乐天堂fun88(中国区)官方网站

1.听 GENERAL

Definitions

For convenience in this report, the terms 鈥淐ompany,鈥� 鈥渙ur鈥� or 鈥渨e鈥� may be used to refer to 乐天堂fun88(中国区)官方网站 Corporation and, unless the context otherwise requires, its subsidiaries and predecessors. Any references to the 鈥淐ompany鈥� 鈥渨e鈥� 鈥渦s鈥� or 鈥渙ur鈥� as of a date prior to October 19, 2004 (the date of our Company鈥檚 formation) are to 乐天堂fun88(中国区)官方网站 Holdings, LLC and its subsidiaries (including their respective predecessors). In this report, 鈥溊痔焯胒un88(中国区)官方网站 International鈥� refers to 乐天堂fun88(中国区)官方网站 International LLC (our 100% owned subsidiary) and, unless the context otherwise requires, its subsidiaries; 鈥淎AC鈥� refers to Arabian Amines Company, our consolidated manufacturing joint venture with the Zamil Group; 鈥淗PS鈥� refers to 乐天堂fun88(中国区)官方网站 Polyurethanes Shanghai Ltd. (our consolidated splitting joint venture with Shanghai Chlor-Alkali Chemical Company, Ltd); 鈥淪asol-乐天堂fun88(中国区)官方网站鈥� refers to Sasol-乐天堂fun88(中国区)官方网站 GmbH and Co. KG (our consolidated joint venture with Sasol that owns and operates a maleic anhydride facility in Moers, Germany); and 鈥淪LIC鈥� refers to Shanghai Liengheng Isocyanate Company (our unconsolidated manufacturing joint venture with BASF and three Chinese chemical companies).

In this report, we may use, without definition, the common names of competitors or other industry participants. We may also use the common names or abbreviations for certain chemicals or products.

Description of Business

We are a global manufacturer of differentiated organic chemical products. Our products comprise a broad range of chemicals and formulations, which we market globally to a diversified group of consumer and industrial customers. Our products are used in a wide range of applications, including those in the adhesives, aerospace, automotive, construction products, personal care and hygiene, durable and non鈥慸urable consumer products, digital inks, electronics, medical, packaging, coatings and construction, power generation, refining, synthetic fiber, textile chemicals and dye industries. We are a leading global producer in many of our key product lines, including MDI, amines, surfactants, maleic anhydride, epoxy鈥慴ased polymer formulations, textile chemicals and dyes.

We operate in four segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. In August 2017, we separated the P&A Business through an IPO of ordinary shares of Venator. Beginning in the third quarter of 2017, we reported the results of the former P&A Business as discontinued operations. See 鈥淣ote 3. Discontinued Operations and Business Dispositions鈥擲eparation of P&A Business.鈥� In a series of transactions beginning in 2006, we sold or shutdown substantially all of our Australian styrenics operations and our North American polymers and base chemicals operations. We also report the results of these businesses as discontinued operations.

Company

Our Company, a Delaware corporation, was formed in 2004 to hold the 乐天堂fun88(中国区)官方网站 businesses, which were founded by Jon M. 乐天堂fun88(中国区)官方网站. Mr. 乐天堂fun88(中国区)官方网站 founded the predecessor to our Company in 1970 as a small polystyrene plastics packaging company. Since then, we have grown through a series of significant acquisitions and now own a global portfolio of businesses. Jon M. 乐天堂fun88(中国区)官方网站 served as the Executive Chairman of our Company until December 31, 2017, at which time Peter 乐天堂fun88(中国区)官方网站, our Chief Executive Officer, was appointed to the role of Chairman of the Board. Jon M. 乐天堂fun88(中国区)官方网站 served as Director and Chairman Emeritus until his passing on February 2, 2018.

Currently, we operate all of our businesses through 乐天堂fun88(中国区)官方网站 International, our 100% owned subsidiary. 乐天堂fun88(中国区)官方网站 International is a Delaware limited liability company and was formed in 1999.

