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OFFON

VENATOR MATERIALS PLC

(VNTR)
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VENATOR MATERIALS : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

02/26/2021 | 11:32am EDT
The following discussion and analysis of financial condition and results of
operations (MD&A) should be read in conjunction with the information under the
headings "Note Regarding Forward-Looking Statements," "Part I. Item 1A. Risk
Factors," "Part II. Item 6. Selected Financial Data" and "Part I. Item 1.
Business," as well as the audited consolidated financial statements and the
related notes thereto. The following MD&A gives effect to the recast as
described in "Part II. Item 8. Financial Statements" of this report.
COVID-19

The COVID-19 pandemic has created significant disruptions to the global economy
and has had an adverse effect on our business and the markets in which we
operate. As a result of the COVID-19 pandemic, governmental authorities have
implemented and are continuing to implement numerous and constantly evolving
measures to try to contain the virus, such as travel bans and restrictions,
limits on gatherings, quarantines, shelter-in-place orders and business
shutdowns. As a result of restrictions and other impacts of the COVID-19
pandemic, demand for many of our products has declined as sales volumes have
decreased 8% in 2020 compared to the prior year period.

We have manufacturing and other operations that are important to our company in
areas significantly affected by the outbreak and have implemented measures to
respond to the impacts of the pandemic, particularly in Europe, which is our
largest market and in which we have important manufacturing facilities. We are
actively managing our business through the pandemic and have enacted rigorous
safety measures across our organization in response to the pandemic, including
stopping non-essential business travel, increasing personal protective equipment
requirements at our manufacturing sites, removing non-essential contractors from
our sites, increasing cleaning and sanitizing measures, implementing social
distancing protocols, requiring work-from-home arrangements as appropriate and
reducing the amount of employees working at a site at any given time. We
continue to evaluate the appropriate measures to have in place to safeguard our
employees and our business and we may take further actions as government
authorities require or recommend, or as we determine to be in the best interest
of our employees, customers, partners and suppliers.

We have not experienced significant impacts or interruptions to our supply chain
as a result of the COVID-19 pandemic. However, at times during the pandemic,
certain of our suppliers have faced difficulties maintaining operations due to
government-ordered restrictions and shelter-in-place mandates. While we have
been able to identify alternative sourcing arrangements without disrupting our
supply chain, financial hardship on our suppliers caused by the COVID-19
pandemic could cause disruptions in our raw material supply. We are proactively
managing our supplier network by maintaining close contact and seeking
alternative arrangements in case our primary suppliers are impacted by the
COVID-19 pandemic.

We are actively managing the business to improve cash flow and ensure adequate
liquidity, which we believe will help us emerge from this environment a stronger
and more resilient company. Such measures include our COVID-19 response program,
our 2020 Business Improvement Program, managing our production network to align
with customer demand, managing our inventories and reducing planned capital
expenditures. In addition, various governments in the countries and localities
in which we operate have established economic relief and stimulus programs to
support their economies during the COVID-19 pandemic. We are participating in
certain smaller-value programs and we continue to assess the potential for the
impact that other programs may have on our liquidity as they become available.
We may also seek to take advantage of opportunities to raise or refinance
capital through debt financing, and may, from time to time, discuss such
opportunities with potential lenders or investors.

We cannot currently predict the duration and severity of impacts to our business
from the global economic slowdown caused by the COVID-19 pandemic. Because of
this, we cannot reasonably estimate with any degree of certainty the future
adverse impact the COVID-19 pandemic may have on our results of operations,
financial position, or liquidity. See "Part I. Item 1A. Risk Factors" for
further details of the risks that the COVID-19 pandemic may present to our
business.

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Recent Developments

German Restructuring

In the fourth quarter of 2020, our Board of Directors approved a plan to
implement a restructuring program at our manufacturing facilities in Duisburg,
Germany as part of our 2020 Business Improvement Program. As a result of this
program, we recognized restructuring expense of approximately $30 million in the
fourth quarter of 2020 of which $10 million was related to cash costs primarily
consisting of employee benefits, and approximately $20 million of non-cash costs
which are primarily related to accelerated depreciation. We expect to incur
additional future costs through 2022 of approximately $23 million which we
expect to be cash costs consisting of $19 million of employee benefit costs and
$4 million of plant shutdown costs.

SK Capital Share Acquisition
On December 23, 2020, funds advised by SK Capital Partners, L.P. ("SK Capital")
purchased approximately 42.4 million shares, representing just under 40% of
Venator's outstanding shares, from Huntsman, including a 30-month option for the
purchase of the remaining approximately 9.7 million Venator shares Huntsman
holds.

Recent Trends and Outlook


The COVID-19 pandemic introduced a period of decline in demand for our products
across our business beginning in the second quarter of 2020. We began to see
signs of economic recovery from the COVID-19 pandemic during the third and
fourth quarters across our business. We anticipate continued recovery throughout
2021 as COVID-19 vaccinations progress globally and governments begin to roll
back restrictions and protective measures that influence the markets in which we
operate. The speed of recovery will depend, however, on industry-specific
factors as further outlined below.

We expect the following in our Titanium Dioxide segment: (i) a two-speed
recovery in volumes as our specialty products experience a longer recovery than
demand for our functional products as our specialty business continues to be
more sensitive to the impacts of COVID-19; (ii) TiO2 pricing to reflect regional
supply and demand balances, increased competition in certain regions for certain
of our products and our customer-tailored approach; (iii) rising cost of ore
feedstocks and energy; and (iv) benefit from our 2020 Business Improvement
Program which includes our program to restructure our German manufacturing
facilities.

We expect the following in our Performance Additives segment: (i) Sequential
increase in volumes across the segment due to normal seasonal demand trends and
continued recovery from COVID-19; (ii) Product portfolio optimization actions;
and (iii) benefit from our 2020 Business Improvement Program which includes our
program to restructure our German manufacturing facilities.

During 2020, in response to the adverse impact of the COVID-19 pandemic, we
implemented our COVID-19 response program to reduce our costs, including
non-recurring personnel cost reductions and operational cost savings at our
manufacturing facilities. Personnel cost management actions included a temporary
reduction in salaries, changes and reductions to bonus schemes and employee
furloughs, as well as reduced spending on other discretionary items. We realized
approximately $27 million of non-recurring savings from our COVID-19 response
program in 2020 which will be replaced by savings from our 2020 Business
Improvement Program.

In the fourth quarter of 2018, we commenced our $40 million, 2019 Business Improvement Program and we delivered $20 million through December 31, 2019. We ended 2020 at the full $40 million run-rate level.


During the third quarter of 2020, we announced our 2020 Business Improvement
Program that will save approximately $55 million compared to 2019. This program
is in addition to our 2019 Business Improvement Program and replaces our
non-recurring COVID-19 cost savings initiatives delivered in 2020. We expect
that this program will be fully implemented by the end of 2022. We realized
approximately $16 million of savings during 2020.

In 2021, we expect total capital expenditures to be approximately $75 million to $85 million. This includes maintenance capital expenditures and the cost of implementing business improvement projects.

