10-Q 1 vntr-20170630x10q.htm 10-Q vntr_Current_Folio_10Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10‑Q

(Check one)

 

☑   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2017

 

OR

 

☐   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 001-38176

 


 

LOGO

Venator Materials PLC

(Exact name of registrant as specified in its charter)

 


 

 

 

England and Wales

98‑1373159

(State or other jurisdiction

(I.R.S. Employer Identification No.)

of incorporation or organization)

 

 

Titanium House, Hanzard Drive, Wynyard Park,

Stockton-On-Tees, TS22, 5FD, United Kingdom

+44 (0) 1740 608 001

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

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

YES ☐ NO ☑

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES ☑ NO ☐

 

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

 

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☑

Smaller reporting company ☐

Emerging growth company ☐

 

 

(Do not check if a smaller reporting company)

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

YES ☐ NO ☑

 


 

As of August 16, 2017, the registrant has outstanding 106,271,712 shares of Common Stock, $0.001 par value per share.

 

 

 

 


 

VENATOR MATERIALS PLC AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10‑Q FOR THE QUARTERLY PERIOD

ENDED JUNE 30, 2017

 

TABLE OF CONTENTS

 

 

 

    

Page

NOTE REGARDING FORWARD-LOOKING STATEMENTS 

 

2

 

 

 

 

PART I  

FINANCIAL INFORMATION

 

3

 

 

 

 

ITEM 1.  

Financial Statements (Unaudited)

 

3

 

 

 

 

 

Venator Materials PLC:

 

3

 

 

 

 

 

Consolidated Balance Sheet

 

3

 

 

 

 

 

Notes to Unaudited Consolidated Balance Sheet

 

4

 

 

 

 

 

Venator (Combined Divisions of Huntsman Corporation):

 

5

 

 

 

 

 

Condensed Combined Balance Sheets

 

5

 

 

 

 

 

Condensed Combined Statements of Operations

 

6

 

 

 

 

 

Condensed Combined Statements of Comprehensive Income (Loss)

 

7

 

 

 

 

 

Condensed Combined Statements of Equity

 

8

 

 

 

 

 

Condensed Combined Statements of Cash Flows

 

9

 

 

 

 

 

Notes to Unaudited Condensed Combined Financial Statements

 

10

 

 

 

 

ITEM 2. 

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

 

24

 

 

 

 

ITEM 3. 

Quantitative and Qualitative Disclosures About Market Risk

 

38

 

 

 

 

ITEM 4. 

Controls and Procedures

 

39

 

 

 

 

PART II  

OTHER INFORMATION

 

41

 

 

 

 

ITEM 1. 

Legal Proceedings

 

41

 

 

 

 

ITEM 1A. 

Risk Factors

 

41

 

 

 

 

ITEM 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

 

41

 

 

 

 

ITEM 6. 

Exhibits

 

41

 

 

 

 

 

Signatures

 

42

 

Venator Materials PLC and our other registered and common-law trade names, trademarks, and service marks appearing in this Quarterly Report on Form 10‑Q for the three months ended June 30, 2017 (“Quarterly Report”) are the property of Venator Materials PLC or our subsidiaries.

1


 

NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain information set forth in this Quarterly Report contains "forward-looking statements" within the meaning the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other projected financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions, divestitures, spin-offs, or other distributions, strategic opportunities, securities offerings, share repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; legal proceedings, environmental, health and safety (“EHS”) matters, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; general economic and capital markets conditions; the timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that we intend or believe will or may occur in the future. In some cases, forward-looking statements can be identified by terminology such as "believes," "expects," "may," "will," "should," "anticipates" or "intends" or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements.

 

Forward-looking statements are based on certain assumptions and expectations of future events which may not be accurate or realized. Forward-looking statements also involve risks and uncertainties, many of which are beyond our control. Important factors that may materially affect such forward-looking statements and projections include volatile global economic conditions; cyclical and volatile titanium dioxide (“TiO2”) products markets; highly competitive industries and the need to innovate and develop new products; increased manufacturing regulations for some of our products, including the outcome of the pending potential classification of TiO2 as a carcinogen in the European Union and any resulting increased regulation; disruptions in production at our manufacturing facilities; fluctuations in currency exchange rates and tax rates; price volatility or interruptions in supply of raw materials and energy; changes to laws, regulations or the interpretation thereof; significant investments associated with efforts to transform our business; differences in views with our joint venture participants; high levels of indebtedness; EHS laws and regulations; our ability to obtain future capital on favorable terms; seasonal sales patterns in our product markets; legal claims against us, including antitrust claims; our ability to adequately protect our critical information technology systems; economic conditions and regulatory changes following the United Kingdom’s likely exit from the European Union; failure to maintain effective internal controls over financial reporting and disclosure; our indemnification of Huntsman Corporation (“Huntsman”) and other commitments and contingencies; financial difficulties and related problems experienced by our customers, vendors, suppliers and other business partners; failure to enforce our intellectual property rights; our ability to effectively manage our labor force; conflicts, military actions, terrorist attacks and general instability; and our ability to realize the expected benefits of our separation from Huntsman.

 

All forward-looking statements, including, without limitation, management’s examination of historical operating trends, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements whether because of new information, future events or otherwise, except as required by securities and other applicable law.