Recent Developments

Separation of the P&A Business

In August 2017, we separated the P&A Business and conducted an IPO of ordinary shares of Venator, formerly a wholly-owned subsidiary of 乐天堂fun88(中国区)官方网站. Additionally, in December 2017, we conducted a secondary offering of Venator ordinary shares. All of such ordinary shares were sold by 乐天堂fun88(中国区)官方网站, and Venator did not receive any proceeds from the offerings. Venator鈥檚 ordinary shares began trading on The New York Stock Exchange under the symbol 鈥淰NTR鈥� on August 3, 2017. As of December 31, 2017, 乐天堂fun88(中国区)官方网站 retained approximately 55% ownership in Venator. On January 3, 2018, the underwriters purchased an additional 1,948,955 Venator ordinary shares pursuant to their over-allotment option, which reduced 乐天堂fun88(中国区)官方网站鈥檚 ownership interest in Venator to approximately 53%. Beginning in the third quarter of 2017, we reported the results of operations of the P&A Business as discontinued operations. For more information, see 鈥淣ote 3. Discontinued Operations and Business Dispositions鈥擲eparation of P&A Business.鈥�

Prepayment of Debt

In August 2017, we made early prepayments of $1,207 million on our Senior Credit Facilities, of which $106听million was paid on our 2015 Extended Term Loan B, 听$347 million was paid on our 2021 Term Loan B, and $754听million was paid on our 2023 Term Loan B. The funds used to pay down the debt included $732 million received from Venator ($750 million of debt raised by Venator, net of $18 million of debt issuance costs), upon its payment of intercompany debt obligations owed to 乐天堂fun88(中国区)官方网站, and $475 million from proceeds of the Venator IPO. In connection with the $1,207 million prepayments of our term loans, we recognized a loss on early extinguishment of debt of $34听million. Additionally, in December 2017, we repaid in full the remaining $511 million on our 2023 Term Loan B using the funds raised from the secondary offering and existing cash and recognized a loss on early extinguishment of debt of $15 million. See 鈥淣ote 13. Debt鈥擠irect and Subsidiary Debt鈥擲enior Credit Facilities.鈥�

With available free cash flow, the net proceeds from the sale of our investment in the P&A business and cash from the repayment of related intercompany indebtedness as described above, we repaid $2.1 billion of debt during the full year 2017 and believe we achieved investment grade-type leverage metrics at year end. See 鈥淣ote 13. Debt鈥擠irect and Subsidiary Debt鈥擲enior Credit Facilities.鈥�

Termination of 乐天堂fun88(中国区)官方网站 and Clariant Merger Agreement

As previously disclosed, on May 21, 2017, 乐天堂fun88(中国区)官方网站 and Clariant entered into a merger agreement. On October 26, 2017, 乐天堂fun88(中国区)官方网站 and Clariant entered into a termination agreement pursuant to which the parties mutually terminated the merger agreement. No fees are payable under the terms of the termination agreement at this time. 乐天堂fun88(中国区)官方网站 and Clariant also agreed to release each other from claims and liabilities arising out of or related to the merger agreement or the transactions contemplated thereby. Pursuant to the termination agreement, each party agreed to bear its own costs, fees and expenses in connection with the merger agreement and the transaction costs contemplated thereby, except for specified joint filing fees and related expenses as set forth in the merger agreement. During the years ended December 31, 2017, 2016 and 2015, we incurred merger-related costs of $28 million, nil and nil, respectively.

U.S. Tax Reform Act

On December 22, 2017, the U.S. Tax Reform Act was signed into law. The U.S.Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018, repealing the deduction for domestic production activities and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

As a result of the U.S. Tax Reform Act, the Company recorded a provisional tax benefit of $137 million due to a remeasurement of deferred tax assets and liabilities and a provisional tax expense of $85 million due to the transition tax on deemed repatriation of deferred foreign income. Absent the Venator offering and certain tax related restructuring transactions, our provisional transition tax liability on deemed repatriation of deferred foreign income would have been $12 million.

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Share Repurchase Program

On February 7, 2018, our Board of Directors authorized our Company to repurchase up to $400 million in shares of our common stock in addition to the $50 million remaining under our September 2015 share repurchase authorization. Repurchases may be made through the open market or in privately negotiated transactions, and repurchases may be commenced or suspended from time to time without prior notice. Shares of common stock acquired through the repurchase program are held in treasury at cost.

乐天堂fun88(中国区)官方网站 Coproration and 乐天堂fun88(中国区)官方网站 International Financial Statements

Except where otherwise indicated, these notes relate to the consolidated financial statements for both our Company and 乐天堂fun88(中国区)官方网站 International. The differences between our consolidated financial statements and 乐天堂fun88(中国区)官方网站 International鈥檚 consolidated financial statements relate primarily to the following: