UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission File Number 001-36794
The Chemours Company
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or other Jurisdiction of Incorporation or Organization)
46-4845564
(I.R.S. Employer Identification No.)
1007 Market Street, Wilmington, Delaware 19801
(Address of Principal Executive Offices)
Registrant’s Telephone Number: (302) 773-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock ($0.01 par value)
Trading Symbol(s)
CC
Name of Exchange on Which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
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 ☐
Yes ☐ No ☒
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Smaller reporting company ☐
Accelerated filer ☐
Emerging growth company ☐
Non-accelerated filer ☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report.
☐
☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐ No ☒
The aggregate market value of common stock held by non-affiliates of the registrant as of June 30, 2021, the last business day of the registrant’s most recently
completed second fiscal quarter, was approximately $5.7 billion. As of February 7, 2022, 160,018,312 shares of the company’s common stock, $0.01 par
value, were outstanding.
Portions of the registrant’s definitive proxy statement relating to its 2022 annual meeting of shareholders (the “2022 Proxy Statement”) are incorporated by
reference into Part III of this Annual Report on Form 10-K where indicated. The 2022 Proxy Statement will be filed with the U. S. Securities and Exchange
Commission within 120 days after the end of the fiscal year to which this report relates.
Documents Incorporated by Reference
The Chemours Company
TABLE OF CONTENTS
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Information About Our Executive Officers
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors, Executive Officers, and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Part IV
Item 15.
Item 16.
Signatures
Exhibits, Financial Statement Schedules
Form 10-K Summary
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78
1
Forward-looking Statements
The Chemours Company
This section and other parts of this Annual Report on Form 10-K contain forward-looking statements, within the meaning of the federal securities
laws, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions
and include any statement that does not directly relate to any historical or current fact. The words “believe”, “expect”, “anticipate”, “plan”, “estimate”,
“target”, “project”, and similar expressions, among others, generally identify “forward-looking statements”, which speak only as of the date the
statements were made. The matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could
cause actual results to differ materially from those set forth in the forward-looking statements. Factors that could cause or contribute to these
differences include, but are not limited to, the risks, uncertainties, and other factors discussed below and within Item 1A – Risk Factors in this Annual
Report on Form 10-K.
Forward-looking statements are based on certain assumptions and expectations of future events that 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:
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fluctuations in energy and raw materials pricing;
failure to develop and market new products and applications, and optimally manage product life cycles;
increased competition, and increasing consolidation of our core customers;
significant litigation and environmental matters, including indemnifications we were required to assume and cost-sharing arrangements into
which we have entered;
significant or unanticipated expenses, including, but not limited to, litigation or legal settlement expenses;
our ability to manage and complete capital projects and/or planned expansions, including the start-up of capital projects;
changes in relationships with our significant customers and suppliers;
failure to manage process safety and product stewardship issues appropriately;
global economic and capital markets conditions, such as inflation, interest and currency exchange rates, and commodity prices, as well as
regulatory requirements;
the effects of pandemics on customer demand for our products, our manufacturing operations, our supply chain effectiveness and
efficiencies, the broader financial markets, and our financial results;
currency-related risks;
our current indebtedness and availability of borrowing facilities, including access to our revolving credit facilities;
business or supply disruptions and security threats, such as acts of sabotage, terrorism or war, weather events, and natural disasters;
uncertainty regarding the availability of additional financing in the future, and the terms of such financing;
negative rating agency actions;
changes in laws and regulations or political conditions;
our ability to protect, defend, and enforce our intellectual property rights;
our ability to predict, identify, and address changes in consumer preference and demand;
our ability to complete potential divestitures or acquisitions and our ability to realize the expected benefits of divestitures or acquisitions if
they are completed;
our ability to meet our growth expectations and outlook;
our ability to pay a dividend and the amount of any such dividend declared; and,
disruptions in our information technology networks and systems.
Additionally, there may be other risks and uncertainties that we are unable to identify at this time or that we do not currently expect to have a material
impact on our business. We assume no obligation to revise or update any forward-looking statement for any reason, except as required by law.
Unless the context otherwise requires, references herein to “The Chemours Company”, “Chemours”, “the Company”, “our company”, “we”, “us”, and
“our” refer to The Chemours Company and its consolidated subsidiaries. References herein to “EID” refer to E. I. du Pont de Nemours and
Company, which is our former parent company and is now a subsidiary of Corteva, Inc. (“Corteva”), a Delaware corporation, unless the context
otherwise requires. References herein to “DuPont” refer to DuPont de Nemours, Inc., a Delaware Corporation.
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Item 1. BUSINESS
Overview
The Chemours Company
PART I
The Chemours Company (herein referred to as “we”, “us”, or “our”) is a leading, global provider of performance chemicals that are key inputs in end-
products and processes in a variety of industries. We deliver customized solutions with a wide range of industrial and specialty chemicals products
for markets, including coatings, plastics, refrigeration and air conditioning, transportation, semiconductor and consumer electronics, general
industrial, and oil and gas. Our principal products include titanium dioxide (“TiO2”) pigment, refrigerants, industrial fluoropolymer resins, sodium
cyanide (prior to the Mining Solutions business sale), and performance chemicals and intermediates. We manage and report our operating results
through four reportable segments: Titanium Technologies, Thermal & Specialized Solutions, Advanced Performance Materials, and Chemical
Solutions. Our Titanium Technologies segment is a leading, global provider of TiO2 pigment, a premium white pigment used to deliver whiteness,
brightness, opacity, and protection in a variety of applications. Our Thermal & Specialized Solutions segment is a leading, global provider of
refrigerants, thermal management solutions, propellants, blowing agents, and specialty solvents. Our Advanced Performance Materials segment is a
leading, global provider of high-end polymers and advanced materials that deliver unique attributes, including low friction coefficients, extreme
temperature resistance, weather resistance, ultraviolet and chemical resistance, and electrical insulation. Our Chemical Solutions segment was a
leading provider of industrial chemicals used in gold production prior to the Mining Solutions business sale and continues to be a leading provider of
chemicals used in industrial, and consumer applications in the Americas.
We operate 29 major production facilities located in nine countries and serve approximately 3,200 customers across a wide range of end-markets in
approximately 120 countries. Many of our commercial and industrial relationships span decades. Our customer base includes a diverse set of
companies, many of which are leaders in their respective industries. Our sales are not materially dependent on any single customer. As of December
31, 2021, no one individual customer represented more than 10% of our consolidated net sales, and one customer represented approximately 6% of
our total outstanding accounts and notes receivables balance.
We are a different kind of chemistry company, driven by our vision to create a better world through the power of our chemistry. Our world-class
product portfolio brings everyday convenience to virtually everything people touch in their daily lives, making our products and the solutions they
enable both vital and essential. We are committed to creating value for our customers and stakeholders around the world through innovative and
sustainable solutions, environmental leadership, community impact and making Chemours the greatest place to work for every employee. Our global
workforce, renowned for its deep and unmatched expertise, bring our chemistry to life, guided by five core values that form the bedrock foundation
for how we operate: (i) Customer Centricity – driving customer growth, and our own, by understanding our customers’ needs and building long-
lasting relationships with them; (ii) Refreshing Simplicity – cutting complexity by investing in what matters, and getting results faster; (iii) Collective
Entrepreneurship – empowering our employees to act like they own our business, while embracing the power of inclusion and teamwork; (iv)
Safety Obsession – living our steadfast belief that a safe workplace is a profitable workplace; and, (v) Unshakable Integrity – doing what’s right for
our customers, colleagues, and communities – always.
Our core values, together with our company purpose and vision, underpin our commitment to our stakeholders to make chemistry as responsible as
it is essential. Our Corporate Responsibility Commitment (“CRC”) is embedded within our growth strategy as a company. In 2018, we issued our
inaugural CRC Report, which included 10 ambitious goals targeted for completion by 2030, built on the pillars of Inspired People, Shared Planet, and
an Evolved Portfolio. In April 2021, we announced an update to our climate goals to better align our climate commitment with the Paris Accord and
set us on a path to achieve net zero greenhouse gas emissions from our operations by 2050. These goals are designed to promote accountability to
our commitment and position us for sustainable, long-term earnings growth. We understand that maintaining safe, sustainable operations has an
impact on us, our communities, the environment, and our collective future. With this focus, we invest in research and development (“R&D”) in order
to develop safer, cleaner, and more efficient products and processes that enable our operations, customers, and consumers to reduce both their
greenhouse gas (“GHG”) emissions, carbon footprint, and overall environmental footprint. We value collaboration to drive change and commit to
working with policymakers, our value chain, and other organizations to encourage collective action to reduce GHG emissions and encourage lower-
carbon forms of energy.
Corporate History
We began operating as an independent company on July 1, 2015 (the “Separation Date”) after separating from EID (the “Separation”). The
Separation was completed pursuant to a separation agreement and other agreements with EID, including an employee matters agreement, a tax
matters agreement, a transition services agreement, and an intellectual property cross-license agreement. These agreements govern the
relationship between us and EID following the Separation and provided for the allocation of various assets, liabilities, rights, and obligations at the
Separation Date. On August 31, 2017, EID completed a merger with The Dow Chemical Company (“Dow”). Following their merger, EID and Dow
engaged in a series of reorganization steps and, in 2019, separated into three publicly-traded companies named Dow Inc., DuPont, and Corteva.
EID is now a subsidiary of Corteva, and, at this time, any agreements related to our Separation are between us and EID, Corteva, and DuPont.
3
Segments
The Chemours Company
In our Titanium Technologies segment, we have a long-standing history of delivering high-quality TiO2 pigment using our proprietary chloride
technology. We are one of the largest global producers of TiO2 pigment, and our low-cost network of manufacturing facilities allows us to efficiently
and cost-effectively serve our global customer base. We believe we are well-positioned to remain one of the lowest-cost, high-quality TiO2 pigment
producers. At the same time, our unique go-to-market strategy, Ti-Pure™ Value Stabilization (“TVS”), provides our customers with three
differentiated channels to buy Ti-Pure™. This combination of technology, strength, and commercial innovation allows us to continue to meet our
customers’ needs around the world.
In our Thermal & Specialized Solutions segment, we are a leading, global provider of refrigerants, thermal management solutions, propellants, foam
blowing agents, and specialty solvents. Our Thermal & Specialized Solutions segment has held a leading position in the refrigerants market since the
commercial introduction of FreonTM in 1930. We are currently a leader in the development of sustainable technologies like OpteonTM, one of the
world’s lowest global warming potential (“GWP”) refrigerant brands, as governments around the world pass laws and regulations that make the use
of low GWP refrigerants a requirement.
In our Advanced Performance Materials segment, we are a leading, global provider of high-end polymers and advanced materials that deliver unique
attributes, including chemical inertness, thermal stability, low friction, weather and corrosion resistance, extreme temperature stability, and unique di-
electric properties. Our Advanced Performance Materials segment has a diversified offering of products that includes various industrial resins,
specialty products, and coatings. These product offerings position the business to serve a breadth of markets, segments, and applications, including
electronics, communications, transportation, wire and cable, energy, oil and gas, and medical, among others, and our product offerings are
fundamental to the future of clean energy and advanced electronics.
In our Chemical Solutions segment, we completed the sale of our Mining Solutions business during 2021. Our Performance Chemicals and
Intermediates business produces industrial chemicals used in various applications by our customers, which are primarily located in the Americas.
Additional information on our segments can be found in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of
Operations and “Note 29 – Geographic and Segment Information” to the Consolidated Financial Statements.
Titanium Technologies Segment
Segment Overview
Our Titanium Technologies segment is a leading, global manufacturer of high-quality TiO2 pigment. TiO2 pigment is used to deliver whiteness,
brightness, opacity, and ultra-violet light protection in applications such as architectural and industrial coatings, flexible and rigid plastic packaging,
polyvinylchloride (“PVC”), laminate papers used for furniture and building materials, coated paper, and coated paperboard used for packaging. We
sell our TiO2 pigment under the Ti-Pure™ brand name. We also sell a chloride-based TiO2 pigment under the BaiMaxTM brand name, which is
exclusively produced for customers in Greater China. We operate four TiO2 pigment production facilities: two in the U.S., one in Mexico, and one in
Taiwan. In total, we have a TiO2 pigment nameplate capacity of approximately 1.25 million metric tons per year. In addition, we have a large-scale
repackaging and distribution facility in Belgium. We also operate mineral sands mining and/or separation operations in Starke, Florida, Nahunta,
Georgia, Jesup, Georgia and Offerman, Georgia.
We are one of a limited number of manufacturers operating a chloride process to produce TiO2 pigment. We believe that our proprietary chloride
technology enables us to operate plants at a much higher capacity than other chloride technology-based TiO2 pigment producers, as we uniquely
utilize a broad spectrum of titanium-bearing ore feedstocks to achieve one of the highest TiO2 pigment unit margins in our industry. This technology,
which is in use at all of our production facilities, provides us with one of the industry’s lowest manufacturing cost positions. Our R&D efforts focus on
improving production processes and developing TiO2 pigment grades that help our customers achieve optimal cost and product performance to
enhance total end-user value.
We sell over 20 different grades of TiO2 pigment, with each grade tailored for targeted applications. Our portfolio of premium performance TiO2
pigment grades provides end-users with benefits beyond opacity, such as longer-lasting performance, brighter colors, and the brilliant whites
achievable only through chloride-manufactured pigment.
4
The Chemours Company
We have operated a titanium mine in Starke, Florida since 1949. Additionally, in 2019, we acquired a titanium mine in Nahunta, Georgia, from which
we source ore feedstock to be processed at its associated mineral sands separation facility in Offerman, Georgia. The titanium mine and mineral
sands separation facility in Georgia were acquired in the third quarter of 2019 as part of our acquisition of Southern Ionics Minerals, LLC (“SIM”).
This acquisition expanded our flexibility and scalability to internally source ore and enabled the commencement of mining operations at our surface
mine in Jesup, Georgia in August 2020. Our mines provide us with low-cost, high-quality domestic ilmenite ore feedstock and currently supply less
than 10% of our ore feedstock needs, with expansion options that could further increase our in-sourced raw material base. Co-products of our mining
operations, which comprised less than 5% of our total net sales in Titanium Technologies during 2021, include zircon (zirconium silicate) and
staurolite minerals. We are a major supplier of high-quality calcined zircon in North America, primarily focused on the precision investment casting
industry, foundry, specialty applications, and ceramics. Our staurolite blasting abrasives are used in a variety of surface preparation applications,
including steel preparation and maintenance and paint removal.
Industry Overview and Competitors
The overall demand for TiO2 pigment is highly correlated to growth in the global residential housing, commercial construction, and packaging
markets. In the long-run, industry demand for TiO2 pigment is generally expected to grow proportionately with global GDP growth. We continue to
experience customers’ preference for high-quality Ti-PureTM offerings. After above-GDP trend TiO2 demand growth in 2016 and 2017, the TiO2
pigment market contracted below the GDP trend in 2018 and 2019. In 2020, the TiO2 pigment market expanded, while global GDP contracted during
the novel coronavirus disease (“COVID-19”) pandemic. In 2021, the TiO2 pigment market again grew at greater-than-global GDP growth rates. In the
longer-term, we expect global TiO2 pigment demand to resume its historical correlation with global GDP growth rates.
We estimate that the worldwide demand for TiO2 pigment in 2021 was approximately 7.3 million metric tons, a second consecutive year above-GDP
growth; of which approximately 60% was for premium performance pigments. Worldwide nameplate capacity in 2021 was estimated to be
approximately 8.6 million metric tons. The products manufactured on this global capacity base are not fully substitutable due to pigment quality
consistency and pigment product design. We believe that the utilization of the premium performance manufacturing base is considerably higher than
that for general purpose, lower-performance production. As future customer demand grows, we have the ability to incrementally increase our
production capacity by approximately 10% through technology-enabled de-bottlenecking processes. We believe that unlocking this additional 10% of
capacity is in line with our stated intention to grow with our customers’ needs over the long-term. This new capacity is expected to provide the
equivalent of a new production line, while requiring a fraction of the capital investment. Our increased pigment production capacity will be supported
by investments to extend our ilmenite mines and through long-term ore feedstock contracts with our suppliers.
Competition in the TiO2 pigment market is based primarily on product performance (both product design and quality consistency), supply capability,
technical service, and price. Our major competitors within higher-performance pigments include Tronox Holdings plc, LB Group Co.Ltd., Venator
Materials plc, Kronos Worldwide, Inc., and INEOS AG.
Raw Materials
The primary raw materials used in the manufacture of TiO2 pigment are titanium-bearing ores, chlorine, calcined petroleum coke, and energy. We
source titanium-bearing ores from a number of suppliers around the globe, who are primarily located in Australia and Africa. To ensure proper supply
volume and to minimize pricing volatility, we generally enter into contracts in which volume is requirement-based and pricing is determined by a
range of mechanisms structured to help us achieve competitive cost. We typically enter into a combination of long-term and medium-term supply
contracts and source our raw materials from multiple suppliers across different regions and from multiple sites per supplier. Furthermore, we typically
purchase multiple grades of ore from each supplier to limit our exposure to any single supplier for any single grade of ore in any given time period.
Historically, we have not experienced any problems renewing such contracts for raw materials or securing our supply of titanium-bearing ores.
We play an active role in ore source development around the globe, especially for those ores which can only be used by us, given the capability of
our unique process technology. Supply chain flexibility allows for ore purchase and use optimization to manage short-term demand fluctuations and
provide a long-term competitive advantage. Our process technology and ability to use lower-grade ilmenite ore gives us the flexibility to alter our ore
mix to low-cost configuration based on sales, demand, and projected ore pricing. Lastly, we have taken steps to optimize routes for distribution and
increase storage capacity at our production facilities.
Transporting chlorine, one of our primary raw materials, can be costly. To reduce our need to transport chlorine, we have a chlor-alkali production
facility run by a third party that is co-located at our New Johnsonville, Tennessee site. Calcined petroleum coke is an important raw material input to
our process. We source calcined petroleum coke from well-established suppliers in North America and China, typically under contracts that run
multiple years to facilitate materials and logistics planning through the supply chain. Raw materials distribution efficiency is enhanced through the
use of bulk ocean, barge, and rail transportation modes. Energy is another key input cost in the TiO2 pigment manufacturing process, representing
approximately 10% of the production cost. We have access to natural gas-based energy at our U.S. and Mexico TiO2 pigment production facilities
and our Florida and Georgia minerals plants, supporting advantaged energy costs given the low cost of shale gas in the U.S.
5
Sales, Marketing, and Distribution
The Chemours Company
We sell the majority of our products through a direct sales force. In 2018, we launched our TVS strategy, which we believe to be foundational to
maintaining and growing our Titanium Technologies business. Our TVS strategy establishes a commercial framework that allows us to focus on
enhancing durable, value-oriented customer relationships, while providing customers access to a predictable and reliable supply of high-quality TiO2.
Customers can purchase Ti-PureTM TiO2 either through long-term contracts or through Ti-PureTM Flex. Launched in 2019, Ti-PureTM Flex is a new,
innovative channel that provides customers the unique ability to purchase Ti-Pure™ TiO2 via our web-based portal, the first of its kind in the industry.
To further expand our reach beyond these sales channels, we also utilize third-party sales agents and distributors.
TiO2 pigment represents a significant raw material cost for our direct customers, and as a result, purchasing decisions are often made by our
customers’ senior management teams. TiO2 pigment, however, is only a small fraction of the cost when considering certain end-use applications,
especially in segments with larger value chain players, such as specialty coatings, plastics, and laminates applications. Our sales organization works
to develop and maintain close relationships with key decision makers in our value chain. In addition to close purchasing relationships, our sales and
technical service teams work together to develop relationships with all layers of our customers’ organizations to ensure that we meet our customers’
commercial and technical requirements. When appropriate, we collaborate closely with customers to solve formulation or application problems by
modifying product characteristics or developing new product grades.
To ensure efficient distribution, we have a large fleet of railcars, which are predominantly used for outbound distribution of products in the U.S. and
Canada. A dedicated logistics team, along with external partners, continually optimizes the assignment of our transportation equipment for each
product line and geographic region to maximize utilization and maintain an efficient supply chain.
Customers
Globally, we serve approximately 600 customers through our Titanium Technologies segment. In 2021, our 10 largest Titanium Technologies
customers accounted for approximately 36% of the segment’s net sales, and one Titanium Technologies customer represented more than 10% of
the segment’s net sales. Our larger customers are typically served through direct sales and tend to have medium-term to long-term contracts. We
serve our small-size and mid-size customers through a combination of our direct sales and distribution network. Our direct customers in the Titanium
Technologies segment are producers of decorative coatings, automotive and industrial coatings, polyolefin masterbatches, PVC, engineering
polymers, laminate paper, coatings paper, and coated paperboard. We focus on developing long-term partnerships with key market participants in
each of these sectors. We also deliver a high level of technical service to satisfy our customers’ specific needs, which helps us maintain strong
customer relationships.
Seasonality
The demand for TiO2 pigment is subject to seasonality due to the influence of weather conditions and holiday seasons on some of our applications,
such as decorative coatings. As a result, our TiO2 pigment sales volume is typically lowest in the first quarter, highest in the second and third
quarters, and moderate in the fourth quarter. This pattern applies to the entire TiO2 pigment market, but may vary by region, country, or application.
The impacts of seasonality on demand for TiO2 pigment may also be altered by economic factors, such as changes in global GDP, and other factors,
such as the COVID-19 pandemic.
Thermal & Specialized Solutions Segment
Segment Overview
Our Thermal & Specialized Solutions segment is a leading, global provider of refrigerants, thermal management solutions, propellants, foam blowing
agents, and specialty solvents. We have an industry-leading safety culture and apply world-class R&D and technical expertise to ensure that our
operations run safely and reliably, and to improve our process technology.
Our Thermal & Specialized Solutions segment has held a leading position in the fluorochemicals market since the commercial introduction of
Freon™ in 1930. Since the original chlorofluorocarbons (“CFC”)-based product was introduced, Thermal & Specialized Solutions has been at the
forefront of new technology research for lower GWP and lesser ozone-depleting potential products, leading to the development of
hydrochlorofluorocarbons (“HCFC”) and hydrofluorocarbons (“HFC”). We have a leading position in HFC refrigerants under the brand name Freon™,
and we are a leader in the development of sustainable technologies like Opteon™, a line of low GWP hydrofluoroolefin (“HFO”) refrigerants, which
also have a near-zero ozone-depletion footprint. Opteon™ was initially developed in response to the European Union’s (“EU”) Mobile Air
Conditioning Directive. Today, our OpteonTM-branded portfolio of products is used in a broad range of applications, including automotive, air
conditioning, commercial refrigeration, and foam blowing agents. This patented technology offers similar functionality to current HFC products, but
meets or betters currently-mandated environmental standards and, in some cases, provides energy efficiency benefits.
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The Chemours Company
Our Thermal & Specialized Solutions segment led the industry in the Montreal Protocol-driven transition in 1987 from CFCs to the lesser ozone-
depleting HCFCs and non-ozone-depleting HFCs and, in 1988, committed to cease production of CFCs. Starting in the early 1990s, Thermal &
Specialized Solutions began manufacturing non-ozone-depleting HFCs. Driven by the emerging megatrends of Climate Change, Decarbonization,
and Energy Efficiency, together with environmental legislation being enacted across the U.S., Europe, Latin America, and Japan, we commercialized
Opteon™ in 2016. We will continue to invest in R&D to meet the increasing regulatory requirements of the industry and meet our customers’ needs
as regulations change.
Industry Overview and Competitors
Our Thermal & Specialized Solutions segment competes against a broad variety of global manufacturers, as well as regional manufacturers in Asia
Pacific. We have a leadership position in fluorine chemistry and materials science, a broad scope and scale of operations, market-driven applications
development capabilities, and deep customer knowledge. Key competitors for the Thermal & Specialized Solutions segment include Honeywell
International, Inc., Arkema S.A., Orbia, and Daikin Industries, Ltd.
Thermal & Specialized Solutions’ demand growth has generally been in line with global GDP growth. Growth may be higher than GDP in situations
where, for environmental reasons, regulatory drivers constrain the market or drive the market toward lower GWP alternatives. Developed markets
represent the largest consumers of fluorochemicals today. Global middle class growth and the increasing demand for automobiles, refrigeration, and
air conditioning are all key drivers of increased demand for various fluorochemicals.
Raw Materials
The primary raw materials required to support the Thermal & Specialized Solutions segment are fluorspar, sulfur, ethylene, chlorinated organics,
chlorine, and hydrogen fluoride. These are available in many countries and are not concentrated in any particular region. We pursue maximum
competitiveness in our global supply chains through competitive, flexible, and diversified sourcing of key raw materials. Our contracts typically
include terms that span from two to ten years. Qualified fluorspar sources have fixed contract prices or freely-negotiated, market-based pricing. We
diversify our sourcing through multiple geographic regions and suppliers to ensure a diversified and cost competitive supply.
Sales, Marketing, and Distribution
With approximately 90 years of innovation and development in fluorine science, our technical, marketing, and sales teams around the world have
deep expertise in our products and their end-uses. We work with customers to select the appropriate solutions to meet their technical performance
needs. We sell our products through direct channels and through resellers. Selling agreements vary by product line and markets served and include
both spot-pricing arrangements and multi-year contracts with varying durations.
Our Thermal & Specialized Solutions segment maintains a large fleet of railcars, tank trucks, and containers to deliver our products and support our
supply chain needs. For the portion of the fleet that is leased, the related lease terms are usually staggered, which provides us with a competitive
cost position, as well as the ability to adjust the size of our fleet in response to changes in market conditions. A dedicated logistics team, along with
external partners, works to optimize the assignment of our transportation equipment for each product line and geographic region to maximize
utilization and flexibility of the supply chain.
Customers
Our Thermal & Specialized Solutions segment serves approximately 1,000 customers and distributors globally, and, in many instances, these
commercial relationships have been in place for decades. No single Thermal & Specialized Solutions customer represented more than 10% of the
segment’s net sales in 2021.
Seasonality
Thermal & Specialized Solutions’ refrigerant sales fluctuate by season, as sales in the first half of the year are generally higher than sales in the
second half of the year due to increased demand for residential, commercial, and automotive air conditioning in the spring, which peaks in the
summer months, and then declines in the fall and winter in the northern hemisphere. Mobile air conditioning demand is slightly higher in the first
half of the year due to the timing of automotive production shutdowns in the second half of the year.
7
Advanced Performance Materials Segment
Segment Overview
The Chemours Company
Our Advanced Performance Materials segment is a leading, global provider of high-end polymers and advanced materials that deliver unique
performance capabilities and are present in applications that people around the world use every day. The segment has a diversified portfolio that
includes various industrial resins, specialty products, membranes, and coatings. These product offerings position the business to serve a broad
range of markets, including consumer electronics, semiconductors, digital communications, transportation, energy, oil and gas, and medical, among
others.
Our products set the standard in a number of performance categories, including chemical inertness, thermal stability, low friction, weather and
corrosion resistance, and di-electric properties. These performance advantages make our polymers a material of choice, especially in complex
applications and extreme environmental conditions. Our products are therefore critical to many emerging technology areas, including energy storage,
hydrogen production and fuel cells, 5G data delivery, advanced semi-conductor infrastructure, and connected devices.
Our Advanced Performance Materials products are sold under the brand names Teflon™, Viton™, Krytox™, and Nafion™. Teflon™ coatings, resins,
additives, and films serve as the key underpinning for a variety of industrial and commercial applications, including semiconductor infrastructure.
Viton™ fluoroelastomers are used in automotive, consumer electronics, chemical processing, oil and gas, petroleum refining and transportation, and
aircraft and aerospace applications. Our Krytox™-branded lubricants are used in a broad range of industrial applications, including bearings,
automotive friction management, and electric motors. Nafion™ membranes are critical components in chlor-alkali processing and flow batteries, as
well as the hydrogen electrolyzers and fuel cells which underpin the hydrogen economy.
Our Advanced Performance Materials segment uses a market-back approach to drive technology development. Our innovations are underpinned by
deep technical knowledge and experience in fluoropolymer chemistry. We leverage our state-of-the-art R&D facilities at the Chemours Discovery
Hub to drive faster development on a global scale. We also participate in a broad array of industry consortia and collaborate with leading academics
across a variety of disciplines to drive fundamental R&D in the materials space.
The segment is well positioned to capture future growth through the combination of our unique product capabilities and market-driven product
development process. Advanced Performance Materials will benefit long-term from the megatrends impacting our customers’ key end markets,
including digital connectivity, urbanization, and climate change.
Industry Overview and Competitors
Our Advanced Performance Materials segment competes against a broad variety of global manufacturers, as well as regional manufacturers in Asia
Pacific. We have a leadership position in fluorine chemistry and materials science, a broad scope and scale of operations, a strong applications
development competency, and deep customer knowledge. Key competitors for this segment include Daikin Industries, Ltd., 3M Company, Solvay,
S.A., Asahi Glass Co., Ltd., and Dongyue Group Co., Ltd.
Demand growth for Advanced Performance Materials has generally been in line with global GDP growth. However, demand for the segment’s
products may grow at a rate faster than GDP, driven by global middle-class growth and alignment between our market-driven product technology
development process and emerging market technologies, such as 5G, fuel cells and electrolyzers, electronics, communications, and transportation.
Raw Materials
The primary raw materials required for the Advanced Performance Materials segment are chlorinated organics, hydrogen fluoride, and vinylidene
fluoride. These are available in many countries and are not concentrated in any particular region. We pursue maximum competitiveness in our global
supply chains through competitive, flexible, and diversified sourcing of key raw materials. Our contracts typically include terms that span from two to
ten years. We diversify our sourcing through multiple geographic regions and suppliers to ensure a diversified and cost competitive supply.
Sales, Marketing, and Distribution
With approximately 90 years of innovation and development in fluorine science, our technical, marketing, and sales teams around the world have
deep expertise in our products and their end-uses. We work with customers to select the appropriate fluoropolymers or other advanced performance
materials to meet their technical performance needs based on their intended performance-in-use requirements. We sell our products through direct
and indirect channels, and the duration of our selling agreements vary by product line and markets served.
8
The Chemours Company
Our Advanced Performance Materials segment maintains a limited fleet of railcars, tank trucks, containers, and totes to deliver our products and
support our supply chain needs. For the portion of the fleet that is leased, the related lease terms are usually staggered, which provides us with a
competitive cost position, as well as the ability to adjust the size of our fleet in response to changes in market conditions. We manage our fleet to
ensure it is appropriately sized to meet market demand while maintaining flexibility. A dedicated logistics team, along with external partners, works to
optimize the assignment of our transportation equipment for each product line and geographic region to maximize utilization and flexibility of the
supply chain.
Customers
Our Advanced Performance Materials segment serves approximately 1,400 customers and distributors globally and, in many instances, these
commercial relationships have been in place for decades. No single Advanced Performance Materials customer represented more than 10% of the
segment’s net sales in 2021.
Seasonality
There is no significant seasonality in our Advanced Performance Materials segment’s net sales, as demand is relatively consistent throughout the
year.
Chemical Solutions Segment
Segment Overview
Our Chemical Solutions segment is comprised of a portfolio of industrial chemical businesses, primarily operating in the Americas. The segment’s
products are used as important raw materials and catalysts for a diverse group of industries, including, among others, gold production (prior to the
sale of our Mining Solutions business), clean and disinfect, oil and gas, water treatment, electronics, and automotive. Chemical Solutions generates
value through the use of market-leading manufacturing technology, safety performance, product stewardship, and differentiated logistics capabilities.
In early 2021, we began a strategic review of our Mining Solutions business, which included our sodium cyanide and hydrogen cyanide product lines.
On July 26, 2021, we entered into a definitive agreement with Manchester Acquisition Sub LLC, a Delaware limited liability company and a
subsidiary of Draslovka Holding a.s., to sell our Mining Solutions business and completed the sale on December 1, 2021 for net cash proceeds of
$508 million, net of $13 million cash divested. For the year ended December 31, 2021, the Mining Solutions business accounted for approximately
70% of the Chemical Solutions segment net sales.
Following the sale of our Mining Solutions business, our Chemical Solutions remaining operations include one production facility in North America
that sells products and solutions through the Performance Chemicals and Intermediates product group. Our Performance Chemicals and
Intermediates product group, is primarily comprised of our Glycolic Acid and Vazo™ product lines, and we manufacture a variety of chemicals used
in many different applications. Performance Chemicals and Intermediates business is expected to generally grow in line with growth in global GDP.
Industry Overview and Competitors
The industrial and specialty chemicals produced by our Chemical Solutions segment are important raw materials for a wide range of industries and
end-markets. We hold a long-standing reputation for high quality and the safe-handling of hazardous products, such as sodium cyanide, dimethyl
sulfate and Vazo™. Our positions in these products are the result of our process technology, manufacturing scale, efficient supply chain, and
proximity to large customers. Prior to the sale of the Mining Solutions business, key competitors for the Chemical Solutions include Cyanco Corp.,
Hebei Chengxin Group Co. Ltd., CyPlus GmbH, Orica Ltd., and Tongsuh Petrochemical Corp., Ltd. Key competitors for the remaining business in
our Chemicals Solutions segment include CABB GmbH and Nouryon.