We expect our corporate and other costs will be approximately $45 million in 2021.



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Results of Operations

The following table sets forth our consolidated results of operations for
the years ended December 31, 2020, 2019 and 2018. For a discussion of the 2018
results of operations, see "Part II. Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations-Results of Operations"
in the 2018 Form 10-K.
                                                                                                                             Percent Change
                                                                         Year Ended December 31,                               Year Ended
                                                                                                                                           2019 vs.
(Dollars in millions)                                             2020               2019             2018          2020 vs. 2019            2018
Revenues                                                     $   1,938            $ 2,130          $ 2,265                   (9) %              (6) %
Cost of goods sold                                               1,778              1,892            1,550                   (6) %              22  %
Operating expenses(4)                                              170                192              218                  (11) %             (12) %

Restructuring, impairment and plant closing and transition costs

                                                               58                 33              628                   76  %             (95) %
Operating (loss) income                                            (68)                13             (131)                     NM                 NM
Interest expense, net                                              (52)               (41)             (40)                  27  %               3  %
Other income                                                        27                  8                6                  238  %              33  %
Loss before income taxes                                           (93)               (20)            (165)                 365  %             (88) %
Income tax (expense) benefit                                       (12)              (150)               8                  (92) %                 NM

Net loss                                                          (105)              (170)            (157)                 (38) %               8  %
Reconciliation of net loss to adjusted EBITDA:
Interest expense, net                                               52                 41               40                   27  %               3  %
Income tax expense (benefit)                                        12                150               (8)                 (92) %                 NM
Depreciation and amortization                                      114                110              132                    4  %             (17) %
Net income attributable to noncontrolling interests                 (7)                (5)              (6)                  40  %             (17) %
Other adjustments:
Business acquisition and integration expense (credits)               1                 (1)              20
Separation (gain) expense, net                                     (10)                (3)               2

(Gain) loss on disposition of businesses/assets                     (5)                 1                2
Certain legal expenses/settlements                                   6                  4                -

Amortization of pension and postretirement actuarial losses 13

            14               15
Net plant incident costs (credits)                                   7                 20             (232)
Restructuring, impairment and plant closing and transition
costs                                                               58                 33              628
Adjusted EBITDA(1)                                           $     136            $   194          $   436                  (30) %             (56) %

Net cash provided by operating activities                           34                 33              282                    3  %             (88) %
Net cash used in investing activities                              (64)              (150)            (321)                 (57) %             (53) %
Net cash provided by (used in) financing activities                192                  7              (18)               2,643  %                 NM
Capital expenditures                                               (69)              (152)            (326)                 (55) %             (53) %



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                                                                          Year Ended                      Year Ended                      Year Ended
                                                                         December 31,                    December 31,                    December 31,
(Dollars in millions)                                                        2020                            2019                            2018

Reconciliation of net loss to adjusted net (loss) attributable to Venator Materials PLC ordinary shareholders: Net loss

                                                                 $     (105)                     $     (170)                     $     (157)
Net income attributable to noncontrolling interests                              (7)                             (5)                             (6)
Other adjustments:
Business acquisition and integration expense (credits)                            1                              (1)                             20
Separation (gain) expense, net                                                  (10)                             (3)                              2

(Gain) loss on disposition of businesses/assets                                  (5)                              1                               2
Certain legal expenses/settlements                                                6                               4                               -
Amortization of pension and postretirement actuarial losses                      13                              14                              15
Net plant incident costs (credits), net                                           7                              20                            (232)

Restructuring, impairment and plant closing and transition costs

                                                                            58                              33                             628
Income tax adjustments(3)                                                        20                             133                             (37)

Adjusted net (loss) income attributable to Venator Materials PLC ordinary shareholders(2)

                                             $      (22)                     $       26                      $      235
Weighted-average shares-basic                                                 106.7                           106.5                           106.4
Weighted-average shares-diluted                                               106.7                           106.5                           106.7
Net loss attributable to Venator Materials PLC ordinary
shareholders per share:
Basic                                                                    $    (1.05)                     $    (1.64)                     $    (1.53)
Diluted                                                                  $    (1.05)                     $    (1.64)                     $    (1.53)
Other non-GAAP measures:
Adjusted net (loss) income per share:(2)
Basic                                                                    $    (0.21)                     $     0.24                      $     2.21
Diluted                                                                  $    (0.21)                     $     0.24                      $     2.20





NM-Not meaningful
(1)Our management uses adjusted EBITDA to assess financial performance. Adjusted
EBITDA is defined as net income/loss before interest income/expense, net, income
tax expense/benefit, depreciation and amortization, and net income attributable
to noncontrolling interests, as well as eliminating the following adjustments:
(a) business acquisition and integration expense/credits; (b) separation
gain/expense; (c) loss/gain on disposition of businesses/assets; (d) certain
legal expenses/settlements; (e) amortization of pension and postretirement
actuarial losses/gains; (f) net plant incident costs/credits; and
(g) restructuring, impairment, and plant closing and transition costs/credits.
We believe that net income is the performance measure calculated and presented
in accordance with generally accepted accounting principles in the United States
("U.S. GAAP" or "GAAP") that is most directly comparable to adjusted EBITDA.

We believe adjusted EBITDA is useful to investors in assessing our ongoing
financial performance and provides improved comparability between periods
through the exclusion of certain items that management believes are not
indicative of our operational profitability and that may obscure underlying
business results and trends. However, this measure should not be considered in
isolation or viewed as a substitute for net income or other measures of
performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA
as used herein is not necessarily comparable to other similarly titled measures
of other companies due to potential inconsistencies in the methods of
calculation. Our management believes this measure is useful to compare general
operating performance from period to period and to make certain related
management decisions. Adjusted EBITDA is also used by securities analysts,
lenders and others in their evaluation of different companies because it
excludes certain items that can vary widely across different industries or among
companies within the same industry. For example, interest expense can be highly
dependent on a company's capital structure, debt levels and credit ratings.
Therefore, the impact of interest expense on earnings can vary significantly
among companies. In addition, the tax positions of companies can vary because of
their differing abilities to take advantage of tax benefits and because of the
tax policies of the various jurisdictions in which they operate. As a result,
effective tax rates and tax expense can vary
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considerably among companies. Finally, companies employ productive assets of
different ages and utilize different methods of acquiring and depreciating such
assets. This can result in considerable variability in the relative costs of
productive assets and the depreciation and amortization expense among companies.

Nevertheless, our management recognizes that there are limitations associated
with the use of adjusted EBITDA in the evaluation of us as compared to net
income. Our management compensates for the limitations of using adjusted EBITDA
by using this measure to supplement U.S. GAAP results to provide a more complete
understanding of the factors and trends affecting the business rather than U.S.
GAAP results alone.

In addition to the limitations noted above, adjusted EBITDA excludes items that
may be recurring in nature and should not be disregarded in the evaluation of
performance. However, we believe it is useful to exclude such items to provide a
supplemental analysis of current results and trends compared to other periods
because certain excluded items can vary significantly depending on specific
underlying transactions or events, and the variability of such items may not
relate specifically to ongoing operating results or trends and certain excluded
items, while potentially recurring in future periods, may not be indicative of
future results.

