compared charges to aggregating $29.3 million $5.8 for million the year incurred ended in December connection 31, with 2012, our an 2013 increase refinancing. of $1.2 million or 4.0%. The reduction in interest Income Our income tax expense tax provision (benefit) December 31, 2013 and 2012, was a respectively. $3.9 million Our benefit effective and tax a $19.3 rates million differed expense from the for U.S. the corporate years ended statutory December tax rate 31, 2013 of 35.0%, and 2012, primarily respectively. due to the Our mix effective of pre-tax tax income rate was or 79.9% loss earned and 619.8% in certain for jurisdictions the years ended and Income the change tax expense in our (benefit) valuation (cont d) allowance. We $90.0 record a valuation and $90.4 allowance million, when respectively, it is more has likely been than provided not that for some net operating portion or loss all carryforwards of the deferred and tax other assets deferred will not tax be assets. realized. We As decreased of December our valuation 31, 2013 allowance and December by $0.4 31, million 2012, a in valuation 2013, which allowance includes of a current $0.5 million year operating decrease losses, due to offset changes by $10.1 in other million comprehensive of income income tax benefit (loss), related partially to the offset tax effect by a $0.1 of unrealized million increase pension to gains. the income We increased tax provision. our valuation The $0.1 allowance million by is $36.2 comprised of $10.2 in 2012, million of which related $30.7 to million benefit recorded was included for prior in the year s income net operating tax provision losses and and $5.5 $17.2 million million represents related changes to current in year equity. operating The $30.7 losses. million We consider increase the reversal the valuation of deferred allowance tax liabilities is comprised within of $13.5 the net million operating related loss to carryforward the reversal period, of the projected 366.1% benefit future for taxable the years income ended and December tax planning 31, strategies 2013 and in 2012, making respectively. this assessment. Excluding the change in our valuation allowance, our effective tax rates would have been an 81.4% and Confidential 73

79 D. Summary Arizona consolidated historical financials ($ in thousands) historical financial data Arizona Nine Months Chemical Ended Holdings Year Ended Corporation December 31, September 30, (in Consolidated thousands) Net Revenue $ Statements 1,041,631 of $ Operations 992,259 $ 938,050 Data: Expenses Selling, general and administrative (including $ 728,303 related $ 620,957 party fees) Cost 133,401 of Goods 124,816 Sold 724, ,532718, ,782677,587 78, ,381 Facility closure 436,039 costs Gross 3,216 Profit 317,055 5, ,197 Litigation 260,463 expense 203, ,918 70,100 10,110 Operating 12,894 Insurance recoveries (80,210) (12,894) Operating Income 180,438 79, ,031 94, ,760 Interest expense, net 43,759 36,840 42,825 30,398 35,928 Loss on extinguishment 3, ,860 7,860 Loss (gain) on interest rate caps/swaps, net 4,705 (751) 3, ,003 Foreign currency exchange gains (losses), net (202) 1,322 (1,208) (333) (107) Other income of debt (10,298) $ 39,954 (11,111) $ 39,934(1,342) (1,218) (101) Income Before Income Taxes 142,474 52, ,317 57,038 58,037 Income Tax Expense 49,693 17,131 49,966 17,084 18,103 Net Income $ 92,781 $ 35,298 $ 98,351 Other Capital Financial expenditures Data 139,588 $ 33,716 $ 46,695 $ 34,719 $ 19,325 $ 23,437 EBITDA(1) $ 225,011 $ 124,092 $ 224,798 $ 113,161 $ 116,761 Adjusted EBITDA (2) $ 240,572 $ 204,878 $ 191,694 $ 145,542 $ Historical As Balance of December Sheet Data 31, As of September 30, (in thousands) (unaudited) Cash 780,227 and cash equivalents $ 37,994 $ 39,312 $ 44,439 Property, plant and equipment, net $ 246,782 $ 245,025 $ 239,179 Total assets $ 684,949 $ 702,348 $ 692,507 Total debt $ 450,927 $ 822,621 $ Confidential 74