Raw Materials
Key raw materials for the remaining business in our Chemical Solutions segment include aminonitrile, formaldehyde, natural gas, hydrogen, sodium
trioxide, and caustic soda. We source raw materials from global and regional suppliers, where possible, and maintain multiple supplier relationships
to protect against supply disruptions and potential price increases. To further mitigate the risk of raw materials availability and cost fluctuations, our
Chemical Solutions segment has also taken steps to optimize routes for distribution, lock in long-term contracts with key suppliers, and increase the
number of customer contracts with raw materials price pass-through terms. We do rely on one supplier for aminonitrile, which is a key raw material
for the production of Vazo™. Any prolonged inability to obtain aminonitrile could have an adverse effect on our operating results and could
unfavorably impact our customer relationships. We do not believe that the loss of any other particular suppliers would be material to our business.
9
Sales, Marketing, and Distribution
The Chemours Company
Our technical, marketing, and sales teams around the world have deep expertise with our products and their end-markets. We predominantly sell
directly to end-customers, although we also use a network of distributors for specific product lines and geographies. Sales may take place through
either spot transactions or via long-term contracts.
Most of Chemical Solutions’ raw materials and products can be delivered by efficient bulk transportation. As such, we maintain a fleet of railcars,
tank trucks, and containers to support our supply chain needs. For the portion of the fleet that is leased, the related lease terms are usually
staggered, which provides us with a competitive cost position as well as the ability to adjust the size of our container fleet in response to changes in
market conditions. A dedicated logistics team, along with external partners, continually optimizes the assignment of our transportation equipment to
each product line and geographic regions to maximize utilization and flexibility of the supply chain. The strategic placement of our facilities in
locations designed to serve our key customer base in the Americas gives us robust distribution capabilities.
Customers
Our Chemical Solutions segment focuses on developing long-term partnerships with key market participants. Many of our commercial and industrial
relationships have been in place for decades and are based on our proven value proposition of safely and reliably supplying our customers with the
materials needed for their operations. Our reputation and long-term track record are key competitive advantages, as several of the products’ end-
users demand the highest level of excellence in safe manufacturing, distribution, handling, and storage. Our Chemical Solutions segment has U.S.
Department of Transportation Special Permits and Approvals in place for the distribution of various materials associated with each of our business
lines, as required. During the year, prior to the sale of our Mining Solutions business, our Chemical Solutions segment served approximately 300
customers globally. In 2021, one Chemical Solutions customer represented more than 10% of the segment’s net sales.
Seasonality
Our Chemical Solutions segment’s sales are subject to minimal seasonality.
10
Intellectual Property
The Chemours Company
Intellectual property, including trade secrets, certain patents, trademarks, copyrights, know-how, and other proprietary rights, is a critical part of
maintaining our technology leadership and competitive edge. Our business strategy is to file patent and trademark applications globally for
proprietary new product and application development technologies, and we work actively on a global basis to create, protect, and enforce our
intellectual property rights.
Our Titanium Technologies segment relies upon unpatented proprietary knowledge, continuing technological innovation, and other trade secrets to
develop and maintain our competitive position in this sector. Within this segment, we hold significant intellectual property in the form of trade secrets,
and, while we believe that no single trade secret is material in relation to our combined business as a whole, we believe that our trade secrets are
material in the aggregate. Our proprietary chloride production process is an important part of our technology, and our business could be harmed if
our trade secrets are not maintained in confidence. Within our Titanium Technologies segment’s intellectual property portfolio, we consider our
trademarks Ti-Pure™ and BaiMaxTM to be valuable assets. We have registered the Ti-PureTM trademark in a number of countries and the BaiMaxTM
trademark in China.
Our Thermal & Specialized Solutions segment is a technology leader in the markets in which it participates. We maintain a large fluorochemicals
patent portfolio, inclusive of patents which will expire in varying years into the 2030s. We consider our Opteon™ and Freon™ trademarks used in the
Thermal & Specialized Solutions segment to be valuable assets.
Our Advanced Performance Materials segment possesses extensive know-how and trade secrets related to manufacturing technologies for a broad
range of specialized fluoropolymers, as well as application development technology for fluoropolymers based on comprehensive knowledge of
customer applications. We hold patents relating to manufacturing for certain products with high quality, specifications and purity as required by the
electronics, communications, automotive, wire and cable, and other industries. Additionally, our Advanced Performance Materials segment is a
leader in and holds patents relating to non-fluorinated materials for use as durable water repellants for garments and other uses. In our Advanced
Performance Materials segment’s intellectual property portfolio, we consider our TeflonTM, VitonTM, NafionTM, and KrytoxTM trademarks to be valuable
assets.
Our Chemical Solutions segment is a manufacturing technology leader in a majority of the markets in which it participates. Trade secrets are one of
the key elements of our intellectual property security in the Chemical Solutions segment, as most of the segment’s manufacturing and applications
development technologies are no longer under patent coverage.
The protections afforded under our patents and trademarks vary based on country, scope of individual patent, and trademark coverage, as well as
the availability of legal remedies in each country. Our patents, in the aggregate, are believed to be of material importance to our business. However,
although certain proprietary intellectual property rights are important to our success, we do not believe that we are materially dependent on any
single patent (or group of related patents) or trademark. We believe that securing our intellectual property is critical to maintaining our technology
leadership and our competitive position, especially with respect to new technologies or the extensions of existing technologies. Our proprietary
process technology can be a source of incremental income through licensing arrangements.
11
Environmental and Regulatory Matters
The Chemours Company
Information related to environmental matters is included in several areas of this Annual Report on Form 10-K, including: (i) Item 1A – Risk Factors;
(ii) Item 3 – Legal Proceedings, under the heading “Environmental Proceedings”; (iii) Item 7 – Management’s Discussion and Analysis of Financial
Condition and Results of Operations; and, (iv) “Note 3 – Summary of Significant Accounting Policies” and “Note 22 – Commitments and Contingent
Liabilities” to the Consolidated Financial Statements.
Central to our CRC are our ten goals that we aim to achieve by 2030. These goals fall into three pillars: Inspired People, Shared Planet, and Evolved
Portfolio. In April 2021, we announced an update to our climate goals to better align our climate commitment with the Paris Accord and set us on a
path to achieve net zero greenhouse gas emissions from our operations by 2050. The Shared Planet pillar of our CRC underlines our commitment to
deliver essential solutions responsibly, without causing harm to the Earth. With a focus on the responsible treatment of climate, water, and waste,
our shared planet 2030 goals are comprised of the following:
• Reduce absolute operations Scope 1 and Scope 2 GHG emissions by 60%;
• Reduce air and water process emissions of fluorinated organic chemicals by 99% or more; and,
• Reduce our landfill volume intensity by 70%.
As part of the Evolved Portfolio pillar of our CRC, we are reimagining our portfolio to offer solutions that are also safer, healthier, and more resilient
for a world that demands more. We believe that climate change is an important global issue that presents both opportunities and challenges for our
company, our partners, and our communities. Climate change matters for our company are likely to be driven by changes in physical climate
parameters, regulations and/or public policy, and changes in technology and product demand. Our operations and business results are increasingly
subject to evolving climate-related legislation and regulations, inclusive of restrictions on GHG emissions, cap and trade emissions trading systems,
and taxes on GHG emissions, fuel, and energy, among other provisions. Such regulatory matters have led, and are expected to continue to lead, to
subsequent developments in product technology and demand. This helps guide our investment decisions and drive growth in demand for low-carbon
and energy-efficient products, manufacturing technologies, and services that facilitate adaptation to a changing climate. Our business segments
conduct market trend impact assessments, continuously evaluate opportunities for existing and new products and are well-positioned to take
advantage of opportunities that may arise from increased consumer demand for and/or legislation mandating or incentivizing the use of products and
technologies necessary to achieve a low-carbon economy.
For example, global regulations driving the phase-down of HFCs, including the EU’s F-Gas Directive, the EU’s Mobile Air Conditioning Directive, and
the recently enacted U.S. American Innovation and Manufacturing Act (“AIM”), promote the adoption and sale of our high performing Opteon™
products, which have lower GWP and zero ozone-depletion footprint. Our Opteon™ portfolio has been developed to meet global regulations while
maintaining or improving performance compared to the products they replace in refrigeration and cooling applications, such as food transportation,
food and pharmaceutical/medical storage, food manufacturing and retail, automotive air conditioning, and residential and commercial building air
conditioning. By the year 2025, we estimate that our low GWP products will eliminate an estimated 325 million tons of carbon dioxide equivalents on
a global basis.
We are a proponent of the recently passed bipartisan AIM Act, going into effect in 2022, that will begin the national phase-down of
hydrofluorocarbons. Earlier this year, we announced the implementation of an improvement project to significantly reduce emissions of HFC-23 at
our Louisville, Kentucky manufacturing site. The project includes the design, custom-build and installation of proprietary technology to capture at
least 99% of HFC-23 process emissions from the site.
Our growth prospects in fluoropolymers are also enhanced by regulation driving the increasing demand for electric vehicles and high-performance,
low-emission vehicles. Our fluoropolymers are critical to delivering high performance over a wide range of harsh operating conditions, enhancing
passenger safety, improving emission controls, and better fuel economy, and enable vehicle electrification and the shift to hydrogen-powered
vehicles. We expect the use of our fluoropolymers in vehicles to increase, driven by the automotive industry’s trends toward energy efficiency and
clean energy due to evolving emissions performance regulations and increasing adoption of electric vehicles.
As an energy and emissions intensive company, our costs of complying with complex environmental laws, regulations, and enforcements, as well as
internal and external voluntary programs, are significant and will continue to be significant for the foreseeable future. These laws, regulations, and
enforcements may change and could become more stringent over time, which could result in significant additional compliance costs, increased costs
of purchased energy or other raw materials, increased transportation costs, investments in, or restrictions on, our operations, installation or
modification of GHG-emitting equipment, or additional costs associated with GHG emissions. Additionally, significant regional or national differences
in approaches to the imposition of such regulations and restrictions could present competitive challenges in a global marketplace. Currently, most of
our global operating facilities are required to monitor and report their GHG emissions but may or may not be subject to programs requiring trading or
emission controls. The EU Emission Trading System and the cap and trade pilot program in Mexico apply to our operating sites in those regions.
Furthermore, U.S. political administration could lead to additional federal regulation with respect to GHG emissions limits and/or other legislation that
could impact our operations. By tracking and taking action to reduce our GHG emissions footprint through energy efficiency programs and focused
GHG management efforts, we can decrease the potential future impact of these regulatory matters.
12
Human Capital
The Chemours Company
Meeting our commitment to responsible chemistry depends on our ability to create a vibrant workplace culture that attracts and retains the best and
brightest in their fields to come work at Chemours. Our success depends on our ability to attract and retain key employees, and to identify and
develop talented personnel to succeed our senior management and other key employees. This success depends on creating a diverse, inclusive,
and empowered workforce – one that holds a multiplicity of viewpoints, stems from a variety of backgrounds, and brings an abundance of different
life experiences to work. We believe our global workforce should reflect the viewpoints and diversity of the communities in which we operate. That
combination of excellence and diversity is essential to continuing our strong track record of uncovering and delivering the innovative solutions society
needs.
Diverse and Inclusive Leadership and Workforce
Our board of directors is comprised of eleven individuals with diverse experience and credentials, selected for their acumen and ability to challenge
and add value to management. Our directors have held significant leadership positions and bring a depth of experience across a wide variety of
industries, providing the company with unique insights and fresh perspectives. The demographics of our board of directors include 36% women and
27% ethnically diverse individuals. Refer to Item 10 – Directors, Executive Officers, and Corporate Governance for further information related to our
board of directors. Management of the Company is led by our President and Chief Executive Officer (“CEO”) and his 8 direct reports, which comprise
our Chemours Executive Team (“CET”). The demographics of our CET include 44% women and 44% ethnically diverse individuals. Further
information related to our CET is included under the caption “Information About Our Executive Officers” within this Part I of our Annual Report on
Form 10-K.
At December 31, 2021, we had approximately 6,400 employees globally, nearly all of which were full-time employees. Our employees’ global
demographics consisted of approximately 77% male employees and approximately 23% female employees, and, in the U.S., approximately 21% of
our employees were considered to be ethnically diverse. At December 31, 2021, we had approximately 74% of our employees in the Americas (65%
of whom are in the United States), 14% in Europe, and 12% in Asia Pacific (4% of whom are in China). Approximately 19% of our employees are
represented by unions or works councils. Management believes that its relations with employees and labor organizations are good.
In addition to Chemours employees, our total global workforce also includes contract workers that are available to support our manufacturing sites.
Our number of contract workers varies throughout the year due to business needs and seasonal plant activities. These on-site contract workers
provide services for facility maintenance, engineering services and construction support, operations, research and logistics support, equipment
service and maintenance, custodial services, and site security services. Management believes that its relations with contract workers are good.
Corporate Responsibility Commitment
In 2018, we issued our inaugural CRC Report, which expresses our commitment to our stakeholders to make chemistry as responsible as it is
essential. This commitment is embedded within our growth strategy as a company. Our inaugural report included 10 ambitious goals targeted for
completion by 2030, built on the pillars of Inspired People, Shared Planet, and an Evolved Portfolio. These goals are designed to promote
accountability to our commitment and position us for long-term success. Our Inspired People pillar underlines our commitment to creating and
sustaining a diverse, inclusive, and safe workplace. With a focus on creating a vibrant workplace culture that attracts, retains, and empowers the
best and brightest in their fields, the following table sets forth our Inspired People goals and our relative progress at December 31, 2021.
Inspired People Goal (1)
At December 31, 2021
Fill 50% of all positions globally with women;
Fill 20% of all U.S. positions with ethnically diverse employees;
Approximately 23% of all global positions are filled with women;
Approximately 21% of all U.S. positions are filled with ethnically diverse
Improve employee, contractor, process, and distribution safety
performance by at least 75%; and,
employees;
For our most recent fiscal year (2,3):
- Our employee total recordable incident rate ("TRIR") was 0.29;
- Our contractor TRIR was 0.15;
- Our process safety tier 1 rate was 0.03;
- We had 2 distribution incidents; and,
Invest $50 million in our communities to improve lives by increasing
access to science, technology, engineering, and math (“STEM”) skills,
safety initiatives, and sustainable environment programs.
Approximately $15 million has been invested to improve lives by
increasing access to STEM skills, safety initiatives, and sustainable
environment programs within the communities in which we operate.
(1)
Inspired People goals are targeted for completion by December 31, 2030.
(2) Rate is defined as number of events per 100 workers per year.
(3) Our 2018 baseline metrics are as follows: employee TRIR of 0.28, contractor TRIR of 0.23, process safety tier 1 rate of 0.04, and 3 distribution incidents.
13
The Chemours Company
In support of our goals and commitment to foster a diverse and inclusive environment where all employees can contribute, thrive and grow, we have
several Employee Resource Groups (“ERGs”): Chemours Asian Group, Chemours Black Employee Network, Chemours Latin American Resource
Organization, Chemours Pride Network, Chemours Women’s Network, Early Career Network, and VetNet. The objectives of these ERGs are to help
foster a diverse, inclusive workplace by educating and building awareness across the Company on challenges underrepresented groups often face,
how to be more inclusive, supporting career development efforts, and leading community outreach efforts. We also facilitate additional educational
programs, workshops and discussions on a variety of diversity and inclusion topics for global, regional, and local employee groups. In 2020, we
introduced a new compensations metric focused on increasing the total proportion of women in the global workforce. The annual bonus structure for
all Chemours executives and senior leaders now includes this metric, which we believe is important to drive interim progress toward our 2030 gender
diversity goal.
Ultimately, we believe that our efforts towards achieving each of these goals result in a company culture that views our individual differences, safety-
focused mentality, and talent development initiatives as sources of competitive strength.
Safety Obsession
Responsible chemistry begins with our focus on the safety and health of people all along our value chain, including our own workforce. Our Safety
Obsession is deeply rooted in our responsible chemistry ethos and is one of our five core values, emphasizing our steadfast belief that a safe
workplace is a profitable workplace. Our safety commitment extends beyond ourselves and our manufacturing sites, and we make ongoing, upfront
investments in our people, our facilities, and our processes to protect the safety and well-being of our workforce, our business partners, and the
communities in which we operate.
Our Safety Obsession culture requires and encourages our global workforce to seek out training opportunities to increase safety literacy and
capability at our sites. We offer computer-based learning, classroom-style learning, hands-on training and demonstration for proficiency, and
mentoring and apprenticeship training for skill development. Our course content ranges from general safety awareness trainings to specialized
trainings, covering topics such as hazardous materials, electrical safety, and so forth. Our training programs are tailored to individual employee roles,
promoting the safety of our workforce while simultaneously providing the knowledge and skills necessary to maintain operational performance at our
complex manufacturing facilities. In measuring the safety performance of our workforce, we monitor several metrics, including those set forth in our
Inspired People goals above.
Beyond the physical safety aspects of our workplace, we also consider the emotional and psychological aspects of employee safety – an idea we
refer to as holistic safety. Emotional and psychological safety exists when team members feel accepted and respected, allowing them to bring their
authentic selves to work without fear of negative consequences to self-image, workplace status, or career opportunities. Holistic safety and business
performance are interconnected, as an environment lacking emotional and psychological safety creates distraction, which may lead to workplace
missteps and can result in physical accidents. At Chemours, the way in which we work is grounded in our Safety Obsession, which encompasses the
physical, emotional, and psychological dimensions of safety. Holistic safety also acknowledges our aspiration to be a diverse, equitable, and
inclusive company, where every employee is fully engaged and actively contributing to business results.
Consistent with our Safety Obsession, we have taken several actions during 2021 to promote the health, safety, and well-being of our workforce in
response to the COVID-19 pandemic. Such actions have included requiring remote working arrangements where practicable, the imposition of travel
restrictions, limiting non-essential visits to plant sites, performing health checks before every shift, providing personal protective equipment for our
“essential” operations employees at our sites and labs, and enhanced industrial hygiene and sanitization practices. We have also provided our
employees with opportunities to participate in webinar sessions focused on challenges that may be experienced during trying times, such as mental
and financial health. We will continue to make decisions that promote the health and safety of our employees and contractors throughout the
duration of the COVID-19 pandemic.
Professional Development
We encourage our employees to own their careers by taking the lead in their respective professional development journeys. We actively support our
employees in their professional development, providing multiple learning opportunities and trainings. We also provide our employees with the
necessary tools and resources to develop and produce the next generation of innovative chemistry products, most notably, our 312,000-square-foot
R&D facility on the Science, Technology, and Advanced Research campus of the University of Delaware in Newark, Delaware (“Chemours
Discovery Hub”). Given our focus on experiential learning, we leverage special projects, short-term assignments, and cross-functional job rotations to
further develop talent and support employees in meeting their professional aspirations. Semi-annual performance reviews, combined with annual
career development planning and ongoing feedback, provide support in performance and development and help our people know where they excel
and how they can improve.
14
Equitable Employee Compensation
The Chemours Company
We provide a total compensation package that is targeted to be competitive with the markets in which we compete for talent, while allowing individual
employee pay to vary equitably based on performance, skills, and experience. Our compensation programs are globally aligned, and, where
possible, our total rewards plans include base salary, incentives (short- and long-term), financial, physical, and mental well-being programs, and
monetary and social recognition. We routinely review our total rewards practices in the markets in which we compete to ensure our plans allow us to
recruit and retain the diverse talent we need to be successful. We are firmly committed to paying our employees in a fair and equitable manner,
regardless of race or gender, and we have implemented global total rewards tools to promote equitable remuneration. To ensure we deliver on this
commitment, we periodically engage with independent third-party consultants to review our compensation practices and recommend pay actions.
Employee Attraction and Retention
We believe that our workplace culture, as reinforced by our CRC, corporate values, professional development opportunities, and competitive
employee compensation, is critical in attaining a high offer acceptance rate and maintaining low levels of attrition, thereby enabling us to attract
talented employees and retain and recognize the benefits of our investments in our employees’ technical manufacturing capabilities, safety acumen,
and professional development. For the year ended December 31, 2021, our voluntary attrition percentage was approximately 9%.
Available Information
We are subject to the reporting requirements under the Securities Exchange Act of 1934 (the “Exchange Act”). Consequently, we are required to file
reports and information with the U.S. Securities and Exchange Commission (“SEC”), including reports on the following forms: Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Exchange Act.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports are also
accessible on our website at http://www.chemours.com by clicking on the section labeled “Investor Relations”, then on “Financials” and “SEC
Filings”. These reports are made available, without charge, as soon as it is reasonably practicable after we file or furnish them electronically with the
SEC at http://www.sec.gov.
15
Item 1A. RISK FACTORS
The Chemours Company
Our operations could be affected by various risks, many of which are beyond our control. Based on current information, we believe that the following
identifies the material risk factors that could affect our business, results of operations, or financial condition. Past financial performance may not be a
reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. Refer to our
“Forward-looking Statements” for more details.
Risks Related to Legal Matters, Environmental Sustainability, and Regulations
Our results of operations could be adversely affected by litigation and other commitments and contingencies.
We face risks arising from various unasserted and asserted legal claims, investigations, and litigation matters, such as product liability claims, patent
infringement claims, anti-trust claims, and claims for third-party property damage or personal injury stemming from alleged environmental actions
(which may concern regulated or unregulated substances) or other torts. We have noted a nationwide trend in purported mass tort and class actions
against chemical manufacturers generally seeking relief, such as medical monitoring, property damages, off-site remediation, and punitive damages
arising from alleged environmental actions (which may concern regulated or unregulated substances) or other torts without claiming present personal
injuries. We also have noted a trend in public and private nuisance suits being filed on behalf of states, counties, cities, and utilities alleging harm to
the general public and damages to natural resources. Various factors or developments in these nationwide trends or in the actions could result in
future charges that could have a material adverse effect on us. An adverse outcome in any one or more of these matters could be material to our
financial results and/or stock price, and could adversely impact the value of any of our brands that are associated with any such matters. As
discussed below, we are a named defendant and/or cost-sharing and defending DuPont, Corteva, and EID (together, the “DuPont Indemnitees”) in
litigation related to the production and use of perfluorooctanoic acids and its salts, including the ammonium salt (“PFOA”); hexafluoropropylene oxide
dimer acid (“HFPO Dimer Acid”, sometimes referred to as “GenX” or “C3 Dimer Acid”); Aqueous Film Forming Foam (“AFFF”); per- and
polyfluoroalkyl substances (“PFAS”); and other compounds.
We have received inquiries, government investigations, directives, multiple lawsuits, and other actions related to PFOA, HFPO Dimer Acid, AFFF,
and PFAS as discussed in more detail in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements. These or
other governmental inquiries or lawsuits could lead to us incurring liability for damages or other costs, a criminal or civil proceeding, the imposition of
fines and penalties, and/or other remedies, as well as restrictions on or added costs for our business operations going forward, including in the form
of restrictions on discharges at our Fayetteville Works site in Fayetteville, North Carolina (“Fayetteville”) or otherwise. Additional lawsuits or inquiries
also could be instituted related to these or other compounds in the future. Accordingly, the existing lawsuits and inquiries, and any such additional
litigation, relating to our existing operations, PFOA, HFPO Dimer Acid, AFFF, PFAS, or other compounds associated with our products or operations
could result in us incurring additional costs and liabilities, which may be material to our financial position and results of operations.
In the ordinary course of business, we may make certain commitments, including representations, warranties, and indemnities relating to current and
past operations, including those related to divested businesses, and issue guarantees of third-party obligations. Additionally, we may be required to
indemnify EID with regard to liabilities allocated to, or assumed by, us under each of the separation agreement, the employee matters agreement,
the tax matters agreement, and the intellectual property cross-license agreement that were executed prior to the Separation. These indemnification
obligations to date have included defense costs associated with certain litigation matters, as well as certain damages awards, settlements, and
penalties. In January 2021, we and the DuPont Indemnitees entered into a binding Memorandum of Understanding (the “MOU”) addressing certain
PFAS matters and costs as detailed in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements. Disputes with
the DuPont Indemnitees and others which may arise with respect to the MOU and PFAS matters, including disputes based on matters of law or
contract interpretation, could materially adversely affect our results of operations, financial condition, and cash flows.
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The Chemours Company
We are subject to extensive environmental and health and safety laws and regulations that may result in unanticipated loss or liability
related to our current and past operations, and that may result in significant additional compliance costs or obligations, which in either
case, could reduce our profitability.
Our operations and production facilities are dependent upon attainment and renewal of requisite operating permits and are subject to extensive
environmental and health and safety laws, regulations, and enforcements at national, international, and local levels in numerous jurisdictions, relating
to pollution, protection of the environment, climate change, transporting and storing raw materials and finished products, storing and disposing of
hazardous wastes, and product content and other safety concerns. Such laws include, but are not limited to:
• U.S.-based regulations, such as the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”, often referred
to as “Superfund”), the Resource Conservation and Recovery Act (“RCRA”) and similar state and global laws for management and
remediation of hazardous materials, the Clean Air Act (“CAA”) and Clean Water Act (“CWA”) and similar state and global laws for the
protection of air and water resources, and the Toxic Substances Control Act (“TSCA”);
•
Foreign-based chemical control regulations, such as the Registration, Evaluation, Authorization, and Restriction of Chemicals (“REACH”)
in the EU, the Chemical Substances Control Law (“CSCL”) in Japan, MEP Order No. 7 in China, and the Toxic Chemical Substance
Control Act (“TCSCA”) in Taiwan for the production and distribution of chemicals in commerce and reporting of potential adverse effects;
•
The EU Emissions Trading System and similar local and global laws for regulating GHG emissions; and,
• Numerous local, state, federal, and foreign laws, regulations, and enforcements governing materials transport and packaging.
If we are found to be in violation of these laws, regulations, or enforcements, which may be subject to change based on legislative, scientific, or other
factors, we may incur substantial costs, including fines, damages, criminal or civil sanctions, remediation costs, reputational harm, loss of sales or
market access, or experience interruptions in our operations. Our operations and production may also be subject to changes based on increased
regulation or other changes to, or restrictions imposed by, any such additional regulations. Any operational interruptions or plant shutdowns may
result in delays in production or may cause us to incur additional costs to develop redundancies in order to avoid interruptions in our production
cycles. In addition, the manner in which adopted regulations (including environmental and safety regulations) are ultimately implemented may affect
our products, the demand for and public perception of our products, the reputation of our brands, our market access, and our results of operations. In
the event of a catastrophic incident involving any of the raw materials we use or chemicals we produce, we could incur material costs as a result of
addressing the consequences of such event and future reputational costs associated with any such event.
Our costs of complying with complex environmental laws, regulations, and enforcements, as well as internal and external voluntary programs, are
significant and will continue to be significant for the foreseeable future. These laws, regulations, and enforcements may change and could become
more stringent over time, which could result in significant additional compliance costs, increased costs of purchased energy or other raw materials,
increased transportation costs, investments in, or restrictions on, our operations, installation or modification of GHG-emitting equipment, or additional
costs associated with GHG emissions. As a result of our current and historic operations, including the operations of divested businesses and certain
discontinued operations, we also expect to continue to incur costs for environmental investigation and remediation activities at a number of our
current or former sites and third-party disposal locations. However, the ultimate costs under environmental laws and the timing of these costs are
difficult to accurately predict. While we establish accruals in accordance with U.S. generally accepted accounting principles (“GAAP”), the ultimate
actual costs and liabilities may vary from the accruals because the estimates on which the accruals are based depend on a number of factors (many
of which are outside of our control), including the nature of the matter and any associated third-party claims, the complexity of the site, site geology,
the nature and extent of contamination, the type of remedy, the outcome of discussions with regulatory agencies and other Potentially Responsible
Parties (“PRPs”) at multi-party sites, and the number and financial viability of other PRPs. Refer to “Environmental Matters” within Item 7 –
Management’s Discussion and Analysis of Financial Condition and Results of Operations and “Note 22 – Commitments and Contingent Liabilities” to
the Consolidated Financial Statements for further information. We also could incur significant additional costs as a result of additional contamination
that is discovered or remedial obligations imposed in the future.
As discussed in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements, we continue to have active dialogue
with the North Carolina Department of Environmental Quality (“NC DEQ”) and other stakeholders regarding potential remedies that are both
economically and technologically feasible to achieve the objectives of the Consent Order (“CO”) and Addendum (“Addendum”) related to the
discharge of HFPO Dimer Acid and PFAS from Fayetteville into the Cape Fear River, site surface water, groundwater, and air emissions. The
Addendum establishes the procedure to implement specified remedial measures for reducing PFAS loadings from Fayetteville to the Cape Fear
River, including construction of a barrier wall with a groundwater extraction system. The estimated liabilities of achieving the CO and Addendum
objectives consist of several components, each of which may vary significantly and may exceed the recorded reserve estimates. The final cost of the
on-site barrier wall and groundwater treatment system depends on receiving timely NC DEQ design and permit approvals and thus the timely
finalization of certain significant design details, notably the actual barrier wall location, depth, and length, number and configuration of extraction
wells, water extraction rates and estimated carbon usage. Unanticipated schedule delays or other factors beyond our control could lead to further
increases in the cost of the barrier wall, which could be material. Changes in estimates are recorded in results of operations in the period that the
events and circumstances giving rise to such changes occur.
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The Chemours Company
There is also a risk that one or more of our manufacturing processes, key raw materials, or products may be found to have, or be characterized or
perceived as having, a toxicological or health-related impact on the environment or on our customers or employees or unregulated emissions, which
could potentially result in us incurring liability in connection with such characterization and the associated effects of any toxicological or health-related
impact. If such a discovery or characterization occurs, we may incur increased costs in order to comply with new regulatory requirements or as a
result of litigation. In addition, the relevant materials or products, including products of our customers incorporating our materials or products, may be
recalled, phased-out, or banned. Changes in laws, science, or regulations, or their interpretations, and our customers’ perception of such changes or
interpretations may also affect the marketability of certain of our products.
For example, in May 2016, the European Chemicals Agency (“ECHA”) accepted a proposal from France’s competent authority under REACH to
change the classification of TiO2. ECHA’s Risk Assessment Committee (“RAC”) provided the opinion that the evidence meets the criteria under the
EU’s Classification, Labeling and Packaging (“CLP”) Regulation to classify TiO2 as a Category 2 Carcinogen (suspected human carcinogen) by
inhalation. To implement this opinion, the EU Commission (“EC”) presented a draft of the full 14th Adaptation to Technical Progress (“ATP”), including
a proposed classification (with notes) for the powder form of TiO2 as a Category 2 Carcinogen by inhalation, as a delegated act for scrutiny by EU
Council and Parliament. The act came into enforcement on October 1, 2021. The impacts of the additional regulatory measures will include
increased requirements for TiO2 product labeling and importing operations, which could increase the costs associated with our TiO2 manufacturing
and handling processes.
In June 2019, the Member States Committee of ECHA also voted to list HFPO Dimer Acid as a Substance of Very High Concern. The vote was
based on Article 57(f) – equivalent level of concern having probable serious effects to the environment. This identification does not impose
immediate regulatory restriction or obligations, but may lead to a future authorization or restriction of the substance, which could have an adverse
effect on our results of operations, financial condition, and cash flows. In September 2019, we filed an application with the EU Court of Justice for the
annulment of the decision of ECHA to list HFPO Dimer Acid as a Substance of Very High Concern.
In May 2020, five European countries began an initiative to restrict the manufacture, placing on the market and use of PFAS in the EU. In this
regulatory process, more than 4,000 substances, including F-gases and fluoropolymers are being considered as part of this broad regulatory action.
On July 15, 2021, the countries submitted their restriction proposal, which informs ECHA of the intent to prepare a PFAS restriction dossier for
fluorinated substances within a defined structural formula scope, including branched fluoroalkyl groups and substances containing ether linkages,
fluoropolymers and side chain fluorinated polymers. The restriction dossier will include information on hazards and risks, available information on
alternatives and an analysis of the risk management instrument for addressing the identified risks. The submitting countries indicate that they expect
to submit the restriction dossier to ECHA in July 2022. As part of the preparation of the restriction dossier, stakeholders were requested to provide
relevant information and, based on risk and socio-economic information, derogations from the proposed restriction may be proposed by the
submitting countries. If a derogation is not proposed by the submitting countries, the relevant stakeholders may do so during a consultation process.
The draft dossier will be reviewed by the ECHA committees RAC and Socio-economic Analysis Committees (“SEAC”) and proposals submitted to
the EU Commission in 2023. The estimated entry into force of restrictions is 2025. The impacts of restrictions and regulatory measures could lead to
adverse effects on our results of operations, financial condition, and cash flows.
On October 18, 2021, the U.S. Environmental Protection Agency (the “EPA”) released its PFAS Strategic Roadmap, identifying a comprehensive
approach to addressing PFAS. The PFAS Strategic Roadmap sets timelines by which EPA plans to take specific actions through 2024, including
establishing a national primary drinking water regulation for PFOA and perfluorooctanesulfonic acid (“PFOS”) and taking Effluent Limitations
Guidelines actions to regulate PFAS discharges from industrial categories among other actions. As provided under its roadmap, EPA also released
on the same day its National PFAS Testing Strategy, under which the agency will identify and select certain PFAS compounds for which it will
require PFAS manufacturers to conduct testing pursuant to TSCA orders. EPA has indicated that we will receive orders for certain of such
compounds, including seven of the testing orders will be issued for PFAS compounds alleged to be associated with Fayetteville. On October 25,
2021, EPA published a final toxicity assessment for GenX compounds that decreased the draft reference dose for GenX compounds based on
EPA’s review of new studies and analyses. Under the PFAS Strategic Roadmap, EPA indicated they plan to develop non-regulatory drinking water
health advisories for certain PFAS compounds that have final EPA toxicity assessments, including GenX compounds in the Spring of 2022. We are
currently evaluating the impact of EPA’s final toxicity assessment, including new data and analysis utilized by the agency, and have met with the
agency to discuss process-related and technical concerns about the assessment. We cannot predict the final outcome of EPA’s actions for PFAS,
including the implementation of the PFAS Strategic Roadmap, and the consequences of any such actions to our Company. However, the required
TSCA order testing and GenX compounds toxicity assessment or future health advisories could increase the costs associated with our
manufacturing processes and related remediations at certain of our sites. Additionally, further actions to be taken under or arising from EPA’s action
under its PFAS Strategic Roadmap could lead to material adverse effects on our results of operations, financial condition, and cash flows.