(2)Adjusted net income/loss attributable to Venator Materials PLC ordinary
shareholders is computed by eliminating the after-tax amounts related to the
following from net income/loss attributable to Venator Materials PLC ordinary
shareholders: (a) business acquisition and integration expenses/credits; (b)
separation gain/expense; (c) loss/gain on disposition of businesses/assets; (d)
certain legal expenses/settlements; (e) amortization of pension and
postretirement actuarial losses/gains; (f) net plant incident costs/credits; and
(g) restructuring, impairment, and plant closing and transition costs/credits.
Basic adjusted net income per share excludes dilution and is computed by
dividing adjusted net income by the weighted average number of shares
outstanding during the period. Adjusted diluted net income per share reflects
all potential dilutive ordinary shares outstanding during the period increased
by the number of additional shares that would have been outstanding as dilutive
securities.

Adjusted net income/loss and adjusted net income/loss per share amounts are
presented solely as supplemental information. These measures exclude similar
noncash items as Adjusted EBITDA in order to assist our investors in comparing
our performance from period to period and as such, bear similar risks as
Adjusted EBITDA as documented in footnote (1) above. For that reason, adjusted
net income/loss and the related per share amounts, should not be considered in
isolation and should be considered only to supplement analysis of U.S. GAAP
results.

(3)Prior to the second quarter of 2019, the income tax impacts, if any, of each
adjusting item represented a ratable allocation of the total difference between
the unadjusted tax expense and the total adjusted tax expense, computed without
consideration of any adjusting items using a with and without approach.

Beginning in the three and six-month periods ended June 30, 2019, income tax
expense is adjusted by the amount of additional tax expense or benefit that we
would accrue if we used non-GAAP results instead of GAAP results in the
calculation of our tax liability, taking into consideration our tax structure.
We use a normalized effective tax rate of 35%, which reflects the weighted
average tax rate applicable under the various jurisdictions in which we operate.
This non-GAAP tax rate eliminates the effects of non-recurring and period
specific items which are often attributable to restructuring and acquisition
decisions and can vary in size and frequency. This rate is subject to change
over time for various reasons, including changes in the geographic business mix,
valuation allowances, and changes in statutory tax rates.

We eliminate the effect of significant changes to income tax valuation
allowances from our presentation of adjusted net income to allow investors to
better compare our ongoing financial performance from period to period. We do
not adjust for insignificant changes in tax valuation allowances because we do
not believe it provides more meaningful information than is provided under GAAP.
We believe that our revised approach enables a clearer understanding of the
long-term impact of our tax structure on post tax earnings.

(4)As presented within Item 7, operating expenses include selling, general and administrative expenses and other operating expense/income.


Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019
For the year ended December 31, 2020, net loss was $105 million on revenues of
$1,938 million, compared with a net loss of $170 million on revenues of $2,130
million for the same period in 2019. The decrease of $65 million in net loss was
the result of the following items:
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•Revenues for the year ended December 31, 2020 decreased by $192 million, or 9%,
as compared with the same period in 2019. The decrease was due to a $183
million, or 11%, decrease in revenue in our Titanium Dioxide segment and a $9
million, or 2%, decrease in revenue in our Performance Additives segment. See
"-Segment Analysis" below.
•Our operating expenses for the year ended December 31, 2020 decreased by $22
million, or 11%, as compared to the same period in 2019, primarily due to $21
million of savings from selling, general administrative expense due to cost
savings from our COVID-19 response program and a $6 million gain from the sale
of our property in Umbogintwini, South Africa during the third quarter of 2020,
partially offset by approximately $7 million of legal expenses related to
certain litigation.
•Restructuring, impairment and plant closing and transition costs for the year
ended December 31, 2020 increased to $58 million from $33 million for the same
period in 2019. For more information concerning restructuring activities, see
"Part II. Item 8. Financial Statements and Supplementary Data-Note 13.
Restructuring, Impairment and Plant Closing and Transition Costs" of this
report.
•Other income for the year ended December 31, 2020 increased by $19 million
primarily as a result of the change in the related party payable to Huntsman
pursuant to the tax matters agreement entered into as part of our separation and
a reduction in pension expenses as compared to 2019. For further information
concerning the payable to Huntsman under the tax matters agreement, see "Part
II. Item 8. Financial Statements and Supplementary Data-Note 19. Income Taxes"
of this report.
•Income tax expense for the year ended December 31, 2020 was $12 million
compared to $150 million for the same period in 2019. Our income tax expense is
significantly affected by the mix of income and losses in the tax jurisdictions
in which we operate, as impacted by the presence of valuation allowances in
certain tax jurisdictions. In 2019, we recorded a full valuation allowance
against certain net deferred tax assets of $162 million. For further information
concerning taxes, see "Part II. Item 8. Financial Statements and Supplementary
Data-Note 19. Income Taxes" of this report.

Segment Analysis
                                                         Percent
                                 Year Ended              Change
                                December 31,            Favorable
(in millions)                2020         2019        (Unfavorable)
Revenues
Titanium Dioxide           $ 1,431      $ 1,614               (11) %
Performance Additives          507          516                (2) %
Total                      $ 1,938      $ 2,130                (9) %
Adjusted EBITDA
Titanium Dioxide           $   127      $   197               (36) %
Performance Additives           55           47                17  %
                               182          244               (25) %
Corporate and other            (46)         (50)                8  %
Total                      $   136      $   194               (30) %



                                                                                   Year Ended December 31, 2020 vs. 2019
                                                                     Average Selling
                                                                         Price(1)
                                                                                      Foreign
                                                                                     Currency
                                                            Local                   Translation                 Mix &                   Sales
                                                           Currency                   Impact                    Other                 Volumes(2)
Period-Over-Period Increase (Decrease)
Titanium Dioxide                                                   (2) %                        -  %                  -  %                      (9) %
Performance Additives                                               3  %                        -  %                  -  %                      (5) %




(1)Excludes revenues from tolling arrangements, by-products and raw materials. (2)Excludes sales volumes of by-products and raw materials. Titanium Dioxide

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The Titanium Dioxide segment generated revenues of $1,431 million in the twelve
months ended December 31, 2020, a decrease of $183 million, or 11%, compared to
the same period in 2019. The decrease was primarily due to a 9% decrease in
sales volumes, and a 2% decline in the average TiO2 selling price. The decline
in the average TiO2 volumes was primarily a result of the impact of the COVID-19
pandemic on demand beginning in the second quarter of 2020 and as a result of
the impact of hurricanes in the Gulf of Mexico during the third and fourth
quarters of 2020.

Adjusted EBITDA for the Titanium Dioxide segment was $127 million, a decline of
$70 million, or 36%, in the twelve months ended December 31, 2020 compared to
the same period in 2019. This decrease is primarily a result of lower revenue,
lower plant utilization resulting in higher production costs of approximately
$14 million compared to 2019, higher ore costs, a noncash benefit due to
recognition of changes in pension obligation and the impact of a benefit in 2019
due to a change in plant utilization rates. These unfavorable impacts on our
adjusted EBITDA were partially offset by benefits from our Business Improvement
Programs of approximately $20 million, approximately $19 million of savings from
our COVID-19 response program and the impact of lower energy prices in 2020
compared to the prior year period.

Performance Additives
The Performance Additives segment generated revenues of $507 million in the
twelve months ended December 31, 2020, a decline of $9 million, or 2% compared
to the same period in 2019. This decrease was a result of a 5% decline in
volumes partially offset by a 3% improvement in average selling price. The
decline in sales volumes was primarily a result of lower demand for color
pigments and functional additives products due to the impact of COVID-19 on
demand for construction, coatings and automotive end-use applications, partially
offset by fourth quarter recoveries in color pigments and functional additives.
Volumes in our timber treatment business improved compared to 2019. The average
selling price increased primarily as a result of favorable mix within our color
pigments and timber treatment businesses.

Adjusted EBITDA in the Performance Additives segment was $55 million, an
increase of $8 million, or 17%, for the twelve months ended December 31, 2020
compared to the same period in 2019. The increase in adjusted EBITDA is
primarily related to a $10 million benefit from our Business Improvement
Programs, a $2 million benefit from our COVID-19 response program, and improved
EBITDA in our timber treatment business resulting from volume growth, partially
offset by decrease in revenue year over year as a result of the impact of
COVID-19 and lower plant utilization resulting in higher production costs in our
functional additives business of approximately $4 million compared to the prior
year.

Corporate and other
Corporate and other represents expenses which are not allocated to our segments.
Losses from Corporate and other were $46 million, or $4 million lower for the
twelve months ended December 31, 2020 than the same period in 2019 due to
savings from our Business Improvement Programs and savings from our COVID-19
response program, partially offset by other increases in corporate selling,
general and administrative costs compared to 2019.

Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018
For the year ended December 31, 2019, net loss was $170 million on revenues of
$2,130 million, compared with a net loss of $157 million on revenues of $2,265
million for the same period in 2018. The increase of $13 million in net loss was
the result of the following items:
•Revenues for the year ended December 31, 2019 decreased by $135 million, or 6%,
as compared with the same period in 2018. The decrease was due to a $52 million,
or 3%, decrease in revenue in our Titanium Dioxide segment and an $83 million,
or 14%, decrease in revenue in our Performance Additives segment. See "-Segment
Analysis" below.
•Our operating expenses for the year ended December 31, 2019 decreased by $26
million, or 12%, as compared to the same period in 2018, primarily as a result
lower overhead costs, lower depreciation expense, and a decrease in Pori related
expenses, partially offset by the impact of $14 million of carbon credit sales
in 2018 and the negative impact of foreign exchange.
•Restructuring, impairment and plant closing and transition costs for the year
ended December 31, 2019 decreased to $33 million from $628 million for the same
period in 2018. For more information concerning restructuring activities, see
"Part II. Item 8. Financial Statements and Supplementary Data-Note 13.
Restructuring, Impairment and Plant Closing and Transition Costs" of this
report.
•Other income for the year ended December 31, 2019 increased by $2 million
primarily as a result of the recognition of $4 million related to the change in
the expected future payment to Huntsman pursuant to the tax matters agreement
entered into as part of our separation partially offset by a net decrease in
pension related expense.
•Income tax expense for the year ended December 31, 2019 was $150 million
compared to $8 million of income tax benefit for the same period in 2018. Our
income tax expense is significantly affected by the mix of income and losses
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in the tax jurisdictions in which we operate, as impacted by the presence of
valuation allowances in certain tax jurisdictions. In 2019, we recorded a full
valuation allowance against certain net deferred tax assets of $162 million. For
further information concerning taxes, see "Part II. Item 8. Financial Statements
and Supplementary Data-Note 19. Income Taxes" of this report.

Segment Analysis
                                                           Percent
                                   Year Ended              Change
                                 December 31,             Favorable
(in millions)                  2019         2018        (Unfavorable)
Revenues
Titanium Dioxide             $ 1,614      $ 1,666                (3) %
Performance Additives            516          599               (14) %
Total                        $ 2,130      $ 2,265                (6) %
Segment adjusted EBITDA
Titanium Dioxide             $   197      $   417               (53) %
Performance Additives             47           62               (24) %
                                 244          479               (49) %
Corporate and other              (50)         (43)              (16) %
Total                        $   194      $   436               (56) %



                                                                           

Year Ended December 31, 2019 vs. 2018

                                                               Average Selling
                                                                   Price(1)
                                                                               Foreign
                                                                               Currency
                                                       Local                 Translation                Mix &                   Sales
                                                     Currency                   Impact                  Other                Volumes(2)
Period-Over-Period Increase (Decrease)
Titanium Dioxide                                             (7) %                      (3) %                 -  %                      7  %
Performance Additives                                         -  %                      (2) %                 -  %                    (12) %




(1)Excludes revenues from tolling arrangements, by-products and raw materials. (2)Excludes sales volumes of by-products and raw materials.


Titanium Dioxide
The Titanium Dioxide segment generated revenues of $1,614 million in the twelve
months ended December 31, 2019, a decrease of $52 million, or 3%, compared to
the same period in 2018. The decrease was primarily due to a 7% decline in the
average TiO2 selling price and a 3% unfavorable impact of foreign currency
translation, partially offset by a 7% increase in sales volumes. The decline in
the average TiO2 selling price was primarily a result of lower functional TiO2
prices in Europe and Asia and more stable prices in North America. The average
specialty TiO2 price was stable compared to the prior year. Sales volumes
increased due to sales of new products, increased product availability and
improved demand for our products.

Adjusted EBITDA for the Titanium Dioxide segment was $197 million, a decline of
$220 million in the twelve months ended December 31, 2019 compared to the same
period in 2018. This decrease is primarily a result of lower TiO2 margins due to
a lower average TiO2 selling price, reduced contribution from specialty TiO2,
higher raw material costs, $14 million of carbon credits sold in the twelve
months ended December 31, 2018 and $41 million of lost earnings attributable to
our Pori, Finland TiO2 manufacturing facility, which were reimbursed through
insurance proceeds in the comparable period of 2018. This decrease was partially
offset by higher sales volumes, a $13 million benefit from our 2019 Business
Improvement Program and a $9 million benefit due to a change in plant
utilization rates, which increased our overhead absorption and corresponding
inventory valuation at certain facilities.

Performance Additives

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The Performance Additives segment generated revenues of $516 million in the
twelve months ended December 31, 2019, a decline of $83 million, or 14%,
compared to the same period in 2018. This decrease was a result of a 12% decline
in volumes and a 2% unfavorable impact of foreign currency translation. The
average selling price was stable compared to the prior year. The decline in
volumes was primarily attributable to soft demand in automotive coatings,
plastics and electronics applications, lower sales into construction-related
applications, including the effect of portfolio optimization and a
discontinuation of sales of a product to a timber treatment customer.