80 D. Summary Arizona consolidated historical financials historical (cont d) (1) Arizona Chemical defines EBITDA financial as earnings data (cont d) operating activities, or any other measure of financial before performance interest, presented taxes, depreciation, in accordance and with amortization. GAAP. Arizona EBITDA Chemical s should not EBITDA be considered may not an be alternative comparable to net to income, operating or similarly income, titled cash financial flows metrics from other entities, as other entities may not calculate EBITDA in the same manner Arizona Chemical does. Arizona compensates for the limitations of EBITDA as an analytical tool by reviewing theof comparable (2) Arizona GAAP Chemical measures, defines understanding Adjusted EBITDA the differences as EBITDA between net of the measures, impact of items and incorporating that Arizona this Chemical knowledge does into not consider management s indicative decision-making of its ongoing processes. is derived and why we believe it is helpful and appropriate in the reconciliation below. You are encouraged to evaluate each adjustment and the reasons we operating consider it performance. appropriate for We supplemental explain how each analysis. adjustment analytical tool, Adjusted EBITDA is subject to the limitations applicable to EBITDA described above. As an Because Arizona Chemical s of these and presentation other limitations, of non-gaap EBITDA financial and Adjusted measures EBITDA and the should adjustments not be considered made therein as should a measure not of be discretionary construed as cash an inference available that to Arizona its future Chemical results will to invest be unaffected in the growth by unusual of its or business. items, and in the future non-recurring Arizona Chemical may compensates incur expenses for these or limitations charges similar by relying to the adjustments primarily on made its GAAP in the results presentation and using of its EBITDA non-gaap and Adjusted financial measures. Confidential EBITDA only as supplemental measures. 75

81 D. Summary Arizona consolidated historical financials historical (cont d) Arizona Chemical Holdings Corporation financial data (cont d) Nine (in thousands) Months Ended Year Ended December 31, September 30, Net Add Income (deduct): $ 92,781 $ 35,298 $ 98,351 $ 39,954 $ 39,934 Interest 124,092 expense, 224,798 net 113,165 43,759116,760 36,840 42,825 30,398 35,928 Income tax expense 49,693 17,131 49,966 17,084 18,103 Depreciation and amortization 38,778 34,823 33,656 25,729 22,795 EBITDA 225,011 Add Loss (deduct): 865 (gain) 135 on 475 interest Restructuring rate caps/swaps, and other net charges (a) 4,705 (d) 1,328 (751) 2,078 3,5794, ,003 3,429 Loss 1,165 on Transaction extinguishment and acquisition of debt (b) related 552 costs 7,860 (e) 7, Curtailment ,137 charges Impairment (c) of 162 long-lived assets Other and retirement facility charges closure (c) cost (f) compensation 3,216 (h) 1,619 5, Non-cash 2,400 2,400 share-based Gain compensation on sale of assets (g) 12,074 (i) (9,964) 5,484 (9,091) 1,999 (365) 2,050 (365) (173) Management Debt refinancing incentive-based costs (j) 3,537 share-based 1,327 4,152 compensation 3, (h) Management 2, ,193 fees (k) 8,193 2,198 Tax 2,202 expense 2,149 on 1,571 share-based Litigation expense (l) 70,100 (70,100) 3,100 CTO spill related costs (m) (5,115) Other indirect CTO spill related costs (m) 1,164 UK manufacturing plant closure (n) 1,562 3,600 Unrealized foreign currency losses (gains) (o) (1,259) 8,195 (53) (170) 933 Adjusted EBITDA $ 240,572 $ 204,878 $ 191,694 $ 145,542 $ 139,576 Confidential 76

82 D. Summary Arizona consolidated historical financials historical (cont d) (a) (gain) on interest financial rate caps data and (cont d) (b) Represents loss incurred on the extinguishment swaps. (c) Charges associated with the termination of an employee of debt. (d) Restructuring and other charges primarily related to severance defined expenses benefit for pension employees plan including eliminated curtailment positions costs which and were cash not costs replaced. related to the termination of the plan. (e) (f) In Professional 2012, impairment fees and and other closure costs associated costs related with to the shutdown evaluation of of the acquisition CST plant transactions. in Oulu, Finland, In 2015, and primarily in 2015, professional impairment fees and and closure other costs related related costs to associated the cease with of operations the pending of the sale Chester-le-Street of Arizona Chemical. the U.K. in late plant in (g) (h) Represents expense other share-based recognized compensation for non-cash expense share-based in the compensation. probable of monetization. form of common profit interests granted to certain employees. These interests are recognized as compensation expense at fair market value when (i) 2013 In 2013 of which and $ , million the net