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The Chemours Company
In connection with our Separation, we were required to assume, and indemnify EID for, certain liabilities. As we may be required to make
payments pursuant to these indemnities or under the cost-sharing provisions of the MOU, we may need to divert cash to meet those
obligations, and our financial results could be negatively affected. In addition, the obligations of EID to indemnify us and/or the obligation
of the DuPont Indemnitees to share costs for certain liabilities may not be sufficient to insure us against the full amount of the applicable
liabilities for which it will be allocated responsibility, and EID and/or the DuPont Indemnitees may not be able to satisfy their obligations in
the future.
Pursuant to the separation agreement, the employee matters agreement, the tax matters agreement, and the intellectual property cross-license
agreement we entered into with EID prior to the Separation, we were required to assume, and indemnify EID for, certain liabilities. These
indemnification obligations to date have included, among other items, defense costs associated with certain litigation matters, as well as certain
damages awards, settlement amounts, and penalties. In January 2021, we and the DuPont Indemnitees entered into a binding MOU addressing
certain PFAS matters and costs as detailed in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements.
Disputes with the DuPont Indemnitees and others, which may arise with respect to the MOU, PFAS matters, indemnification, and/or cost-sharing
matters, including disputes based on matter of law or contract interpretation, could materially adversely affect our business, financial condition,
results of operations, and cash flows. As described in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements,
multiple lawsuits have been filed by third parties containing allegations that EID’s separation of Chemours was a fraudulent transfer.
Third parties could also seek to hold us responsible for any of the liabilities of the EID businesses. EID has agreed to indemnify us for such liabilities,
but such indemnity from EID may not be sufficient to protect us against the full amount of such liabilities, and EID may not be able to fully satisfy its
indemnification obligations. Moreover, even if we ultimately succeed in recovering from EID any amounts for which we are held liable, we may be
temporarily required to bear these losses ourselves. Each of these risks could negatively affect our business, financial condition, results of
operations, and cash flows. Refer to “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements for further
information.
In connection with our Separation, we were required to enter into numerous Separation-related and commercial agreements with our
former parent company, EID, which may not reflect optimal or commercially beneficial terms to us.
Commercial agreements we entered into with EID prior to the Separation were formed in the context of the Separation while we were still a wholly-
owned subsidiary of EID. Accordingly, during the period in which the terms of those agreements were formed, we did not have an independent board
of directors or management independent of EID. Certain commercial agreements, having long terms and commercially-advantageous cancellation
and assignment rights to EID, may not include adjustments for changes in industry and market conditions. There is a risk that the pricing and other
terms under these agreements may not be commercially beneficial or able to be changed in the future. The terms relate to, among other things, the
allocation of assets, liabilities, rights, and obligations, including the provision of products and services and the sharing and operation of property,
manufacturing, office, and laboratory sites, and other commercial rights and obligations between us and EID.
If the distribution, in connection with the Separation, together with certain related transactions, were to fail to qualify for non-recognition
treatment for U.S. federal income tax purposes, then we could be subject to significant tax and indemnification liability and stockholders
receiving our common stock in the distribution could be subject to significant tax liability.
Generally, taxes resulting from the failure of the Separation and distribution or certain related transactions to qualify for non-recognition treatment
under U.S. federal, state, and/or local tax law, and/or foreign tax law, would be imposed on EID or EID’s stockholders and, under the tax matters
agreement that we entered into with EID prior to the Separation, EID is generally obligated to indemnify us against such taxes to the extent that we
may be jointly, severally, or secondarily liable for such taxes. However, under the terms of the tax matters agreement, we are also generally
responsible for any taxes imposed on EID that arise from the failure of the distribution to qualify as tax-free for U.S. federal income tax purposes
within the meaning of Section 355 of the Internal Revenue Code (“IRC”) or the failure of such related transactions to qualify for tax-free treatment, to
the extent such failure to qualify is attributable to actions, events, or transactions relating to our or our affiliates’ stock, assets, or business, or any
breach of our or our affiliates’ representations, covenants, or obligations under the tax matters agreement (or any other agreement we enter into in
connection with the Separation and distribution), the materials submitted to the U.S. Internal Revenue Service (“IRS”) or other governmental
authorities in connection with the request for the IRS Ruling or other tax rulings or the representation letter provided to counsel in connection with the
tax opinion. Events triggering an indemnification obligation under the agreement include events occurring after the distribution that cause EID to
recognize a gain under Section 355(e) of the IRC. Such tax amounts could be significant. To the extent we are responsible for any liability under the
tax matters agreement, there could be a material adverse impact on our financial condition, results of operations, and cash flows in future reporting
periods.
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The Chemours Company
Our failure to comply with the anti-corruption laws of the U.S. and various international jurisdictions could negatively impact our
reputation and results of operations.
Doing business on a global basis requires us to comply with the laws and regulations of the U.S. government and those of various international and
sub-national jurisdictions, and our failure to successfully comply with these rules and regulations may expose us to liabilities. These laws and
regulations apply to companies, individual directors, officers, employees, and agents, and may restrict our operations, trade practices, investment
decisions, and partnering activities. In particular, our international operations are subject to U.S. and foreign anti-corruption laws and regulations,
such as the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act 2010 (“Bribery Act”), and other anti-corruption laws of the various
jurisdictions in which we operate. The FCPA, the Bribery Act, and other laws prohibit us and our officers, directors, employees, and agents acting on
our behalf from corruptly offering, promising, authorizing, or providing anything of value to foreign officials for the purposes of influencing official
decisions or obtaining or retaining business or otherwise obtaining favorable treatment. Our global operations may expose us to the risk of violating,
or being accused of violating, the foregoing or other anti-corruption laws. Such violations could be punishable by criminal fines, imprisonment, civil
penalties, disgorgement of profits, injunctions, and exclusion from government contracts, as well as other remedial measures. Investigations of
alleged violations can be very expensive, disruptive, and damaging to our reputation. Although we have implemented anti-corruption policies and
procedures, there can be no guarantee that these policies, procedures, and training will effectively prevent violations by our employees or
representatives in the future. Additionally, we face a risk that our distributors and other business partners may violate the FCPA, the Bribery Act, or
similar laws or regulations. Such violations could expose us to FCPA and Bribery Act liability, and/or our reputation may potentially be harmed by
their violations and resulting sanctions and fines.
Risks Related to COVID-19
A pandemic, epidemic, or other outbreak of infectious disease may have a material adverse effect on our business operations, results of
operations, financial condition, and cash flows.
Our operational and financial condition may be negatively impacted by the widespread outbreak of any illnesses or communicable diseases, as well
as any associated public health crises that may ensue. To minimize the transmissions, social and economic restrictions have been or may be
imposed in the U.S. and abroad, including travel bans, quarantines, restrictions on public gatherings, shelter-in-place orders, and/or safer-at-home
orders. These restrictions, while necessary and important for public health, can have negative business-related implications for our Company and the
U.S. and global economies.
Since 2020, the COVID-19 pandemic has negatively impacted the global economy, disrupting global supply chains and creating significant
uncertainty and volatility in financial markets. While we experienced minimal disruption in our operations and business-related processes, we are
continuously monitoring the effects of the COVID-19 pandemic on all aspects of our business, including its adverse impacts on our employees,
customers, suppliers, vendors, business partners, and supply and distribution channels, as well as our ability to execute our business strategies and
objectives. As a multi-national corporation, we are also continuously monitoring the operational and financial impacts of evolving restrictive local and
national laws and regulations, as well as recommendations set forth by public health organizations and governmental organizations to impede the
spread of COVID-19.
The extent to which the COVID-19 pandemic could adversely impact our Company depends on evolving factors, as well as future developments that
we are not able to predict with certainty. These factors include the duration and scope of the COVID-19 pandemic, including an increased spread of
infections or new variants of the virus; the health of our employees and the workforce of certain third-party service providers or contractors; extended
travel bans, quarantines, or shelter-in-place orders; changes in customer demand; increased operating costs to deal with the impacts of COVID-19;
supply chain inefficiencies or ineffectiveness, including raw material shortages, driven by impacts of COVID-19 on our suppliers; prolonged weaker
economic conditions; and consumer and business confidence and the resulting decreases in our customers’ demand and spending patterns, as well
as their respective abilities to fulfill any existing purchase obligations.
The widespread outbreak of any illness or communicable disease could result in, and in the instance of the COVID-19 pandemic has resulted in, a
significant health crisis that adversely affects local and global economies and financial markets, including the companies that operate within these
conditions. Each of the above considerations related to the COVID-19 pandemic remain highly uncertain and subject to change, continue to evolve,
and have the potential to have a material adverse impact on our business operations, results of operations, financial condition, and cash flows.
However, we cannot predict with certainty the magnitude of such impacts at this time. The impact of COVID-19 may also exacerbate our other risks,
as described within this Item 1A – Risk Factors, any of which could have a material effect on us, including among other things, risks associated with
our indebtedness, including available capacity, compliance with debt covenants; risks related to adequacy of our cash flow and earnings and other
conditions which may affect our liquidity; and risks related to our ongoing ability to pay dividends and repurchase common stock. As the situation
continues to evolve, additional impacts of which we are not currently aware may also arise.
20
Risks Related to Our Business Performance
The Chemours Company
Operating as a multi-national corporation presents risks associated with global and regional economic downturns and global capital
market conditions, as well as risks resulting from changes to regional regulatory requirements (including environmental standards).
Our business and operating results may in the future be adversely affected by global and regional economic conditions, including instability in credit
markets, declining consumer and business confidence, fluctuating commodity prices and interest rates, volatile exchange rates, and other
challenges, such as tariffs on international trade, border adjustments for certain products, and a changing financial regulatory environment that could
affect the global economy. Such global and regional economic conditions may be further affected by physical risks that stem from a number of root
causes, including natural disasters, climate change, and/or travel-based restrictions that may be driven by geo-political activities, military actions,
terrorism, and the spread of pandemics, such as the COVID-19 pandemic.
Our customers may experience deterioration of their businesses, shortages in cash flows, and difficulty obtaining financing. As a result, existing or
potential customers may delay or cancel plans to purchase products and may not be able to fulfill their obligations to us in a timely fashion. Further,
suppliers could experience similar conditions, which could impact their ability to supply materials or otherwise fulfill their obligations to us. Because
we have significant international operations, there are a large number of currency transactions that result from our international sales, purchases,
investments, and borrowings. Future weakness in the global economy and failure to manage these risks could adversely affect our results of
operations, financial condition, and cash flows in future periods.
In addition to the general risks associated with operating in the global economy, our revenue and profitability are largely dependent on the TiO2
pigment industry and the industries that are the end-users of our refrigerants and fluoropolymers. TiO2 pigment, refrigerants, and fluoropolymers are
used in many “quality of life” products for which demand historically has been linked to global, regional, and local GDP and discretionary spending,
which can be negatively impacted by regional and world events or economic conditions. Such events, which may or may not impact all of our
businesses at the same time or to the same degree, are likely to cause a decrease in the demand for our products and, as a result, may have an
adverse effect on our results of operations and financial condition. The future profitability of our operations, and cash flows generated by those
operations, will also be affected by the available supply of our products in the market. Further, our future demand growth may be below average
global GDP growth rates if our sales into developed markets outpace our sales into emerging markets. In addition, because demand for certain of
our products is driven in part by industry needs to comply with certain environmental regulations (such as markets for refrigerants and foams with low
GWP), changes in, the elimination of, or lack of enforcement of such environmental regulations in the U.S., the EU, or other jurisdictions can also
negatively impact demand for such products and, as a result, our results of operations and financial condition.
The businesses in which we compete are highly competitive. If our intellectual property were compromised or copied by competitors, or if
our competitors were to develop similar or superior intellectual property or technology, our results of operations could be negatively
affected.
Each of the businesses in which we operate is highly competitive. Competition in the performance chemicals industry is based on a number of
factors, such as price, product quality, and service. We face significant competition from major international and regional competitors. Some of our
competitors in the Titanium Technologies segment have announced plans to expand their chloride capacity. Additionally, our Titanium Technologies
business competes with numerous regional producers, including producers in China, who have expanded their readily available production capacity
during the previous five years. The risk of substitution of these Chinese producers by our customers could increase as these Chinese producers
expand their use of chloride production technology. Similarly, we compete with various producers in our Thermal & Specialized Solutions and
Advanced Performance Materials businesses, and the risk of substitution of these producers by our customers could increase if these producers
develop better capabilities to manufacture products similar to our specialty products.
Intellectual property rights, including patents, trade secrets, confidential information, trademarks, and tradenames are important to our business. We
endeavor to protect our intellectual property rights in key jurisdictions in which our products are produced or used and in jurisdictions into which our
products are imported. Our success depends to a significant degree upon our ability to protect and preserve our intellectual property rights. However,
we may be unable to obtain protection for our intellectual property in key jurisdictions. Although we own and have applied for numerous patents and
trademarks throughout the world, we may have to rely on judicial enforcement of our patents and other proprietary rights. Our patents and other
intellectual property rights may be challenged, invalidated, circumvented, and rendered unenforceable or otherwise compromised. A failure to
protect, defend, or enforce our intellectual property could have an adverse effect on our financial condition and results of operations. Similarly, third
parties may assert claims against us and our customers and distributors, alleging our products infringe upon third-party intellectual property rights.
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The Chemours Company
We also rely upon unpatented proprietary technology, know-how, and other trade secrets to maintain our competitive position. While we maintain
policies to enter into confidentiality agreements with our employees and third parties to protect our proprietary expertise and other trade secrets,
these agreements may not be enforceable or, even if legally enforceable, we may not have adequate remedies for breaches of such agreements.
We also may not be able to readily detect breaches of such agreements. The failure of our patents or confidentiality agreements to protect our
proprietary technology, know-how, or trade secrets could result in significantly lower revenues, reduced profit margins, or loss of market share.
If we must take legal action to protect, defend, or enforce our intellectual property rights, any suits or proceedings could result in significant costs and
diversion of resources and management’s attention, and we may not prevail in any such suits or proceedings. A failure to protect, defend, or enforce
our intellectual property rights could have an adverse effect on our financial condition and results of operations.
Effects of price fluctuations in energy and raw materials, our raw materials contracts, and our inability to renew such contracts, could
have a significant impact on our earnings.
Our manufacturing processes consume significant amounts of energy and raw materials, the costs of which may be subject to worldwide supply and
demand factors, global trade regulations and tariffs, GHG emissions-based regulations, and other factors beyond our control. Variations in the cost
of energy, which primarily reflect market prices for oil and natural gas, and for raw materials may significantly affect our operating results from period
to period. Additionally, to the extent climate change regulations and restrictions are not stringently imposed in the countries in which our competitors
operate, our competitors could gain cost or other competitive advantages. Consolidation in the industries providing our raw materials may also have
an impact on the cost and availability of such materials. To the extent we do not have fixed price contracts with respect to specific raw materials, we
have no control over the costs of raw materials, and such costs may fluctuate widely for a variety of reasons, including changes in availability, major
capacity additions or reductions, or significant facility operating problems.
When possible, we have purchased, and we plan to continue to purchase, raw materials, including titanium-bearing ores and fluorspar, through
negotiated medium-term or long-term contracts to minimize the impact of price fluctuations. To the extent that we have been able to achieve
favorable pricing in our existing negotiated long-term contracts, we may not be able to renew such contracts at the current prices, or at all, and this
may adversely impact our profitability and cash flows from operations. However, to the extent that the prices of the raw materials that we utilize
significantly decline, we may be bound by the terms of our existing long-term contracts and obligated to purchase such raw materials at higher prices
as compared to other market participants.
We attempt to offset the effects of higher energy and raw materials costs through selling price increases, productivity improvements, and cost
reduction programs. However, the outcome of these efforts is largely determined by existing competitive and economic conditions, and may be
subject to a time delay between the increase in our raw materials costs and our ability to increase prices, which could vary significantly depending on
the market served. If we are not able to fully offset the effects of higher energy or raw materials costs, there could be a material adverse effect on our
financial results.
Our reported results and financial condition could be adversely affected by currency exchange rates and currency devaluation could
impair our competitiveness.
Due to our international operations, we transact in many foreign currencies, including, but not limited to, the euro, the Mexican peso, the Chinese
yuan, and the Japanese yen. As a result, we are subject to the effects of changes in foreign currency exchange rates. During times of a
strengthening U.S. dollar, our reported net sales and operating income will be reduced because the local currency will be translated into fewer U.S.
dollars. During periods of local economic crisis, local currencies may be devalued significantly against the U.S. dollar, potentially reducing our
margin. For example, depreciation of the euro against the U.S. dollar has historically negatively impacted our results of operations. We also have
certain indebtedness and payables denominated in the euro, and, during times of a strengthening euro relative to the U.S. dollar, our overall debt
obligations and payables in U.S. dollars equivalent will increase.
We enter into certain of our qualifying foreign currency forward contracts under a cash flow hedge program to mitigate the risks associated with
fluctuations in the euro against the U.S. dollar for forecasted U.S. dollar-denominated purchases for certain of our international subsidiaries. There
can be no assurance that any hedging action will lessen the adverse impact of a variation in currency rates. Also, actions to recover margins may
result in lower volume and a weaker competitive position, which may have an adverse effect on our profitability. For example, in our Titanium
Technologies segment, a substantial portion of our manufacturing is located in the U.S. and Mexico, while our TiO2 pigment is delivered to customers
around the world. Furthermore, our ore cost is principally denominated in U.S. dollars. Accordingly, in periods when the U.S. dollar or Mexican peso
strengthen against other local currencies, such as the euro, our costs are higher relative to some of our competitors who operate largely outside of
the U.S. and Mexico, and the benefits we realize from having lower costs associated with our manufacturing process are reduced, impacting our
profitability.
22
The Chemours Company
If we are unable to innovate and successfully introduce new products, or new technologies or processes reduce the demand for our
products or the price at which we can sell products, our profitability could be adversely affected.
Our industries and the end-use markets into which we sell our products experience periodic technological changes and product improvements, as
well as changes in mandates on or regulation of products and services. Our future growth will depend on our ability to gauge the direction of
commercial and technological progress in key end-use markets, our ability to fund and successfully develop, manufacture, and market products in
such changing end-use markets, and our ability to adapt to changing regulations. We must continue to develop lower-emission manufacturing
technologies and identify, develop, and market innovative products or enhance existing products on a timely basis to maintain our profit margins and
our competitive position. We may be unable to develop new products or technologies, either alone or with third parties, or license intellectual
property rights from third parties on a commercially competitive basis. If we fail to keep pace with the evolving technological innovations in our end-
use markets on a competitive basis, including with respect to innovation related to the development of alternative uses for, or application of, products
developed that utilize such end-use products, our financial condition and results of operations could be adversely affected. We cannot predict
whether technological innovations will, in the future, result in a lower demand for our products or affect the competitiveness of our business. We may
be required to invest significant resources to adapt to changing technologies, markets, customer behaviors and demands, competitive environments,
and laws, regulations, or enforcements. We cannot anticipate market acceptance of new products or future products. In addition, we may not achieve
the expected benefits associated with new products developed to meet new laws, regulations, or enforcements if the implementation of such laws,
regulations, or enforcements is delayed, and we may face competition from illegal or counterfeit products in regulated markets.
If our long-lived assets become impaired, we may be required to record a significant charge to earnings.
We have a significant amount of long-lived assets on our consolidated balance sheets. Under GAAP, we review our long-lived assets for impairment
when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in
circumstances, indicating that the carrying value of our long-lived assets may not be recoverable, include, but are not limited to, changes in the
industrial, economic, political, social, and physical landscapes in which we operate, as well as competition or other factors leading to a reduction in
expected long-term sales or profitability. We may be required to record a significant non-cash charge in our financial statements during the period in
which any impairment of our long-lived assets is determined, negatively impacting our results of operations.
We could be subject to changes in our tax rates and the adoption of tax legislation or exposure to additional tax liabilities that may
adversely affect our results of operations, financial condition, and cash flows.
We are subject to taxes in the U.S. and non-U.S. jurisdictions where our subsidiaries are organized. Due to economic and political conditions, tax
rates in various jurisdictions may be subject to significant change. Our future effective tax rates could be affected by and may fluctuate because of
changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in
tax laws or their interpretations, and taxes associated with the repatriation of our non-U.S. earnings. Our tax returns and other tax matters are
subject to examination by local tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting from
these examinations to determine the adequacy of our provision for taxes. There can be no assurance as to the outcome of these examinations. If our
effective tax rates were to increase, or if the ultimate determination of the taxes owed by us is for an amount in excess of amounts previously
accrued, our operating results, financial condition, and cash flows could be adversely affected.
We are subject to continuing contingent tax-related liabilities of EID.
There are other significant areas where the liabilities of EID may become our obligations. For example, under the IRC and the related rules and
regulations, each corporation that was a member of EID’s consolidated tax reporting group during any taxable period or portion of any taxable period
ending on or before the effective time of the distribution is jointly and severally liable for the U.S. federal income tax liability of the entire consolidated
tax reporting group for such taxable period. In connection with the Separation and distribution, we entered into a tax matters agreement with EID that
allocates the responsibility for prior period taxes of EID’s consolidated tax reporting group between us and EID. If EID were unable to pay any prior
period taxes for which it is responsible, however, we could be required to pay the entire amount of such taxes, and such amounts could be
significant. Other provisions of federal, state, local, or foreign law may establish similar liability for other matters, including laws governing tax-
qualified pension plans, as well as other contingent liabilities.
23
The Chemours Company
We are a holding company that is dependent on cash flows from our operating subsidiaries to fund our debt obligations, PFAS escrow
funding requirements, capital expenditures, and ongoing operations.
All of our operations are conducted, and all of our assets are owned, by our operating companies, which are our subsidiaries. We intend to continue
to conduct our operations at the operating companies and any future subsidiaries. Consequently, our cash flows and our ability to meet our
obligations, including our debt obligations, PFAS escrow funding requirements, or make cash distributions depends upon the cash flows of our
operating companies and any future subsidiaries, as well as the ability of our operating companies and any future subsidiaries to transfer funds in the
form of dividends or otherwise.
Our debt is generally the exclusive obligation of The Chemours Company and our guarantor subsidiaries, as described in “Note 20 – Debt” to the
Consolidated Financial Statements. Because a significant portion of our operations are conducted by non-guarantor subsidiaries, our cash flows and
our ability to service indebtedness, including our ability to pay the interest on our debt when due and principal of such debt at maturity, are
dependent to a large extent upon cash dividends and distributions or other transfers from such non-guarantor subsidiaries. Any payment of
dividends, distributions, loans, or advances by our non-guarantor subsidiaries to us could be subject to restrictions on dividends or repatriation of
earnings under applicable local law, monetary transfer restrictions, and foreign currency exchange regulations in the jurisdictions in which our
subsidiaries operate, and any restrictions imposed by the current and future debt instruments of our non-guarantor subsidiaries.
Our subsidiaries are separate legal entities and, except for our guarantor subsidiaries, have no obligation, contingent or otherwise, to pay any
amounts due on our debt or to make any funds available for those amounts, whether by dividends, loans, distributions, or other payments, and do
not guarantee the payment of interest on, or principal of, our debt. Any right that we have to receive any assets of any of our subsidiaries that are not
guarantors upon the liquidation or reorganization of any such subsidiary, and the consequent right of holders of the outstanding notes to realize
proceeds from the sale of their assets, will be structurally subordinated to the claims of that subsidiary’s creditors, including trade creditors and
holders of debt issued by that subsidiary.
The ability of our operating companies and any future subsidiaries to make any payments to us depends on their earnings, the terms of their
indebtedness, including the terms of any credit facilities, and legal restrictions regarding the transfer of funds.
Failure to meet some or all of our key financial and non-financial targets could negatively impact the value of our business and adversely
affect our stock price.
From time to time, we may announce certain key financial and non-financial targets that are expected to serve as benchmarks for our performance
for a given time period, including goals for our future net sales growth, adjusted earnings before interest, taxes, depreciation, and amortization,
adjusted earnings per share, free cash flows, return on invested capital, net leverage ratio, corporate responsibility commitments, and/or
sustainability commitments. Our failure to meet one or more of these key targets may negatively impact our results of operations, stock price, and
stockholder returns. The factors influencing our ability to meet these key targets include, but are not limited to, changes in the global economic
environment, changes in our competitive landscape, including our relationships with new or existing customers, our ability to introduce new products,
applications, or technologies, our undertaking of an acquisition, joint venture, or other strategic arrangement, the outcome of any new or existing
litigation, our failure to comply with new or existing laws or regulations, and other factors described within this Item 1A – Risk Factors, many of which
are beyond our control.
24
Risks Related to Our Operations
The Chemours Company
Our ability to make future strategic decisions regarding our manufacturing operations are subject to regulatory, environmental, political,
legal, and economic risks, and to a certain extent may be subject to consents or cooperation from EID under the agreements entered into
between us and EID as part of the Separation. These could adversely affect our ability to execute our future strategic decisions and our
results of operations and financial condition.
One of the ways we may improve our business is through the expansion or improvement of our facilities. Construction of additions or modifications to
facilities involves numerous regulatory, environmental, political, legal, and economic uncertainties that are beyond our control and are subject to
various start-up risks and consent to operate. Difficulties in obtaining any of the requisite licenses, permits, and authorizations from governmental or
regulatory authorities could increase the total cost, delay, jeopardize, or prevent the construction or opening of such facilities. Our expansion or
improvement projects may also require the expenditure of significant amounts of capital, and financing may not be available on economically
acceptable terms, or at all. As a result, these projects may not be completed on schedule, at the budgeted cost, or at all, which may adversely affect
our results of operations, financial condition, and cash flows. Moreover, our revenue may not increase immediately upon the expenditure of funds on
a particular project or may be negatively impacted by regulatory or other developments relating to the chemicals we use or manufacture. As a result,
we may not be able to realize our expected investment return, which could also adversely affect our results of operations, financial condition, and
cash flows.
We periodically assess our manufacturing operations in order to manufacture and distribute our products in the most efficient manner and to
minimize the potential impacts of climate-related physical risks on our operations. Based on our assessments, we may make strategic decisions
regarding our manufacturing operations, such as capital improvements to modernize certain units and/or improve structural resilience, move
manufacturing or distribution capabilities from one plant or facility to another plant or facility, discontinue manufacturing or distributing certain
products, or close or divest all or part of a manufacturing plant or facility, some of which have significant shared services and lease agreements with
EID. These agreements may adversely impact our ability to make these strategic decisions regarding our manufacturing operations. Further, if such
agreements are terminated or revised, we would have to assess and potentially adjust our manufacturing operations, the closure or divestiture of all
or part of a manufacturing plant or facility that could result in future charges that could be significant.
Hazards associated with chemical manufacturing, storage, containment, and transportation could adversely affect our results of
operations.
There are hazards associated with chemical manufacturing and the related storage, containment, and transportation of raw materials, products, and
wastes. These hazards could lead to an interruption or suspension of operations and have an adverse effect on the productivity and profitability of a
particular manufacturing facility or on us as a whole. While we endeavor to provide adequate protection for the safe-handling of these materials,
issues could be created by various events, including unforeseen accidents or defects, natural disasters, severe weather events, acts of sabotage,
military actions, terrorism, and performance by third parties, including tenants at certain of our manufacturing facilities, and, as a result, we could
face the following potential hazards:
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piping and storage tank leaks and ruptures;
• mechanical failure;
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employee exposure to hazardous substances;
fires and explosions; and,
chemical spills and other discharges or releases of toxic or hazardous substances or gases.
These hazards may cause personal injury and loss of life, damage to property, contamination of the environment, and damage to natural resources,
which could lead to government fines and penalties, remedial obligations, work stoppage injunctions, claims and lawsuits by injured persons,
damage to our public reputation and brands, loss of sales and market access, customer dissatisfaction, and diminished product acceptance. If such
actions are determined adversely to us or there is an associated economic impact to our business, we may have inadequate insurance or cash flows
to offset any associated costs. Such outcomes could adversely affect our financial condition and results of operations.
25
The Chemours Company
Our results of operations and financial condition could be seriously impacted by business disruptions and security breaches, including
cybersecurity incidents.
Business and/or supply chain disruptions, plant downtime, power outages, and/or information technology system and network disruptions, regardless
of cause, including acts of sabotage, employee error or other actions, geo-political activity, military actions, and terrorism (including cyberterrorism)
could seriously harm our operations, as well as the operations of our customers and suppliers. Further, the nature of our business dictates that we
maintain significant concentrations of physical assets in geographic locations which may be vulnerable to the impacts of climate change, including
significant changes in storm patterns and intensities, water shortages, increasing atmospheric and water temperatures, and rising sea levels. Such
events could also seriously harm our operations, as well as the operations of our customers and suppliers, and accordingly, we continue to study the
long-term implications of changing climate parameters on plant siting, operational issues, and water availability. Any of the aforementioned
disruptions and/or events could have a negative impact on our business, results of operations, financial condition, and cash flows.
Failure to effectively prevent, detect, and recover from security breaches, including attacks on information technology and infrastructure by hackers,
viruses, breaches due to employee error or other actions, or other disruptions, could result in misuse of our assets, business disruptions, loss of
property including trade secrets and confidential business information, legal claims or proceedings, reporting errors, processing inefficiencies,
negative media attention, loss of sales, and interference with regulatory compliance. Such risks are particularly relevant in consideration of remote
working arrangements utilized by our workforce where practicable during the COVID-19 pandemic. Like most major corporations, we have been, and
expect to be, the target of industrial espionage, including cyberattacks, from time to time. We have determined that these attacks have resulted, and
could result in the future, in unauthorized parties gaining access to certain confidential business information, and have included the obtaining of trade
secrets and proprietary information related to the chloride manufacturing process for TiO2 pigment by third parties. Although we do not believe that
we have experienced any material losses to date related to these breaches, there can be no assurance that we will not suffer any such losses in the
future. We plan to actively manage the risks within our control that could lead to business disruptions and security breaches. As these threats
continue to evolve, particularly around cybersecurity, we may be required to expend significant resources to enhance our control environment,
processes, practices, and other protective measures. Despite these efforts, such events could materially adversely affect our business, financial
condition, or results of operations.
Our information technology is provided by a combination of internal and external services and service providers, and we rely on information
technology in many aspects of our business, including internal and external communications, and the management of our accounting, finance, and
supply chain functions. Further, our business involves the use, storage, and transmission of information about customers, suppliers, and employees.
As we become more dependent on information technology to conduct our business, and as the number and sophistication of cyberattacks increases,
the risks associated with cybersecurity, information security, and data privacy also increases. In response to such risks, we provide our employees
with cyber and information security training on a periodic and an annual basis. Failure to maintain effective internal control over our information
technology and infrastructure could materially adversely affect our business, financial condition, or results of operations, and/or have a material
adverse impact on our stock price.
Preparedness plans pertaining to the physical- and cyber-related aspects of our business have been developed with detailed actions needed in the
event of unforeseen events or severe weather. We also engineer our facilities to better withstand these events and hold insurance coverage to
protect against losses from physical damages and business interruptions. These measures have historically been in place, and such activities and
associated costs are driven by normal operational preparedness. However, there can be no assurance that such measures will be effective for a
particular event that we may experience.
Our operations could be materially impacted in the event of a failure of our information technology infrastructure.
We currently use an enterprise resource planning (“ERP”) software platform that is no longer supported; however, we are able to pay for extended,
customer-specific support, which can be costly. We are currently evaluating our options to upgrade or switch this platform. Any systems failure,
accident, or security breach could result in significant costs or disruptions to our operations, which could have a material adverse effect on our
business. Further, such improvements and upgrades are often complex, costly, and time-consuming. We may experience challenges integrating any
new ERP software platform with our existing technology systems, or may uncover problems with our existing technology systems. Any unsuccessful
attempt to upgrade or switch our ERP software platform could result in outages, a disruption to our operations and our ability to serve our customers,
and/or damage to our reputation.
26
Risks Related to Our Indebtedness
The Chemours Company
Our current level of indebtedness could adversely affect our financial condition, and we could have difficulty fulfilling our obligations
under our indebtedness, which may have a material adverse effect on us.
As of December 31, 2021, we had approximately $3.8 billion of indebtedness. At December 31, 2021, together with the guarantors, we had
approximately $1.2 billion of indebtedness outstanding under our senior secured credit facilities, and a $900 million revolving credit facility
(“Revolving Credit Facility”) capacity, which would be senior secured indebtedness, if drawn (collectively, the “Senior Secured Credit Facilities”). Our
current level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our
indebtedness. The level of our indebtedness could have other important consequences on our business, including:
• making it more difficult for us to satisfy our obligations with respect to indebtedness;
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increasing our vulnerability to adverse changes in general economic, industry, and competitive conditions;
requiring us to dedicate a significant portion of our cash flows from operations to make payments on our indebtedness, thereby reducing
the availability of our cash flows to fund working capital and other general corporate purposes;
limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
restricting us from capitalizing on business opportunities;
placing us at a competitive disadvantage compared to our competitors that have less debt;
limiting our ability to borrow additional funds for working capital, acquisitions, debt service requirements, execution of our business
strategy, or other general corporate purposes;
requiring us to provide additional credit support, such as letters of credit or other financial guarantees, to our customers, suppliers, or
regulators, thereby limiting our availability of funds under our Revolving Credit Facility;
limiting our ability to enter into certain commercial arrangements because of concerns of counterparty risks; and,
limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors that
have less debt.