 

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward‑looking statements contained in or contemplated by this report. Any forward‑looking statements should be considered in light of the risks set forth in our Risk Factors previously disclosed in our Prospectus (the “Prospectus”) filed with the Securities and Exchange Commission (the “SEC”) on August 4, 2017 pursuant to Rule 424(b) of the Securities Act.

2


 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

 

VENATOR MATERIALS PLC

CONSOLIDATED BALANCE SHEET

(Unaudited)

 

 

 

 

 

 

 

June 30, 

(Dollars in thousands, except par value)

 

2017

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

 

$

20

Total current assets

 

 

20

Noncurrent assets

 

 

 —

Total assets

 

$

20

LIABILITIES AND EQUITY

Current liabilities:

 

 

 

Accounts payable to affiliates

 

$

20

Total current liabilities

 

 

20

Noncurrent liabilities

 

 

 —

Total liabilities

 

 

20

Equity

 

 

 

Subscriber shares ($1.28 par value per share, 50,000 shares authorized and subscribed)

 

 

64

Redeemable shares ($1.28 par value per share, 50,000 shares authorized and subscribed)

 

 

64

Ordinary share ($1.00 par value per share, 1 share authorized and subscribed)

 

 

 —

Shares receivable from Huntsman International

 

 

(128)

Total equity

 

 

 —

Total liabilities and equity

 

$

20

 

See notes to unaudited balance sheet.

3


 

VENATOR MATERIALS PLC

NOTES TO UNAUDITED CONSOLIDATED BALANCE SHEET

 

NOTE 1. BACKGROUND AND BASIS OF PRESENTATION

 

Background

 

Venator Materials PLC (the “Company”), a company incorporated in the United Kingdom, was formed on April 28, 2017 and has a single wholly-owned subsidiary, Venator Finance S.à.r.l. Upon our formation, we issued 50,000 of our ordinary shares, par value £1 per share (the "Subscriber Shares"), to Huntsman International (Netherlands) B.V., an indirect wholly-owned subsidiary of Huntsman International LLC (“Huntsman”). On June 30, 2017, (a) Huntsman International (Netherlands) B.V. transferred the Subscriber Shares to Huntsman, and (b) we issued 50,000 redeemable shares, par value £1 per share, and one ordinary share, par value $1 per share, to Huntsman International, all of which (including the Subscriber Shares) were repurchased by us prior to the consummation of our initial public offering (“IPO”). These amounts are reflected in the accompanying consolidated balance sheet as a reduction of equity.

 

Basis of Presentation

 

The accompanying consolidated balance sheet of the Company is prepared in conformity with accounting principles generally accepted in the United States of America.

 

NOTE 2. SUBSEQUENT EVENTS

 

Initial Public Offering

 

On August 8, 2017, we completed our IPO of 26,105,000 ordinary shares, par value $0.001 per share (the “Ordinary Shares”), which includes 3,405,000 Ordinary Shares issued upon the exercise in full by the underwriters of their option to purchase additional shares, at a public offering price of $20.00 per share. All of the Ordinary Shares were sold by Huntsman, and we did not receive any proceeds from the offering. The Ordinary Shares began trading August 3, 2017 on the New York Stock Exchange under the symbol “VNTR.” In conjunction with the IPO, the Company assumed the Titanium Dioxide and Performance Additives businesses of Huntsman and the related assets, liabilities and obligations and operations. After the IPO, the Company operates in two segments, Titanium Dioxide and Performance Additives. Following the IPO, Huntsman owns approximately 75% of Venator’s outstanding Ordinary Shares. The material terms of the IPO are described in the Prospectus.

 

Senior Credit Facilities and Senior Notes

 

On August 8, 2017, in connection with the IPO and our separation from Huntsman, we entered into new financing arrangements and incurred new debt, including borrowings of $375 million under a new senior secured term loan facility with a maturity of seven years (the “Term Loan Facility”). In addition to the Term Loan Facility, we entered into a $300 million asset-based revolving lending facility with a maturity of five years (the “ABL facility” and, together with the term loan facility, the “Senior Credit Facilities”). On July 14, 2017, in connection with the IPO and the Separation, our subsidiary Venator Finance S.à.r.l. along with Venator Materials LLC, a related party, issued $375,000,000 in aggregate principal amount of 5.75% of Senior Notes due 2025 (the “Senior Notes”).

 

Venator Materials PLC evaluated subsequent events through August 28, 2017, the date this balance sheet was available to be issued.

4


 

VENATOR

(COMBINED DIVISIONS OF HUNTSMAN CORPORATION)

CONDENSED COMBINED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

    

June 30, 

    

December 31, 

(Dollars in millions)

 

2017

 

2016

ASSETS

Current assets:

 

 

  

 

 

  

Cash and cash equivalents(a)

 

$

34

 

$

29

Accounts receivable (net of allowance for doubtful accounts of $4 each)(a)

 

 

402

 

 

247

Accounts receivable from affiliates

 

 

200

 

 

243

Inventories(a)

 

 

431

 

 

426

Prepaid expenses

 

 

 9

 

 

11

Other current assets

 

 

68

 

 

59

Current assets of discontinued operations

 

 

 —

 

 

84

Total current assets

 

 

1,144

 

 

1,099

Property, plant and equipment, net(a)

 

 

1,189

 

 

1,178

Intangible assets, net(a)

 

 

22

 

 

23

Investment in unconsolidated affiliates

 

 

72

 

 

85

Deferred income taxes

 

 

157

 

 