Adjusted EBITDA in the Performance Additives segment was $47 million, a decrease
of $15 million, or 24%, for the twelve months ended December 31, 2019 compared
to the same period in 2018. This decrease was primarily a result of lower sales
volumes and product mix, partially offset by lower raw material and selling,
general and administrative costs, a $5 million benefit from our 2019 Business
Improvement Program and a $2 million benefit due to a change in plant
utilization which increased our overhead absorption rates at certain facilities.

Corporate and other
Corporate and other represents expenses which are not allocated to our segments.
Losses from Corporate and other were $50 million, or $7 million higher for the
twelve months ended December 31, 2019 than the same period in 2018 due to a $9
million unfavorable impact of foreign currency exchange rates partially offset
by a $2 million benefit from our 2019 Business Improvement Program.

Liquidity and Capital Resources
We had cash and cash equivalents of $220 million and $55 million as of December
31, 2020 and 2019, respectively. We expect to have adequate liquidity to meet
our obligations over the next 12 months. We believe our future obligations,
including needs for capital expenditures will be met by available cash generated
from operations and cash on hand.
Our financing arrangements include borrowings of $375 million under the Term
Loan Facility, $225 million of Senior Secured Notes, and $375 million of Senior
Unsecured Notes, issued by our subsidiaries Venator Finance S.à r.l. and Venator
Materials LLC (the "Issuers"). We have a related-party note payable to Huntsman
for a liability pursuant to the tax matters agreement entered into at the time
of the separation of which $17 million has been presented as Noncurrent payable
to affiliate and $3 million is included within accounts payable to affiliates on
our consolidated balance sheets.
In addition to the Term Loan Facility, Senior Secured Notes and Senior Unsecured
Notes, we have an ABL Facility. Availability to borrow under the ABL Facility is
subject to a borrowing base calculation comprising both accounts receivable and
inventory in the U.S., Canada, the U.K. and Germany and accounts receivable in
France and Spain. Thus, the base calculation may fluctuate from time to time and
may be further impacted by the lenders' discretionary ability to impose reserves
and availability blocks that might otherwise incrementally increase borrowing
availability. The borrowing base calculation as of December 31, 2020 is
approximately $281 million, of which $251 million is available to be drawn, as a
result of $30 million of letters of credit issued and outstanding at December
31, 2020.
Items Impacting Short-Term and Long-Term Liquidity
Our liquidity can be significantly impacted by various factors. The following
matters had, or are expected to have, a significant impact on our liquidity:
•Cash inflows from our accounts receivable and inventory, net of accounts
payable, as reflected in our consolidated statements of cash flows increased by
$25 million for the year ended December 31, 2020 as compared to the same period
in the prior year. We expect our working capital to be a use of liquidity in
2021.

•In 2021, we expect total capital expenditures to be approximately $75 million
to $85 million. This includes maintenance capital expenditures and the cost of
implementing business improvement projects


•During the year ended December 31, 2020, we made contributions to our pension
and postretirement benefit plans of $38 million. During the first quarter of
2021, we expect to contribute an additional amount of approximately $10 million
to these plans.

•We are involved in a number of cost reduction programs for which we have established restructuring accruals including the program at our Duisburg Germany manufacturing facility which was approved in the fourth quarter of

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2020. As of December 31, 2020, we had a total of $19 million of accrued
restructuring costs of which $10 million is classified as current. We expect to
pay approximately $34 million for restructuring and plant closing costs during
2021. For further discussion of these plans and the costs involved, see "Part
II. Item 8. Financial Statements and Supplementary Data-Note 13. Restructuring,
Impairment and Plant Closing and Transition Costs" of this report.

•During 2020, in response to the adverse impact of the COVID-19 pandemic, we
implemented our COVID-19 response program to reduce our costs, including
non-recurring personnel cost reductions and operational cost savings at our
manufacturing facilities. Personnel cost management actions included a temporary
reduction in salaries, changes and reductions to bonus schemes and employee
furloughs, as well as reduced spending on other discretionary items. We realized
approximately $27 million of non-recurring savings from our COVID-19 response
program in 2020 which will be replaced by savings from our 2020 Business
Improvement Program.

•During the third quarter of 2020, we announced our 2020 Business Improvement
Program that will save approximately $55 million compared to 2019. This program
is in addition to our 2019 Business Improvement Program and replaces our
non-recurring COVID-19 cost savings initiatives delivered in 2020. We expect
that this program will be fully implemented by the end of 2022. We achieved $16
million of savings attributable to the 2020 Business Improvement Program and $14
million from the 2019 Business Improvement Program for the year ended December
31, 2020.

•On January 30, 2017, our TiO2 manufacturing facility in Pori, Finland,
experienced fire damage. We are in the process of closing our Pori, Finland,
TiO2 manufacturing facility and transferring our specialty and differentiated
business to other sites in our manufacturing network. We intend to operate the
Pori facility at reduced production rates through the transition period, subject
to economic and other factors. We do not expect any material capital
expenditures relating to the transfer during 2021. We intend to optimize the
remaining transfer of our specialty and differentiated business from our Pori,
Finland manufacturing site to other sites in our manufacturing network, but the
timing of this transfer will be elongated, due in part to the COVID-19 pandemic,
and may result in a lower total expected capital outlay and a lower associated
adjusted EBITDA benefit than originally estimated.

•We have $946 million in debt outstanding under our $359 million Term Loan
Facility, $215 million of 9.5% Senior Secured Notes due 2025 and $372 million of
5.75% of Senior Unsecured Notes due 2025. Through December 31, 2020, we are in
compliance with all applicable financial covenants included in the terms of our
Senior Credit Facility, Senior Secured Notes and Senior Unsecured Notes. In July
2017, the U.K.'s Financial Conduct Authority, which regulates LIBOR, announced
that it intends to phase out LIBOR by the end of 2021. We are currently
evaluating the potential effect of the eventual replacement of LIBOR on our
financial statements. Accounting guidance has been recently issued to ease the
transition to alternative reference rates from a financial reporting
perspective. See "Note 2. Recently Issued Accounting Pronouncements" of the
notes to consolidated financial statements. See further discussion under
"Financing Arrangements."

As of December 31, 2020 and 2019, we had $7 million and $13 million, respectively, classified as current portion of debt.