The occurrence of any one or more of these circumstances could have a material adverse effect on us.
Our ability to make scheduled payments on and to refinance our indebtedness, including on our outstanding notes, depends on and is subject to our
financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business, and other factors
(many of which are beyond our control), including the availability of financing in the international banking and capital markets. We cannot be certain
that our business will generate sufficient cash flows from operations or that future borrowings will be available to us in an amount sufficient to enable
us to service our debt, including the outstanding notes, to refinance our debt, or to fund our other liquidity needs.
If we are unable to meet our debt service obligations or to fund our other liquidity needs, we will need to restructure or refinance all or a portion of our
debt, including the outstanding notes. Failure to successfully restructure or refinance our debt could cause us to default on our debt obligations and
would impair our liquidity. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial
condition at such time. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous
covenants that could further restrict our business operations.
Moreover, in the event of a default of our debt service obligations, if not cured or waived, the holders of the applicable indebtedness, including
holders of our outstanding notes and the Senior Secured Credit Facilities, could elect to declare all the funds borrowed to be due and payable,
together with accrued and unpaid interest. We cannot be certain that our assets or cash flows would be sufficient to fully repay borrowings under our
outstanding debt instruments if accelerated upon an event of default. First, a default in our debt service obligations in respect of the outstanding
notes would result in a cross-default under the Senior Secured Credit Facilities. The foregoing would permit the lenders under the Revolving Credit
Facility to terminate their commitments thereunder and cease making further loans, and would allow the lenders under the Senior Secured Credit
Facilities to declare all loans immediately due and payable and to institute foreclosure proceedings against their collateral. Second, any event of
default or declaration of acceleration under the Senior Secured Credit Facilities or certain other agreements relating to our outstanding indebtedness
could also result in an event of default under the indenture governing the outstanding notes, and any event of default or declaration of acceleration
under any other of our outstanding indebtedness may also contain a cross-default provision. Any such default, event of default if not cured or waived,
or declaration of acceleration could force us into bankruptcy, reorganization, insolvency, or liquidation.
Refer to “Note 20 – Debt” to the Consolidated Financial Statements for further discussion related to our indebtedness.
27
The Chemours Company
Despite our current level of indebtedness, we may incur substantially more debt and enter into other transactions, which could further
exacerbate the risks to our financial condition described above.
Notwithstanding our current level of indebtedness, we may incur significant additional indebtedness in the future, including additional secured
indebtedness (including the $900 million maximum capacity under the Revolving Credit Facility) that would be effectively senior to our outstanding
notes. Although the indenture that governs the outstanding notes and the credit agreement that governs the Senior Secured Credit Facilities contain
restrictions on our ability to incur additional indebtedness and to enter into certain types of other transactions, these restrictions are subject to a
number of significant qualifications and exceptions. Additional indebtedness incurred in compliance with these restrictions, including additional
secured indebtedness, could be substantial. These restrictions also do not prevent us from incurring obligations, such as trade payables, that do not
constitute indebtedness as defined under our debt instruments. To the extent such new debt is added to our current debt levels, the substantial
leverage risks described in the immediately preceding risk factor would increase.
We may need additional capital in the future and may not be able to obtain it on favorable terms.
Our industry is capital intensive, and we may require additional capital in the future to finance our growth and development, implement further
marketing and sales activities, fund ongoing R&D activities, make investments driven by environmental compliance, and meet general working
capital needs. Our capital requirements will depend on many factors, including acceptance of and demand for our products, the extent to which we
invest in new technology and R&D projects, and the status and timing of these developments, as well as the general availability of capital from debt
and/or equity markets. However, debt or equity financing may not be available to us on terms we find acceptable, if at all. If we are unable to raise
additional capital when needed, our financial condition could be materially and adversely affected.
Additionally, our failure to maintain the credit ratings on our debt securities, including the outstanding notes, could negatively affect our ability to
access capital and could increase our interest expense on future indebtedness. We expect the credit rating agencies to periodically review our
capital structure and the quality and stability of our earnings. Deterioration in our capital structure or the quality and stability of our earnings could
result in a downgrade of our overall credit ratings and our debt securities. Any negative rating agency actions could constrain the capital available to
us, reduce or eliminate available borrowing to us, and could limit our access to and/or increase the cost of funding our operations. If, as a result, our
ability to access capital when needed becomes constrained, our interest costs could increase, which could have material adverse effect on our
results of operations, financial condition, and cash flows.
The agreements governing our indebtedness restrict our current and future operations, particularly our ability to respond to changes or to
take certain actions.
The agreements governing our indebtedness, including the outstanding notes, contain, and the agreements governing future indebtedness and
future debt securities may contain, significant restrictive covenants and, in the case of the Revolving Credit Facility, financial maintenance and
negative covenants that will limit our operations, including our ability to engage in activities that may be in our long-term best interests. These
restrictive covenants may limit us, and our restricted subsidiaries, from taking, or give rights to the holders of our indebtedness in the event of, the
following actions:
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incurring additional indebtedness and guaranteeing indebtedness and other obligations;
paying dividends or making other distributions in respect of, or repurchasing or redeeming, our capital stock;
• making acquisitions or other investments;
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prepaying, redeeming, or repurchasing certain indebtedness;
selling or otherwise disposing of assets;
selling stock of our subsidiaries;
incurring liens;
entering into transactions with affiliates;
entering into agreements restricting our subsidiaries’ ability to pay dividends;
entering into transactions that result in a change of control of us; and,
consolidating, merging, or selling all or substantially all of our assets.
Our failure to comply with those covenants could result in an event of default that, if not cured or waived, could result in the acceleration of some or
all of our indebtedness, which could lead us to bankruptcy, reorganization, or insolvency.
28
The Chemours Company
Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase
significantly.
Our borrowings under the Senior Secured Credit Facilities are at variable rates and expose us to interest rate risk. As a result, if interest rates
increase, our debt service obligations under the Senior Secured Credit Facilities or other variable rate debt would increase, even though the amount
borrowed would remain the same, and our net income and cash flows, including cash available for servicing our indebtedness, would
correspondingly decrease. We may use, from time to time, derivative instruments to mitigate interest rate risk. However, there is no guarantee that
derivative contracts may be available to us and/or if such contracts will provide the desired results. As of December 31, 2021, we had approximately
$1.2 billion of our outstanding debt under the Senior Secured Credit Facilities at variable interest rates.
Refer to “Note 26 – Financial Instruments” to the Consolidated Financial Statements for further details regarding our interest rate swaps designated
as a cash flow hedge.
General Risk Factors
Our stock price could become more volatile and investments could lose value.
The market price for our common stock may be affected by a number of factors, including, but not limited to:
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our quarterly or annual earnings, or those of other companies in our industry;
actual or anticipated fluctuations in our operating results;
changes in earnings estimates by securities analysts or our ability to meet those estimates or our earnings guidance;
anticipated or actual outcomes or resolutions of legal or other contingencies;
the operating and stock price performance of other comparable companies;
a change in our dividend or stock repurchase activities;
changes in applicable rules and regulations and the reputation of our business;
the announcement of new products by us or our competitors;
overall market fluctuations and domestic and worldwide economic conditions; and,
other factors described within this Item 1A – Risk Factors, and elsewhere within this Annual Report on Form 10-K.
A significant drop or rise in our stock price could expose us to costly and time-consuming litigation, which could result in substantial costs and divert
management’s attention and resources, resulting in an adverse effect on our business. As further described in “Note 22 – Commitments and
Contingent Liabilities” to the Consolidated Financial Statements, lawsuits have been filed alleging that Chemours and certain of its officers have
violated the Exchange Act of 1934.
We cannot guarantee the timing or amount of our dividends and/or our share repurchases, which are subject to a number of uncertainties
that may affect the price of our common stock.
The declaration, payment, and amount of any dividends, and/or the decision to purchase common stock under our share repurchase programs, are
subject to the sole discretion of our board of directors and, in the context of our financial policy and capital allocation strategy, will depend upon many
factors, including our financial condition, operating results, cash flows, and relevant prospects, our capital requirements and access to capital
markets, covenants associated with certain of our debt obligations, legal requirements, and other factors that our board of directors may deem
relevant, and there can be no assurances that we will continue to pay a dividend or repurchase our common shares in the future.
The reduction or elimination of our dividends or share repurchase programs could adversely affect the price of our common stock. Additionally, any
repurchases of our common stock will reduce the amount of our common stock outstanding. There can be no assurances that any share repurchase
activity will increase stockholder value due to market fluctuations in the price of our common stock, which may reduce the price of our common stock
to levels below the repurchase price. Although our share repurchase programs are designed to enhance long-term shareholder value, short-term
fluctuations in the market price of our common stock could reduce the program’s overall effectiveness.
29
A stockholder’s percentage of ownership in us may be diluted in the future.
The Chemours Company
A stockholder’s percentage ownership in our common stock may be diluted because of equity issuances for acquisitions, capital market transactions,
or otherwise, including, without limitation, equity awards that we may be granting to our directors, officers, and employees. Such issuances may have
a dilutive effect on our earnings per share, which could adversely affect the market price of our common stock.
In addition, our amended and restated certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more
classes or series of preferred stock having such designation, powers, preferences, and relative participating, optional, and other special rights,
including preferences over our common stock with respect to dividends and distributions, as our board of directors generally may determine. The
terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. For example, we
could grant the holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or to
veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred stock
could affect the residual value of our common stock.
Certain provisions in our amended and restated certificate of incorporation and amended and restated by-laws, and of Delaware law, may
prevent or delay an acquisition of us, which could decrease the trading price of the common stock.
Our amended and restated certificate of incorporation and amended and restated by-laws contain, and Delaware law contains, provisions that are
intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder
and to encourage prospective acquirers to negotiate with our board of directors rather than to attempt a hostile takeover. These provisions include,
among others:
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the inability of our stockholders to act by written consent;
the limited ability of our stockholders to call a special meeting;
rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings;
the right of our board of directors to issue preferred stock without stockholder approval;
the ability of our directors, and not stockholders, to fill vacancies (including those resulting from an enlargement of the board of directors)
on our board of directors; and,
the requirement that stockholders holding at least 80% of our voting stock are required to amend certain provisions in our amended and
restated certificate of incorporation and our amended and restated by-laws.
In addition, we are subject to Section 203 of the Delaware General Corporations Law (“DGCL”). Section 203 of the DGCL provides that, subject to
limited exceptions, persons that (without prior board of directors approval) acquire, or are affiliated with a person that acquires, more than 15% of the
outstanding voting stock of a Delaware corporation shall not engage in any business combination with that corporation, including by merger,
consolidation, or acquisitions of additional shares, for a three-year period following the date on which that person or its affiliate becomes the holder of
more than 15% of the corporation’s outstanding voting stock.
We believe these provisions will protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to
negotiate with our board of directors and by providing our board of directors with more time to assess any acquisition proposal. These provisions are
not intended to make us immune from takeovers. However, these provisions will apply even if an acquisition proposal or offer may be considered
beneficial by some stockholders and could delay or prevent an acquisition that our board of directors determines is not in our and/or our
stockholders’ best interests. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.
Several of the agreements that we have entered into with EID require EID’s consent to any assignment by us of our rights and obligations, or a
change of control of us, under the agreements. The consent rights set forth in these agreements might discourage, delay, or prevent a change of
control that a stockholder may consider favorable.
Our success depends on our ability to attract and retain key employees, and to identify and develop talented personnel to succeed our
senior management and other key employees.
Our success depends on the performance of our key employees, including our senior management team. If we are unable to attract, retain, identify,
and develop a talented, diverse set of leaders, whether due to technical, geographical, social, or other differences, our results of operations, financial
condition, and cash flows could be adversely affected. Further, if we are unable to effectively plan for the succession of our senior management
team, our results of operations, financial condition, and cash flows could be adversely affected, as we may be unable to realize our business
strategy. While our ongoing personnel practices identify a succession process for our key employees, we cannot guarantee the effectiveness of this
process, the continuity of highly-qualified individuals serving in all of our key positions at particular moments in time, and/or the completeness of any
knowledge transfer at the time of succession, including its impacts on our general operations and on our internal controls over our financial reporting.
30
The Chemours Company
Item 1B. UNRESOLVED STAFF COMMENTS
None.
Item 2. PROPERTIES
Our Production Facilities and Technical Centers
Our corporate headquarters is located in Wilmington, Delaware, and we maintain a global network of production facilities and technical centers
located in cost-effective and strategic locations. We also use contract manufacturing and joint venture partners in order to provide regional access or
to lower manufacturing costs, as appropriate.
The following chart sets forth our production facilities at December 31, 2021.
Region
Titanium Technologies
North America
DeLisle, Mississippi
New Johnsonville,
Tennessee
Jesup, Georgia (Mine) (1)
Nahunta, Georgia (Mine) (1)
Offerman, Georgia (Mineral
Separation)
Starke, Florida (Mine &
Mineral Separation)
Production Facilities
Thermal & Specialized
Solutions
Corpus Christi, Texas
El Dorado, Arkansas (1)
LaPorte, Texas (1)
Louisville, Kentucky (1)
Advanced Performance
Materials
Deepwater, New Jersey
Elkton, Maryland (1)
Fayetteville, North Carolina
Louisville, Kentucky
Parlin, New Jersey (1)
Washington, West Virginia
Chemical Solutions
Shared Locations
Belle, West Virginia (3)
Europe, the Middle East,
and Africa
Latin America
Altamira, Mexico
Asia Pacific
Kuan Yin, Taiwan
(1) Site is leased from a third party.
(2) Site with joint venture equity affiliates.
Barueri, Brazil (1)
Manaus, Brazil (1)
Monterrey, Mexico (1)
Chiba, Japan (2)
Mechelen, Belgium
Villers St. Paul, France (1)
Dordrecht, Netherlands (4)
Shimizu, Japan (2)
Sichuan, China (2)
Changshu, China (2,4)
(3) Shared site between the Thermal & Specialized Solutions and Chemical Solutions segments.
(4) Shared site between the Thermal & Specialized Solutions and Advanced Performance Materials segments.
We have technical centers and R&D facilities located at a number of our production facilities. We also maintain stand-alone technical centers to
serve our customers and provide technical support.
The following chart sets forth our stand-alone technical centers at December 31, 2021.
Region
Titanium Technologies
Thermal & Specialized
Solutions
Advanced Performance
Materials
Chemical Solutions
Technical Centers
North America
Europe, the Middle East,
and Africa
Latin America
Asia Pacific
Kallo, Belgium (1)
Mexico City, Mexico (1)
(1) Site is leased from a third party.
(2) Shared site between the Thermal & Specialized Solutions and Advanced Performance Materials segments.
(3) Shared site between the Titanium Technologies, Thermal & Specialized Solutions, and Advanced Performance Materials segments.
Shared Locations
Newark, Delaware (1,3)
Wilmington, Delaware (1,2)
Meyrin, Switzerland (1,2)
Shanghai, China (1,3)
31
The Chemours Company
Our plants and equipment are maintained in good operating condition. We believe that we have sufficient production capacity for our primary
products to meet demand in 2022. Our properties are primarily owned by us; however, certain properties are leased, as noted in the preceding
tables.
We recognize that the security and safety of our operations are critical to our employees and communities, as well as our future. Physical security
measures have been combined with process safety measures, administrative procedures, and emergency response preparedness into an integrated
security plan. We conduct vulnerability assessments at our operating facilities in the U.S., as well as high-priority sites worldwide, and as a result,
identify and implement the appropriate measures to protect these facilities from physical and cyberattacks. We also maintain preparedness plans
that detail actions needed to recover from acute severe weather events, natural disasters, or other events that could disrupt our business. We
engineer our facilities to better withstand these events and hold insurance coverage to protect against losses from physical damages and business
interruptions. These measures have historically been in place, and these activities and associated costs are driven by normal operational
preparedness.
Item 3. LEGAL PROCEEDINGS
Legal Proceedings
We are subject to various legal proceedings, including, but not limited to, product liability, intellectual property, personal injury, commercial,
contractual, employment, governmental, environmental and regulatory, anti-trust, and other such matters that arise in the ordinary course of
business. In addition, we, by virtue of our status as a subsidiary of EID prior to the Separation, are subject to or required under the Separation-
related agreements executed prior to the Separation to indemnify EID against various pending legal proceedings. Information regarding certain of
these matters is set forth below and in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements. In the
foregoing, we have excluded matters that we expect to result in sanctions of less than $1 million, if any.
Litigation
PFOA and PFAS: Environmental and Litigation Proceedings
For purposes of this report, the term “PFOA” means, collectively, perfluorooctanoic acid and its salts, including the ammonium salt, and does not
distinguish between the two forms. The term “PFAS” means per- and polyfluoroalkyl substances. Information related to these and other litigation
matters is included in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements.
Fayetteville, North Carolina
Actions related to Fayetteville, other than those by the State of North Carolina, as discussed in “Note 22 – Commitments and Contingent Liabilities”
to the Consolidated Financial Statements, are shown below.
In the U.S. District Court for the Eastern District of North Carolina:
• Carey et al. vs. E. I. DuPont de Nemours and Company (7:17-cv-00189-D; 7:17-cv-00197-D; and, 7:17-cv-00201-D);
• Cape Fear Public Utility Authority vs. The Chemours Company FC, LLC et al. and Brunswick County v. DowDuPont et al. (7:17-cv-00195-
D and 7:17-cv-00209-D);
• Dew et al. vs. E. I. DuPont de Nemours and Company et al. (17:18-cv-00030-D);
• O’Brien et al. vs. E. I. DuPont de Nemours and Company et al. (5:20-cv-00208-D) ; and,
• Priselac vs. The Chemours Company et al. (20-CVS-499).
In Bladen County, North Carolina:
• Kinlaw et al. vs. The Chemours Company et al. (20-CVS-497); and,
•
Lohr et al. vs. The Chemours Company et al. (20-CVS-498).
32
Environmental Proceedings
Dordrecht, Netherlands
The Chemours Company
In May 2020, we were notified of an alleged criminal offense related to the Netherlands’ Environmental Management Act and the Working Conditions
Decree, regarding the use of PFOA during the pre-spin time period of June 1, 2008 to December 31, 2012. The investigation was initiated in the first
quarter of 2016 by a public prosecutor. We believe that the Company has complied with all relevant laws, and we are in contact with the prosecutor.
Fayetteville, North Carolina
In February 2019, we received a Notice of Violation (“NOV”) from the EPA alleging certain TSCA violations at Fayetteville. Matters raised in the NOV
could have the potential to affect operations at Fayetteville. For this NOV, we responded to EPA in March 2019 and at this time management does
not believe that a loss is probable related to this NOV. We have also received NOVs from NC DEQ following entry of the CO, including in April 2020,
January 2021, and August 2021, alleging violations relating to Fayetteville. We have responded to these matters and are presently appealing the
penalty from the August 2021 NOV, for which a loss is reasonably possible. We do not believe that a loss is probable related to the matters in the
other NOVs. Further discussion related to these matters is included under the heading “Fayetteville Works, Fayetteville, North Carolina” in “Note 22 –
Commitments and Contingent Liabilities” to the Consolidated Financial Statements.
Item 4. MINE SAFETY DISCLOSURES
Information regarding mine safety and other regulatory actions at our surface mines and/or mineral sands separation facilities in Starke, Florida,
Jesup, Georgia, Nahunta, Georgia, and Offerman, Georgia, are included in Exhibit 95 to this Annual Report on Form 10-K.
33
The Chemours Company
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following list sets forth our executive officers and a summary of their professional experience.
Mark E. Newman, age 58, serves as our President and CEO. Mr. Newman was appointed President and CEO in July 2021, prior to which time he
had served as our Senior Vice President and Chief Operating Officer (“COO”) since June 2019 and our Senior Vice President and Chief Financial
Officer (“CFO”) from November 2014 to June 2019. Mr. Newman joined Chemours in November 2014 from SunCoke Energy, Inc. (“SunCoke”),
where he was SunCoke’s Senior Vice President and CFO and led its financial, strategy, business development, and information technology
functions. Mr. Newman joined SunCoke’s leadership team in March 2011 to help drive SunCoke’s separation from its parent company, Sunoco, Inc.
He led SunCoke through an initial public offering and championed a major restructuring of SunCoke, which resulted in the initial public offering of
SunCoke Energy Partners, L.P. in January 2013, creating the first coke-manufacturing master limited partnership. Prior to joining SunCoke, Mr.
Newman served as Vice President – Remarketing and Managing Director of SmartAuction, Ally Financial Inc. (previously, the General Motors
Acceptance Corporation). Mr. Newman began his career at the General Motors Company in 1986 as an Industrial Engineer and progressed through
several financial and operational leadership roles within the global automaker, including Vice President and CFO of Shanghai General Motors
Limited; Assistant Treasurer of General Motors Corporation; and, Vice President – North America and CFO. Mr. Newman served on the board of
Altria Group, Inc. from February 2018 through January 2022.
Sameer Ralhan, age 48, serves as our Senior Vice President and CFO. Mr. Ralhan was appointed Senior Vice President and CFO in June 2019.
Mr. Ralhan joined Chemours in November 2014 and has held several positions of increasing responsibility in strategy, mergers and acquisitions
(“M&A”), finance, and treasury. He served as Vice President, Business Finance and Treasurer from 2018 to 2019, retaining his responsibilities as
Treasurer until August 2020, and Vice President, Business Finance and Head of M&A from 2016 to 2018. He also served as Treasurer and Head of
M&A from 2015 to 2016, and Head of M&A from 2014 to 2015. Prior to joining Chemours, Mr. Ralhan served as a Managing Director in the Global
Natural Resources Group of Goldman Sachs & Co. During his tenure at Goldman Sachs and Co., from 2007 to 2014, he advised companies in the
chemicals, industrials, and basic materials sectors on M&A, portfolio transformations, corporate finance matters, and capital markets transactions.
Mr. Ralhan also served as an associate in the investment banking group of Bank of America Securities, LLC from 2004 to 2007. Mr. Ralhan began
his career as a Chemical Engineer and brings chemicals industry operating experience from his time (1998 – 2002) at Aspen Technology, Inc.,
where, as an advanced process control engineer, he executed manufacturing process improvement and operational enhancement initiatives for
several global chemical and petrochemical companies.
Edwin C. Sparks, age 48, serves as our President – Titanium Technologies and President – Chemical Solutions. Mr. Sparks was appointed to these
roles in March 2021 and April 2018, respectively. Previously, he served as President – Fluoroproducts (comprised of Thermal & Specialized
Solutions and Advanced Performance Materials) from October 2019 to March 2021. Additionally, Mr. Sparks served as Director of Corporate
Strategy from 2017 to 2018 and Global Planning Director – Titanium Technologies from 2016 to 2017. He also served as the Asia Pacific Regional
Business Director – Titanium Technologies from 2015 to 2016, based in Singapore. Prior to joining Chemours, he held leadership positions of
increasing scope in the EID Titanium Technologies business, with responsibilities including sales, marketing, operations, strategy, and technology.
Mr. Sparks joined EID in 1994 as a process engineer.
Alisha Bellezza, age 46, serves as our President – Thermal & Specialized Solutions. Ms. Bellezza was appointed to this role in March 2021, having
led the business since July 2020. Ms. Bellezza joined Chemours in 2015 to launch the investor relations function, before becoming our Vice
President, Treasurer and Head of Investor Relations from 2016 to 2018. More recently, she held the position of Vice President, Global Sales,
Commercial Operations & Supply Chain in the Titanium Technologies segment from 2018 to 2020. Prior to Chemours, Ms. Bellezza held positions
with increasing responsibility in Investor Relations, Corporate Strategy & Development, and Finance at FMC Corporation in the Agricultural Products
Group and at the Corporate level from 2006 to 2015. She began her career as a financial analyst in banking at Bank One corporation and First Bank
& Trust, holding progressive leadership positions before joining Verizon Communications in 2003 to 2006.
Denise Dignam, age 56, serves as our President – Advanced Performance Materials Ms. Dignam was appointed to this role in March 2021. Ms.
Dignam joined Chemours in 2015 and has served as our Vice President of Global Operations – Fluoroproducts, from 2019 to 2021; Global Senior
Business Director – Fluoropolymers, from 2016 to 2019; and North American Business Director – Diversified Technologies and Industrial Resins,
from 2015 to 2016. Previously, she worked at EID in various roles, including Director of Global Supply Chain – Fluoroproducts, from 2013 to 2014;
Global Business Manager of Sulfur Products, from 2009 to 2013; and Global Sales Manager of Clean Technologies from 2007 to 2009. Ms. Dignam
joined EID in 1988 as a design engineer.
David C. Shelton, age 58, serves as our Senior Vice President, General Counsel and Corporate Secretary. Prior to Chemours, Mr. Shelton was
appointed Associate General Counsel for EID in 2011 and was responsible for the U.S. Commercial team, which included the business lawyers and
paralegals counseling all EID business units, with the exception of Agriculture. Mr. Shelton also served as the Commercial Attorney to a variety of
EID businesses including the Performance Materials platform, which he advised on international assignment in Geneva, and the businesses now
comprising Chemours. Prior to that, Mr. Shelton advised the company on environmental and remediation matters as part of the environmental legal
team. Mr. Shelton joined EID in 1996, after seven years in private practice as a litigator in Pennsylvania and New Jersey.
34
The Chemours Company
Susan M. Kelliher, age 55, serves as our Senior Vice President, Human Resources and Health Services. Ms. Kelliher joined Chemours in 2017
from Albemarle Corporation (“Albemarle”), where she served as Senior Vice President – Human Resources for the global specialty chemical
company. Prior to Albemarle, she served as Vice President – Human Resources at Hewlett Packard, where she held a number of leadership
positions on global teams including Imaging and Printing and Global Sales & Enterprise Marketing from 2007 to 2012. Before joining Hewlett
Packard, Ms. Kelliher served as Vice President – Human Resources for Cymer, Inc. (“Cymer”), where she led the people function. She joined Cymer
from The Home Depot where, from 2004 to 2007, she was the Vice President – Human Resources for the growth engines of the company –
Business Development, and Home Services including responsibility for due diligence and integration for the company’s acquisitions. From 2000 to
2004, Ms. Kelliher served as Senior Director of Human Resources for Corporate Business Development and International Operations for the
Raytheon Company (“Raytheon”). Prior to Raytheon, she served as the Director of Human Resources – Western Region for YUM! Brands, Pizza Hut
division from 1995 to 2000. Ms. Kelliher started her career at Mobil Oil, where her career progressed through a variety of assignments including
support for new ventures in Europe, Russia, and Africa from 1990 to 1995.
Alvenia Scarborough, age 48, serves as our Senior Vice President, Corporate Communications and Chief Brand Officer. Ms. Scarborough was
appointed to this role in October 2020, after serving as Senior Director of Corporate Communications and Brand Marketing since July 2015. Prior to
Chemours, Ms. Scarborough held a variety of corporate communications and marketing communications positions with increasing responsibility
across brand development, corporate reputation, media relations, employee communications, and digital marketing. Ms. Scarborough brings over
two decades of communications experience with leading multinational companies, including: EID, where she served as the Corporate Leader, Brand
Management, Protection and Licensing from 2013 to 2015 and Global Director, Business Communications and Brand Marketing from 2011 to 2013;
Newell Rubbermaid, where she served as the Director, Business Communications and Brand Marketing, Global Technology Brands from 2009 to
2010; and Kodak Alaris, where she served as Director of Marketing & Communications, Consumer Imaging from 2000 to 2009, where she spent
several years as a product management commercial leader. Ms. Scarborough’s unique experience and modern approach to communications have
resulted in multiple industry awards and recognition for breakthrough social media and advertising campaigns.
Jonathan S. Lock, age 41, serves as our Senior Vice President and Chief Development Officer. Mr. Lock leads our Corporate Strategy, M&A,
Investor Relations, Sustainability and Regulatory Affairs functions. Mr. Lock was appointed to this role in November 2021. Mr. Lock joined Chemours
in April 2018 as Vice President, Corporate Development and Investor Relations with oversight for Corporate Strategy, M&A, and Investor Relations.
Prior to Chemours, Mr. Lock led corporate strategy and investor relations for SunCoke Energy and its Master Limited Partnership, SunCoke Energy
Partners, from 2013 to 2018, where he helped the company expand and grow following its spin-out from Sunoco. Prior to SunCoke, Mr. Lock was a
leader in the industrials practice at Marakon Associates where he advised Global 500 companies on growth and portfolio issues first from 2004 to
2008 and again from 2011 to 2013. From 2001 to 2004 Jonathan was a member of the Technology Labs group at Accenture.
35
The Chemours Company
PART II
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY
SECURITIES
Market for Registrant’s Common Equity and Related Stockholder Matters
Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol, “CC”. The number of record holders of our common stock
was 40,500 at February 7, 2022. Holders of our common stock are entitled to receive dividends when they are declared by our board of directors,
and dividends are generally declared and paid on a quarterly basis. Our stock transfer agent and registrar is Computershare Trust Company, N.A.
Unregistered Sales of Equity Securities
None.
Issuer Purchases of Equity Securities
2018 Share Repurchase Program
On August 1, 2018, our board of directors approved a share repurchase program authorizing the purchase of shares of our issued and outstanding
common stock in an aggregate amount not to exceed $750 million, plus any associated fees or costs in connection with our share repurchase activity
(the “2018 Share Repurchase Program”). On February 13, 2019, our board of directors increased the authorization amount of the 2018 Share
Repurchase Program from $750 million to $1.0 billion. Under the 2018 Share Repurchase Program, shares of our common stock can be purchased
in the open market from time to time, subject to management’s discretion, as well as general business and market conditions. Our 2018 Share
Repurchase Program became effective on August 1, 2018 and was originally scheduled to continue through the earlier of its expiration on December
31, 2020 or the completion of repurchases up to the approved amount. On December 8, 2020, our board of directors approved the extension of the
2018 Share Repurchase Program through December 31, 2022. The program may be suspended or discontinued at any time. All common shares
purchased under the 2018 Share Repurchase Program are expected to be held as treasury stock and accounted for using the cost method.
Through December 31, 2021, under the 2018 Share Repurchase Program, we have purchased a cumulative 20,779,745 shares of our issued and
outstanding common stock, which amounted to $749 million at an average share price of $36.05 per share. The aggregate amount of our common
stock that remained available for purchase under the 2018 Share Repurchase Program at December 31, 2021 was $251 million.
The following table sets forth the purchases of our issued and outstanding common stock under the 2018 Share Repurchase Program for the three
months ended December 31, 2021.
(Dollars in millions, except per share amounts)
Period
Month ended October 31, 2021
Month ended November 30, 2021
Month ended December 31, 2021
Total
Total Number
Total Number
of Shares
Approximate Dollar
Value of Shares
That May Yet be
of Shares
Purchased
(1)
Average Price
Paid per Share
(2)
Purchased as Part of
Publicly Announced
Plans or Programs
Purchased Under the
Plans or Programs
(2)
719,485 $
739,197
1,564,257
3,022,939 $
30.02
31.44
31.94
31.36
719,485 $
739,197
1,564,257
3,022,939 $
324
301
251
251
(1) The total number of shares purchased under the share repurchase program is determined using trade dates for the related transactions.
(2) The average price paid per share and approximate dollar value of shares that may yet be purchased under the share repurchase program exclude fees, commissions, and
other charges for the related transactions.
36
Stock Performance Graph
The Chemours Company
The following graph presents the five-year cumulative total stockholder returns for our common stock compared with the Standard & Poor’s (“S&P”)
MidCap 400 and the S&P MidCap 400 Chemical indices.
The graph assumes that the values of our common stock, the S&P MidCap 400 index, and the S&P MidCap 400 Chemical index were each $100 on
December 31, 2016, and that all dividends were reinvested.
Item 6. RESERVED
Schedules not listed herein have been omitted because they are not required, not applicable, or the required information is otherwise included.
Pursuant to the reporting requirements under the Exchange Act, we are required to and have previously filed reports and information with the SEC,
including reports on the following forms: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and
amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. These reports and information have been
filed or furnished with the SEC and are available electronically, both with the SEC and on our company website, as referenced under the caption
“Available Information” within this Part I of our Annual Report on Form 10-K.
37
The Chemours Company
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) supplements the Consolidated Financial
Statements and the related notes thereto included elsewhere herein to help provide an understanding of our financial condition, changes in our
financial condition, and the results of our operations for the periods presented. For the year ended December 31, 2019, and changes from the year
ended December 31, 2019 to the year ended December 31, 2020, management’s discussion and analysis pertaining to our financial condition,
changes in our financial condition, and the results of our operations have been omitted from this MD&A and may be found in Item 7 – Management’s
Discussion and Analysis of Financial Condition and Results of Operations as included in our Annual report on Form 10-K for the year ended
December 31, 2020. This MD&A should be read in conjunction with the Consolidated Financial Statements and the related notes thereto included
elsewhere in this Annual Report on Form 10-K.
Our forward-looking statements are based on certain assumptions and expectations of future events that may not be accurate or realized. These
statements, as well as our historical performance, are not guarantees of future performance. Forward-looking statements also involve risks and
uncertainties that are beyond our control. Additionally, there may be other risks and uncertainties that we are unable to identify at this time or that we
do not currently expect to have a material impact on our business. Factors that could cause or contribute to these differences include, but are not
limited to, the risks, uncertainties, and other factors discussed within Item 1A – Risk Factors in this Annual Report on Form 10-K.
Overview
We are a leading, global provider of performance chemicals that are key inputs in end-products and processes in a variety of industries. We deliver
customized solutions with a wide range of industrial and specialty chemical products for markets, including coatings, plastics, refrigeration and air
conditioning, transportation, semiconductor and consumer electronics, general industrial, and oil and gas. Our principal products include TiO2
pigment, refrigerants, industrial fluoropolymer resins, sodium cyanide (prior to the Mining Solutions business sale), and performance chemicals and
intermediates. We manage and report our operating results through four reportable segments: Titanium Technologies, Thermal & Specialized
Solutions, Advanced Performance Materials, and Chemical Solutions. Our Titanium Technologies segment is a leading, global provider of TiO2
pigment, a premium white pigment used to deliver whiteness, brightness, opacity, and protection in a variety of applications. Our Thermal &
Specialized Solutions segment is a leading, global provider of refrigerants, thermal management solutions, propellants, blowing agents, and specialty
solvents. Our Advanced Performance Materials segment is a leading, global provider of high-end polymers and advanced materials that deliver
unique attributes, including low friction coefficients, extreme temperature resistance, weather resistance, ultraviolet and chemical resistance, and
electrical insulation. Our Chemical Solutions segment was a leading provider of industrial chemicals used in gold production prior to the Mining
Solutions business sale and continues to be a leading provider of chemicals used in industrial, and consumer applications in the Americas.
Recent Developments
Coronavirus Disease 2019 (“COVID-19”)
The COVID-19 pandemic continues to spread throughout the world. More contagious COVID-19 variants continue to emerge driving up infection
rates globally, particularly in jurisdictions where vaccination rates have lagged. As a global provider of performance chemicals that are key inputs in
end-products and processes in a variety of industries, a pandemic presents obstacles that can adversely impact customer demand for our products,
our manufacturing operations, our supply chain effectiveness and efficiencies, and ultimately, our financial results. Throughout the outbreak and
subsequent stages of the COVID-19 pandemic that have occurred thus far, above all, we have remained steadfast in our commitment to the health,
safety, and well-being of our employees and their families, while serving our customers, and conserving cash to ensure the continuity of our business
operations into the future.
Although COVID-19 infections have continued to spread throughout the Americas, Europe and Asia Pacific, we continue to experience minimal
disruption in our operations and business-related processes. Where necessary, based on COVID-19 infection rates and local regulations, we
continue to take a number of measures to promote the safety and security of our employees, including requiring remote working arrangements for
employees where practicable, the imposition of travel restrictions, limiting non-essential visits to plant sites, performing health checks before every
shift, and providing personal protective equipment for our “essential” operations employees at our sites and laboratories. We cannot predict with
certainty the potential future impact of the COVID-19 pandemic on our customers’ ability to manufacture their products, as well as any potential
future disruptions in our supply chain due to restrictions on travel and transport, regional quarantines, and other social distancing measures. The
risks and uncertainties posed by this significant, widespread event are innumerable and far-reaching, including but not limited to those described in
Item 1A – Risk Factors in this Annual Report on Form 10-K. Refer to the “Segment Reviews”, “2022 Outlook”, and “Liquidity and Capital Resources”
sections within this MD&A for further considerations regarding the quickly evolving market dynamics that are impacting our businesses and our
associated response.
38
The Chemours Company
Despite the health and safety, business continuity, and macroeconomic challenges associated with conducting business in the current environment,
we remain committed to anticipating and meeting the demands of our customers, as they, like us, continue to navigate uncharted territory. In 2020,
we elected to accept tax relief provided by various taxing jurisdictions, resulting in the deferral of approximately $80 million in tax payments, of which
approximately $35 million was paid in 2020 and $35 million was paid in 2021, the remainder of which will be paid in 2022. In addition, in 2021, we
recorded approximately $15 million of benefit related to the Employee Retention Credit (“ERC”) of the Coronavirus Aid, Relief, and Economic
Security (“CARES”) Act, which we expect to receive in 2022. We continue to anticipate that our cash generated from operations, available cash,
receivables securitization, and existing debt financing arrangements will provide us with sufficient liquidity through at least February 2023.
Winter Storm Uri
Over several days in mid-February 2021, a major winter storm impacted a significant portion of the United States. In Texas, especially, snow, ice,
and record-low temperatures drove higher-than-normal energy and heating demand, leaving millions of residents and businesses without power.
Impacts from the storm to our operations were principally at our sites in Corpus Christi, El Dorado and LaPorte in our Thermal & Specialized
Solutions segment which experienced physical damage resulting in plant downtime along with significant increases in utility costs during and
immediately following the storm. Our sites at DeLisle and New Johnsonville in our Titanium Technologies segment and at Memphis in our Chemical
Solutions segment were affected to a lesser degree than those in Thermal & Specialized Solutions. Our Advanced Performance Materials plant sites
were not directly impacted by the storm, but the segment did face some challenges in the broader supply chain. The total cost of plant repairs and
utility charges in excess of historical averages amount to approximately $21 million. In addition, storm-related downtime resulted in under absorption
of plant fixed costs, impacting cost of goods sold by $9 million. We do not expect to receive any storm-related insurance recoveries.
Sale of Mining Solutions Business
In March 2021, we announced the initiation of a strategic review to assess the potential sale of the Mining Solutions business. On July 26, 2021, we
entered into a definitive agreement with Manchester Acquisition Sub LLC, a Delaware limited liability company and a subsidiary of Draslovka Holding
a.s., (“Draslovka”) to sell the Mining Solutions business of our Chemical Solutions segment (the “Mining Solutions Transaction”). The sale was
completed on December 1, 2021 for net cash proceeds of $508 million, net of $13 million cash divested. Upon completion of the sale, we also
recorded a net pre-tax gain on sale of $112 million, inclusive of $21 million of transaction costs.
Senior Unsecured Notes Due November 2029
In August 2021, we issued a $650 million aggregate principal amount of 4.625% senior unsecured notes due November 2029 (the “2029 Notes”). We
received proceeds of $642 million, net of underwriting fees and other related expenses of $8 million, which are deferred and amortized to interest
expense over the term of the 2029 Notes. The net proceeds from the 2029 Notes were used, together with cash on hand, to purchase or redeem, as
applicable, the $750 million 7.000% senior notes due May 2025, denominated in U.S. dollars (the “2025 Notes”). In connection with the purchase
and redemption of the 2025 Notes, we incurred a loss on extinguishment of $20 million for the year ended December 31, 2021.
Revolving Credit Facility
Our credit agreement, as amended and restated on April 3, 2018 (“Credit Agreement”), provides for a seven-year, senior secured term loan facility
and a five-year, $800 million senior secured revolving credit facility (“Revolving Credit Facility”). On October 7, 2021, we entered into an amendment
to the credit agreement (“Credit Agreement Amendment”) to, among other things, increase the aggregate commitment under our Revolving Credit
Facility to $900 million and extend the maturity date to October 7, 2026.
39
Results of Operations and Business Highlights
Results of Operations
The Chemours Company
The following table sets forth our results of operations for the years ended December 31, 2021 and 2020.
(Dollars in millions)
Net sales
Cost of goods sold
Gross profit
Selling, general, and administrative expense
Research and development expense
Restructuring, asset-related, and other charges
Total other operating expenses
Equity in earnings of affiliates
Interest expense, net
Loss on extinguishment of debt
Other income, net
Income before income taxes
Provision for (benefit from) income taxes
Net income
Net income attributable to Chemours
Net Sales
Year Ended December 31,
2021
2020
$
$
6,345
4,964
1,381
592
107
6
705
43
(185 )
(21 )
163
676
68
608
608
$
$
4,969
3,902
1,067
527
93
80
700
23
(210 )
(22 )
21
179
(40 )
219
219
The following table sets forth the impacts of price, volume, currency, and portfolio changes on our net sales for the year ended December 31, 2021.
Change in net sales from prior period
Price
Volume
Currency
Portfolio
Total change in net sales
Year Ended December 31, 2021
7 %
21 %
2 %
(2 )%
28 %
Our net sales increased by $1.4 billion (or 28%) to $6.3 billion for the year ended December 31, 2021, compared with net sales of $5.0 billion for the
same period in 2020. The increase in our net sales for the year ended December 31, 2021 was primarily attributable to an increase in volume of 21%
and an increase in price of 7%, partially offset by portfolio change of 2% driven by our Chemical Solutions segment. Volume and price increases in
net sales were driven by increases in volume and price across all segments. Favorable currency movements in our Titanium Technologies, Thermal
and Specialized Solutions, and Advanced Performance Materials segments added a tailwind of 2% to our net sales.
The drivers of these changes for each of our segments are discussed further under the “Segment Reviews” section within this MD&A.
Cost of Goods Sold
Our cost of goods sold (“COGS”) increased by $1.1 billion (or 27%) to $5.0 billion for the year ended December 31, 2021, compared with COGS of
$3.9 billion for the same period in 2020. The increases in our COGS for the year ended December 31, 2021 were primarily attributable to higher net
sales, as well as higher raw material costs, higher distribution, freight, and logistics expenses driven by the overall increase in net sales, raw material
inflation and supply chain constraints. The increase was also due to plant fixed costs expensed in conjunction with plant downtime at certain of our
facilities and under absorption of plant fixed costs due to operational issues and supply chain disruptions related to inclement weather from Winter
Storm Uri during the first quarter of 2021, partially offset by a payroll tax credit recognized under the ERC of the CARES Act. The increase in COGS
was also driven by $193 million of on-site environmental remediation costs at our Fayetteville Works site in Fayetteville, North Carolina
(“Fayetteville”) during 2021, partially offset by Qualified Spend recovery from DuPont and Corteva.
40
Selling, General, and Administrative Expense
The Chemours Company
Our selling, general, and administrative (“SG&A”) expense increased by $65 million (or 12%) to $592 million for the year ended December 31, 2021,
compared with SG&A expense of $527 million for the same period in 2020. The increase in our SG&A expense for the year ended December 31,
2021 was primarily attributable to higher performance-based compensation expenses in the current year, $25 million incurred for settlement with the
State of Delaware, and cost deferral activities in the prior year related to COVID-19, partially offset by Qualified Spend recovery from DuPont and
Corteva.
Research and Development Expense
Our research and development (“R&D”) expense increased by $14 million (or 15%) to $107 million for the year ended December 31, 2021,
compared with R&D expense of $93 million for the same period in 2020. The increase in our R&D expense for the year ended December 31, 2021
was primarily attributable to R&D project activities returning to a normalized level following the deferral of activities in 2020 due to COVID-19, growth
initiatives in the current year, and our increased focus on product development in our Advanced Performance Materials segment.
Restructuring, Asset-related, and Other Charges
Our restructuring, asset-related, and other charges decreased by $74 million (or 93%) to $6 million for the year ended December 31, 2021,
compared with $80 million for the same period in 2020.
For the year ended December 31, 2021, our restructuring, asset-related, and other charges were primarily attributable to $12 million of
decommissioning and dismantling related charges in connection with our decision to exit the Aniline business and stop production at our
Pascagoula, Mississippi manufacturing plant, partially offset by a net $9 million gain from contract termination with a third-party services provider at
our previously owned Mining Solutions facility in Gomez Palacio, Durango, Mexico. This facility was sold as part of the Mining Solutions Transaction.
For the year ended December 31, 2020, our restructuring, asset-related, and other charges were primarily attributable to $37 million in contract
termination fees and immediate recognition of prepaid costs in connection with our entry into dispute resolution with a third-party services provider at
our previously owned Mining Solutions facility under construction in Gomez Palacio, Durango, Mexico. The facility was sold as part of the Mining
Solutions Transaction. We also incurred $15 million of employee-related separation liabilities under various restructuring programs and $10 million of
asset-related impairment charges in our Advanced Performance Materials segment, as well as $12 million of charges in connection with our decision
to exit the Aniline business and stop production at our Pascagoula, Mississippi manufacturing plant.
Equity in Earnings of Affiliates
Our equity in earnings of affiliates increased by $20 million (or 87%) to $43 million for the year ended December 31, 2021, compared with equity in
earnings of affiliates of $23 million for the same period in 2020. The increase in our equity in earnings of affiliates for the year ended December 31,
2021 was primarily attributable to increased demand for our investees’ products, primarily from Chemours-Mitsui Fluorochemicals Company, Ltd.
Interest Expense, Net
Our interest expense, net decreased by $25 million (or 12%) to $185 million for the year ended December 31, 2021, compared with interest expense,
net of $210 million for the same period in 2020. The decrease in our interest expense, net for the year ended December 31, 2021 was primarily
attributable to a reduction in our outstanding debt obligations and associated rates following the refinancing of our 6.625% senior unsecured notes
due May 2021, denominated in U.S. dollars (“2023 Dollar Notes”) in the fourth quarter of 2020, as well as the refinancing of our 2025 Notes in the
third quarter of 2021 and lower variable interest rates on our senior secured term loans.
Loss on Extinguishment of Debt
For the year ended December 31, 2021, we recognized a loss on extinguishment of debt of $21 million primarily in connection with our tender offer
and make-whole call to purchase any and all of our 2025 Notes.
For the year ended December 31, 2020, we recognized a loss on extinguishment of debt of $22 million in connection with our tender offer and make-
whole call to purchase any and all of our remaining outstanding 2023 Dollar Notes.
41
Other Income (Expense), Net
The Chemours Company
Our other income (expense), net increased by $142 million (or over 100%) to $163 million for the year ended December 31, 2021, compared with
other income, net of $21 million for the same period in 2020. The increase in our other income, net for the year ended December 31, 2021 was
primarily attributable to a net pre-tax gain on sale of $112 million associated with the sale of the Mining Solutions business of our Chemical Solutions
segment and favorable changes in net exchange gains and losses of $29 million, driven by the favorable movements in several foreign currencies.
Provision for (Benefit from) Income Taxes
Our provision for (benefit from) income taxes amounted to a provision for income taxes of $68 million and a benefit from income taxes of $40 million
for the years ended December 31, 2021 and 2020, respectively. Our provision for (benefit from) income taxes represented effective tax rates of 10%
and negative 22% for the years ended December 31, 2021 and 2020, respectively.
The $108 million increase in our provision for income taxes for the year ended December 31, 2021, when compared with the same period in 2020,
was primarily attributable to increased profitability, changes to our geographical mix of earnings, and $21 million of income tax expense related to the
gain realized from the sale of our Mining Solutions business. In addition, we recorded income tax benefits in 2020 of $18 million related to the U.S.
IRS acceptance of a non-automatic method change that allows for the recovery of tax basis for depreciation, which had been previously disallowed,
and $11 million related to favorable impacts of certain elections and accounting method changes in connection with the filing of our 2019 U.S. federal
income tax return, both of which did not reoccur in 2021. These increases were partially offset by income tax benefits in 2021 of $41 million
associated with non-recurring accrued environmental remediation liabilities recorded in 2021, $11 million associated with a 2012 income tax refund
received in a foreign subsidiary, and $16 million associated with a reversal of a valuation allowance on a certain foreign subsidiary’s deferred tax
assets in relation to the sale of our Mining Solutions business on December 1, 2021.
Segment Reviews
Adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) is the primary measure of segment profitability used by
our Chief Operating Decision Maker (“CODM”) and is defined as income (loss) before income taxes, excluding the following:
•
•
•
•
•
•
interest expense, depreciation, and amortization;
non-operating pension and other post-retirement employee benefit costs, which represents the component of net periodic pension
(income) costs excluding the service cost component;
exchange (gains) losses included in other income (expense), net;
restructuring, asset-related, and other charges;
(gains) losses on sales of assets and businesses; and,
other items not considered indicative of our ongoing operational performance and expected to occur infrequently, including Qualified
Spend reimbursable by DuPont and/or Corteva as part of our cost-sharing agreement under the terms of the Memorandum of
Understanding (“MOU”) that were previously excluded from Adjusted EBITDA.
A reconciliation of net income (loss) attributable to Chemours to Adjusted EBITDA for the years ended December 31, 2021 and 2020 is included in
the “Non-GAAP Financial Measures” section of this MD&A.
The following table sets forth our Adjusted EBITDA by segment for the years ended December 31, 2021 and 2020.
(Dollars in millions)
Titanium Technologies
Thermal & Specialized Solutions
Advanced Performance Materials
Chemical Solutions
Corporate and Other
Total Adjusted EBITDA
Year Ended December 31,
2021
2020
$
$
809
412
261
51
(220 )
1,313
$
$
510
354
126
73
(184 )
879
42
Titanium Technologies
The Chemours Company
The following table sets forth the net sales, Adjusted EBITDA, and Adjusted EBITDA margin amounts for our Titanium Technologies segment for the
years ended December 31, 2021 and 2020.
(Dollars in millions)
Segment net sales
Adjusted EBITDA
Adjusted EBITDA margin
Year Ended December 31,
2021
2020
$
$
3,355
809
24 %
2,402
510
21 %
The following table sets forth the impacts of price, volume, currency, and portfolio changes on our Titanium Technologies segment’s net sales for the
year ended December 31, 2021.
Change in segment net sales from prior period
Price
Volume
Currency
Portfolio
Total change in segment net sales
Segment Net Sales
Year Ended December 31, 2021
10 %
28 %
2 %
— %
40 %
Our Titanium Technologies segment’s net sales increased by $953 million (or 40%) to $3.4 billion for the year ended December 31, 2021, compared
with segment net sales of $2.4 billion for the same period in 2020. The increase in segment net sales for the year ended December 31, 2021 was
primarily attributable to an increase in volume of 28% and an increase in price of 10%. Volume increases were driven by steady demand and market
share recovery for our products across all end-markets and regions. Price increases were due to contracted price changes, as well as spot price
increases in our Flex and Distribution channels. Favorable currency movements added a 2% tailwind to the segment’s net sales during the year
ended December 31, 2021.
Adjusted EBITDA and Adjusted EBITDA Margin
Segment Adjusted EBITDA increased by $299 million (or 59%) to $809 million and segment Adjusted EBITDA margin increased by approximately
300 basis points to 24% for the year ended December 31, 2021, compared with segment Adjusted EBITDA of $510 million and segment Adjusted
EBITDA margin of 21% for the same period in 2020. The increase in Adjusted EBITDA and segment Adjusted EBITDA margin was primarily
attributable to the aforementioned increase in volume and price of the segment’s net sales, partially offset by higher raw material and energy costs,
and fixed cost headwinds to support the increase in demand.
43
Thermal & Specialized Solutions
The Chemours Company
The following table sets forth the net sales, Adjusted EBITDA, and Adjusted EBITDA margin amounts for our Thermal & Specialized Solutions
segment for the years ended December 31, 2021 and 2020.
(Dollars in millions)
Segment net sales
Adjusted EBITDA
Adjusted EBITDA margin
Year Ended December 31,
2021
2020
$
$
1,257
412
33 %
1,105
354
32 %
The following table sets forth the impacts of price, volume, currency, and portfolio changes on our Thermal & Specialized Solutions segment’s net
sales for the year ended December 31, 2021.
Change in segment net sales from prior period
Price
Volume
Currency
Portfolio
Total change in segment net sales
Segment Net Sales
Year Ended December 31, 2021
4 %
9 %
1 %
— %
14 %
Our Thermal & Specialized Solutions segment’s net sales increased by $152 million (or 14%) to $1.3 billion for the year ended December 31, 2021,
compared with segment net sales of $1.1 billion for the same period in 2020. The increase in segment net sales for the year ended December 31,
2021 was primarily attributable to increases in volume and price of 9% and 4%, respectively. Volumes increased due to higher global customer
demand for our refrigerants driven by global market recovery, partially offset by demand headwinds from automotive original equipment
manufacturer (“OEM”) related to semiconductor shortages. Overall, prices increased due to actions implemented to offset inflationary headwinds.
Favorable currency movements added a 1% tailwind to the segment’s net sales during the year ended December 31, 2021.
Adjusted EBITDA and Adjusted EBITDA Margin
Segment Adjusted EBITDA increased by $58 million (or 16%) to $412 million and segment Adjusted EBITDA margin increased by approximately 100
basis points to 33% for the year ended December 31, 2021, compared with segment Adjusted EBITDA of $354 million and segment Adjusted
EBITDA margin of 32% for the same period in 2020. The increase in segment Adjusted EBITDA and segment Adjusted EBITDA margin for the year
ended December 31, 2021 was primarily attributable to the increase in stationary pricing in 2021, partially offset by higher raw material costs and
plant fixed costs incurred in conjunction with the temporary idling of certain of our facilities due to inclement weather from Winter Storm Uri early in
the year.
44
Advanced Performance Materials
The Chemours Company
The following table sets forth the net sales, Adjusted EBITDA, and Adjusted EBITDA margin amounts for our Advanced Performance Materials
segment for the years ended December 31, 2021 and 2020.
(Dollars in millions)
Segment net sales
Adjusted EBITDA
Adjusted EBITDA margin
Year Ended December 31,
2021
2020
$
$
1,397
261
19 %
1,104
126
11 %
The following table sets forth the impacts of price, volume, currency, and portfolio changes on our Advanced Performance Materials segment’s net
sales for the year ended December 31, 2021.
Change in segment net sales from prior period
Price
Volume
Currency
Portfolio
Total change in segment net sales
Segment Net Sales
Year Ended December 31, 2021
4 %
20 %
3 %
— %
27 %
Our Advanced Performance Materials segment’s net sales increased by $293 million (or 27%) to $1.4 billion for the year ended December 31, 2021,
compared with segment net sales of $1.1 billion for the same period in 2020. The increase in segment net sales for the year ended December 31,
2021 was primarily attributable to a 20% increase in volume and a 4% increase in price. Volumes increased due to higher global customer demand
across nearly all regions and markets. Global average selling price increased due to customer level pricing actions partially offset by our composition
of product and customer mix. Favorable currency movements added a 3% tailwind to the segment’s net sales during the year ended December 31,
2021.
Adjusted EBITDA and Adjusted EBITDA Margin
Segment Adjusted EBITDA increased by $135 million (or over 100%) to $261 million and segment Adjusted EBITDA margin increased by
approximately 800 basis points to 19% for the year ended December 31, 2021, compared with segment Adjusted EBITDA of $126 million and
segment Adjusted EBITDA margin of 11% for the same period in 2020. The increases in segment Adjusted EBITDA and segment Adjusted EBITDA
margin for the year ended December 31, 2021 were primarily attributable to the aforementioned increases in volumes and price, partially offset by
growth investments, higher raw material costs and higher fixed costs related to performance-based compensation.
The segment’s operating results for the years ended December 31, 2021 and 2020 included $15 million and $19 million, respectively, of additional
costs for process-related waste water treatment at Fayetteville. We expect to continue to incur these costs as we actively work with the North
Carolina Department of Environmental Quality (the “NC DEQ”) to resolve the suspension of our National Pollutant Discharge Elimination System
(“NPDES”) permit.
45
Chemical Solutions
The Chemours Company
The following table sets forth the net sales, Adjusted EBITDA, and Adjusted EBITDA margin amounts for our Chemical Solutions segment for the
years ended December 31, 2021 and 2020.
(Dollars in millions)
Segment net sales
Adjusted EBITDA
Adjusted EBITDA margin
Year Ended December 31,
2021
2020
$
$
336
51
15 %
358
73
20 %
The following table sets forth the impacts of price, volume, currency, and portfolio changes on our Chemical Solutions segment’s net sales for the
year ended December 31, 2021.
Change in segment net sales from prior period
Price
Volume
Currency
Portfolio
Total change in segment net sales
Segment Net Sales
Year Ended December 31, 2021
7 %
13 %
— %
(26 )%
(6 )%
Our Chemical Solutions segment’s net sales decreased by $22 million (or 6%) to $336 million for the year ended December 31, 2021, compared with
segment net sales of $358 million for the same period in 2020. The decrease in segment net sales for the year ended December 31, 2021 was
primarily attributable to portfolio change, which drove a 26% decline in net sales following our exit of the Aniline business at our Pascagoula,
Mississippi production facility at the end of 2020 and the sale of our Mining Solutions business on December 1, 2021. The decrease in our net sales
was partially offset by an increase in volume of 13% and an increase in price of 7%. Volumes increased due to increased customer demand in our
Mining Solutions business prior to the sale on December 1, 2021. Average prices increased primarily due to higher contractual raw material cost
pass-through in our Mining Solutions business prior to the sale on December 1, 2021.
Adjusted EBITDA and Adjusted EBITDA Margin
Segment Adjusted EBITDA decreased by $22 million (or 30%) to $51 million and segment Adjusted EBITDA margin decreased by approximately
500 basis points to 15% for the year ended December 31, 2021, compared with segment Adjusted EBITDA of $73 million and segment Adjusted
EBITDA margin of 20% for the same period in 2020. The decreases in segment Adjusted EBITDA and segment Adjusted EBITDA margin for the
year ended December 31, 2021 were primarily attributable to plant fixed costs incurred in conjunction with the temporary idling of certain of our
facilities due to inclement weather from Winter Storm Uri during the first quarter as well as higher raw material and plant fixed costs. Furthermore,
the aforementioned exit of the Aniline business at our Pascagoula, Mississippi production facility and the sale of our Mining Solutions business
further decreased segment Adjusted EBITDA and segment Adjusted EBITDA margin.
Corporate and Other
Corporate costs and certain legal and environmental expenses, stock-based compensation expenses, and foreign exchange gains and losses
arising from the remeasurement of balances in currencies other than the functional currency of our legal entities are reflected in Corporate and
Other.
Corporate and Other costs increased by $36 million (or 20%) to $220 million for the year ended December 31, 2021, compared with Corporate and
Other costs of $184 million for the same period in 2020. The increase in Corporate and Other costs for the year ended December 31, 2021 was
primarily attributable to higher costs associated with legacy environmental remediation matters and higher performance-based compensation
expenses.
46
2022 Outlook
The Chemours Company
Our 2022 results will be driven by the following expectations in each of our reportable segments:
•
•
Titanium Technologies – Continued strength in demand across most end-markets, partially offset by headwinds from raw material
inflation and shortages, logistics challenges, and broader customer supply chain issues;
Thermal & Specialized Solutions – Improved customer demand for our refrigerants, including continued OpteonTM adoption in mobile
and stationary applications, paired with market recovery from semiconductor supply chain constraints;
• Advanced Performance Materials – Continued strong demand for our polymers across diverse end-markets, partially offset by raw
material inflation, energy costs, and logistics challenges; and,
• Chemical Solutions – Continued growth in Glycolic Acid and expansion into higher-end markets, partially offset by headwinds from
transportation and logistics challenges.
We expect that our capital expenditures will be approximately $400 million.
Our outlook for 2022 reflects our current visibility and expectations based on market factors, such as currency movements, macro-economic factors,
and end-market demand. In particular, end-market demand may be impacted by factors beyond our control, including the ongoing COVID-19
pandemic. Our ability to meet our expectations are subject to numerous risks, including, but not limited to, those described in Item 1A – Risk Factors.
Liquidity and Capital Resources
Our primary sources of liquidity are cash generated from operations and available cash, along with our receivables securitization and borrowings
under our debt financing arrangements, both of which are described in further detail in “Note 20 – Debt” to the Consolidated Financial Statements.
Our operating cash flow generation is driven by, among other things, the general global economic conditions at any point in time and their resulting
impacts on demand for our products, raw materials and energy prices, and industry-specific issues, such as production capacity and utilization. We
have generated strong operating cash flows through various past industry and economic cycles, evidencing the underlying operating strength of our
businesses.
Uncertainty continues to exist concerning both the magnitude and the duration of the impacts to our financial results and condition caused by the
ongoing COVID-19 pandemic. Regardless of size and duration, the evolving challenges have had and could again, in the future, have an adverse
impact on our operating cash flows. We anticipate that our cash generated from operations, available cash, receivables securitization, and existing
debt financing arrangements will provide us with sufficient liquidity through at least February 2023. If the macroeconomic situation deteriorates or the
duration of the pandemic is further extended, we will evaluate additional cost actions, as necessary, as the operational and financial impacts to our
Company continue to evolve.
At December 31, 2021, we had total cash and cash equivalents of $1.5 billion, of which $924 million was held by our foreign subsidiaries. All cash
and cash equivalents held by our foreign subsidiaries is readily convertible into currencies used in our operations, including the U.S. dollar. During
the year ended December 31, 2021, we received approximately $326 million of net cash in the U.S. through intercompany loans and dividends.
Traditionally, the cash and earnings of our foreign subsidiaries have generally been used to finance their operations and capital expenditures, and it
is our intention to indefinitely reinvest the historical pre-2018 earnings of our foreign subsidiaries. However, beginning in 2018, management asserts
that only certain foreign subsidiaries are indefinitely reinvested. For further information related to our income tax positions, refer to “Note 9 – Income
Taxes” to the Consolidated Financial Statements. Management believes that sufficient liquidity is available in the U.S. through at least February
2023, which includes borrowing capacity under our revolving credit facility.
47
The Chemours Company
Over the course of the next 12 months and beyond, we anticipate making significant cash payments for known contractual and other obligations,
which we expect to fund through cash generated from operations, available cash, receivables securitization, and our existing debt financing
arrangements. Such obligations include:
• Principal and interest obligations on long-term debt – We are required to make quarterly principal payments related to our Senior
Secured Credit Facilities, with the balance due at maturity. Principal payments are also due at maturity for our 4.000% senior unsecured
notes due May 2026, which are denominated in euros, the 5.375% senior unsecured notes due May 2027, the 5.750% senior unsecured
notes due November 2028, and the 4.625% senior unsecured notes due November 2029 (collectively, the “Notes”). The earliest maturity
date of our outstanding debt is scheduled in 2025. For a schedule of our debt principal maturities for the next five years and thereafter,
refer to “Note 20 – Debt” to the Consolidated Financial Statements. Our interest obligations under our Senior Secured Credit Facilities may
be paid monthly or quarterly, and our interest obligations in connection with the Notes are paid semi-annually in arrears on May 15 and
November 15 of each year. Through 2024, we anticipate that our scheduled interest payments will approximate $150 million per year and
in 2025, we anticipate that our scheduled interest payments will approximate $130 million, subject to changes in variable interest rates.
• Operating and finance leases – We lease certain office space, laboratory space, equipment, railcars, tanks, barges, tow boats, and
warehouses. The majority of our lease population pertains to operating leases, and the remaining terms on our total lease population
varies, extending up to 25 years. For a schedule of our lease payments for the next five years and thereafter, refer to “Note 14 – Leases” to
the Consolidated Financial Statements.
• Purchase obligations – As part of our normal, recurring operations, we enter into enforceable and legally-binding agreements to
purchase goods and/or services that specify fixed or minimum quantities, fixed minimum or variable price provisions, and the approximate
timing of the agreement. These agreements primarily pertain to our purchases of raw materials and utilities costs and may span multiple
years. Based upon our currently executed agreements, we anticipate that our contractually obligated cash payments for raw materials and
utilities will approximate $395 million for the year ending December 31, 2022, $245 million for the year ending December 31, 2023, and
$215 million annually for each of the three years thereafter. Renewal, modification, or execution of additional agreements for future
purchasing obligations may increase or decrease these amounts in future years.
• Environmental remediation – We, due to the terms of our Separation-related agreements with EID, are subject to contingencies pursuant
to environmental laws and regulations that in the future may require further action to correct the effects on the environment of prior
disposal practices or releases of chemical substances, which are attributable to EID’s activities before our spin-off. Much of this liability
results from CERCLA, RCRA, and similar federal, state, local, and foreign laws. These laws may require us to undertake certain
investigative, remediation, and restoration activities at sites where we conduct or EID once conducted operations or at sites where waste
generated by us was disposed. At December 31, 2021, our consolidated balance sheets include $562 million for environmental
remediation liabilities, of which $173 million was classified as current, and a portion is subject to recovery under the MOU. Of the current
environmental remediation liabilities of $173 million, $114 million relates to Fayetteville. Pursuant to the binding MOU that we entered into
with DuPont, Corteva, and EID in January 2021 costs related to potential future legacy PFAS liabilities arising out of pre-July 1, 2015
conduct will be shared until the earlier to occur of: (i) December 31, 2040; (ii) the day on which the aggregate amount of Qualified Spend is
equal to $4.0 billion; or, (iii) a termination in accordance with the terms of the MOU. The parties have agreed that, during the term of the
cost-sharing arrangement, we will bear half of the cost of such future potential legacy PFAS liabilities, and DuPont and Corteva will
collectively bear the other half of the cost of such future potential legacy PFAS liabilities. After the term of this arrangement, our
indemnification obligations under the Separation Agreement would continue unchanged, subject in each case to certain exceptions set out
in the MOU. Refer to the “Environmental Matters” section within this MD&A for the anticipated environmental remediation payments over
the next three years. Refer to “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements for further
discussion of the MOU and Qualified Spend.
48
The Chemours Company
• PFAS escrow funding requirements – Pursuant to the binding MOU that we entered into with DuPont, Corteva, and EID in January
2021, the parties have agreed to establish an escrow account in order to support and manage the payments for potential future PFAS
liabilities. The MOU provides that: (i) no later than each of September 30, 2021 and September 30, 2022, we shall deposit $100 million into
an escrow account and DuPont and Corteva shall together deposit $100 million in the aggregate into an escrow account, and (ii) no later
than September 30 of each subsequent year through and including 2028, we shall deposit $50 million into an escrow account and DuPont
and Corteva shall together deposit $50 million in the aggregate into an escrow account. Subject to the terms and conditions set forth in the
MOU, each party may be permitted to defer funding in any year (excluding 2021). Additionally, if on December 31, 2028, the balance of the
escrow account (including interest) is less than $700 million, we will make 50% of the deposits and DuPont and Corteva together will make
50% of the deposits necessary to restore the balance of the escrow account to $700 million. Such payments will be made in a series of
consecutive annual equal installments commencing on September 30, 2029 pursuant to the escrow account replenishment terms as set
forth in the MOU. Any funds that remain in escrow at termination of the MOU will revert to the party that deposited them. As such, future
payments made by us into the escrow account will remain an asset of Chemours, and such payments will be reflected as a transfer to
restricted cash on our consolidated balance sheets. No withdrawals are permitted from the escrow account before January 2026, except
for funding mutually agreed-upon third-party settlements in excess of $125 million. Starting in January 2026, withdrawals may be made
from the escrow account to fund Qualified Spend if the parties’ aggregate Qualified Spend in that particular year is greater than $200
million. Starting in January 2031, the amounts in the escrow account can be used to fund any Qualified Spend. Future payments from the
escrow account for potential future PFAS liabilities will be reflected on our consolidated statement of cash flows at that point in time. Refer
to “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements for further discussion.
• Settlement with the State of Delaware – In July 2021, we, DuPont, Corteva, and EID entered into a settlement agreement with the State
of Delaware to resolve claims regarding the operation, manufacturing, use and disposal of all chemical compounds, including but not
limited to PFAS. In January 2022, we, DuPont, Corteva and EID paid a total of $50 million to Delaware, which will be used for a Natural
Resources and Sustainability Trust. Pursuant to the binding MOU, we contributed $25 million to the settlement. Refer to “Note 22 –
Commitments and Contingent Liabilities” to the Consolidated Financial Statements for further discussion.
• Purchases of property, plant, and equipment – As further discussed under the “Capital Expenditures” section within this MD&A, our
operations are capital intensive, requiring ongoing investment to upgrade or enhance existing operations and to meet environmental and
operational regulations. For the year ended December 31, 2021 and 2020, our purchases of property, plant, and equipment amounted to
$277 million and $267 million, respectively. For the year ending December 31, 2022, we expect that our capital expenditures will be
approximately $400 million. Our capital expenditures do not include the estimated future spend at Fayetteville, which is included in our
environmental remediation liabilities, as noted in the “Environmental Liabilities” section of “Liquidity and Capital Resources” within this
MD&A.
We continue to believe our sources of liquidity are sufficient to fund our planned operations and to meet our interest, dividend, and contractual
obligations through at least February 2023. Our financial policy seeks to: (i) selectively invest in organic and inorganic growth to enhance our
portfolio, including certain strategic capital investments; (ii) maintain appropriate leverage by using free cash flows to repay outstanding borrowings;
and, (iii) return cash to shareholders through dividends and share repurchases. Specific to our objective to return cash to shareholders, in recent
quarters, we have previously announced dividends of $0.25 per share, amounting to approximately $160 million per year, and, on February 9, 2022,
we announced our quarterly cash dividend of $0.25 per share for the first quarter of 2022. Under our 2018 Share Repurchase Program, as further
discussed in Item 5 – Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities in this Annual
Report on Form 10-K, we also have remaining authority to repurchase $251 million of our outstanding common stock. On December 1, 2021, we
completed the sale of the Mining Solutions business of our Chemical Solutions segment to Draslovka and received net cash proceeds of $508
million, net of $13 million cash divested. We expect to use the proceeds from the sale for general corporate purposes as permitted under our Credit
Agreement. Subject to approval by our board of directors, we may raise additional capital or borrowings from time to time, or seek to refinance our
existing debt. There can be no assurances that future capital or borrowings will be available to us, and the cost and availability of new capital or
borrowings could be materially impacted by market conditions. Further, the decision to refinance our existing debt is based on a number of factors,
including general market conditions and our ability to refinance on attractive terms at any given point in time. Any attempts to raise additional capital
or borrowings or refinance our existing debt could cause us to incur significant charges. Such charges could have a material impact on our financial
position, results of operations, or cash flows.
49
Cash Flows
The Chemours Company
The following table sets forth a summary of the net cash provided by (used for) our operating, investing, and financing activities for the years ended
December 31, 2021 and 2020.
(Dollars in millions)
Cash provided by operating activities
Cash provided by (used for) investing activities
Cash used for financing activities
Operating Activities
$
Year Ended December 31,
2021
2020
$
820
220
(560 )
807
(234 )
(449 )
We generated $820 million and $807 million in cash flows from our operating activities during the years ended December 31, 2021 and 2020. The
increase in our operating cash inflows for the year ended December 31, 2021 was primarily attributable to higher net earnings from operations,
collections during the year and timing of payments to vendors, partially offset by payments of taxes previously deferred. The increase was further
offset by $125 million of accounts receivables sold to the bank, under our Securitization Facility during the year ended December 31, 2020,
compared to $25 million of additional accounts receivables sold during the year ended December 31, 2021. Sale of accounts receivable under our
Securitization Facility were pursuant to the Amended Purchase Agreement, dated March 9, 2020 and further amended in 2021. For further
information refer to “Note 20 – Debt” to the Consolidated Financial Statements.
Investing Activities
We generated $220 million in cash flows from our investing activities during the year ended December 31, 2021. Our investing cash inflows were
primarily attributable to $508 million of cash proceeds, which are net of $13 million cash divested, from the Mining Solutions Transaction. Our
investing cash inflows were partially offset by purchases of property, plant, and equipment, amounting to $277 million and $12 million of cash used
for the settlement of certain foreign currency contracts. For further information related to the capital projects driving our year-over-year increase in
purchases of property, plant, and equipment, refer to the “Capital Expenditures” section within this MD&A.
We used $234 million in cash flows for our investing activities during the year ended December 31, 2020. Our investing cash outflows were primarily
attributable to purchases of property, plant, and equipment, amounting to $267 million. Investing cash outflows for the year ended December 31,
2020 were partially offset by $27 million of cash received from the settlement of certain of our foreign currency forward contracts.
Financing Activities
We used $560 million in cash flows for our financing activities during the year ended December 31, 2021. Our financing cash outflows were primarily
attributable to $854 million in debt repayments, comprised of the $750 million 2025 notes refinancing and $104 million Senior Secured Term Loan
repurchases and repayments. These debt repayments were partially offset by $650 million of proceeds from the issuance of the 2029 Notes, which
was used, together with cash on hand to repay the 2025 notes and related fees. Financing cash outflows also include $173 million in purchases of
our issued and outstanding common stock under our 2018 Share Repurchase Program, $164 million returned to shareholders in the form of cash
dividends paid, and $18 million in premium payments to purchase and redeem the 2025 Notes.
We used $449 million in cash flows for our financing activities during the year ended December 31, 2020. Our financing cash outflows were primarily
attributable to our debt refinancing activities, resulting in $908 million in debt repayments and $16 million in premium payments to purchase and
redeem the remaining outstanding aggregate principal amount of our 2023 Dollar Notes, partially offset by $800 million of proceeds received in
connection with the issuance of our 2028 Notes. We also continued our capital allocation activities to return cash to our shareholders, resulting in
$164 million of cash dividends paid. Our financing cash outflows were also attributable to the amendment and restatement of our receivables
purchase agreement dated as of July 12, 2019 (the “Original Purchase Agreement”) under our Securitization Facility, resulting in net repayments of
$110 million to settle the associated collateralized borrowings. Aside from the payments associated with our debt refinancing activities and our
Securitization Facility, we also made $35 million in debt repayments. Our financing cash outflows for the year ended December 31, 2020 are also
inclusive of our repayment of $300 million in proceeds received from drawing on our revolving credit facility, which was executed on April 8, 2020 as
a precautionary measure in light of macroeconomic uncertainties driven by COVID-19. We also made a $10 million acquisition-related installment
payment in 2020, which was associated with our previous acquisition of Southern Ionics Minerals, LLC (“SIM”) in 2019.
50
Current Assets
The following table sets forth the components of our current assets at December 31, 2021 and 2020.
The Chemours Company
(Dollars in millions)
Cash and cash equivalents
Accounts and notes receivable, net
Inventories
Prepaid expenses and other
Total current assets
December 31,
2021
2020
$
$
1,451
720
1,099
75
3,345
$
$
1,105
511
939
78
2,633
Our accounts and notes receivable, net increased by $209 million (or 41%) to $720 million at December 31, 2021, compared with accounts and
notes receivable, net of $511 million at December 31, 2020. The increase in our accounts and notes receivable, net at December 31, 2021 was
primarily attributable to higher net sales and the timing of collections from our customers. The increase in our accounts and notes receivable, net
was partially offset by the increased utilization of our Securitization Facility and transfers of certain accounts and notes receivable, net in connection
with the Mining Solutions Transaction.
Our inventories increased by $160 million (or 17%) to $1.1 billion at December 31, 2021, compared with inventories of $939 million at December 31,
2020. The increase in our inventories at December 31, 2021 was primarily attributable to an increase in our finished product and raw materials
inventories, which was due to ramp-up in production and higher raw material costs.
Our prepaid expenses and other assets decreased by $3 million (or 4%) to $75 million at December 31, 2021, compared with prepaid expenses and
other assets of $78 million at December 31, 2020. The decrease in our prepaid expenses and other assets at December 31, 2021 was primarily
attributable to a decrease in our income taxes receivable.
51
Current Liabilities
The following table sets forth the components of our current liabilities at December 31, 2021 and 2020.
The Chemours Company
(Dollars in millions)
Accounts payable
Compensation and other employee-related costs
Short-term and current maturities of long-term debt
Current environmental remediation
Other accrued liabilities
Total current liabilities
December 31,
2021
2020
1,162
173
25
173
325
1,858
$
$
844
107
21
95
375
1,442
$
$
Our accounts payable increased by $318 million (or 38%) to $1.2 billion at December 31, 2021, compared with accounts payable of $844 million at
December 31, 2020. The increase in our accounts payable at December 31, 2021 was primarily attributable to higher raw material purchases in line
with higher production levels, higher raw material costs and the timing of payments to our vendors.
Our compensation and other employee-related costs increased by $66 million (or 62%) to $173 million at December 31, 2021 compared with
compensation and other employee-related costs of $107 million at December 31, 2020. The increase in our compensation and other employee-
related costs at December 31, 2021 was primarily attributable to increased accruals for employee benefits and performance-based compensation.
Our short-term and current maturities of long-term debt increased by $4 million (or 19%) to $25 million at December 31, 2021, compared with short-
term and current maturities of long-term debt of $21 million at December 31, 2020. The increase in our short-term and current maturities of long-term
debt at December 31, 2021 was primarily attributable to an increase in our finance lease liabilities.
Our current environmental remediation increased by $78 million (or 82%) to $173 million at December 31, 2021, compared with current
environmental remediation of $95 million at December 31, 2020. The increase in our current environmental remediation at December 31, 2021 was
primarily attributable to liabilities recorded under the Consent Order and Addendum with the NC DEQ, which includes construction of the barrier wall
and operation of the groundwater extraction and treatment system at Fayetteville that we expect to spend in 2022. The increase also relates to a $9
million accrual recorded to resolve the claims asserted by the U.S. Environmental Protection Agency (the “EPA”) related to past indirect costs
associated with the 2012 Record of Decision (“ROD”), as amended, and the 2014 agreement entered into with the EPA and the State of Indiana. For
more information regarding this matter, refer to “U.S. Smelter and Lead Refinery, Inc., East Chicago, Indiana” under the “Significant Environmental
Remediation Sites” within this MD&A.
Our other accrued liabilities decreased by $50 million (or 13%) to $325 million at December 31, 2021, compared with other accrued liabilities of $375
million at December 31, 2020. The decrease in our other accrued liabilities at December 31, 2021 was primarily attributable to the payment of legal
fees, the payment of contract termination fees in connection with construction work at our Mining Solutions facility in Gomez Palacio, Durango,
Mexico, the payment of $29 million for the Ohio multi-district litigation settlement, and the payment of certain previously deferred income tax
liabilities. The decrease in our other accrued liabilities was partially offset by increased accrued customer rebates and the $25 million accrual
associated with our portion of the costs to enter into the Settlement Agreement, Limited Release, Waiver and Covenant Not to Sue reflecting
Chemours, DuPont, Corteva, EID and the State of Delaware’s agreement to settle and fully resolve claims alleged against the companies.
Credit Facilities and Notes
Refer to “Note 20 – Debt” to the Consolidated Financial Statements for a discussion of our credit facilities and notes.
52
Guarantor Financial Information
The Chemours Company
The following disclosures set forth summarized financial information and alternative disclosures in accordance with Rule 13-01 of Regulation S-X
(“Rule 13-01”). These disclosures have been made in connection with certain subsidiaries' guarantees of the 4.000% senior unsecured notes due
May 2026, which are denominated in euros and the 5.375% senior unsecured notes due May 2027 (collectively, the “Registered Notes”), which are
registered under the Securities Act of 1933, as amended. Each series of the Registered Notes was issued by The Chemours Company (the “Parent
Issuer”), and was fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the existing and future domestic
subsidiaries of the Parent Issuer (together, the “Guarantor Subsidiaries”), subject to certain conditions as set forth in “Note 20 – Debt” to the
Consolidated Financial Statements. The assets, liabilities, and operations of the Guarantor Subsidiaries primarily consist of those attributable to The
Chemours Company FC, LLC, our primary operating subsidiary in the United States, as well as the other U.S.-based operating subsidiaries as set
forth in Exhibit 22 to this Annual Report on Form 10-K. Each of the Guarantor Subsidiaries is 100% owned by the Company. None of our other
subsidiaries, either direct or indirect, guarantee the Registered Notes (together, the “Non-Guarantor Subsidiaries”). Pursuant to the indentures
governing the Registered Notes, the Guarantor Subsidiaries will be automatically released from those guarantees upon the occurrence of certain
customary release provisions.
Our summarized financial information is presented on a combined basis, consisting of the Parent Issuer and Guarantor Subsidiaries (collectively, the
“Obligor Group”), in accordance with the requirements under Rule 13-01, and is presented after the elimination of: (i) intercompany transactions and
balances among the Parent Issuer and Guarantor Subsidiaries, and (ii) equity in earnings from and investments in the Non-Guarantor Subsidiaries.
(Dollars in millions)
Net sales (1)
Gross profit
Income before income taxes
Net income
Net income attributable to Chemours
(1) Net sales includes intercompany sales to the Non-Guarantor Subsidiaries.
$
Year Ended December 31, 2021
(Dollars in millions)
Assets
Current assets (1,2,3)
Long-term assets (4)
Liabilities
Current liabilities (2)
Long-term liabilities
December 31,
2021
2020
$
$
$
1,554
3,720
$
1,504
4,497
(1) Current assets includes $525 million and $283 million of cash and cash equivalents at December 31, 2021 and 2020, respectively.
(2) Current assets includes $407 million and $236 million of intercompany accounts receivable from the Non-Guarantor Subsidiaries at December 31, 2021 and 2020,
respectively. Current liabilities includes $328 million and $388 million of intercompany accounts payable to the Non-Guarantor Subsidiaries at December 31, 2021 and 2020,
respectively.
(3) As of December 31, 2021 and 2020, $76 million and $33 million of accounts receivable generated by the Obligor Group, respectively, remained outstanding with one of the
Non-Guarantor Subsidiaries under the Securitization Facility.
(4)
Long-term assets includes $729 million and $1.2 billion of intercompany notes receivable from the Non-Guarantor Subsidiaries at December 31, 2021 and 2020,
respectively.
There are no significant restrictions that may affect the ability of the Guarantor Subsidiaries in guaranteeing the Parent Issuer’s obligations under our
debt financing arrangements. While the Non-Guarantor Subsidiaries do not guarantee the Parent Issuer’s obligations under our debt financing
arrangements, we may, from time to time, repatriate post-2017 earnings from certain of these subsidiaries to meet our financing obligations, as well.
53
4,014
542
138
144
144
1,057
4,288
1,298
4,703
Supplier Financing
The Chemours Company
We maintain supply chain finance programs with several financial institutions. The programs allow our suppliers to sell their receivables to one of
the participating financial institutions at the discretion of both parties on terms that are negotiated between the supplier and the respective financial
institution. Our obligations to our suppliers, including the amounts due and scheduled payment dates, are not impacted by our suppliers’ decisions
to sell their receivables under this program. At December 31, 2021 and 2020, the total amounts outstanding under these programs were $153
million and $160 million, respectively. Pursuant to their agreement with a financial institution, certain suppliers may elect to be paid early at their
discretion. The available capacity under these programs can vary based on the number of investors and/or financial institutions participating in
these programs at any point in time.
Off-Balance Sheet Arrangements
In March 2020, through a wholly-owned special purpose entity (“SPE”), we entered into the Amended Purchase Agreement, which amends and
restates, in its entirety, the Original Purchase Agreement under our Securitization Facility. In March of 2021, through the SPE we entered into the
First Amendment, which among other things, extends the term of the Amended Purchase Agreement and increases the facility limit to $150 million.
In November 2021, through the SPE we entered into the Second Amendment, which among other things, extends the term of the Amended
Purchase Agreement.
See “Note 20 – Debt” to the Consolidated Financial Statements for further details regarding this off-balance sheet arrangement.
Historically, we have not made any payments to satisfy guarantee obligations; however, we believe we have the financial resources to satisfy these
guarantees in the event required.
Capital Expenditures
Our operations are capital intensive, requiring ongoing investment to upgrade or enhance existing operations and to meet environmental and
operational regulations. Our capital requirements have consisted, and are expected to continue to consist, primarily of:
•
•
ongoing capital expenditures, such as those required to maintain equipment reliability, maintain the integrity and safety of our
manufacturing sites, comply with environmental regulations, and meet our Corporate Responsibility Commitments;
investments in our existing facilities to help support the introduction of new products and de-bottleneck to expand capacity and grow our
business; and,
•
investments in projects to reduce future operating costs and enhance productivity.
The following table sets forth our ongoing and expansion capital expenditures, including certain environmental capital expenditures, for the years
ended December 31, 2021 and 2020.
(Dollars in millions)
Titanium Technologies
Thermal & Specialized Solutions
Advanced Performance Materials
Chemical Solutions
Corporate and Other (1)
Total purchases of property, plant, and equipment
Year Ended December 31,
2021
2020
$
$
104
26
103
39
5
277
$
$
89
28
109
25
16
267
(1)
Includes $9 million during the year ended December 31, 2020, related to our capital expenditures for our new R&D facility on the Science, Technology, and Advanced
Research campus of the University of Delaware in Newark, Delaware (“Chemours Discovery Hub”).
Our capital expenditures increased by $10 million (or 4%) to $277 million for the year ended December 31, 2021, compared with capital expenditures
of $267 million for the same period in 2020. The increase in our capital expenditures for the year ended December 31, 2021 was primarily
attributable to cost deferral activities in the prior year related to COVID-19 and was largely offset by the timing of payments to our vendors which
resulted in an increased outstanding balance of our capital expenditures in accounts payable when compared to December 31, 2020.
54
Critical Accounting Policies and Estimates
The Chemours Company
Our significant accounting policies are more fully described in “Note 3 – Summary of Significant Accounting Policies” to the Consolidated Financial
Statements. Management believes that the application of these policies on a consistent basis enables us to provide the users of our financial
statements with useful and reliable information about our operating results and financial condition.
The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires
management to make estimates and assumptions that affect the reported amounts, including, but not limited to, receivable and inventory valuations,
impairment of tangible and intangible assets, long-term employee benefit obligations, income taxes, restructuring liabilities, environmental matters,
and litigation. Management’s estimates are based on historical experience, facts, and circumstances available at the time, and various other
assumptions that are believed to be reasonable. We review these matters and reflect changes in estimates as appropriate. Management believes
that the following represents some of the more critical judgment areas in the application of our accounting policies, which could have a material effect
on our financial position, results of operations, or cash flows.
Provision for (Benefit from) Income Taxes
The provision for (benefit from) income taxes is determined using the asset and liability approach of accounting for income taxes. Under this
approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered
or paid. The provision for (benefit from) income taxes represents income taxes paid or payable for the current year, plus the change in deferred taxes
during the year. Deferred taxes result from differences between the financial and tax bases of our assets and liabilities and are adjusted for changes
in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not
that a tax benefit will not be realized. In evaluating the ability to realize deferred tax assets, we rely on, in order of increasing subjectivity, taxable
income in prior carryback years, the future reversals of existing taxable temporary differences, tax planning strategies, and forecasted taxable
income using historical and projected future operating results.
The breadth of our operations and the global complexity of tax regulations require assessments of uncertainties and judgments in estimating the
taxes that we will ultimately pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various
jurisdictions, outcomes of tax litigation, and resolutions of disputes arising from federal, state, and international tax audits in the normal course of
business. A liability for unrecognized tax benefits is recorded when management concludes that the likelihood of sustaining such positions upon
examination by taxing authorities is less than more-likely-than-not. It is our policy to include accrued interest related to unrecognized income tax
positions and income tax-related penalties in the provision for (benefit from) income taxes.
We account for the tax impacts of new provisions based on interpretation of existing statutory law, including proposed regulations issued by the U.S.
Treasury and the IRS. While there can be no assurances as to the effect of any final regulations on our provision for (benefit from) income taxes, we
will continue to evaluate the impacts as any issued regulations become final and adjust our estimates, as appropriate.
Refer to “Note 9 – Income Taxes” to the Consolidated Financial Statements for further information related to our income tax positions.
Long-lived Assets
We evaluate the carrying value of our long-lived assets to be held and used when events or changes in circumstances indicate that the carrying
value of an asset may not be recoverable. For the purposes of recognition or measurement of an impairment charge, the assessment is performed
on the asset or asset group at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets
and liabilities. To determine the level at which the assessment is performed, we consider factors such as revenue dependency, shared costs, and
the extent of vertical integration. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows
from the use and eventual disposition of the asset or asset group are separately identifiable and are less than its carrying value. In that event, a loss
is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. The fair value methodology used is an
estimate of fair market value, which is made based on prices of similar assets or other valuation methodologies, including present value techniques.
Long-lived assets to be disposed of other than by sale are classified as held for use until their disposal. Long-lived assets to be disposed of by sale
are classified as held for sale and are reported at the lower of their carrying amount or fair market value, less the estimated costs to sell.
Depreciation is discontinued for any long-lived assets classified as held for sale.
55
The Chemours Company
The testing for potential impairment of these assets is significantly dependent on numerous assumptions and reflects management’s best estimates
at a particular point in time. The dynamic economic environments in which our segments operate, and key economic and business assumptions with
respect to projected selling prices, market growth, and inflation rates, can significantly impact the outcome of our impairment tests. Estimates based
on these assumptions may differ significantly from actual results. Changes in the factors and assumptions used in assessing potential impairments
can have a significant impact on the existence and magnitude of impairments, as well as the time in which such impairments are recognized. In
addition, we continually review our diverse portfolio of assets to ensure that they are achieving their greatest potential and are aligned with our
growth strategy. Strategic decisions involving a particular group of assets may trigger an assessment of the recoverability of the related assets. Such
an assessment could result in impairment losses. We did not recognize material impairment charges on our long-lived assets during the years ended
December 31, 2021 and 2020.
Goodwill
The excess of the purchase price over the estimated fair value of the net assets acquired in a business combination, including any identified
intangible assets, is recorded as goodwill. We test our goodwill for impairment at least annually on October 1; however, these tests are performed
more frequently when events or changes in circumstances indicate that the asset may be impaired. Goodwill is evaluated for impairment at the
reporting unit level, which is defined as an operating segment. A reporting unit is the level at which discrete financial information is available and
reviewed by business management on a regular basis. An impairment exists when the carrying value of a reporting unit exceeds its fair value. The
amount of impairment loss recognized in the consolidated statements of operations is equal to the excess of a reporting unit’s carrying value over its
fair value, which is limited to the total amount of goodwill allocated to the reporting unit.
The fair values of our reporting units were determined by using a combination of income-based and/or market-based valuation techniques. These
valuation models incorporated a number of assumptions and judgments surrounding general market and economic conditions, short- and long-term
revenue growth rates, gross margins, and prospective financial information surrounding future cash flows of the reporting units. Projections are
based on internal forecasts of future business performance and are based on growth assumptions, which exclude business growth opportunities not
yet fully realized. Discount rate and market multiple assumptions were determined based on relevant peer companies in the chemicals sector.
As of October 1, 2021, we performed our annual goodwill impairment tests for all reporting units. Based upon the results of our annual goodwill
impairment tests, no adjustments to the carrying value of goodwill were necessary during the year ended December 31, 2021. In consideration of the
results of our annual goodwill impairment tests, as well as the carrying amounts of goodwill held by each of our reporting units, further information
and sensitivity analyses for certain of our reporting units have been included below.
The consideration offered for the Mining Solutions business in the definitive agreement entered into on July 26, 2021 with Draslovka to sell the
Mining Solutions business of our Chemical Solutions segment, indicated the reporting unit had a fair value of $520 million at the test date, which was
used in the most recent goodwill analysis. The estimated fair value is 46% higher than the reporting unit's carrying value. Mining Solutions had $51
million of goodwill and no impairment of this balance existed as of the test date. The $51 million of goodwill was allocated to the disposal group in
determining the gain on sale of our Mining Solutions business to Draslovka on December 1, 2021.
The estimated fair value of the Advanced Performance Materials reporting unit was determined by utilizing a discount rate of 9.95% and a market
multiple of 5.2 times Adjusted EBITDA, resulting in an estimated fair value 14% higher than its carrying value. Advanced Performance Materials has
$56 million of goodwill. Changing the weighting of the market and income approaches used for Advanced Performance Materials could result in a
maximum reduction of the excess of estimated fair value over carrying value to 9%. Assuming all other factors remain the same, a 200-basis point
increase in the discount rate would decrease the excess of estimated fair value over carrying value to 2%; a 1% decrease in the long-term growth
rate would decrease the excess of estimated fair value over carrying value to 9%; and, a 15% decrease in the market multiple assumption would
decrease the excess of estimated fair value over carrying value to 6%. Under each of these sensitivity scenarios, the Advanced Performance
Materials reporting unit's fair value exceeded its carrying value.
In consideration of the COVID-19 pandemic, we note that a deterioration in general market conditions, a sustained trend of weaker than anticipated
Company financial performance, a decline in the Company’s share price for a sustained period of time, or an increase in the market-based weighted
average cost of capital, among other factors, could significantly impact our impairment analyses and may result in future goodwill impairment
charges that, if incurred, could have a material adverse effect on our results of operations.
56
Employee Benefits
The Chemours Company
The amounts recognized in our consolidated financial statements related to pension and other long-term employee benefits plans are determined
from actuarial valuations. Inherent in these valuations are assumptions including, but not limited to, the expected returns on plan assets, discount
rates at which liabilities are expected to be settled, rates of increase in future compensation levels, and mortality rates. These assumptions are
updated annually and are disclosed in “Note 27 – Long-term Employee Benefits” to the Consolidated Financial Statements. In accordance with
GAAP, actual results that differed from the assumptions are accumulated and amortized over future periods and, therefore, affect expense
recognized and obligations recorded in future periods.
We use discount rates that are developed by matching the expected cash flows of each benefit plan to various yield curves constructed from a
portfolio of high-quality, fixed income instruments provided by the plan’s actuary as of the measurement date. As of December 31, 2021, the
weighted-average discount rate was 1.4%.
The expected long-term rates of return on plan assets are determined by performing a detailed analysis of historical and expected returns based on
the strategic asset allocation of the underlying asset class applicable to each country. We also consider our historical experience with the pension
funds’ asset performance. The expected long-term rates of return on plan assets are assumptions and not what is expected to be earned in any one
particular year. The weighted-average long-term rates of return on plan assets assumptions used for determining our net periodic pension cost for
2021 was 1.2%.
A 50 basis point increase in the discount rate would result in a decrease of $4 million to the net periodic benefit cost for 2022, while a 50 basis point
decrease in the discount rate would result in an increase of approximately $5 million. A 50 basis point increase in the expected return on plan assets
assumption would result in a decrease of approximately $3 million to the net periodic benefit cost for 2022, while a 50 basis point decrease in the
expected return on plan assets assumption would result in an increase of approximately $3 million.
Litigation
We accrue for litigation matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated.
Litigation liabilities and expenditures included in our consolidated financial statements include litigation matters that are liabilities of EID and its
subsidiaries, which we may be required to indemnify pursuant to the Separation-related agreements executed prior to the Separation. Disputes
between us and EID may arise with respect to indemnification of these matters, including disputes based on matters of law or contract interpretation.
If, and to the extent these disputes arise, they could materially adversely affect our results of operations. Legal costs such as outside counsel fees
and expenses are charged to expense in the period services are received.
Environmental Liabilities and Expenditures
We accrue for environmental remediation costs when it is probable that a liability has been incurred and a reasonable estimate of the liability can be
made. Where the available information is sufficient to estimate the amount of liability, that estimate has been used. Where the information is only
sufficient to establish a range of probable liability, and no point within the range is more likely than any other, the lower end of the range has been
used. Estimated liabilities are determined based on existing remediation laws and technologies and our planned remedial responses, which are
derived from environmental studies, sampling, testing, and other analyses. Inherent uncertainties exist in such evaluations, primarily due to unknown
environmental conditions, changing governmental regulations regarding liability, and emerging remediation technologies. These accruals are
adjusted periodically as remediation efforts progress and as additional technology, regulatory, and legal information become available.
Environmental liabilities and expenditures include claims for matters that are liabilities of EID and its subsidiaries, which we may be required to
indemnify pursuant to the Separation-related agreements executed prior to the Separation. These accrued liabilities are undiscounted and do not
include claims against third parties.
Costs related to environmental remediation are charged to expense in the period that the associated liability is accrued. Other environmental costs
are also charged to expense in the period incurred, unless they increase the value of the property or reduce or prevent contamination from future
operations, in which case they are capitalized and amortized.
Recent Accounting Pronouncements
Refer to “Note 3 – Summary of Significant Accounting Policies” to the Consolidated Financial Statements for a discussion about recent accounting
pronouncements.
57
Environmental Matters
The Chemours Company
Consistent with our values and our Environment, Health, Safety, and Corporate Responsibility policy, we are committed to preventing releases to the
environment at our manufacturing sites to keep our people and communities safe, and to be good stewards of the environment. We are also subject
to environmental laws and regulations relating to the protection of the environment. We believe that, as a general matter, our policies, standards, and
procedures are properly designed to prevent unreasonable risk of harm to people and the environment, and that our handling, manufacture, use, and
disposal of hazardous substances are in accordance with applicable environmental laws and regulations.
Environmental Expenditures
We incur costs for pollution abatement activities, including waste collection and disposal, installation and maintenance of air pollution controls and
waste water treatment, emissions testing and monitoring, and obtaining permits. Annual expenses charged to current operations include
environmental operating costs and increases in remediation accruals, if any, during the period reported.
The charges described in this section include $359 million accrued for costs associated with the Consent Order (“CO”) between us and NC DEQ,
which is further described in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements. These accrued liabilities
represent on-site remediation, off-site groundwater remediation, and toxicology studies related to Fayetteville.
Our environmental remediation expenditures are subject to considerable uncertainty and may fluctuate significantly. In the U.S., additional capital
expenditures associated with ongoing operations (as described below) are expected to be required over the next decade for treatment, storage, and
disposal facilities for solid and hazardous waste and for compliance with the Clean Air Act (“CAA”). Until all CAA regulatory requirements are
established and known, considerable uncertainty will remain regarding estimates for our future capital and remediation expenditures.
Environmental Capital Expenditures
For the years ended December 31, 2021 and 2020, we spent $69 million and $33 million, respectively, on environmental capital projects that were
either required by law or necessary to meet our internal environmental objectives. The increase in our environmental capital expenditures for the
year ended December 31, 2021, when compared with the same period in 2020, was primarily attributable to increases in our Titanium Technologies
and Advanced Performance Materials segments related to projects focused on the reduction of air and water emissions in line with our Corporate
Responsibility Commitment (“CRC”).
We expect our future capital expenditures for environmental matters will continue to vary, based on the success of our deployed solutions, changes
in our operations, technological advancements, developments in environmental requirements, and stakeholder expectations.
Environmental Remediation
In large part, because of past operations, operations of predecessor companies, or past disposal practices, we, like many other similar companies,
have clean-up responsibilities and associated remediation costs, and are subject to claims by other parties, including claims for matters that are
liabilities of EID and its subsidiaries that we may be required to indemnify pursuant to the Separation-related agreements executed prior to the
Separation.
We accrue for clean-up activities consistent with the policy described under “Critical Accounting Policies and Estimates” discussed within this MD&A
and in “Note 3 – Summary of Significant Accounting Policies” to the Consolidated Financial Statements. Our environmental liabilities include
estimated costs, including certain accruable costs associated with on-site capital projects. The accruable costs relate to a number of sites for which it
is probable that environmental remediation will be required, whether or not subject to enforcement activities, as well as those obligations that result
from environmental laws such as the CERCLA, RCRA, and similar federal, state, local, and foreign laws. These laws may require certain
investigative, remediation, and restoration activities at sites where we conduct or EID once conducted operations or at sites where our generated
waste was disposed. At December 31, 2021 and 2020, our consolidated balance sheets include environmental remediation liabilities of $562 million
and $390 million, respectively, relating to these matters, which, as discussed in further detail below, include $359 million and $194 million,
respectively, for Fayetteville.
58
The following table sets forth the activities related to our environmental remediation liabilities for the years ended December 31, 2021 and 2020.
The Chemours Company
(Dollars in millions)
Balance at January 1,
Increase in remediation accrual
Remediation payments (1)
Balance at December 31,
December 31,
2021
2020
$
$
390
269
(97 )
562
$
$
406
71
(87 )
390
(1) Remediation payments do not include Qualified Spend that we have been reimbursed for by DuPont and/or Corteva as part of our cost-sharing agreement under the terms of
the MOU.
Our estimated liability for environmental remediation covered 211 sites at December 31, 2021 and 2020.
The following table sets forth our environmental remediation liabilities by site category.
(Dollars in millions)
Site Category
Chemours-owned
Multi-party Superfund/non-owned (1)
Closed or settled
Total sites
December 31, 2021
December 31, 2020
Number of Sites
Remediation
Accrual
Number of Sites
Remediation
Accrual
23
86
102
211
$
$
486
76
—
562
24
87
100
211
$
$
318
72
—
390
(1) Sites not owned by Chemours, including sites previously owned by EID or Chemours, where remediation obligations are imposed by environmental remediation laws, such as
CERCLA, RCRA, or similar state laws.
As part of our legacy as a former subsidiary of EID, we are cleaning-up historical impacts to soil and groundwater that have occurred in the past at
the 23 sites that we own. These operating and former operating sites make up approximately 86% of our environmental remediation liabilities at
December 31, 2021.
We were also assigned numerous clean-up obligations from EID, which pertain to 86 sites previously owned by EID and/or us, as well as sites that
we or EID never owned or operated. We are meeting our obligations to clean up those sites. The majority of these non-owned sites are multi-party
Superfund sites that we, through EID, have been notified of potential liability under CERCLA, RCRA, or similar state laws and which, in some cases,
may represent a small fraction of the total waste that was allegedly disposed of at a site. These sites represent approximately 14% of our
environmental remediation liabilities at December 31, 2021. Included in the 86 sites are 36 inactive sites for which there has been no known
investigation, clean-up, or monitoring activity, and no remediation obligation is imposed or required; as such, no remediation liabilities are recorded.
The remaining 102 sites, which are Superfund sites and other sites not owned by us, are either already closed or settled, or sites for which we do not
believe we have clean-up responsibility based on current information.
With the exception of Fayetteville, our remediation portfolio is relatively mature, with many sites under active clean-up and moving towards final
completion.
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The following graph sets forth the number of remediation sites by site clean-up phase and our environmental remediation liabilities by site clean-up
phase as of December 31, 2021 and 2020.
The Chemours Company
(1) Number of sites does not include the 36 inactive sites for which there has been no known investigation, clean-up, or monitoring activities
as of December 31, 2021 and 2020.
(2) Dollars in millions.
(3) As of December 31, 2021, Active Remediation included $359 million for on-site remediation and off-site groundwater remediation at
Fayetteville. As of December 31, 2020, Active Remediation included $194 million for on-site remediation and off-site groundwater
remediation at Fayetteville.
As remediation efforts progress, sites move from the investigation phase (“Investigation”) to the active clean-up phase (“Active Remediation”), and as
construction is completed at Active Remediation sites, those sites move to the operation, maintenance, and monitoring (“OM&M”), or closure phase.
As final clean-up activities for some significant sites are completed over the next several years, we expect our annual expenses related to these
active sites to decline over time. The time frame for a site to go through all phases of remediation (Investigation and Active Remediation) may take
about 15 to 20 years, followed by several years of OM&M activities. Remediation activities, including OM&M activities, vary substantially in duration
and cost from site to site. These activities, and their associated costs, depend on the mix of unique site characteristics, evolving remediation
technologies, and diverse regulatory requirements, as well as the presence or absence of other Potentially Responsible Parties (“PRPs”). In addition,
for claims that we may be required to indemnify EID pursuant to the Separation-related agreements, we and EID may have limited available
information for certain sites or are in the early stages of discussions with regulators. For these sites, there may be considerable variability between
the clean-up activities that are currently being undertaken or planned and the ultimate actions that could be required. Therefore, considerable
uncertainty exists with respect to environmental remediation costs, and, under adverse changes in circumstances, although deemed remote, the
potential liability may range up to approximately $660 million above the amount accrued at December 31, 2021. In general, uncertainty is greatest
and the range of potential liability is widest in the Investigation phase, narrowing over time as regulatory agencies approve site remedial plans. As a
result, uncertainty is reduced, and sites ultimately move into OM&M, as needed. As more sites advance from Investigation to Active Remediation to
OM&M or closure, the upper end of the range of potential liability is expected to decrease over time.
Some remediation sites will achieve site closure and will require no further action to protect people and the environment and comply with laws and
regulations. At certain sites, we expect that there will continue to be some level of remediation activity due to ongoing OM&M of remedial systems. In
addition, portfolio changes, such as an acquisition or divestiture, or notification as a PRP for a multi-party Superfund site, could result in additional
remediation activity and potentially additional accrual.
Management does not believe that any loss, in excess of amounts accrued, related to remediation activities at any individual site will have a
material impact on our financial position or cash flows for any given year, as such obligation can be satisfied or settled over many years.
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Significant Environmental Remediation Sites
The Chemours Company
While there are many remediation sites that contribute to our total accrued environmental remediation liabilities at December 31, 2021 and 2020, the
following table sets forth the liabilities of the four sites that are deemed the most significant, together with the aggregate liabilities of the 69 other
sites.
(Dollars in millions)
Chambers Works, Deepwater, New Jersey
Fayetteville Works, Fayetteville, North Carolina
Pompton Lakes, New Jersey
USS Lead, East Chicago, Indiana
All other sites
Total environmental remediation
December 31,
2021
2020
27
359
42
24
110
562
$
$
20
194
42
12
122
390
$
$
The four sites listed above represent 80% and 69% of our total accrued environmental remediation liabilities at December 31, 2021 and 2020,
respectively. For these four sites, we expect to spend, in the aggregate, $215 million over the next three years. For all other sites, we expect to
spend $68 million over the next three years.
Chambers Works, Deepwater, New Jersey (“Chambers Works”)
The Chambers Works complex is located on the eastern shore of the Delaware River in Deepwater, Salem County, New Jersey. The site comprises
the former Carneys Point Works in the northern area and the Chambers Works manufacturing area in the southern area. Site operations began in
1892 when the former Carneys Point smokeless gunpowder plant was constructed at the northern end of Carneys Point. Site operations began in
the manufacturing area around 1914 and included the manufacture of dyes, aromatics, elastomers, chlorofluorocarbons, and tetraethyl lead. We
continue to manufacture a variety of fluoropolymers and finished products at Chambers Works. In addition, two tenants operate processes at
Chambers Works. As a result of over 100 years of continuous industrial activity, site soils and groundwater have been impacted by chemical
releases.
In response to identified groundwater contamination, a groundwater interceptor well system (“IWS”) was installed in 1970, which was designed to
contain contaminated groundwater and restrict off-site migration. Additional remediation is being completed under a federal RCRA Corrective Action
permit. The site has been studied extensively over the years, and more than 25 remedial actions have been completed to date and engineering and
institutional controls put in place to ensure protection of people and the environment. In the fourth quarter of 2017, a site perimeter sheet pile barrier
intended to more efficiently contain groundwater was completed.
Remaining work beyond continued operation of the IWS and groundwater monitoring includes completion of various targeted studies on site and in
adjacent water bodies to close investigation data gaps, as well as selection and implementation of final remedies under RCRA Corrective Action for
various solid waste management units and areas of concern not yet addressed through interim measures. In the first quarter of 2021, in connection
with ongoing discussions with EPA and the New Jersey Department of Environmental Protection (the “NJ DEP”) relating to such remaining work as
well as the scope of remedial programs and investigation relating to the Chambers Works site, we recorded an adjustment of $7 million related to the
remediation estimate associated with certain areas of the site relating to historic industrial activity as well as ongoing remedial programs.
Fayetteville Works, Fayetteville, North Carolina
Fayetteville is located southeast of the City of Fayetteville in Cumberland and Bladen counties, North Carolina. The facility encompasses
approximately 2,200 acres, which were purchased by EID in 1970, and are bounded to the east by the Cape Fear River and to the west by North
Carolina Highway 87. Currently, the Company manufactures fluorinated monomers, fluorinated vinyl ethers, NafionTM membranes and dispersions,
and fluoropolymer processing aids at the site. A former manufacturing area, which was sold in 1992, produced nylon strapping and elastomeric tape.
EID sold its Butacite® and SentryGlas® manufacturing units to Kuraray America, Inc. in September 2014. In July 2015, upon our Separation from
EID, we became the owner of the Fayetteville land assets along with fluoromonomers, Nafion™ membranes, and the related polymer processing aid
manufacturing units. A polyvinyl fluoride resin manufacturing unit remained with EID.
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The Chemours Company
Beginning in 1996, several stages of site investigation were conducted under oversight by NC DEQ, as required by the facility's hazardous waste
permit. In addition, the site has voluntarily agreed to agency requests for additional investigations of the potential release of “PFAS” (perfluoroalkyl
and polyfluoroalkyl substances) beginning with “PFOA” (collectively, perfluorooctanoic acids and its salts, including the ammonium salt) in 2006. As a
result of detection of GenX in on-site groundwater wells during our investigations in 2017, NC DEQ issued a Notice of Violation (“NOV”) on
September 6, 2017 alleging violations of North Carolina water quality statutes and requiring further response. Since that time, and in response to
three additional NOVs issued by NC DEQ and pursuant to the CO (as discussed below), we have worked cooperatively with the agency to
investigate and address releases of PFAS to on-site and off-site groundwater and surface water.
As discussed in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements, we, along with NC DEQ and Cape
Fear River Watch (“CFRW”), a non-profit organization, have filed a final CO that comprehensively addressed various issues, NOVs, and court filings
made by NC DEQ regarding Fayetteville and resolved litigations filed by NC DEQ and CFRW. In connection with the CO, a thermal oxidizer (“TO”)
became fully operational at the site in December 2019 to reduce aerial PFAS emissions from Fayetteville.
In August 2020, we, along with NC DEQ and CFRW, reached agreement on the terms of an addendum to the CO (the “Addendum”). The Addendum
establishes the procedure to implement specified remedial measures for reducing PFAS loadings from Fayetteville to the Cape Fear River, including
construction of a barrier wall with groundwater extraction system to be completed by March 15, 2023. After a period of public comment, the
Addendum was approved by the North Carolina Superior Court for Bladen County on October 12, 2020 and establishes the procedure to implement
specified remedial measures for reducing PFAS loadings from Fayetteville to the Cape Fear River, including construction of a barrier wall with a
groundwater extraction system to be completed by March 15, 2023.
Following issuance of an NPDES permit by NC DEQ on September 18, 2020, we began operation of a capture and treatment system from the site’s
old outfall channel on September 30, 2020. In January 2021, the operation of the old outfall treatment system was interrupted on two occasions, and
notice was provided to NC DEQ of the low treatment flow conditions through the system. On January 26, 2021, we received an NOV from NC DEQ,
alleging violations of the CO and the NPDES water permit arising from the design and operation of the treatment system related to the old outfall.
Along with our third-party service provider, we have taken, and continue to take, interim actions intended to improve the operation of the old outfall
treatment system and address challenges posed by substantial rain events, sediment loading into the system, and variability in water influent
conditions. In addition, along with our third-party service provider, we are actively working on long-term enhancements to the treatment system
based on learnings from the recent challenges. An incremental $64 million was accrued in 2021, representing approximately $3 million per year for
20 years of estimated operation of the system, primarily related to the probable enhancements and the long-term operation of the water treatment
system in accordance with the requirements of the CO. System enhancements completed or being implemented consist of a holding pond,
installation of new ultra-filtration units and additional water pretreatment equipment which is anticipated to be completed by the second quarter of
2022.
In 2021, work commenced on the detailed engineering design of the barrier wall and refinement of models for the planned groundwater extraction
system. Engineering designs for our major construction projects are typically reviewed at 30, 60 and 90% complete. In June 2021, we reviewed the
30% complete design and associated preliminary vendor estimates for the construction and operation of a barrier wall and groundwater treatment
system at Fayetteville. Following the completion of the 30% design, we recorded $109 million of additional accrual as further discussed below.
The current planned construction site of the future barrier wall, that will address both on-site groundwater and long-term seep remediation, is
expected to be located at an approximately 30 feet higher elevation above the Cape Fear River as compared to the initial, conceptual design that
was prepared in support of the Corrective Action Plan (“CAP”) submission to NC DEQ on December 31, 2019, which addressed groundwater only.
The CAP submission unit cost estimate was the principal basis of unit costs for our liability estimates through March 31, 2021. It was determined,
based upon the 30% design information completed during the second quarter of 2021, that there was significantly increased construction complexity
and related vendor and other design costs to be incurred. For example, the steep slope of the revised construction site results in the depth of the wall
increasing from the original estimates of approximately 65 feet to approximately 85 feet below ground along most of its length. Construction of
approximately 64 pumping wells, a more than 50% increase from the conceptual design, are expected to be required to extract groundwater for
treatment based on studies of groundwater flows that were completed in May 2021. The wells will also need to be drilled deeper into the ground
based on the revised location. A 2-mile access road, with retaining walls above and below the road to reduce slope erosion and landslides, will now
be required for large, heavy construction equipment to access the barrier wall location safely. The estimated cost for construction as a result of these
changes is based on third-party contractor estimates provided in late May 2021. Together, all these modifications to the design resulted in an
additional $49 million accrual for construction of the barrier wall in 2021.
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The Chemours Company
In addition, the volume of groundwater, seep water, and stormwater (up to a 0.5 inch rain event in any 24 hours period per the Addendum)
intercepted for treatment is estimated to be up to a maximum of 1,500 gallons per minute (“gpm”) based on groundwater flow modeling completed in
the second quarter of 2021. Until the pre-design investigation and groundwater modeling was complete, the volume of water captured for treatment
was estimated to be approximately 1,200 gpm, and the pretreatment requirements to remove dissolved solids had not been determined. Hence, we
determined in 2021 that construction of a larger treatment plant than previously considered in the conceptual design and previous cost estimates
was required. Consistent with prior periods, we accrued 20 years of ongoing monitoring and maintenance for Fayetteville environmental remediation
systems based on the CO and Addendum. The revised estimate to process higher volumes of groundwater than originally contemplated resulted in
an additional accrual (change in estimate) of $60 million in 2021 related to estimated higher power consumption, ongoing monitoring, pretreatment,
filtering supplies, principally carbon and regular maintenance of the system over a 20-year period of estimated operation starting in 2023.
In August 2021, we reviewed the 60% complete design and associated updated preliminary vendor estimates, which was submitted to NC DEQ for
review and approval. There were no changes in estimate upon completing the review of the 60% design. Additionally, applications for the necessary
permit for the groundwater extraction system have been submitted.
On September 15, 2021, we received a ‘conditional approval’ of the 60% design of the barrier wall and groundwater extraction and treatment system
which included comments that NC DEQ requested us to address within forty-five days (i.e., by October 30). We responded to the comments on
October 5, 2021. We believe that the design of the barrier wall and groundwater extraction and treatment system meets the requirements for this
project under the Addendum. However, it is reasonably possible that additional costs could be incurred for the project, or that the 90% design
completion or project construction work be delayed, pending resolution of NC DEQ comments. These costs are not estimable at this time due to the
uncertainty around the objective and scope of NC DEQ comments as well as additional design basis that may be required. The NC DEQ’s comments
also addressed other onsite remediation activities under the CO, but unrelated to the design of the barrier wall and groundwater treatment system. It
is reasonably possible that additional costs could be incurred to address the areas raised by NC DEQ, but cannot be estimated at this time as it
would require additional pre-design investigation work that has not yet been scoped or performed.
Pre-construction site preparation activities are in progress and construction of the water treatment facility is expected to commence in 2022.
Construction of the barrier wall is expected to commence in 2022 with completion planned in the first quarter of 2023. At December 31, 2021, several
significant uncertainties remain, principally related to the resolution of comments received from NC DEQ on the 60% design, an extension of the
barrier wall along Willis Creek at the northern end of the site, additional wetlands mitigation fees, finalization of the volume of water to be treated,
contract negotiations with key construction and water treatment vendors and the estimated future time period of OM&M. Accordingly, we have
increased the upper range of our cost estimates for the barrier wall and groundwater OM&M from $111 million at December 31, 2020 to $305 million
at December 31, 2021, of which $170 million is accrued. We have not accrued for the incremental costs in the upper range, including the extension
of the barrier wall. While we believe that extension of the barrier wall along Willis Creek is technically impracticable and not necessary to comply with
the terms of the CO and Addendum, an estimate of the cost for the barrier wall extension was included in the upper range of the cost estimate of
approximately $30 million.
The final cost of the on-site groundwater treatment system primarily depends on receiving timely NC DEQ design and permit approvals and thus the
timely finalization of certain significant design details, notably the actual barrier wall location, depth, and length, number and configuration of
extraction wells, water extraction rates and estimated carbon usage. Pending resolution of NC DEQ comments on the 60% design, the engineering
design is expected to be approximately 90% complete in the first quarter of 2022, which will form the basis of a submission for the approval by NC
DEQ which is required to be submitted by us as provided by the Addendum. Per the Addendum, NC DEQ shall use best efforts to complete its
review and notify us whether the design is approved within 30 days after submittal. If not approved within 30 days, subsequent deadlines shall be
extended by the time required for NC DEQ approval in excess of 30 days. Unanticipated schedule delays or other factors beyond our control could
lead to further increases in the cost of the barrier wall and groundwater treatment system, which could be material. Changes in estimates are
recorded in results of operations in the period that the events and circumstances giving rise to such changes occur. If we do not achieve project
completion of the barrier wall and groundwater treatment system by March 15, 2023, subject to extensions provided above, the Addendum specifies
penalties of $0.15 million plus an additional $0.02 million per week until installation is completed.
Accordingly, based on the CO, the Addendum, the CAP, and management’s plans, which are based on current regulations and technology, we
have accrued $289 million and $140 million at December 31, 2021 and 2020, respectively, related to the estimated cost of on-site remediation,
which is within the existing estimated range of potential outcomes, based on current potential remedial options, and projected to be paid over a
period of approximately 20 years. The final costs of any selected remediation will depend primarily on the final approved design and actual labor
and material costs. Accordingly, as discussed above, during 2021, we revised, in accordance with ASC 250 – Accounting Changes and Error
Corrections, our estimated liability to comply with the CO and Addendum. In accordance with ASC 410 – Asset Retirement and Environmental
Obligations, these amounts were recorded as a component of cost of goods sold as we only capitalize environmental costs if the costs extend the
useful life of the property, increase the property’s capacity, and/or reduce or prevent contamination from future operations.
63
The Chemours Company
It is possible that issues relating to site discharges in various transport pathways, the selection of remediation alternatives to achieve PFAS loading
reductions, or the operating effectiveness of the TO could result in further litigation and/or regulatory demands with regards to Fayetteville, including
potential permit modifications or penalties under the CO and the Addendum. It is also possible that, as additional data is collected on the transport
pathways and dialogue continues with NC DEQ and other stakeholders, the type or extent of remediation actions required to achieve the objectives
committed to in the CO may change (increase or decrease) or remediation activities could be delayed. If such issues arise, or if the CO is further
amended, an additional loss is reasonably possible, but not estimable at this time. With respect to the Addendum, at this time, we believe that
payment of any of the stipulated financial penalties for untimeliness or noncompliance is remote.
As of December 31, 2021, based on the CO, the Addendum, the CAP, and our plans, which are based on current regulations and technology, we
have accrued $289 million and $70 million related to the estimated cost of on-site and off-site remediation, respectively. For the year ended
December 31, 2021, we accrued an additional $228 million, of which $193 million was attributable to our on-site and plant remediation and $35
million was attributable to off-site groundwater testing and water treatment system installations at additional qualifying third-party properties in the
vicinity surrounding Fayetteville. Off-site installation, maintenance, and monitoring may be impacted by additional changes in estimates as actual
experience may differ from management’s estimates.
On November 3, 2021, NC DEQ notified us of the potential need to revise our off-site drinking water program under the CO in light of EPA’s
recently published final toxicity assessment for GenX compounds and plan to develop a drinking water health advisory in the Spring of 2022. We
cannot estimate the potential impact or additional cost due to the uncertainties on the potential EPA drinking water health advisories.
Also on November 3, 2021, NC DEQ sent a notice to us regarding PFAS contamination from the Cape Fear River of groundwater monitoring wells
and water supply wells in New Hanover County and potentially three other downstream counties based on new sampling data by NC DEQ and its
determination of our obligations for such contamination. NC DEQ directed us to submit, within 90 days of receipt of the notice (due February 1,
2022), for its review and approval a comprehensive groundwater contamination assessment in such counties, as well as, an updated drinking water
program to provide for sampling under the CO in such counties. We submitted our response on February 1, 2022, and accordingly, for the year
ended December 31, 2021, we recorded $11 million for the assessment and for sampling related to potential PFAS contamination of groundwater
and supply of alternative drinking water in New Hanover and three other downstream counties. The liability is based on management’s preliminary
assessment of the facts and circumstances for this matter. The estimated liability was based on certain assumptions, which management believes
are reasonable under the circumstances and include, but are not limited to, implementation of the soil and groundwater assessment, the source and
cause of PFAS contamination within the four counties, the estimated number of properties at which sampling is conducted and whether such
property will qualify for an alternative drinking water supply, other potentially responsible parties and the method of long-term alternative water
supply, if any.
Management’s estimate of the ultimate liability for this matter is dependent upon obtaining additional information, including, but not limited to, those
items identified above. Given the level of uncertainties noted above, we are not able to provide a reasonable high-end estimate beyond the $11
million accrued at December 31, 2021. The ultimate resolution of this matter could have a material adverse effect on our financial position, results of
operations and cash flow.
Pompton Lakes, New Jersey
During the 20th century, blasting caps, fuses, and related materials were manufactured at Pompton Lakes, Passaic County, New Jersey. Operating
activities at the site were ceased in the mid-1990s. The primary contaminants in the soil and sediments are lead and mercury. Groundwater
contaminants include volatile organic compounds. Under the authority of EPA and NJ DEP, remedial actions at the site are focused on investigating
and cleaning-up the area. Groundwater monitoring at the site is ongoing, and we have installed and continue to install vapor mitigation systems at
residences within the groundwater plume. In addition, we are further assessing groundwater conditions. In September 2015, EPA issued a
modification to the site’s RCRA permit that requires us to dredge mercury contamination from a 36-acre area of the lake and remove sediment from
two other areas of the lake near the shoreline. The remediation activities commenced when permits and implementation plans were approved in May
2016, and work on the lake dredging project is now complete. In April 2019, we submitted a revised Corrective Measures Study (“CMS”) proposing
actions to address on-site soils impacted from past operations that exceed applicable clean-up criteria. We received comments on the CMS from
EPA and NJ DEP in March 2020, and we responded to their comments in June 2020 and continue to seek resolution with EPA.
64
U.S. Smelter and Lead Refinery, Inc., East Chicago, Indiana
The Chemours Company
The U.S. Smelter and Lead Refinery, Inc. (“USS Lead”) Superfund site is located in the Calumet neighborhood of East Chicago, Lake County,
Indiana. The site includes the former USS Lead facility along with nearby commercial, municipal, and residential areas. The primary compounds of
interest are lead and arsenic which may be found in soils within the impacted area. The EPA is directing and organizing remediation on this site, and
we are one of a number of parties working cooperatively with EPA on the safe and timely completion of this work. EID’s former East Chicago
manufacturing facility was located adjacent to the site, and EID assigned responsibility for the site to us in the Separation Agreement.
The USS Lead Superfund site was listed on the National Priorities List in 2009. To facilitate negotiations with PRPs, EPA divided the residential part
of the USS Lead Superfund site into three zones, referred to as Zone 1, Zone 2, and Zone 3. The division into three zones resulted in Atlantic
Richfield Co. (“Atlantic Richfield”) and EID entering into an agreement in 2014 with EPA and the State of Indiana to reimburse EPA’s costs to
implement clean-up in Zone 1 and Zone 3. In March 2017, we and three other parties – Atlantic Richfield, EID, and the U.S. Metals Refining Co.
(“U.S. Metals”) – entered into an administrative order on consent to reimburse EPA’s costs to clean-up a portion of Zone 2. In March 2018, EPA
issued a Unilateral Administrative Order for the remainder of the Zone 2 work to five parties, including us, Atlantic Richfield, EID, U.S. Metals, and
USS Lead Muller Group, and these parties entered into an interim allocation agreement to perform that work. As of the end of 2019, the required
work in Zone 3 had been completed, and Zone 2 was nearly complete by the end of 2020. The determination of a final allocation for Zone 2 and/or
the other Zones is ongoing, and additional PRPs may be identified.
The environmental accrual for USS Lead continues to include completion of the remaining obligations under the 2012 Record of Decision (“ROD”)
and Statement of Work, which principally encompasses completion of Zone 1. The EPA released a proposed amendment to the 2012 ROD (the
“ROD Amendment”) for a portion of Zone 1 in December 2018 (following its August 2018 Feasibility Study Addendum), with its recommended option
based on future residential use. The EPA’s ROD Amendment for modified Zone 1 was released in March 2020, and selects as the preferred remedy
one which requires a clean-up to residential standards based on the current applicable residential zoning. The ROD Amendment for modified Zone 1
also sets forth a selected contingent remedy which requires clean-up to commercial/industrial standards if the future land use becomes
commercial/industrial. In November 2019, a Letter of Intent was executed by the City of East Chicago, Indiana and Industrial Development
Advantage, LLC, relating to modified Zone 1 development, and EPA has indicated that it is “more likely” that future land use in this area will be
commercial/industrial and not residential. During the second quarter of 2021, we accrued an additional $3 million based on a remediation estimate
provided by Industrial Development Advantage, LLC. We expect that our future costs for modified Zone 1 will be further contingent on the
development of this area and implementation under the ROD Amendment, as well as any final allocation between PRPs. In the third quarter of 2021,
we recorded an additional $9 million to resolve the claims asserted by EPA related to past indirect costs associated with the 2012 ROD as amended,
and the 2014 agreement entered into with EPA and the State of Indiana.
New Jersey Department of Environmental Protection Directives and Litigation
In March 2019, NJ DEP issued two Directives, one being a state-wide PFAS Directive, and filed four lawsuits against Chemours and other
defendants, including allegations relating to clean-up and removal costs at four sites including Chambers Works. In December 2021, a consolidated
order was entered in the lawsuits granting, in part, and denying, in part a motion to dismiss or strike parts of the Second Amended Complaints. In
January 2022, NJ DEP filed a motion for a preliminary injunction requiring EID and Chemours to establish a remediation funding source (“RFS”) in
the amount of $943 million for Chambers Works, the majority of which is for non-PFAS remediation items. Further discussion related to these
matters is included in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements.
PFOA
See our discussion under the heading “PFOA” in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements.
GenX
In June 2019, the Member States Committee of the European Chemicals Agency (“ECHA”) voted to list HFPO Dimer Acid as a Substance of Very High
Concern. The vote was based on Article 57(f) – equivalent level of concern having probable serious effects to the environment. This identification does
not impose immediate regulatory restriction or obligations, but may lead to a future authorization or restriction of the substance. On September 24, 2019,
Chemours filed an application with the EU Court of Justice for the annulment of the decision of ECHA to list HFPO Dimer Acid as a Substance of Very
High Concern. In September 2021, the General Court held an oral hearing on the written submissions and the court has provided notice that its ruling will
be provided in February 2022.
65
PFAS
The Chemours Company
Refer to our discussion under the heading “PFAS” in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements.
In May 2020, ECHA announced that five Member States (Germany, the Netherlands, Norway, Sweden, and Denmark) launched a call for evidence to
inform a PFAS restriction proposal. Companies producing or using PFAS, as well as selling mixture or products containing PFAS, were invited to provide
input. This call for evidence closed July 31, 2020. Thousands of substances meet the definition of PFAS as outlined in the call for evidence. This very
broad definition covers substances with a variety of physical and chemical properties, health and environmental profiles, uses, and benefits. We
submitted information on the substances covered by the call for evidence to the Member State competent authority for Germany, which is the Federal
Institute for Occupational Safety and Health (“BAuA”).
In May 2020, five European countries began an initiative to restrict the manufacture, placing on the market and use of PFAS in the EU. In this
regulatory process, more than 4,000 substances, including F-gases and fluoropolymers are being considered as part of this broad regulatory action.
On July 15, 2021, the countries submitted their restriction proposal, which informs ECHA of the intent to prepare a PFAS restriction dossier for
fluorinated substances within a defined structural formula scope, including branched fluoroalkyl groups and substances containing ether linkages,
fluoropolymers and side chain fluorinated polymers. The restriction dossier will include information on hazards and risks, available information on
alternatives and an analysis of the risk management instrument for addressing the identified risks. The submitting countries indicate that they expect
to submit the restriction dossier to ECHA in July 2022. As part of the preparation of the restriction dossier, stakeholders were requested to provide
relevant information and, based on risk and socio-economic information, derogations from the proposed restriction may be proposed by the
submitting countries. If a derogation is not proposed by the submitting countries, the relevant stakeholders may do so during a consultation process.
The draft dossier will be reviewed by the ECHA committees Risk Assessment Committee (“RAC”) and Socio-economic Analysis Committees
(“SEAC”) and proposals submitted to the EU Commission in 2023. The estimated entry into force of restrictions is 2025. The impacts of restrictions
and regulatory measures could lead to material adverse effects on our results of operations, financial condition, and cash flows.
On October 18, 2021, EPA released its PFAS Strategic Roadmap, identifying a comprehensive approach to addressing PFAS. The PFAS Strategic
Roadmap sets timelines by which EPA plans to take specific actions through 2024, including establishing a national primary drinking water regulation
for PFOA and perfluorooctanesulfonic acid (“PFOS”) and taking Effluent Limitations Guidelines actions to regulate PFAS discharges from industrial
categories among other actions. As provided under its roadmap, EPA also released on the same day its National PFAS Testing Strategy, under
which the agency will identify and select certain PFAS compounds for which it will require PFAS manufacturers to conduct testing pursuant to the
Toxic Substances Control Act (“TSCA”) orders. EPA has indicated that we will receive orders for certain of such compounds, including seven of the
testing orders will be issued for PFAS compounds alleged to be associated with Fayetteville. On October 25, 2021, EPA published a final toxicity
assessment for GenX compounds that decreased the draft reference dose for GenX compounds based on EPA’s review of new studies and
analyses. Under the PFAS Strategic Roadmap, EPA indicated they plan to develop non-regulatory drinking water health advisories for certain PFAS
compounds that have final EPA toxicity assessments, including GenX compounds in the Spring of 2022. We are currently evaluating the impact of
EPA’s final toxicity assessment, including new data and analysis utilized by the agency, and have met with the agency to discuss process-related
and technical concerns about the assessment. It is reasonably possible that additional costs could be incurred in connection with EPA’s actions,
however, we cannot estimate the potential impact or additional cost due to the uncertainties on the potential drinking water health advisories or other
actions. The environmental remediation liabilities recorded for Fayetteville and certain other sites, such as Washington Works, Parkersburg, West
Virginia and Chambers Works, Deepwater, New Jersey as of December 31, 2021 are based upon the existing Consent Orders, agreements and/or
voluntary commitments with EPA, state and other local regulators and depending on the ultimate outcome of EPA’s actions, could require adjustment
to meet higher drinking water standards.
Delaware Chancery Court Lawsuit
In May 2019, we filed a lawsuit in Delaware Chancery Court (“Chancery Court”) against DuPont, Corteva, and EID concerning EID’s contention that
it is entitled to unlimited indemnity from us for specified liabilities that EID assigned to us in the spin-off. The lawsuit requested a declaratory
judgment limiting EID’s indemnification rights against us and the transfer of liabilities to us to the actual “high-end (maximum) realistic exposures” it
stated in connection with the spin-off, or, in the alternative, requiring the return of the approximate $4.0 billion dividend EID extracted from us in
connection with the spin-off. In March 2020, the Chancery Court granted EID’s Motion to Dismiss, placing the matter in non-public binding arbitration.
The dismissal was affirmed by the Delaware Supreme Court. In January 2021, the parties entered into a binding MOU, addressing the allegations in
the lawsuit and arbitration. Pursuant to the MOU, the parties have agreed to dismiss the arbitration. Many of the potential litigation liabilities
discussed in “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements are included in the MOU.
66
Non-GAAP Financial Measures
The Chemours Company
We prepare our consolidated financial statements in accordance with GAAP. To supplement our financial information presented in accordance with
GAAP, we provide the following non-GAAP financial measures – Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Share (“EPS”),
Free Cash Flows (“FCF”), Return on Invested Capital (“ROIC”), and Net Leverage Ratio – in order to clarify and provide investors with a better
understanding of our performance when analyzing changes in our underlying business between reporting periods and provide for greater
transparency with respect to supplemental information used by management in its financial and operational decision-making. We utilize Adjusted
EBITDA as the primary measure of segment profitability used by our CODM.