gains was received relate to in the May sale 2013 of Arizona and $0.6 Chemical s million was personal received care in business June consisting The gain of of intellectual $9.1 million property, in 2013 customer is net of relationships restructuring and expenses inventories, and the for gain $12.0 of million $0.4 million in cash in on 2014 May is 23, of an expense for a claim from a distributor. In net 2012, (j) Professional this amount fees represents and other a costs net gain incurred on the related sale of to Arizona the refinancing Chemical s of Arizona 10% investment Chemical s in historical Arboris and indebtedness the related and land other for $15 financing million costs in cash related and to $5 the million historical receivable indebtedness. over the following two year period. (k) (l) In Management 2013, this represents fees and out litigation of pocket expenses expenses and paid damages to Arizona associated Chemical s with a owners claim filed in accordance by a former with customer the management for alleged agreement breach that of warranty will terminate and breach at the of closing contract of regarding the Arizona delivery Chemical of resin Acquisition. the period 2005 through In 2014, the credit represents an accrued insurance recovery for the related litigation expenses and damages. products during (m) remediation In December costs 2011, and the a leak amount was in discovered 2014 represents in CTO additional tanks owned storage by Arizona costs incurred Chemical as a in result Söderhamn, of the loss Sweden. of the The CTO net tanks. reduction in costs in 2012 represents insurance recoveries related to environmental (n) actual $4.8 benefit. million For represents the nine the months full year ended of September the expected 30, operational 2015, $3.6 expense million savings represents related the to pro the rata anticipated portion of closure the full in year late expected 2015 of Arizona savings. Chemical s (o) Represents UK unrealized manufacturing foreign facility currency in advance losses (gains). of realizing the Confidential 77

83 D. Selected Arizona consolidated historical financials historical (cont d) ($ in thousands) Nine months ended financial Years data ended (cont d) December 31, September 30, (in Consolidated thousands) Statements (unaudited) Net Revenue $ 938,050 $ of 992,259 Operations $ 1,041,631 Data: 317, , , , ,922 $ 1,211,947 $ 931,770 $ 620,957 $ 728,303 Cost of Goods Sold 677, , , , , , ,381 Gross Profit 260, ,197 Operating Selling, general Expenses Impairment and administrative 4, , , , , ,443 78, ,782 Facility closure costs 3,216 5,953 Restructuring expense 1,637 3,169 Other 340,970 operating 82,814 income 100,760 94,040 Interest (1,500) expense, Litigation net 42,825 expense 36,840 43,759 10,110 24,640 70,100 18,207 35,928 12,894 30,398 3,100 Insurance recoveries (80, 210) (12,894) Operating Income 200,031 79, ,438 Loss Foreign on currency extinguishment exchange of gains debt 7,860 (losses), 552 net (1,208) 27,4851,322 5,888 (202) 7,860 (3,893) Loss (12,064) (gain) on (107) interest (333) rate Other caps/swaps, income (1,342) net 3,579 (11,111) (751) 4,705 (10,298) 270 (800) 1,002 (2,692) 7,003 (101) , ,268 72,473 58,037 57,038 Income Tax Expense 49,966 17,131 49,693 76,695 32,554 18,103 17,084 (1,218) Income Before Income Taxes 148,317 52,429 Equity Net Income in Earnings $ 98,351 of $ Affiliate, 35,298 $ Net 92,781 of Taxes $ 217,214 $ $ $ 40,476 $ $ (641) 39,934 $ (557) $ 39,954 $ $ As Cash of and December cash equivalents 31, As of September $ 39,312 $ 30, 37, $ , $ 24, $ 38, $ ,439 (in $ thousands) 34,912 Total (unaudited) assets $ Consolidated 702,348 $ 684,949 balance $ sheets 659,599 data: 450,927 $ 517,696 $ 531,779 $ 458,135 $ 780,227 $ 842,807 $ 663,326 $ 655,462 $ 692,507 $ 679,300 Total debt $ 822,621 $ Confidential 78

84 E. Nine Management s Months Ended discussion September and 30, analysis 2015 Compared of financial to condition Nine Months and results Ended of September operations 30, Arizona Our net revenue for the nine months ended September 30, 2015 was $621.0 million on sales 2014 the nine months ended September 30, The decline of $107.3 million, or 14.7%, was driven volumes partially of by the kilotons negative as compared effect of currency to net revenue fluctuations of $728.3 (primarily million the on Euro sales versus volumes US dollar) of which kilotons accounted during for volumes $63.0 associated million of with the decrease our TOFA and products the remainder sold to driven customers by $32.0 in North America. of lower We prices continued and $12.0 to face million strong due competition to lower sales in the volumes markets and where mix. we The sell decline TOFA products in sales volumes due primarily was mostly to oversupply attributable of TOFA to sales the North America region. Our sales volume declines were partially offset by slightly higher prices for our rosin esters products which are sold into the adhesives and roads & construction markets. The slightlyin higher Our cost prices of goods for our sold rosin for esters the nine products months was ended driven September by increased 30, 2015 demand decreased for hydrocarbon by $88.3 million, resin supplies, or 17%, despite when lower compared oil prices. costs for our raw materials, which contributed $22.0 million, currency fluctuations accounted for $53.0 million of the lower cost to the of nine goods months sold and ended the September remaining 30, $ million Lower resulted oil prices from resulted lower sales in lower and mix as further described in our description of net above. Our Adjusted EBITDA for the nine months ended September 30, 2015 was $140.8 million, or 22.5% of net revenue. This compares with volumes Adjusted Year Ended EBITDA December of $ , 2014 million, Compared or 20% to Year of net Ended revenue December during the 31, nine 2013months ended September 30, Lower sales prices were partially offset by lower raw material costs and lower SG&A expenses. Our ended net December revenue for 31, the year The ended decline December of $ , million, 2014 was or $ %, million was driven sales by $27.0 volumes million of of lower kilotons prices as and compared $28.0 million to net revenue due to lower of $992.3 sales million volumes, on partially sales volumes offset by of the positive kilotons effect during of $1 the million year due vegetable to currency oil-based fluctuations products. (primarily Lower sales the prices Euro versus for our US TOFA dollar). products Lower were sales partially prices and offset volumes by slightly for our higher TOFA prices products for our were rosin driven esters by products excess supply which in are the sold market into the in addition adhesives to and widely roads available & construction competing markets. Our cost The of goods slightly sold higher for the prices year for ended our December rosin esters 31, products 2014 decreased was driven by $40.0 by increased million, demand or 5.6%, for when hydrocarbon compared resin to supplies, the year ended despite December lower oil 31, prices. materials which contributed $3.0 million and approximately $34.0 million was driven by lower sales volumes. Currency fluctuations accounted for $ million Lower of oil the prices lower resulted cost of in goods lower sold. costs Our for our Adjusted raw EBITDA 20.5% of for net the revenue, year ended compared December to $ , 2014 million, was or $ % million of net or Lower sales prices and volumes were only partially offset by lower raw revenue material for the costs. year Our ended SG&A December expenses 31, were million in higher share based compensation and approximately $3.0 million of debt issue costs) are addbacks to our approximately Adjusted EBITDA. $5.7 million Excluding higher, these however costs, $14.0 our adjusted million SG&A (including expenses approximately were down $11.0 approximately Confidential $9.0 million driven mostly by the reversal of previously accrued bonuses as we did not achieve our internal targets for payout. 79

85 E. Ye Management s ar E nded December discussion 31, 2013 and analysis Compared of to financial Year Ended condition December and results 31, 2012 of operations Arizona (cont d) Our December net revenue 31, for the The year decline ended of December $49.3 million, 31, 2013 or 4.7%, was $992.3 was driven million by on $77.0 sales million volumes of lower of prices, kilotons partially as compared offset by to $11.0 $1,041.6 million million of higher on sales sales volumes of and approximately kilotons during $16.0 the million year ended currency fluctuations effects (primarily the Euro versus US dollar). The sale decreases were mainly the result of softer demand during the global economic uncertainty experienced in 2012 and in in the positive 2013, particularly in Europe and the Americas. Partially offsetting those price declines were higher prices for resins in the Asian markets resulting from constrained gum rosin supply in China. Sales vo first lumes half of half our of TOFA 2013, it products did not increased offset the during sales volume the first gains half of we 2013 experienced due to favorable in the first supply half of and demand Our conditions. sales volumes While were the also supply positively and demand impacted conditions by a lack for of TOFA supply products for TOR became and rosin less esters favorable products. in the second Our materials cost of which goods contributed sold for the $22.0 year million ended December and was offset 31, 2013 by positive decreased currency by $7.0 fluctuations. million, or Our 1.0%, Adjusted when compared EBITDA to for the the year year ended ended December December 31, 31, Lower was $204.9 oil prices million, resulted or 20.7%, lower of costs net revenue, for our raw to $240.6 million or 23.1% of net revenue for the year ended December 31, The decrease of $35.7 million or 17.4% was mainly driven by the price declines due to the global economic uncertainty compared and the first half of These price declines were partially offset by decreases in raw material costs which reduced our cost of goods sold. in 2012 Confidential 80

86 F. Historical Kraton Pro Reconciliation Forma of GAAP to non-gaap financial measures Year Net Income Ended 12/31, (loss) $ months $90.9 ended ($16.2) TTM ($1.0) Year $1.2 Ended $ /31, ($7.7) 9 months ($25.5) ended $17.6 TTM ($28.9) in ($2.1) millions) Interest 2010 expense, 2011 net /30/ /30/ /30/ /30/ Income 9/30/ (3.9) (10.7) 16.5 Depreciation & Amortization EBITDA $185.0 $184.1 $97.0 $88.8 $97.2 tax $90.7 expense $61.2 (benefit) $67.7 $ $162.6 Settlement $ gain (1) Transaction ($6.8) and acquisition Property related tax costs dispute (5) (2) Retirement Impairment plan charge of (3) long-lived 1.1 assets 0.4 (6) Restructuring and 6.9 other Impairment charges of (4) spare parts 1.4 inventory (7) Production Other downtime share based (8) compensation expense 12.0 (0.3) (11)(2.1) 10.3 (0.3) (2.1) 10.6 KFPC Gain startup on sale costs of assets (9) (12) (0.4) Debt 2.4 Non-cash refinancing compensation costs (13) expense (10) Litigation expense (14) (70.1) (73.2) CTO spill related costs (15) UK manufacturing cost closure (16) Unrealized foreign currency 4.3 losses (19) (gains) (0.2) Kraton run-rate Loss costs on extinguishment reset initiatives of (20) debt (17) Estimated 15.8 Incremental pro forma synergies impact of (21) purchase accounting (18) 65.0 FIFO ECRC 16.8 spread 16.3 (22) 16.8 (12.1) Turnaround (66.3) 30.5 costs 30.7 Adjusted 9.3 (6.5) EBITDA 40.1 at 55.9 ECRC $ Kraton capex (excluding JV capex) (55.6) $128.0 (64.4) $143.8 (69.6) $140.9 (76.8) $147.2 (70.1) $115.5 (47.5) $116.8 (42.4) (64.0) $168.1 (70.1) $338.9 (42.4) $270.0 (64.0) $420.0 (34.7) (23.4) (39.0) 50% JV capex (6.2) (22.5) (33.8) (46.1) (28.3) (22.5) (46.1) (28.3) Arizona capex Unlevered Note: Table Free may Cash not Flow foot due $127.2 to rounding. $63.6 $74.2 $58.0 $54.6 $34.1 $28.3 $75.8 $211.6 $158.0 $288.7 Confidential 81

87 F. (1) Kraton Receipt from Reconciliation LyondellBasell of GAAP in settlement to non-gaap of disputed financial charges. measures (2) Charge (cont d) (3) In 2014, charges associated with curtailment charges associated with the termination associated of with certain resolution defined of benefit a property pension tax plans. dispute In in 2012, France. benefit plan upon the retirement an employee. retirement plan settlement charge associated with a disbursement from a (4) (5) Severance For the years expenses, ended December professional 31, fees 2014 and and other 2013, restructuring primarily related professional charges. are primarily related to the proposed acquisition of Arizona Chemical, and for fees the related nine months to the terminated ended September combination 30, 2014, agreement charges with are primarily the LCY related Parties. to For the the terminated nine months combination ended September agreement 30, with 2015, the charges Parties. LCY (6) were In no 2015, longer impairment economically related viable; to the $1.4 announced million closure was related of Arizona to information Chemical s technology Chester-le-Street and office plant assets in associated the U.K. In with 2014, restructuring $2.4 million activities; was related and $0.9 to engineering million was and related design to assets other for long-lived projects assets. we determined $3.4 million was associated with the Asia HSBC facility and $2.0 million was associated with other long-lived assets. In 2012, (7) (8) Impairment For the nine of months spare parts ended inventory September associated 30, 2015, with the the reduction coal-burning costs boilers due which to insurance were decommissioned recoveries related in to production downtime at our Belpre, Ohio, facility and an operating disruption from a small fire at our Berre, France, production facility, which downtime occurred at our in Belpre, the first Ohio quarter facility. of In 2014 In 2013, and 2015, production costs downtime for weather-related Belpre, Ohio, facility, in preparation for the installation of natural gas boilers to replace the coal-burning boilers required by the MACT legislation. In 2012, storm related charges at our Belpre, Ohio facility. our (9) (11) Startup Represents costs other related share-based to the joint compensation venture company, expense KFPC. in the (10) form Costs of common associated profit with interests equity granted compensation to certain plans. market value when probable of monetization. Arizona Chemical employees. These interests are recognized as compensation expense at fair (12) expense This for gain a claim on sale from of assets a distributor. relates to the sale of Arizona Chemical s personal care business in 2013, of which $0.6 million was received in June The gain of $0.4 million shown for 2014 is net of an (13) (14) Professional This credit represents fees and other an accrued costs insurance incurred related recovery to the for the refinancing litigation of expenses Arizona Chemical s and damages historical previously indebtedness. of contract regarding delivery of resin products during the period 2005 through recorded associated with a claim filed by a former customer for an alleged breach of warranty and breach (15) (16) This $4.8 amount million represents additional the full year storage of expected costs for operational CTO incurred expense as a savings result of related a leak to discovered the anticipated in CTO closure tanks in owned late 2015 by Arizona of Arizona Chemical Chemical s in Söderhamn, UK manufacturing Sweden in facility benefit for the nine months ended September 30, 2015, $3.6 million represents the pro rata portion of the full year expected savings. in advance of realizing the actual (17) purchase This accounting amount represents adjustments. the anticipated net loss to retire the issuers existing 6.75% Senior Notes in connection with the refinancing of indebtedness. (18) This amount represents incremental costs related to (19) (20) Adjustment to normalize attain the run-rate turnaround cost costs savings subject for implemented to a cap of $7.5 actions. million. the $70.0 million. See note above for how the run-rate was calculated. Of the $70 million of Kraton cost reset initiative savings that are expected, we have already taken actions to achieve $24.0 million of (21) and $40.0 We estimate million pre-tax in the run-rate reduction synergies of manufacturing of $65.0 million, costs and to efficiency be realized initiatives, by the end not of including 2018, as a an result estimated of the $50.5 Arizona million Chemical to realize Acquisition such synergies. comprised of $25.0 million in general and administrative costs, (22) cost Although ( ECRC ) we of report our inventory our financial and cost results of goods using sold. the first We in maintain first out our ( FIFO ) perpetual basis inventory of accounting, our global as part enterprise of our pricing resource strategy, planning we measure system, where our business the carrying performance value of using our inventory the estimated is determined current replacement FIFO. At the beginning of each month, we determine the estimated current cost of our raw materials for that particular month, and using the same perpetual inventory system that we use to manage inventory using therefore costs of goods sold under FIFO, we revalue our ending inventory to reflect the total cost of such inventory as if it was valued using ECRC. The result of this revaluation from FIFO creates the and spread ECRC. between FIFO and ECRC. With inventory valued under FIFO and ECRC, we then have the ability report cost of goods sold and therefore Adjusted EBITDA under both our FIFO convention and Confidential 82