As of December 31, 2020 and 2019, we had $15 million and $16 million,
respectively, of cash and cash equivalents held outside of the U.S. and Europe,
including our variable interest entities. As of December 31, 2020, our non-U.K.
subsidiaries have no plan to distribute funds in a manner that would cause them
to be subject to U.K., U.S., or other local country taxation. For the year ended
December 31, 2020, our non-U.K. subsidiaries made no distribution of earnings
that caused them to be subject to material U.K., U.S., or other local country
taxation. In the first quarter of 2019, a non-U.K. subsidiary distributed $12
million to a U.K. subsidiary subject to a 5% withholding tax.
Cash Flows for the Year Ended December 31, 2020 Compared to the Year Ended
December 31, 2019
Net cash provided by operating activities was $34 million for the twelve months
ended December 31, 2020, compared to net cash provided by operating activities
of $33 million for the twelve months ended December 31, 2019. The increase in
net cash provided by operating activities for the twelve months ended December
31, 2020 compared with the same period of 2019 was primarily attributable to an
increase in cash flows due to changes in assets and liabilities of approximately
$53 million, partially offset by a $52 million decrease in cash inflows from net
income. The decrease in cash flows from net income is as a result of a $65
million decrease in net loss, as described in "-Results of Operations" above,
partially offset by changes in non-cash elements of net income comprised
primarily of a $141 million decrease in deferred income taxes, primarily as the
result of the recognition of a full valuation allowance against the net deferred
tax assets held at our German businesses during 2019 reduced by the impact of a
$27 million increase in noncash restructuring and impairment charges.
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Net cash used in investing activities was $64 million for the twelve months
ended December 31, 2020, compared to net cash used in investing activities of
$150 million for the twelve months ended December 31, 2019. The decrease in net
cash used in investing activities was primarily attributable to a $83 million
decrease in capital expenditures as we took measures to preserve cash in
response to the impact of the COVID-19 pandemic.
Net cash provided by financing activities was $192 million for the twelve months
ended December 31, 2020, compared to net cash provided by financing activities
of $7 million for the twelve months ended December 31, 2019. The increase in net
cash provided by financing activities for the twelve months ended December 31,
2020 compared with the same period of 2019 was primarily attributable to $221
million proceeds from the issuance of long-term debt during the second quarter
of 2020 partially offset by the impacts of $15 million in proceeds from the
termination of cross-currency swap contracts in 2019 and $14 million unfavorable
variance in net borrowings/repayments on notes payable.
Cash Flows for the Year Ended December 31, 2019 Compared to the Year Ended
December 31, 2018
Net cash provided by operating activities was $33 million for the twelve months
ended December 31, 2019, compared to net cash provided by operating activities
of $282 million for the twelve months ended December 31, 2018. The decrease in
net cash provided by operating activities for the twelve months ended December
31, 2019 compared with the same period of 2018 was primarily attributable to
changes in net income. The $13 million increase in net loss, as described in
"-Results of Operations" above, was offset by changes in non-cash elements of
net income comprised primarily of a $583 million decrease in non-cash
restructuring and impairment charges and a $158 million increase in income tax
expense primarily as the result of the recognition of a full valuation allowance
against the deferred tax assets held at our German businesses. The increase in
net loss, after giving effect to the non-cash restructuring and impairment
charges and the increase in income tax expense, was partially offset by an
increase in cash flows due to changes in assets and liabilities of approximately
$205 million.
Net cash used in investing activities was $150 million for the twelve months
ended December 31, 2019, compared to net cash used in investing activities of
$321 million for the twelve months ended December 31, 2018. The decrease in net
cash used in investing activities for the twelve months ended December 31, 2019
compared with the same period of 2018 was primarily attributable to a $174
million decrease in capital expenditures as a result of the unreimbursed Pori
capital expenditures in 2018.
Net cash provided by financing activities was $7 million for the twelve months
ended December 31, 2019, compared to net cash used in financing activities of
$18 million for the twelve months ended December 31, 2018. The increase in net
cash provided by financing activities for the twelve months ended December 31,
2019 compared with the same period of 2018 was primarily attributable to $15
million in proceeds from the termination of cross-currency swap contracts in
2019 and $13 million favorable variance in net borrowings/repayments on notes
payable.

Changes in Financial Condition


The following information summarizes our working capital as of December 31, 2020
and 2019:
                                           December 31,          December 31,            Increase
(Dollars in millions)                          2020                  2019               (Decrease)           Percent Change
Cash and cash equivalents                 $        220          $         55          $        165                     300  %
Accounts and notes receivable, net                 324                   321                     3                       1  %

Inventories                                        440                   513                   (73)                    (14) %
Prepaid expenses                                    24                    21                     3                      14  %
Other current assets                                49                    67                   (18)                    (27) %
Total current assets                             1,057                   977                    80                       8  %
Accounts payable                                   240                   334                   (94)                    (28) %
Accounts payable to affiliates                      22                    17                     5                      29  %
Accrued liabilities                                118                   116                     2                       2  %
Current operating lease liability                    8                     8                     -                       -  %
Current portion of debt                              7                    13                    (6)                    (46) %
Total current liabilities                          395                   488                   (93)                    (19) %
Working capital                           $        662          $        489          $        173                      35  %



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Our working capital increased by $173 million as a result of the net impact of
the following significant changes:
•Cash and cash equivalents increased by $165 million primarily due to cash
inflows of $192 million from financing activities and, inflows of $34 million
from operating activities and partially offset by outflows of $64 million from
investing activities.
•Inventories decreased by $73 million primarily due to lower levels of raw
materials and finished goods at December 31, 2020 as compared to the prior year
as a result of efforts to manage our inventory levels to respond to reductions
in customer demand during the COVID-19 pandemic.
•Accounts payable decreased by $94 million as a result of a reduction in capital
accruals and reductions in inventory during 2020.

The following information summarizes our working capital as of December 31, 2019
and 2018:
                                           December 31,          December 31,             Increase
(Dollars in millions)                          2019                  2018                (Decrease)           Percent Change
Cash and cash equivalents                 $         55          $        165          $        (110)                    (67) %
Accounts and notes receivable, net                 321                   351                    (30)                     (9) %

Inventories                                        513                   538                    (25)                     (5) %
Prepaid expenses                                    21                    20                      1                       5  %
Other current assets                                67                    51                     16                      31  %
Total current assets from continuing
operations                                         977                 1,125                   (148)                    (13) %
Accounts payable                                   334                   382                    (48)                    (13) %
Accounts payable to affiliates                      17                    18                     (1)                     (6) %
Accrued liabilities                                116                   135                    (19)                    (14) %
Current operating lease liability                    8                     -                      8                         NM
Current portion of debt                             13                     8                      5                      63  %
Total current liabilities from continuing
operations                                         488                   543                    (55)                    (10) %
Working capital                           $        489          $        582          $         (93)                    (16) %


Our working capital decreased by $93 million as a result of the net impact of the following significant changes:


•Cash and cash equivalents decreased by $110 million primarily due to cash
outflows of $150 million from investing activities, partially offset by cash
inflows of $33 million from operating activities and $7 million from financing
activities.
•Accounts receivable decreased by $30 million primarily due to lower sales year
over year.
•Inventories decreased by $25 million primarily due to lower levels of finished
goods at December 31, 2019 as compared to the prior year as a result of
seasonality and efforts across the organization to manage inventory levels
partially offset by an $11 million increase in inventory due to a change in
plant utilization rates which increased our overhead absorption and
corresponding inventory valuation at certain facilities in 2019.
•Accrued liabilities decreased by $19 million primarily due to a reduction of $9
million of accrued restructuring costs and $7 million of current portion of ARO
costs.

Financing Arrangements For a discussion of financing arrangements, see "Part II. Item 8. Financial Statements and Supplementary Data-Note 16. Debt" of this report.