142

Notes receivable from affiliates

 

 

57

 

 

57

Other noncurrent assets

 

 

36

 

 

35

Noncurrent assets of discontinued operations

 

 

 —

 

 

42

Total assets

 

$

2,677

 

$

2,661

LIABILITIES AND EQUITY

Current liabilities:

 

 

  

 

 

  

Accounts payable(a)

 

$

292

 

$

297

Accounts payable to affiliates

 

 

629

 

 

695

Accrued liabilities(a)

 

 

211

 

 

146

Current portion of debt(a)

 

 

 3

 

 

10

Current liabilities of discontinued operations

 

 

 —

 

 

27

Total current liabilities

 

 

1,135

 

 

1,175

Long-term debt

 

 

11

 

 

13

Long-term debt to affiliates

 

 

90

 

 

882

Deferred income taxes

 

 

10

 

 

12

Other noncurrent liabilities

 

 

326

 

 

324

Noncurrent liabilities of discontinued operations

 

 

 —

 

 

78

Total liabilities

 

 

1,572

 

 

2,484

Commitments and contingencies (Notes 10 and 11)

 

 

  

 

 

  

Equity

 

 

  

 

 

  

Parent’s net investment and advances

 

 

1,410

 

 

588

Accumulated other comprehensive loss

 

 

(316)

 

 

(423)

Venator equity

 

 

1,094

 

 

165

Noncontrolling interest in subsidiaries

 

 

11

 

 

12

Total equity

 

 

1,105

 

 

177

Total liabilities and equity

 

$

2,677

 

$

2,661


(a)

At June 30, 2017 and December 31, 2016, respectively, $5 and $4 of cash and cash equivalents, $6 each of accounts receivable, (net), $1 each of inventories, $4 each of property, plant and equipment, (net), $19 and $20 of intangible assets, (net), $1 each of accounts payable, $3 and $4 of accrued liabilities, and $2 each of current portion of debt, from consolidated variable interest entities are included in the respective balance sheet captions above. See "Note 5. Variable Interest Entities."

 

See notes to unaudited condensed combined financial statements.

5


 

VENATOR

(COMBINED DIVISIONS OF HUNTSMAN CORPORATION)

CONDENSED COMBINED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

June 30, 

 

June 30, 

(Dollars in millions)

    

2017

    

2016

    

2017

    

2016

Trade sales, services and fees, net

 

$

562

 

$

576

 

$

1,099

 

$

1,116

Cost of goods sold

 

 

479

 

 

543

 

 

942

 

 

1,056

Operating expenses:

 

 

  

 

 

  

 

 

  

 

 

  

Selling, general and administrative (includes corporate allocations of $28, $26, $52 and $49, respectively)

 

 

57

 

 

60

 

 

108

 

 

113

Restructuring, impairment and plant closing costs

 

 

 7

 

 

13

 

 

33

 

 

24

Other income, net

 

 

(40)

 

 

(18)

 

 

(30)

 

 

(11)

Total expenses

 

 

24

 

 

55

 

 

111

 

 

126

Operating income (loss)

 

 

59

 

 

(22)

 

 

46

 

 

(66)

Interest expense

 

 

(10)

 

 

(16)

 

 

(24)

 

 

(30)

Interest income

 

 

 1

 

 

 7

 

 

 3

 

 

11

Other income

 

 

 —

 

 

 1

 

 

 —

 

 

 1

Income (loss) from continuing operations before income taxes

 

 

50

 

 

(30)

 

 

25

 

 

(84)

Income tax (expense) benefit

 

 

(16)

 

 

 6

 

 

(12)

 

 

 7

Income (loss) from continuing operations

 

 

34

 

 

(24)

 

 

13

 

 

(77)

Income from discontinued operations, net of tax

 

 

 —

 

 

 1

 

 

 8

 

 

 6

Net income (loss)

 

 

34

 

 

(23)

 

 

21

 

 

(71)

Net income attributable to noncontrolling interests

 

 

(3)

 

 

(3)

 

 

(6)

 

 

(5)

Net income (loss) attributable to Venator

 

$

31

 

$

(26)

 

$

15

 

$

(76)

 

See notes to unaudited condensed combined financial statements.

6


 

VENATOR

(COMBINED DIVISIONS OF HUNTSMAN CORPORATION)

CONDENSED COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

June 30, 

 

June 30, 

(Dollars in millions)

    

2017

    

2016

    

2017

    

2016

Net income (loss)

 

$

34

 

$

(23)

 

$

21

 

$

(71)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

74

 

 

(14)

 

 

79

 

 

(61)

Pension and other postretirement benefits adjustments

 

 

24

 

 

 4

 

 

28

 

 

12

Other comprehensive income (loss), net of tax:

 

 

98

 

 

(10)

 

 

107

 

 

(49)

Comprehensive income (loss)

 

 

132

 

 

(33)

 

 

128

 

 

(120)

Comprehensive income attributable to noncontrolling interest

 

 

(3)

 

 

(3)

 

 

(6)

 

 

(5)

Comprehensive income (loss) attributable to Venator

 

$

129

 

$

(36)

 

$

122

 

$

(125)

 

See notes to unaudited condensed combined financial statements.

7


 

VENATOR

(COMBINED DIVISIONS OF HUNTSMAN CORPORATION)

CONDENSED COMBINED STATEMENTS OF EQUITY

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Venator Equity

 

 

 

 

 

 

 

    

Parent’s Net

    

Accumulated

    

 

 

    

 

 

 

 

Investment

 

Other

 

Noncontrolling

 

 

 

 

 

and

 

Comprehensive

 

Interest in

 

 

 

(Dollars in millions)

 

Advances

 

Loss

 

Subsidiaries

 

Total

Balance, January 1, 2017

 

$

588

 

$

(423)

 

$

12

 

$

177

Net income

 

 

15

 

 

 —

 

 

 6

 

 

21

Net changes in other comprehensive income

 

 

 —

 

 

107

 

 

 —

 

 

107

Dividends paid to noncontrolling interests

 

 

 —

 

 

 —

 

 

(6)

 

 

(6)

Net changes in parent’s net investment and advances

 

 

807

 

 

 —

 

 

(1)

 

 

806

Balance, June 30, 2017

 

$

1,410

 

$

(316)

 

$

11

 

$

1,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Venator Equity

 

 

 

 

 

 

 

    

Parent’s Net

    

Accumulated

    

 

 

    

 

 

 

 

Investment

 

Other

 

Noncontrolling

 

 

 

 

 

and

 

Comprehensive

 

Interest in

 

 

 

(Dollars in millions)

 

Advances

 

Loss

 

Subsidiaries

 

Total

Balance, January 1, 2016

 

$

1,112

 

$

(401)

 

$

17

 

$

728

Net (loss) income

 

 

(76)

 

 

 —

 

 

 5

 

 

(71)

Net changes in other comprehensive loss

 

 

 —

 

 

(49)

 

 

 —

 

 

(49)

Dividends paid to noncontrolling interests

 

 

 —

 

 

 —

 

 

(8)

 

 

(8)

Net changes in parent’s net investment and advances

 

 

(316)

 

 

 —

 

 

(1)

 

 

(317)

Balance, June 30, 2016

 

$

720

 

$

(450)

 

$

13

 

$

283

 

See notes to unaudited condensed combined financial statements.

8


 

VENATOR

(COMBINED DIVISIONS OF HUNTSMAN CORORATION)

CONDENSED COMBINED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Six months ended

 

 

June 30, 

(Dollars in millions)

    

2017

    

2016

Operating Activities:

 

 

  

 

 

  

Net income (loss)

 

$

21

 

$

(71)

Income from discontinued operations, net of tax

 

 

(8)

 

 

(6)

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

 

 

  

 

 

  

Depreciation and amortization

 

 

59

 

 

54

Deferred income taxes

 

 

 1

 

 

(11)

Noncash restructuring charges

 

 

 6

 

 

 8

Noncash interest

 

 

20

 

 

21

Noncash loss on foreign currency transactions

 

 

 6

 

 

 2

Insurance proceeds for business interruption, net of gain on recovery

 

 

28

 

 

 —

Other, net

 

 

 4

 

 

 4

Changes in operating assets and liabilities:

 

 

  

 

 

  

Accounts receivable

 

 

(156)

 

 

(22)

Inventories

 

 

12

 

 

101

Prepaid expenses

 

 

 2

 

 

 2

Other current assets

 

 

(4)

 

 

 2

Other noncurrent assets

 

 

 2

 

 

(5)

Accounts payable

 

 

(7)

 

 

(26)

Accrued liabilities

 

 

 —

 

 

(24)

Other noncurrent liabilities

 

 

(16)

 

 

(4)

Net cash (used in) provided by operating activities from continuing operations

 

 

(30)

 

 

25

Net cash provided by operating activities from discontinued operations

 

 

 1

 

 

 8

Net cash (used in) provided by operating activities

 

 

(29)

 

 

33

Investing Activities:

 

 

  

 

 

  

Capital expenditures

 

 

(40)

 

 

(57)

Insurance proceeds for recovery of property damage

 

 

50

 

 

 —

Net advances to affiliates

 

 

91

 

 

84

Repayment of government grant

 

 

(5)

 

 

 —

Cash received from unconsolidated affiliates

 

 

27

 

 

19

Investment in unconsolidated affiliates

 

 

(19)

 

 

(13)

Net cash provided by investing activities from continuing operations

 

 

104

 

 

33

Net cash used in investing activities from discontinued operations

 

 

(1)

 

 

(4)

Net cash provided by investing activities

 

 

103

 

 

29

Financing Activities:

 

 

  

 

 

  

Repayment of long-term debt

 

 

(5)

 

 

 —

Net repayments on affiliate accounts payable

 

 

(60)

 

 

(47)

Dividends paid to noncontrolling interest

 

 

(6)

 

 

(8)

Net cash used in financing activities from continuing operations

 

 

(71)

 

 

(55)

Net cash used in financing activities from discontinued operations

 

 

 —

 

 

(2)

Net cash used in financing activities

 

 

(71)

 

 

(57)

Effect of exchange rate changes on cash

 

 

 1

 

 

 —

Net change in cash and cash equivalents, including discontinued operations

 

 

 4

 

 

 5

Cash and cash equivalents at beginning of period, including discontinued operations

 

 

30

 

 

22

Cash and cash equivalents at end of period, including discontinued operations

 

$

34

 

$

27

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

  

 

 

  

Cash paid for interest

 

$

 2

 

$

 2

Cash paid for income taxes

 

 

 4

 

 

 3

Supplemental disclosure of noncash activities:

 

 

 

 

 

 

Capital expenditures included in accounts payable as of June 30, 2017 and 2016, respectively

 

$

 9

 

$

11

Received settlements of notes receivable from affiliates

 

 

 —

 

 

229

Settled long-term debt to affiliates

 

 

792

 

 

15

 

See notes to unaudited condensed combined financial statements.

9


 

VENATOR

(COMBINED DIVISIONS OF HUNTSMAN CORPORATION)

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS

 

NOTE 1. GENERAL, DESCRIPTION OF BUSINESS, RECENT DEVELOPMENTS AND BASIS OF PRESENTATION

 

General

 

Except when the context otherwise requires or where otherwise indicated, (1) all references to "Venator," the "Company," "we," "us" and "our" refer to Venator Materials PLC and its subsidiaries, or, as the context requires, the historical Pigments and Additives business of Huntsman and assume the completion of the Separation (defined below), (2) all references to "Huntsman" refer to Huntsman Corporation, our controlling shareholder, and its subsidiaries, other than us, (3) all references to the "Titanium Dioxide" segment or business refer to the TiO2 business of Venator, or, as the context requires, the historical Pigments and  Additives segment of Huntsman and the related operations and assets, liabilities and obligations, (4) all references to the "Performance Additives" segment or business refer to the functional additives, color pigments, timber treatment and water treatment businesses of Venator, or, as the context requires, the Pigments and Additives segment of Huntsman and the related operations and assets, liabilities and obligations, (5) all references to "other businesses" refer to certain businesses that Huntsman retained in connection with the Separation and that are reported as discontinued operations in our condensed combined financial statements, (6) all references to "Huntsman International" refer to Huntsman International LLC, a wholly-owned subsidiary of Huntsman, a shareholder and the entity through which Huntsman operates all of its businesses, and (7) we refer to the internal reorganization prior to our initial public offering, the separation transactions initiated to separate the Venator business from Huntsman’s other businesses, including the entry into and effectiveness of the separation agreement and ancillary agreements, and the Senior Credit Facilities (defined below) and Senior Notes (defined below), including the use of the net proceeds of the Senior Credit Facilities and the Senior Notes, which were used to repay intercompany debt we owed to Huntsman and to pay related fees and expenses, as the "Separation" and (8) the “Rockwood acquisition” refers to Huntsman’s acquisition of the performance and additives and TiO2 businesses of Rockwood Holdings, Inc. (“Rockwood”) completed on October 1, 2014.

 

Description of Business

 

Venator operates in two segments: Titanium Dioxide and Performance Additives. The Titanium Dioxide segment manufactures and sells primarily TiO2, and operates eight TiO2 manufacturing facilities across the globe, predominantly in Europe. The Performance Additives segment manufactures and sells functional additives, color pigments, timber treatment and water treatment chemicals. This segment operates 19 color pigments, functional additives, water treatment and timber treatment manufacturing and processing facilities in Europe, North America, Asia and Australia.

 

Recent Developments

 

Initial Public Offering and Separation

 

On August 8, 2017, we completed our initial public offering (the “IPO”) of 26,105,000 ordinary shares, par value $0.001 per share (the “Ordinary Shares”), which includes 3,405,000 Ordinary Shares issued upon the exercise in full by the underwriters of their option to purchase additional shares, at a public offering price of $20.00 per share. All of the Ordinary Shares were sold by Huntsman, and we did not receive any proceeds from the offering. The Ordinary Shares began trading August 3, 2017 on the New York Stock Exchange under the symbol “VNTR.” Following the IPO, Huntsman owns approximately 75% of Venator’s outstanding Ordinary Shares. The material terms of the IPO are described in the Prospectus.

 

In connection with the IPO and the Separation, Venator and Huntsman entered into certain agreements that allocated between Venator and Huntsman the various assets, employees, liabilities and obligations that were previously part of Huntsman and that govern various interim and ongoing relationships between the parties.

 

10


 

Senior Credit Facilities and Senior Notes

 

On August 8, 2017, in connection with the IPO and the Separation, we entered into new financing arrangements and incurred new debt, including borrowings of $375 million under a new senior secured term loan facility with a maturity of seven years (the “Term Loan Facility”). In addition to the Term Loan Facility, we entered into a $300 million asset-based revolving lending facility with a maturity of five years (the “ABL facility” and, together with the term loan facility, the “Senior Credit Facilities”). On July 14, 2017, in connection with the IPO and the Separation, our subsidiaries Venator Finance S.à.r.l. and Venator Materials LLC, issued $375,000,000 in aggregate principal amount of 5.75% of Senior Notes due 2025 (the “Senior Notes”). Promptly following consummation of the Separation, the proceeds of the Senior Notes were released from escrow and Venator used the net proceeds of the Senior Notes and borrowings under the Term Loan Facility to repay intercompany debt owed to Huntsman and to pay related fees and expenses. See “Note 7. Related Party Financing” for further discussion of our debt owed to Huntsman.

 

Pori Fire

 

On January 30, 2017, our TiO2 manufacturing facility in Pori, Finland experienced fire damage and it is currently not fully operational. We are committed to repairing the facility as quickly as possible and a portion of our white end production became operational during the second quarter of 2017. During the first half of 2017, we recorded a loss of $32 million for the write-off of fixed assets and lost inventory in other operating income, net in our condensed combined statements of operations. In addition, we recorded a loss of $15 million of costs for cleanup of the facility in other operating income, net through June 30, 2017. The site is insured for property damage as well as business interruption losses subject to retained deductibles of $15 million and 60 days, respectively, with a limit of $500 million. The fire at our Pori facility did not have a material impact on our 2017 second quarter operating results as losses incurred were offset by insurance proceeds. On February 9, 2017 and May 2, 2017, we received $54 million and $76 million, respectively, as partial progress payments from our insurer. During the first six months of 2017, we recorded $84 million of income related to property damage and business interruption insurance recoveries in other operating income, net in our condensed combined statements of operations to offset property damage and business interruption losses recorded during the period. In addition, we recorded $46 million as deferred income in accrued liabilities as of June 30, 2017 for insurance proceeds received for costs not yet incurred. On July 10, 2017, we received an additional progress payment of $11 million from our insurer.

 

Basis of Presentation

 

Venator’s unaudited condensed combined financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP" or "U.S. GAAP") and in management’s opinion reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results of operations, comprehensive income (loss), financial position and cash flows for the periods presented. Results of interim periods are not necessarily indicative of those to be expected for the full year. These unaudited condensed combined financial statements should be read in conjunction with the audited combined financial statements and notes to combined financial statements included in the Prospectus.

 

Venator’s operations were included in Huntsman’s financial results in different legal forms, including but not limited to: (1) wholly-owned subsidiaries for which the Titanium Dioxide and Performance Additives businesses were the sole businesses; (2) legal entities which are comprised of the Titanium Dioxide and Performance Additives businesses; and (3) variable interest entities in which the Titanium Dioxide and Performance Additives businesses are the primary beneficiaries. The unaudited condensed combined financial statements include all revenues, costs, assets, liabilities and cash flows directly attributable to Venator, as well as allocations of direct and indirect corporate expenses, which are based upon an allocation method that in the opinion of management is reasonable. Such corporate cost allocation transactions between Venator and Huntsman have been considered to be effectively settled for cash in the condensed combined financial statements at the time the transaction is recorded and the net effect of the settlement of these intercompany transactions is reflected in the condensed combined statements of cash flows as a financing activity. Because the historical condensed combined financial information for the periods indicated reflect the combination of these legal entities under common control, the historical condensed combined financial information includes the results of operations of other Huntsman businesses are not a part of our operations after the Separation. We report the results of those other businesses as discontinued operations. See “Note 3. Discontinued Operations” for further discussion of discontinued operations.

 

11


 

In addition, the unaudited condensed combined financial statements have been prepared from Huntsman’s historical accounting records and are presented on a stand-alone basis as if Venator’s operations had been conducted separately from Huntsman; however, Venator did not operate as a separate, stand-alone entity for the periods presented and, as such, the condensed combined financial statements may not be indicative of the financial position, results of operations and cash flows had Venator been a stand-alone company.

 

For purposes of these unaudited condensed combined financial statements, all significant transactions with Huntsman International have been included in group equity. All intercompany transactions within the combined business have been eliminated.

 

Huntsman’s executive, information technology, EHS and certain other corporate departments perform certain administrative and other services for Venator. Additionally, Huntsman performs certain site services for Venator. Expenses incurred by Huntsman and allocated to Venator are determined based on specific services provided or are allocated based on Venator’s total revenues, total assets, and total employees in proportion to those of Huntsman. Management believes that such expense allocations are reasonable. Corporate allocations include allocated selling, general, and administrative expenses of $28 million and $26 million for the three months ended June 30, 2017 and 2016, respectively, and $52 million and $49 million for the six months ended June 30, 2017 and 2016, respectively.

 

NOTE 2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

 

Accounting Pronouncements Adopted During 2017

 

In July 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015‑11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The amendments in this ASU do not apply to inventory that is measured using last-in first-out ("LIFO") or the retail inventory method, but rather does apply to all other inventory, which includes inventory that is measured using first-in first-out or average cost. An entity should measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments in this ASU should be applied prospectively. We adopted the amendments in this ASU effective January 1, 2017, and the initial adoption of the amendment in this ASU did not have a significant impact on our condensed combined financial statements.

 

Accounting Pronouncements Pending Adoption in Future Periods

 

In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606), outlining a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers and supersedes most current revenue recognition guidance. In August 2015, the FASB issued ASU No. 2015‑14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferring the effective date of ASU No. 2014‑09 for all entities by one year. Further, in March 2016, the FASB issued ASU No. 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), clarifying the implementation guidance on principal versus agent considerations, in April 2016, the FASB issued ASU No. 2016‑10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, clarifying the implementation guidance on identifying performance obligations in a contract and determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time), in May 2016, the FASB issued ASU No. 2016‑12, Revenue from Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, providing clarifications and practical expedients for certain narrow aspects in Topic 606, and in December 2016, the FASB issued ASU 2016‑20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The amendments in these ASUs are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The amendments in ASU No. 2014‑09, ASU No. 2016‑08, ASU No. 2016‑10, ASU No. 2016‑12 and ASU No. 2016‑20 should be applied retrospectively, and early application is permitted. We are currently performing the analysis identifying areas that will be impacted by the adoption of the amendments in ASU No. 2014‑09, ASU No. 2016‑08, ASU No. 2016‑10, ASU No. 2016‑12 and ASU No. 2016‑20 on our condensed combined financial statements. At this time, other than additional required disclosures, we do not expect the adoption of the amendments in these ASUs to have

12


 

a significant impact on our financial statements. The standard will be adopted in our fiscal year 2018 and we have elected the modified retrospective approach as the transition method.

 

In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842). The amendments in this ASU will increase transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this ASU will require lessees to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application of the amendments in this ASU is permitted for all entities. Reporting entities are required to recognize and measure leases under these amendments at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact of the adoption of the amendments in this ASU on our financial statements and believe, based on our preliminary assessment, that we will record significant additional right-of-use assets and lease obligations.

 

In August 2016, the FASB issued ASU No. 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU clarify and include specific guidance to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. We do not expect the adoption of the amendments in this ASU to have a significant impact on our financial statements.

 

In October 2016, the FASB issued ASU No. 2016‑16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The amendments in this ASU require entities to recognize the current and deferred income taxes for an intra-entity transfer of an asset other than inventory when the transfer occurs, as opposed to deferring the recognition of the income tax consequences until the asset has been sold to an outside party. The amendments in this ASU are effective for annual reporting periods beginning after December 31, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We do not expect the adoption of the amendments in this ASU to have a significant impact on our financial statements.

 

In November 2016, the FASB issued ASU No. 2016‑18, Statement of Cash Flows (Topic 230): Restricted Cash. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, and interim period within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. We do not expect the adoption of the amendments in this ASU to have a significant impact on our financial statements.

 

In January 2017, the FASB issued ASU No. 2017‑01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early application is permitted. The amendments in this ASU should be applied prospectively on or after the effective date. No disclosures are required at transition. We do not expect the adoption of the amendments in this ASU to have a significant impact on our financial statements.

 

In March 2017, the FASB issued ASU No. 2017‑07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments in this ASU require that an employer report the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the same line items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the

13


 

income statement separately from the service cost component and outside of income from operations. The amendments in this ASU also allow only the service cost component to be eligible for capitalization when applicable (for example, as a cost of internally manufactured inventory or a self-constructed asset). The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit cost in assets. The amendments in this ASU will impact the presentation of our financial statements. Our current presentation of service cost components is consistent with the amendments in this ASU. Upon adoption of the amendments in this ASU, we expect to present the other components within other nonoperating income, whereas we currently present these within cost of goods sold and selling, general and administrative expenses.

 

NOTE 3. DISCONTINUED OPERATIONS

 

The Titanium Dioxide, Performance Additives and other businesses were included in Huntsman's financial results in different legal forms, including, but not limited to: (1) wholly-owned subsidiaries for which the Titanium Dioxide and Performance Additives businesses were the sole businesses; (2) legal entities that are comprised of other businesses and include the Titanium Dioxide and/or Performance Additives businesses; and (3) variable interest entities in which the Titanium Dioxide, Performance Additives and other businesses are the primary beneficiaries. Because the historical condensed combined financial information for the periods indicated reflect the combination of these legal entities under common control, the historical condensed combined financial information includes the results of operations of other Huntsman businesses that are not a part of our operations after the Separation. The legal entity structure of Huntsman was reorganized during the fourth quarter of 2016 and the second quarter of 2017 such that the other businesses would not be included in Venator’s legal entity structure and as such, the discontinued operations presented below reflect financial results of the other businesses through the date of such reorganization.

 

The following table summarizes the balance sheet data for discontinued operations:

 

 

 

 

 

 

    

December 31, 

(Dollars in millions)

 

2016

ASSETS

Current assets:

 

 

  

Cash and cash equivalents

 

$

 1

Accounts receivable (net of allowance for doubtful accounts of $1)

 

 

10

Accounts receivable from affiliates

 

 

61

Inventories

 

 

 9

Prepaid expenses

 

 

 1

Other current assets

 

 

 2

Total current assets of discontinued operations

 

 

84

Property, plant and equipment, net

 

 

19

Intangible assets, net

 

 

 2

Deferred income taxes

 

 

21

Noncurrent assets of discontinued operations

 

 

42

Total assets of discontinued operations

 

$

126

LIABILITIES

Current liabilities:

 

 

  

Accounts payable

 

$

 7

Accounts payable to affiliates

 

 

 2

Accrued liabilities

 

 

18

Total current liabilities of discontinued operations

 

 

27

Deferred income taxes

 

 

 1

Other noncurrent liabilities

 

 

77

Noncurrent liabilities of discontinued operations

 

 

78

Total liabilities of discontinued operations

 

$

105

 

14


 

The following table summarizes the operations data for discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

June 30, 

 

June 30, 

(Dollars in millions)

    

2017

    

2016

    

2017

    

2016

Revenues:

 

 

  

 

 

  

 

 

  

 

 

  

Trade sales, services and fees, net

 

$

 —

 

$

29

 

$

15

 

$

55

Related party sales

 

 

 —

 

 

17

 

 

17

 

 

36

Total revenues

 

 

 —

 

 

46

 

 

32

 

 

91

Cost of goods sold

 

 

 —

 

 

38

 

 

26

 

 

74

Operating expenses:

 

 

  

 

 

  

 

 

  

 

 

  

Selling, general and administrative (includes corporate allocations of nil, $2, $2 and $3, respectively)

 

 

 —

 

 

 6

 

 

(7)

 

 

10

Restructuring, impairment and plant closing costs

 

 

 —

 

 

 —

 

 

 1

 

 

 —

Other (income) expense, net

 

 

 —

 

 

(1)

 

 

 1

 

 

(1)