Cross-Currency Swap
For a discussion of cross-currency swaps, see "Part II. Item 8. Financial
Statements and Supplementary Data-Note 17. Derivative Instruments and Hedging
Activities" of this report.

Contractual Obligations and Commercial Commitments

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Our obligations under long-term debt (including the current portion), lease
agreements and other contractual commitments as of December 31, 2020 are
summarized below:
(Dollars in millions)                            2021            2022-2023           2024-2025           After 2025           Total

Long-term debt, including current portion(1) $ 6 $ 8

       $      951          $         -          $   965
Interest(2)                                        56                 104                  91                    -              251
Finance leases                                      2                   3                   2                    5               12
Operating leases                                   11                  14                   9                   37               71
Purchase commitments(3)                           124                 145                  36                   13              318
Total(4)(5)                                    $  199          $      274          $    1,089          $        55          $ 1,617





(1)For more information, see "-Financing Arrangements."
(2)Interest calculated using actual and forecasted interest rates as of December
31, 2020 and contractual maturity dates.
(3)We have various purchase commitments extending through 2029 for materials,
supplies and services entered into in the ordinary course of business. Included
in the purchase commitments table above are contracts which require minimum
volume purchases that extend beyond one year or are renewable annually and have
been renewed for 2020. Certain contracts allow for changes in minimum required
purchase volumes in the event of a temporary or permanent shutdown of a
facility. To the extent the contract requires a minimum notice period, such
notice period has been included in the above table. The contractual purchase
price for substantially all of these contracts is variable based upon market
prices, subject to annual negotiations. We have estimated our contractual
obligations by using the terms of our current pricing for each contract. We also
have a limited number of contracts which require a minimum payment even if no
volume is purchased. We believe that all of our purchase obligations will be
utilized in our normal operations. For each of the years ended December 31,
2020, 2019 and 2018, we made minimum payments of nil, $1 million and nil,
respectively, under such take or pay contracts without taking the product.
(4)Totals do not include commitments pertaining to our pension and other
postretirement obligations. Our estimated future contributions to our pension
and postretirement plans are as follows:
                                                                                       Annual Average
       (Dollars in millions)                2021      2022-2023       

2024-2025 of Next 5 Years

       Pension plans                       $ 56      $       90      $       92      $             48
       Other postretirement obligations       -               -               -                     -



(5)The above table does not reflect expected tax payments and unrecognized tax
benefits due to the inability to make reasonably reliable estimates of the
timing and amount of payments. For additional discussion on unrecognized tax
benefits, see "Part II. Item 8. Financial Statements and Supplementary
Data-Note 19. Income Taxes" of this report.

Off-Balance-Sheet Arrangements
We are required to provide standby letters of credit primarily to collateralize
our obligation to third parties for pension liabilities and commercial
obligations in the ordinary course of business. Although the letters of credit
are off-balance sheet, the obligations to which they relate are reflected as
liabilities on the consolidated balance sheets. For a discussion of letters of
credit, see "Part II. Item 8. Financial Statements and Supplementary
Data-Note 16. Debt" of this report.

Restructuring, Impairment and Plant Closing and Transition Costs For further discussion of these and other restructuring plans and the costs involved, see "Part II. Item 8. Financial Statements and Supplementary Data-Note 13. Restructuring, Impairment and Plant Closing and Transition Costs" of this report.


Legal Proceedings
For a discussion of legal proceedings, see "Part II. Item 8. Financial
Statements and Supplementary Data-Note 22. Commitments and Contingencies-Legal
Matters" of this report.

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Environmental, Health and Safety Matters
As noted in "Part I. Item 1. Business-Environmental, Health and Safety Matters"
and "Part I. Item 1A. Risk Factors" of this report, we are subject to extensive
environmental regulations, which may impose significant additional costs on our
operations in the future. While we do not expect any of these enactments or
proposals to have a material adverse effect on us in the near term, we cannot
predict the longer-term effect of any of these regulations or proposals on our
future financial condition. For a discussion of EHS matters, see "Part II. Item
8. Financial Statements and Supplementary Data-Note 23. Environmental, Health
and Safety Matters" of this report.

Recently Issued Accounting Pronouncements
For a discussion of recently issued accounting pronouncements, see "Part II.
Item 8. Financial Statements and Supplementary Data-Note 2. Recently Issued
Accounting Pronouncements" of this report.

Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity
with U.S. GAAP requires management to make judgments, estimates and assumptions
that affect the reported amounts in our consolidated financial statements. Our
significant accounting policies are summarized in "Part II. Item 8. Financial
Statements and Supplementary Data-Note 1. Description Of Business, Recent
Developments and Summary Of Significant Accounting Policies" of this report.
Summarized below are our critical accounting policies:
Employee Benefit Programs
We sponsor several contributory and non-contributory defined benefit plans,
covering employees primarily in the U.S., the U.K., Germany and Finland, but
also covering employees in a number of other countries. We fund the material
plans through trust arrangements (or local equivalents) where the assets are
held separately from us. We also sponsor unfunded postretirement plans which
provide medical and, in some cases, life insurance benefits covering certain
employees in the U.S. and Canada. Amounts recorded in our consolidated financial
statements are recorded based upon actuarial valuations performed by various
third-party actuaries. Inherent in these valuations are numerous assumptions
regarding expected long-term rates of return on plan assets, discount rates,
compensation increases, mortality rates and health care cost trends. We evaluate
these assumptions at least annually.
The discount rate is used to determine the present value of future benefit
payments at the end of the year. For our U.S. and non-U.S. plans, the discount
rates were based on the results of matching expected plan benefit payments with
cash flows from a hypothetical yield curve constructed with high-quality
corporate bond yields.
The following weighted-average discount rate assumptions were used for the
defined benefit and other postretirement plans for the year:
                                                             December 31, 2020        December 31, 2019        December 31, 2018
Defined benefit plans
Projected benefit obligation                                            1.09  %                  1.60  %                  2.38  %
Net periodic pension cost                                               1.60  %                  2.38  %                  2.21  %
Other postretirement benefit plans
Projected benefit obligation                                            2.46  %                  3.27  %                  3.50  %
Net periodic pension cost                                               3.27  %                  3.51  %                  3.30  %



The expected return on plan assets is determined based on asset allocations,
historical portfolio results, historical asset correlations and management's
expected long-term return for each asset class. The expected rate of return on
U.S. plan assets was 7.75% in 2020 and 2019, each, and the expected rate of
return on non-U.S. plans was 4.99% and 5.18% for 2020 and 2019, respectively.

The expected increase in the compensation levels assumption reflects our long-term actual experience and future expectations.

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Management, with the advice of actuaries, uses judgment to make assumptions on
which our employee pension and postretirement benefit plan obligations and
expenses are based. The effect of a 1% change in three key assumptions is
summarized as follows (dollars in millions):
                                                           Statement of       Balance Sheet
Assumptions                                               Operations(1)         Impact(2)
Discount rate
1% increase                                              $           (8)     $         (177)
1% decrease                                                          20                 220
Expected long-term rates of return on plan assets
1% increase                                                          (9)                  -
1% decrease                                                           9                   -
Rate of compensation increase
1% increase                                                           2                   9
1% decrease                                                          (1)                 (7)




(1)Estimated (decrease) increase on 2020 net periodic benefit cost (2)Estimated (decrease) increase on December 31, 2020 pension and postretirement liabilities and accumulated other comprehensive loss


Income Taxes
We use the asset and liability method of accounting for income taxes. Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial and tax reporting
purposes. We evaluate deferred tax assets to determine whether it is more likely
than not that they will be realized. Valuation allowances are reviewed on a tax
jurisdiction basis to analyze whether there is sufficient positive or negative
evidence to support a change in judgment about the realizability of the related
deferred tax assets for each jurisdiction. These conclusions require significant
judgment. In evaluating the objective evidence that historical results provide,
we consider the cyclicality of businesses and cumulative income or losses during
the applicable period. Cumulative losses incurred over the period limit our
ability to consider other subjective evidence such as our projections for the
future. Changes in expected future income in applicable jurisdictions could
affect the realization of deferred tax assets in those jurisdictions. As of
December 31, 2020, we had total valuation allowances of $708 million. See "Part
II. Item 8. Financial Statements and Supplementary Data-Note 19. Income
Taxes" of this report for more information regarding our valuation allowances.
As of December 31, 2020, our non-U.K. subsidiaries have no plan to distribute
earnings in a manner that would cause them to be subject to U.K., U.S., or other
local country taxation.
Accounting for uncertainty in income taxes prescribes a recognition threshold
and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. The
application of income tax law is inherently complex. We are required to
determine if an income tax position meets the criteria of more-likely-than-not
to be realized based on the merits of the position under tax law, in order to
recognize an income tax benefit. This requires us to make significant judgments
regarding the merits of income tax positions and the application of income tax
law. Additionally, if a tax position meets the recognition criteria of
more-likely-than-not we are required to make judgments and apply assumptions in
order to measure the amount of the tax benefits to recognize. These judgments
are based on the probability of the amount of tax benefits that would be
realized if the tax position was challenged by the taxing authorities.
Interpretations and guidance surrounding income tax laws and regulations change
over time. As a consequence, changes in assumptions and judgments can materially
affect amounts recognized in our consolidated financial statements.
Long-Lived Assets
The useful lives of our property, plant and equipment are estimated based upon
our historical experience, engineering estimates and industry information and
are reviewed when economic events indicate that we may not be able to recover
the carrying value of the assets. The estimated lives of our property range from
3 to 50 years and depreciation is recorded on the straight-line method. Inherent
in our estimates of useful lives is the assumption that periodic maintenance and
an appropriate level of annual capital expenditures will be performed. Without
on-going capital improvements and maintenance, the productivity and cost
efficiency declines and the useful lives of our assets would be shorter.
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Management uses judgment to estimate the useful lives of our long-lived assets.
At December 31, 2020, if the estimated useful lives of our property, plant and
equipment had either been one year greater or one year less than their recorded
lives, then depreciation expense for 2020 would have been approximately $11
million less or $14 million greater, respectively.
We are required to evaluate the carrying value of our long-lived tangible and
intangible assets whenever events indicate that such carrying value may not be
recoverable in the future or when management's plans change regarding those
assets, such as idling or closing a plant. We evaluate impairment by comparing
undiscounted cash flows of the related asset groups that are largely independent
of the cash flows of other asset groups to their carrying values. Key
assumptions in determining the future cash flows include the useful life,
technology, competitive pressures, raw material pricing and regulations. In
connection with our asset evaluation policy, we reviewed all of our long-lived
assets for indicators that the carrying value may not be recoverable.
Restructuring and Plant Closing and Transition Costs
We recorded restructuring charges in recent periods in connection with closing
certain plant locations, workforce reductions and other cost savings programs in
each of our business segments. These charges are recorded when management has
committed to a plan and incurred a liability related to the plan. Estimates for
plant closing costs include the write-off of the carrying value of the plant,
any necessary environmental and/or regulatory costs, contract termination and
demolition costs. Estimates for workforce reductions and other costs savings are
recorded based upon estimates of the number of positions to be terminated,
termination benefits to be provided and other information, as necessary.
Management evaluates the estimates on a quarterly basis and will adjust the
reserve when information indicates that the estimate is above or below the
currently recorded estimate. For further discussion of our restructuring
activities, see "Part II. Item 8. Financial Statements and Supplementary
Data-Note 13. Restructuring, Impairment and Plant Closing and Transition
Costs" of this report.
Contingent Loss Accruals
Environmental remediation costs for our facilities are accrued when it is
probable that a liability has been incurred and the amount can be reasonably
estimated. Estimates of environmental liabilities require evaluating government
regulation, available technology, site-specific information and remediation
alternatives. We accrue an amount equal to our best estimate of the costs to
remediate based upon the available information. The extent of environmental
impacts may not be fully known and the processes and costs of remediation may
change as new information is obtained or technology for remediation is improved.
Our process for estimating the expected cost for remediation considers the
information available, technology that can be utilized and estimates of the
extent of environmental damage. Adjustments to our estimates are made
periodically based upon additional information received as remediation
progresses. As of December 31, 2020 and 2019, we had recognized a liability of
$8 million and $9 million, respectively, related to these environmental matters.
For further information, see "Part II. Item 8. Financial Statements and
Supplementary Data-Note 23. Environmental, Health and Safety Matters" of this
report.
We are subject to legal proceedings and claims arising out of our business
operations. We routinely assess the likelihood of any adverse outcomes to these
matters, as well as ranges of probable losses. A determination of the amount of
the reserves required, if any, for these contingencies is made after analysis of
each known claim. We have an active risk management program consisting of
numerous insurance policies secured from many carriers. These policies often
provide coverage that is intended to minimize the financial impact, if any, of
the legal proceedings. The required reserves may change in the future due to new
developments in each matter. For further information, see "Part II. Item 8.
Financial Statements and Supplementary Data-Note 22. Commitments and
Contingencies-Legal Proceedings" of this report.
Variable Interest Entities-Primary Beneficiary
We evaluate each of our variable interest entities on an on-going basis to
determine whether we are the primary beneficiary. Management assesses, on an
on-going basis, the nature of our relationship to the variable interest entity,
including the amount of control that we exercise over the entity as well as the
amount of risk that we bear and rewards we receive in regard to the entity, to
determine if we are the primary beneficiary of that variable interest entity.
Management judgment is required to assess whether these attributes are
significant. The factors management considers when determining if we have the
power to direct the activities that most significantly impact each of our
variable interest entity's economic performance include supply arrangements,
manufacturing arrangements, marketing arrangements and sales arrangements. We
consolidate all variable interest entities for which we have concluded that we
are the primary beneficiary. For the years ended December 31, 2020, 2019 and
2018, the percentage of revenues from our consolidated variable interest
entities in relation to total revenues that will ultimately be attributable to
Venator is 5.4%, 4.4% and 5.2%, respectively. For further information, see "Part
II. Item 8. Financial Statements and Supplementary Data-Note 9. Variable
Interest Entities" of this report.

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