Total expenses (income)

 

 

 —

 

 

 5

 

 

(5)

 

 

 9

Income from discontinued operations before tax

 

 

 —

 

 

 3

 

 

11

 

 

 8

Income tax expense

 

 

 —

 

 

(2)

 

 

(3)

 

 

(2)

Net income from discontinued operations

 

$

 —

 

$

 1

 

$

 8

 

$

 6

 

 

NOTE 4. INVENTORIES

 

Inventories are stated at the lower of cost or market, with cost determined using the average cost method. Inventories at June 30, 2017 and December 31, 2016 consisted of the following:

 

 

 

 

 

 

 

 

 

    

June 30, 

    

December 31, 

(Dollars in millions)

 

2017

 

2016

Raw materials and supplies

 

$

154

 

$

134

Work in process

 

 

46

 

 

46

Finished goods

 

 

231

 

 

246

Total

 

$

431

 

$

426

 

 

NOTE 5. VARIABLE INTEREST ENTITIES

 

We evaluate our investments and transactions to identify variable interest entities for which we are the primary beneficiary. We hold a variable interest in the following joint ventures for which we are the primary beneficiary:

 

·

Pacific Iron Products Sdn Bhd is our 50%-owned joint venture with Coogee Chemicals that manufactures products for Venator. It was determined that the activities that most significantly impact its economic performance are raw material supply, manufacturing and sales. In this joint venture we supply all the raw materials through a fixed cost supply contract, operate the manufacturing facility and market the products of the joint venture to customers. Through a fixed price raw materials supply contract with the joint venture we are exposed to the risk related to the fluctuation of raw material pricing. As a result, we concluded that we are the primary beneficiary.

 

·

Viance, LLC ("Viance") is our 50%-owned joint venture with Dow Chemical Company. Viance markets timber treatment products for Venator. We have determined that the activity that most significantly impacts Viance’s economic performance is manufacturing. The joint venture sources all of its products through a contract manufacturing arrangement at our Harrisburg, North Carolina facility and we bear a disproportionate amount of working capital risk of loss due to the supply arrangement whereby we control manufacturing on Viance’s behalf. As a result, we concluded that we are the primary beneficiary.

 

Creditors of these entities have no recourse to Venator’s general credit. As the primary beneficiary of these variable interest entities at June 30, 2017, the joint ventures’ assets, liabilities and results of operations are included in Venator’s condensed combined financial statements.

 

15


 

The revenues, income from continuing operations before income taxes and net cash provided by operating activities for our variable interest entities for the three and six months ended June 30, 2017 and 2016 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

June 30, 

 

June 30, 

(Dollars in millions)

    

2017

    

2016

    

2017

    

2016

Revenues

 

$

32

 

$

30

 

$

66

 

$

59

Income from continuing operations before income taxes

 

 

 5

 

 

 6

 

 

12

 

 

10

Net cash provided by operating activities

 

 

 7

 

 

 5

 

 

14

 

 

12

 

 

 

NOTE 6. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

 

Venator has initiated various restructuring programs in an effort to reduce operating costs and maximize operating efficiency. As of June 30, 2017 and December 31, 2016, accrued restructuring and plant closing costs by type of cost and initiative consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Other

    

 

 

 

 

Workforce

 

restructuring

 

 

 

(Dollars in millions)

 

reductions(1)

 

costs

 

Total(2)

Accrued liabilities as of December 31, 2016

 

$

21

 

$

 —

 

$

21

2017 charges

 

 

19

 

 

 8

 

 

27

2017 payments

 

 

(8)

 

 

(8)

 

 

(16)

Foreign currency effect on liability balance

 

 

 1

 

 

 —

 

 

 1

Accrued liabilities as of June 30, 2017

 

$

33

 

$

 —

 

$

33


(1)

The total workforce reduction reserves of $33 million relate to the termination of 335 positions, of which zero positions had been terminated as of June 30, 2017.

(2)

Accrued liabilities remaining at June 30, 2017 and December 31, 2016 by year of initiatives were as follows:

 

 

 

 

 

 

 

 

 

    

June 30, 

    

December 31, 

(Dollars in millions)

 

2017

 

2016

2015 initiatives and prior

 

$

14

 

$

21

2016 initiatives

 

 

 —

 

 

 —

2017 initiatives

 

 

19

 

 

 —

Total

 

$

33

 

$

21

 

Details with respect to our reserves for restructuring, impairment and plant closing costs are provided below by segment and initiative:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Titanium

    

Performance

    

Discontinued

 

 

 

(Dollars in millions)

 

Dioxide

 

Additives

 

Operations

 

Total

Accrued liabilities as of December 31, 2016

 

$

12

 

$

 9

 

$

 1

 

$

21

2017 charges

 

 

21

 

 

 6

 

 

 —

 

 

27

2017 payments

 

 

(10)

 

 

(6)

 

 

 —

 

 

(16)

Net activity due to discontinued operations

 

 

 —

 

 

 —

 

 

(1)

 

 

 —

Foreign currency effect on liability balance

 

 

 1

 

 

 —

 

 

 —

 

 

 1

Accrued liabilities as of June 30, 2017

 

$

24

 

$

 9

 

$

 —

 

$

33

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of restructuring reserves

 

$

20

 

$

 9

 

$

 —

 

$

29

Long-term portion of restructuring reserve

 

 

 4

 

 

 —

 

 

 —

 

 

 4