Adjusted EBITDA is defined as income (loss) before income taxes, excluding the following:
•
•
•
•
•
•
interest expense, depreciation, and amortization;
non-operating pension and other post-retirement employee benefit costs, which represents the components of net periodic pension
(income) costs excluding the service cost component;
exchange (gains) losses included in other income (expense), net;
restructuring, asset-related, and other charges;
(gains) losses on sales of assets and business; and,
other items not considered indicative of our ongoing operational performance and expected to occur infrequently, including Qualified
Spend reimbursable by DuPont and/or Corteva as part of our cost-sharing agreement under the terms of the MOU that were previously
excluded from Adjusted EBITDA.
Adjusted Net Income is defined as our net income (loss), adjusted for items excluded from Adjusted EBITDA, except interest expense, depreciation,
amortization, and certain provision for (benefit from) income tax amounts. Adjusted EPS is calculated by dividing Adjusted Net Income by the
weighted-average number of our common shares outstanding. Diluted Adjusted EPS accounts for the dilutive impact of our stock-based
compensation awards, which includes unvested restricted shares. FCF is defined as our cash flows provided by (used for) operating activities, less
purchases of property, plant, and equipment as shown in our consolidated statements of cash flows. ROIC is defined as Adjusted Earnings before
Interest and Taxes (“EBIT”), divided by the average of our invested capital, which amounts to our net debt, or debt less cash and cash equivalents,
plus equity. Net Leverage Ratio is defined as our total debt principal, net, or our total debt principal outstanding less cash and cash equivalents,
divided by Adjusted EBITDA.
We believe the presentation of these non-GAAP financial measures, when used in conjunction with GAAP financial measures, is a useful financial
analysis tool that can assist investors in assessing our operating performance and underlying prospects. This analysis should not be considered in
isolation or as a substitute for analysis of our results as reported under GAAP. In the future, we may incur expenses similar to those eliminated in this
presentation. Our presentation of Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, FCF, ROIC, and Net Leverage Ratio should not be
construed as an inference that our future results will be unaffected by unusual or infrequently occurring items. The non-GAAP financial measures we
use may be defined differently from measures with the same or similar names used by other companies. This analysis, as well as the other
information provided in this Annual Report on Form 10-K, should be read in conjunction with the Consolidated Financial Statements and notes
thereto included in this report.
67
The following table sets forth a reconciliation of our net income (loss) attributable to Chemours to Adjusted Net Income, Adjusted EBITDA, and
Adjusted EPS for the years ended December 31, 2021 and 2020.
The Chemours Company
(Dollars in millions, except per share amounts)
Net income attributable to Chemours
Non-operating pension and other post-retirement employee benefit income
Exchange (gains) losses, net
Restructuring, asset-related, and other charges (1)
Loss on extinguishment of debt
Gain on sales of assets and businesses (2,3)
Natural disasters and catastrophic events (4)
Transaction costs
Qualified spend recovery (5)
Legal and environmental charges (6,7)
Adjustments made to income taxes (8)
Benefit from income taxes relating to reconciling items (9)
Adjusted Net Income
Interest expense, net
Depreciation and amortization
All remaining provision for income taxes
Adjusted EBITDA
Weighted-average number of common shares outstanding - basic
Dilutive effect of our employee compensation plans
Weighted-average number of common shares outstanding - diluted
Per share data
Basic earnings per share of common stock
Diluted earnings per share of common stock
Adjusted basic earnings per share of common stock
Adjusted diluted earnings per share of common stock
$
$
$
Year Ended December 31,
2021
2020
608
(9 )
(3 )
6
21
(115 )
21
4
(20 )
230
(27 )
(42 )
674
185
317
137
1,313
$
$
219
(1 )
26
80
22
(8 )
—
2
—
49
(23 )
(37 )
329
210
320
20
879
164,943,575
3,754,864
168,698,439
164,681,827
1,664,702
166,346,529
$
3.69
3.60
4.09
4.00
1.33
1.32
2.00
1.98
(1)
Includes restructuring, asset-related, and other charges, which are discussed in further detail in “Note 7 – Restructuring, Asset-related, and Other Charges” to the
Consolidated Financial Statements.
(2) The year ended December 31, 2021 includes a net pre-tax gain on sale of $112 million associated with the sale of the Mining Solutions business of our Chemical Solutions
segment which is further discussed in “Note 4 – Acquisitions and Divestitures” to the Consolidated Financial Statements.
(3) The year ended December 31, 2020 includes a gain of $6 million associated with the sale of our Oakley, California site, which was contingent upon the completion of certain
environmental remediation activities at the site.
(4) Natural disasters and catastrophic events pertains to the total cost of plant repairs and utility charges in excess of historical averages caused by Winter Storm Uri.
(5) Qualified spend recovery represents costs and expenses that were previously excluded from Adjusted EBITDA, reimbursable by DuPont and/or Corteva as part of our cost-
sharing agreement under the terms of the MOU which is discussed in further detail in "Note 22 – Commitments and Contingent Liabilities" to the Consolidated Financial
Statements.
(6)
(7)
Legal charges pertains to litigation settlements, PFOA drinking water treatment accruals, and other legal charges which are discussed in further detail in “Note 22 –
Commitments and Contingent Liabilities” to the Consolidated Financial Statements. The year ended December 31, 2020 includes $29 million of charges in connection with
our portion of the costs to settle PFOA multi-district litigation in Ohio. Refer to “Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements
for further details.
In 2021, environmental charges pertains to management’s assessment of estimated liabilities associated with certain non-recurring environmental remediation expenses at
various sites. For the year ended December 31, 2021, environmental charges include $169 million related to the construction of the barrier wall, operation of the
groundwater extraction and treatment system, and long-term enhancements to the old outfall treatment system at Fayetteville. In 2020, environmental charges pertains to
management’s assessment of estimated liabilities associated with on-site remediation, off-site groundwater remediation, and toxicity studies related to Fayetteville. Refer to
“Note 22 – Commitments and Contingent Liabilities” to the Consolidated Financial Statements for further details.
(8)
Includes the removal of certain discrete income tax impacts within our provision for income taxes, such as shortfalls and windfalls on share-based payments, certain return-
to-accrual adjustments, valuation allowance adjustments, unrealized gains and losses on foreign exchange rate changes, and other discrete income tax items.
(9) The income tax impacts included in this caption are determined using the applicable rates in the taxing jurisdictions in which income or expense occurred and represent
both current and deferred income tax expense or benefit based on the nature of the non-GAAP financial measure.
68
The Chemours Company
The following table sets forth a reconciliation of our cash flows provided by (used for) operating activities to FCF for the years ended December 31,
2021 and 2020.
(Dollars in millions)
Cash provided by operating activities
Less: Purchases of property, plant, and equipment (1)
Free Cash Flows
Year Ended December 31,
2021
2020
$
$
820
(277 )
543
$
$
807
(267 )
540
(1) The year ended December 31, 2021 includes $22 million related to construction-in-progress assets acquired in exchange for the termination of a contract with a third-party
service provider at our under-construction Mining Solutions facility in Gomez Palacio, Durango, Mexico.
The following table sets forth a reconciliation of Adjusted EBIT and average invested capital, and their nearest respective GAAP measures, to ROIC
for the periods presented.
(Dollars in millions)
Adjusted EBITDA (1)
Less: Depreciation and amortization (1)
Adjusted EBIT
(Dollars in millions)
Total debt, net (2)
Total equity
Less: Cash and cash equivalents
Invested capital, net
Average invested capital (3)
Return on Invested Capital
$
$
$
$
$
Year Ended December 31,
2021
2020
1,313
(317 )
996
$
$
As of December 31,
2021
2020
3,749
1,082
(1,451 )
3,380
3,705
$
$
$
879
(320 )
559
4,026
815
(1,105 )
3,736
3,895
27 %
14 %
(1) Reconciliations of net income (loss) attributable to Chemours to Adjusted EBITDA are provided on a quarterly basis. Refer to the preceding table for the reconciliation of net
income (loss) attributable to Chemours to Adjusted EBITDA for the years ended December 31, 2021 and 2020.
(2) Total debt, net is net of unamortized issue discounts of $5 million and $7 million and debt issuance costs of $28 million and $28 million at December 31, 2021 and 2020,
respectively.
(3) Average invested capital is based on a five-quarter trailing average of invested capital, net.
The following table sets forth a reconciliation of our total debt principal, cash and cash equivalents, and Adjusted EBITDA to Net Leverage Ratio.
(Dollars in millions)
Total debt principal
Less: Cash and cash equivalents
Total debt principal, net
(Dollars in millions)
Adjusted EBITDA (1)
Net Leverage Ratio
$
$
$
As of December 31,
2021
2020
3,782
(1,451 )
2,331
$
$
Year Ended December 31,
2021
2020
1,313
$
1.8x
4,061
(1,105 )
2,956
879
3.4x
(1) Reconciliations of net income (loss) attributable to Chemours to Adjusted EBITDA are provided on a quarterly basis. Refer to the preceding table for the reconciliation of
net income (loss) attributable to Chemours to Adjusted EBITDA for the years ended December 31, 2021 and 2020.
69
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Chemours Company
We are exposed to changes in foreign currency exchange rates because of our global operations. As a result, we have assets, liabilities, and cash
flows denominated in a variety of foreign currencies. We also have variable rate indebtedness, which subjects us to interest rate risk. Additionally, we
are also exposed to changes in the prices of certain commodities that we use in production. Changes in these rates and commodity prices, which
may be further exacerbated by the impacts of COVID-19 and the associated volatility in the broader financial markets, may have an impact on our
future cash flows and earnings. We manage these risks through our normal operating and financing activities and, when deemed appropriate,
through the use of derivative financial instruments. We do not enter into derivative financial instruments for trading or speculative purposes.
By using derivative financial instruments, we are subject to credit and market risk. The fair values of the derivative financial instruments are
determined by using valuation models whose inputs are derived using market observable inputs, and reflect the asset or liability position as of the
end of each reporting period. When the fair value of a derivative contract is positive, the counterparty owes us, thus creating a receivable risk for us.
We are exposed to counterparty credit risk in the event of non-performance by counterparties to our derivative agreements. We minimize
counterparty credit (or repayment) risk by entering into transactions with major financial institutions of investment grade credit ratings.
Our risk management programs and the underlying exposures are closely correlated, such that the potential loss in value for the risk management
portfolio described above would be largely offset by the changes in the value of the underlying exposures. Refer to “Note 26 – Financial Instruments”
to the Consolidated Financial Statements for further information.
Foreign Currency Risks
We enter into foreign currency forward contracts to minimize the volatility in our earnings related to foreign exchange gains and losses resulting from
remeasuring our monetary assets and liabilities that are denominated in non-functional currencies, and any gains and losses from the foreign
currency forward contracts are intended to be offset by any gains or losses from the remeasurement of the underlying monetary assets and liabilities.
These derivatives are stand-alone and, except as described below, have not been designated as a hedge. At December 31, 2021, we had 12 foreign
currency forward contracts outstanding with an aggregate gross notional U.S. dollar equivalent of $254 million, the fair value of which amounted to
less than negative $1 million. At December 31, 2020, we had 25 foreign currency forward contracts outstanding with an aggregate gross notional
U.S. dollar equivalent of $688 million, the fair value of which amounted to $3 million. We recognized a net loss of $15 million, a net gain of $29
million, and a net loss of $2 million for the years ended December 31, 2021, 2020, and 2019, respectively, within other income (expense), net related
to our non-designated foreign currency forward contracts.
We enter into certain qualifying foreign currency forward contracts under a cash flow hedge program to mitigate the risks associated with fluctuations
in the euro against the U.S. dollar for forecasted U.S. dollar-denominated inventory purchases in certain of our international subsidiaries that use the
euro as their functional currency. At December 31, 2021, we had 175 foreign currency forward contracts outstanding under our cash flow hedge
program with an aggregate notional U.S. dollar equivalent of $195 million, the fair value of which amounted to $5 million. At December 31, 2020, we
had 144 foreign currency forward contracts outstanding under our cash flow hedge program with an aggregate notional U.S. dollar equivalent of
$101 million, the fair value of which amounted to negative $4 million. We recognized a pre-tax gain of $10 million, a pre-tax loss of $4 million, and a
pre-tax gain of $6 million for the years ended December 31, 2021, 2020, and 2019, respectively, within accumulated other comprehensive loss. For
the year ended December 31, 2021, $2 million of loss was reclassified to the cost of goods sold from accumulated other comprehensive loss. For the
years ended December 31, 2020 and 2019, $3 million and $10 million of gain was reclassified to the cost of goods sold from accumulated other
comprehensive loss, respectively.
We designated our euro-denominated debt as a hedge of our net investment in certain of our international subsidiaries that use the euro as their
functional currency in order to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates of the euro with
respect to the U.S. dollar. We recognized a pre-tax gain of $73 million, a pre-tax loss of $88 million, and a pre-tax gain of $20 million for the years
ended December 31, 2021, 2020, and 2019, respectively, on our net investment hedge within accumulated other comprehensive loss.
70
Interest Rate Risk
The Chemours Company
We entered into interest rate swaps, to mitigate the volatility in our cash payments for interest due to fluctuations in the London Interbank Offered
Rate (“LIBOR”), as is applicable to the portion of our senior secured term loan facility denominated in U.S. dollars. At December 31, 2021, we had
three interest rate swaps outstanding under our cash flow hedge program with an aggregate notional U.S. dollar equivalent of $400 million, the fair
value of which amounted to less than $1 million. At December 31, 2020, we had three interest rate swaps outstanding under our cash flow hedge
program with an aggregate notional U.S. dollar equivalent of $400 million, the fair value of which amounted to negative $3 million. We recognized a
pre-tax gain of $2 million and a pre-tax loss of $4 million for the years ended December 31, 2021 and 2020 within accumulated other comprehensive
loss, respectively. For the years ended December 31, 2021 and 2020, losses of $2 million and less than $1 million were reclassified to interest
expense, net from accumulated other comprehensive loss, respectively.
Concentration of Credit Risk
Our sales are not materially dependent on any single customer. At December 31, 2021 and 2020, one individual customer balance represented
approximately 6% and 5% of our total outstanding accounts and notes receivable balance, respectively. Any credit risk associated with our accounts
and notes receivable balance is representative of the geographic, industry, and customer diversity associated with our global businesses. As a result
of our customer base being widely dispersed, we do not believe our exposure to credit-related losses related to our business as of December 31,
2021 and 2020 was material.
We also maintain strong credit controls in evaluating and granting customer credit. As a result, we may require that customers provide some type of
financial guarantee in certain circumstances. The length of terms for customer credit varies by industry and region.
Commodities Risk
A portion of our products and raw materials are commodities whose prices fluctuate as market supply and demand fundamentals change.
Accordingly, product margins and the level of our profitability tend to fluctuate with changes in the business cycle. We try to protect against such
instability through various business strategies. These include provisions in sales contracts allowing us to pass on higher raw materials costs through
timely price increases and formula price contracts to transfer or share commodity price risk. We did not have any commodity derivative financial
instruments in place as of December 31, 2021 and 2020.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by this Item 8 – Financial Statements and Supplementary Data is incorporated by
reference herein as set forth in Item 15(a)(1) – Consolidated Financial Statements.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that the information required to be disclosed in our
reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules
and forms of the SEC. These controls and procedures also provide reasonable assurance that information required to be disclosed in such reports is
accumulated and communicated to management, including our CEO and CFO, to allow timely decisions regarding required disclosures.
As of December 31, 2021, our CEO and CFO, together with management, conducted an evaluation of the effectiveness of our disclosure controls
and procedures as defined in Rule 13a-15(e) under the Exchange Act. Based on that evaluation, the CEO and CFO have concluded that these
disclosure controls and procedures are effective at the reasonable assurance level.
71
Changes in Internal Control over Financial Reporting
The Chemours Company
There have been no changes in our internal control over financial reporting that occurred during the year ended December 31, 2021 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
We have completed an evaluation of our internal control over financial reporting and have concluded that our internal control over financial reporting
was effective as of December 31, 2021 (refer to “Management’s Report on Internal Control over Financial Reporting” on page F-2 to the
Consolidated Financial Statements). The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein (refer to the
“Report of Independent Registered Public Accounting Firm” on page F-3 to the Consolidated Financial Statements).
Item 9B. OTHER INFORMATION
None.
Item 9C. DISCLOSURE REGARDING FOREIGN JURSIDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
72
The Chemours Company
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Except for information concerning executive officers, which is included in Part I of this Annual Report on Form 10-K under the caption “Information
About Our Executive Officers”, the information about our directors required by this Item 10 – Directors, Executive Officers, and Corporate
Governance is contained under the caption “Proposal 1 – Election of Directors” in the definitive proxy statement for our 2022 annual meeting of
stockholders (the “2022 Proxy Statement”), which we anticipate filing with the SEC within 120 days after the end of the fiscal year to which this report
relates, and is incorporated herein by reference.
Information regarding our audit committee and our code of ethics is contained in the 2022 Proxy Statement under the captions “Corporate
Governance” and “Board Structure and Committee Composition” and is incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
The information required by this Item 11 – Executive Compensation is contained in the 2022 Proxy Statement under the captions “Executive
Compensation”, “Director Compensation”, and “Compensation and Leadership Development Committee” and is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters and
not otherwise set forth below is contained in the 2022 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and
Management” and is incorporated herein by reference.
Securities authorized for issuance under equity compensation plans
(Shares in thousands)
Plan Category
Equity compensation plans approved by security holders
Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants, and Rights
(1)
December 31, 2021
Weighted-average Exercise
Price of Outstanding Options,
Warrants, and Rights
(2)
Number of Securities
Remaining Available for Future
Issuance Under Equity
Compensation Plans
(3)
8,900 $
20.32
11,800
(1)
Includes the approximate number of outstanding stock options, restricted stock units (“RSUs”), and performance share units (“PSUs”).
(2) Represents the weighted-average exercise price of outstanding stock options only. RSUs and PSUs do not have associated exercise prices.
(3) Reflects the approximate shares available for issuance pursuant to The Chemours Company 2017 Equity and Incentive Plan (the “Equity Plan”), which was approved by our
stockholders in 2017 and replaces The Chemours Company Equity and Incentive Plan. On April 28, 2021, stockholders approved an amendment and restatements of the
Equity Plan to increase the number of shares reserved for issuance by 3,050,000. Following the amendment and restatement, the maximum number of shares of stock
reserved for the grant or settlement of awards under the Equity Plan is 22,050,000.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item 13 – Certain Relationships and Related Transactions, and Director Independence is contained in the 2022
Proxy Statement under the captions “Director Independence” and “Certain Relationships and Transactions” and is incorporated herein by reference.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item 14 – Principal Accounting Fees and Services is contained in the 2022 Proxy Statement under the captions
“Proposal 4 – Ratification of Selection of Independent Registered Public Accounting Firm”, “Fees Paid to Independent Registered Public Accounting
Firm”, and “Audit Committee’s Pre-Approval Policies and Procedures” and is incorporated herein by reference.
73
The Chemours Company
PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) Consolidated Financial Statements
Refer to the “Index to the Consolidated Financial Statements” commencing on page F-1 of this Annual Report on Form 10-K.
The report of our independent registered public accounting firm with respect to the above-referenced financial statements and their report on internal
control over financial reporting is included on page F-3. Their consent appears as Exhibit 23 of this Form 10-K.
(a)(2) Financial Statement Schedule
Schedules not listed herein have been omitted because they are not required, not applicable, or the required information is otherwise included.
(a)(3) Exhibits
Refer to the “Exhibit Index” beginning on page 75 of this Annual Report on Form 10-K.
Item 16. FORM 10-K SUMMARY
None.
74
The Chemours Company
EXHIBIT INDEX
Exhibit
Number
2.1
2.1(1)
2.2
3.1
3.2
4.1
4.1(1)
4.1(2)
Description
Separation Agreement by and between E. I. du Pont de Nemours and Company and the Chemours Company (incorporated by reference to Exhibit 2 to the Company’s
Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on July 1, 2015).
Amendment No. 1, dated August 24, 2017, to the Separation Agreement, dated as of July 1, 2015, by and between E. I. du Pont de Nemours and Company and The
Chemours Company (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on
August 25, 2017).
Purchase and Sale Agreement, dated as of July 26, 2021, by and between The Chemours Company and Manchester Acquisition Sub LLC (incorporated by reference to
Exhibit 2.1 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on July 26, 2021).
Company’s Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, as filed with the U.S.
Securities and Exchange Commission on July 1, 2015).
Company’s Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and
Exchange Commission on July 1, 2015).
Indenture (for senior debt securities), dated as of May 23, 2017, by and between The Chemours Company and U.S. Bank National Association, as trustee (incorporated by
reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on May 23, 2017).
First Supplemental Indenture, dated as of May 23, 2017, by and among The Chemours Company, the guarantors named therein and U.S. Bank National Association, as
trustee (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on May 23,
2017).
Second Supplemental Indenture, dated as of June 6, 2018, among The Chemours Company, the Guarantors named therein, U.S. Bank National Association, as trustee,
Elavon Financial Services DAC, UK Branch, as paying agent, and Elavon Financial Services DAC, as registrar and transfer agent (incorporated by reference to Exhibit 4.1 to
the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on June 6, 2018).
4.1(3)
Specimen 5.375% Senior Note due 2027 (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and
Exchange Commission on May 23, 2017).
4.1(4)
Specimen 4.000% Senior Note Due 2026 (included in Exhibit 4.2(2)).
4.2
Indenture, dated as of November 27, 2020, between The Chemours Company and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to
the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on November 27, 2020).
4.2(1)
First Supplemental Indenture, dated as of November 27, 2020, among The Chemours Company, the guarantors named therein, and U.S. Bank National Association, as
trustee (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on November
27, 2020).
4.2(2)
Second Supplemental Indenture, dated as of August 18, 2021, among The Chemours Company, the guarantors party thereto and U.S. Bank National Association, as trustee
(incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on August 18, 2021).
4.2(3)
Specimen 5.750% Senior Notes Due 2028 (included in Exhibit 4.3(1)).
4.2(4)
Specimen 4.625% Senior Notes Due 2029 (included in Exhibit 4.3(2)).
4.3
Description of common stock (incorporated by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019).
10.1
10.2
10.3
10.4
Second Amended and Restated Transition Services Agreement by and between E. I. du Pont de Nemours and Company and The Chemours Company (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on July 1, 2015).
Tax Matters Agreement by and between E. I. du Pont de Nemours and Company and The Chemours Company (incorporated by reference to Exhibit 10.2 to the Company’s
Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on July 1, 2015).
Employee Matters Agreement by and between E. I. du Pont de Nemours and Company and The Chemours Company (incorporated by reference to Exhibit 10.3 to the
Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on July 1, 2015).
Third Amended and Restated Intellectual Property Cross-License Agreement by and among E. I. du Pont de Nemours and Company, The Chemours Company FC and The
Chemours Company TT, LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange
Commission on July 1, 2015).
10.14(1)
Amended and Restated Credit Agreement, dated as of April 3, 2018, among The Chemours Company, the Lenders and Issuing Banks party thereto and JPMorgan Chase
Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange
Commission on April 3, 2018).
10.14(2)
Amendment No. 1 to the Amended and Restated Credit Agreement, dated as of April 3, 2018, among The Chemours Company, the Lenders and Issuing Banks party thereto
and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the U.S.
Securities and Exchange Commission on October 8, 2021).
10.16*
The Chemours Company Equity and Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 (File No. 333-205391, as filed with the U.S.
Securities and Exchange Commission on July 1, 2015).
10.17*
The Chemours Company Retirement Savings Restoration Plan (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, as filed with the
U.S. Securities and Exchange Commission on July 1, 2015).
10.18*
The Chemours Company Management Deferred Compensation Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 (File No. 333-205393), as filed
with the U.S. Securities and Exchange Commission on July 1, 2015).
10.19(1)* The Chemours Company Stock Accumulation and Deferred Compensation Plan for Directors (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 (File No.
333-205392), as filed with the U.S. Securities and Exchange Commission on July 1, 2015).
75
Exhibit
Number
The Chemours Company
Description
10.19(2)* The Chemours Company Stock Accumulation and Deferred Compensation Plan for Directors (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report
on Form 10-Q, as filed with the U.S. Securities and Exchange Commission on May 4, 2018).
10.20*
The Chemours Company Senior Executive Severance Plan (incorporated by reference to Exhibit 10.20 to the company’s Amendment No. 3 to Form 10, as filed with the
U.S. Securities and Exchange Commission on May 13, 2015).
10.21*
Form of Option Award Terms under the Company’s Equity and Incentive Plan (incorporated by reference to Exhibit 10.21 to the company’s Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 2015).
10.22*
Form of Restricted Stock Unit Terms under the Company’s Equity and Incentive Plan (incorporated by reference to Exhibit 10.22 to the company’s Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2015).
10.23*
Form of Stock Appreciation Right Terms under the Company’s Equity and Incentive Plan (incorporated by reference to Exhibit 10.23 to the company’s Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2015).
10.24(1)* Form of Restricted Stock Unit Terms for Non-Employee Directors under the Company’s Equity Incentive Plan (incorporated by reference to Exhibit 10.24 to the company’s
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015).
10.24(2)* Form of Deferred Stock Unit Terms for Non-Employee Directors under the Company’s Equity and Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s
Quarterly Report on Form 10-Q, as filed with the U.S. Securities and Exchange Commission on May 4, 2018).
10.25*
Form of Performance-Based Restricted Stock Unit Terms for August 2015 (incorporated by reference to Exhibit 10.25 to the company’s Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 2015).
10.26*
Form of Performance Share Unit Award Terms under the Company’s Equity and Incentive Plan (incorporated by reference to Exhibit 10.26 to the company’s Annual Report
on Form 10-K for the year ended December 31, 2015).
10.27*
Form of Cash Performance Award Terms under the Company’s Equity and Incentive Plan (incorporated by reference to Exhibit 10.27 to the company’s Annual Report on
Form 10-K for the year ended December 31, 2015).
10.28*
Form of Indemnification Agreement for officers and directors (incorporated by reference to Exhibit 10.28 to the company’s Annual Report on Form 10-K for the year ended
December 31, 2015).
10.30
Letter Agreement dated January 28, 2016 by and between The Chemours Company and E. I. du Pont de Nemours and Company (incorporated by reference to Item 10.2 to
the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on February 23, 2016).
10.31*
Form of Option Award Terms under the Company’s Equity Incentive Plan for grantees located in the U.S. (incorporated by reference to Exhibit 10.31 to the Company’s
Annual Report on Form 10-K for the year ended December 31, 2016).
10.32*
Form of Option Award Terms under the Company’s Equity Incentive Plan for grantees located outside the U.S. (incorporated by reference to Exhibit 10.32 to the Company’s
Annual Report on Form 10-K for the year ended December 31, 2016).
10.33*
Form of Award Terms of Time-Vested Restricted Stock Units under the Company’s Equity Incentive Plan for grantees located in the U.S. (incorporated by reference to
Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016).
10.34*
Form of Award Terms of Time-Vested Restricted Stock Units under the Company’s Equity Incentive Plan for grantees located outside the U.S. (incorporated by reference to
Exhibit 10.34 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016).
10.35*
Form of Award Terms of Performance Share Units under the Company’s Equity Incentive Plan (incorporated by reference to Exhibit 10.35 to the Company’s Annual Report
on Form 10-K for the year ended December 31, 2016).
10.36*
The Chemours Company 2017 Equity and Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the U.S.
Securities and Exchange Commission on May 1, 2017).
10.37
Memorandum of Understanding, dated January 22, 2021, by and among The Chemours Company, Corteva, Inc., E. I. du Pont de Nemours and Company and DuPont de
Nemours, Inc. (f/k/a DowDuPont Inc.) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and
Exchange Commission on January 22, 2021).
10.38*
Separation Agreement and Release between E. Bryan Snell and the Company effective March 1, 2021, dated March 1, 2021 (incorporated by reference in Exhibit 10.1 to
the Company’s Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on March 2, 2021).
10.39*
Employment Transition Agreement between Mark Vergnano and the Company, dated as of June 2, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on June 3, 2021).
10.40
Settlement Agreement, Limited Release, Waiver and Covenant Not to Sue, dated July 13, 2021, by and among The Chemours Company, Corteva, Inc., E.I. du Pont De
Nemours and Company, DuPont de Nemours, Inc, and the State of Delaware (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as
filed with the U.S. Securities and Exchange Commission on July 13, 2021).
21
22
23
Subsidiaries of the Registrant.
List of Guarantor Subsidiaries.
Consent of Independent Registered Public Accounting Firm.
31.1
Rule 13a-14(a)/15d-14(a) Certification of the Company’s Principal Executive Officer.
31.2
Rule 13a-14(a)/15d-14(a) Certification of the Company’s Principal Financial Officer.
76
The Chemours Company
32.1
32.2
Section 1350 Certification of the Company’s Principal Executive Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange
Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.
Section 1350 Certification of the Company’s Principal Financial Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange
Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.
95
Mine Safety Disclosures.
101.INS
XBRL Instance Document.
101.SCH
XBRL Taxonomy Extension Schema Document.
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.
104
The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which has been formatted in Inline XBRL and included within
Exhibit 101.
* Management contract or compensatory plan or arrangement.
77
The Chemours Company
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE CHEMOURS COMPANY
(Registrant)
Date: February 11, 2022
By:
/s/ Sameer Ralhan
Sameer Ralhan
Senior Vice President, Chief Financial Officer
(As Duly Authorized Officer and Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated:
Signature
/s/ Mark E. Newman
Mark E. Newman
/s/ Sameer Ralhan
Sameer Ralhan
/s/ Camela T. Wisel
Camela T. Wisel
/s/ Dawn L. Farrell
Dawn L. Farrell
/s/ Curtis V. Anastasio
Curtis V. Anastasio
/s/ Bradley J. Bell
Bradley J. Bell
/s/ Mary B. Cranston
Mary B. Cranston
/s/ Curtis J. Crawford
Curtis J. Crawford
/s/ Erin N. Kane
Erin N. Kane
/s/ Sean D. Keohane
Sean D. Keohane
/s/ Sandra Phillips Rogers
Sandra Phillips Rogers
/s/ Mark P. Vergnano
Mark P. Vergnano
Title(s)
President, Chief Executive Officer, and
Director
(Principal Executive Officer)
Senior Vice President,
Chief Financial Officer
(Principal Financial Officer)
Vice President and Controller
(Principal Accounting Officer)
Date
February 11, 2022
February 11, 2022
February 11, 2022
Chairperson of the Board
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
February 11, 2022
Director
Director
Director
Director
Director
Director
Director
Director
78
The Chemours Company
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
Management’s Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm (PCAOB ID: 238)
Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020, and 2019
Consolidated Balance Sheets at December 31, 2021 and 2020
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019
Notes to the Consolidated Financial Statements
Page
F-2
F-3
F-5
F-6
F-7
F-8
F-9
F-10
F-1
The Chemours Company
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the Company;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with
authorization of management and directors of the Company; and,
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, uses, or dispositions of the
Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, based on criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013).
Based on its assessment and those criteria, management concluded that the Company maintained effective internal control over financial reporting
as of December 31, 2021.
PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of the Company’s internal control
over financial reporting as of December 31, 2021, as stated in its report, which is presented on the following page.
/s/ Mark E. Newman
Mark E. Newman
President and
Chief Executive Officer
February 11, 2022
/s/ Sameer Ralhan
Sameer Ralhan
Senior Vice President,
Chief Financial Officer
F-2
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of The Chemours Company
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of The Chemours Company and its subsidiaries (the “Company”) as of December
31, 2021 and 2020, and the related consolidated statements of operations, of comprehensive income, of shareholders' equity and of cash flows for
each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial
statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as
of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on
the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and
whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on
a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
F-3
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the
consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the
critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accrued Liabilities Associated with the Fayetteville Works On-site Surface Water and Groundwater Remediation Activities
As described in Note 22 to the consolidated financial statements, the Company is cooperating with a variety of ongoing inquiries and investigations
from federal, state, and local authorities, regulators, and other governmental entities with respect to the discharge of hexafluoropropylene oxide
dimer acid (“HFPO Dimer Acid,” sometimes referred to as “GenX” or “C3 Dimer Acid”) and per- and polyfluoroalkyl substances (“PFAS”) from the
Company’s Fayetteville Works site in North Carolina (“Fayetteville”) into the Cape Fear River site surface water and groundwater. The Company’s
accrued liabilities for on-site surface water and groundwater remediation activities were $289 million as of December 31, 2021. The Company’s
estimated liability for the on-site remediation activities that are probable and estimable is based on the Consent Order, the related addendum with
the North Carolina Department of Environmental Quality (the “Addendum”), the Corrective Action Plan (“CAP”) and management’s assessment of
the current facts and circumstances, which are subject to various assumptions including the transport pathways (being pathways by which PFAS
reaches the Cape Fear River) which will require remedial actions, the types of interim and permanent site surface water and on-site remedies and
treatment systems selected and implemented, the estimated cost of such potential remedies and treatment systems, any related operation,
maintenance, and monitoring (“OM&M”) requirements, and other charges contemplated by the Consent Order and the Addendum.
The principal considerations for our determination that performing procedures relating to the accrued liabilities associated with the Fayetteville Works
on-site surface water and groundwater remediation activities is a critical audit matter are the significant judgment by management in estimating the
accrued liabilities for the on-site surface water and groundwater remediation activities based on the Consent Order, including the Addendum, CAP
and management’s assessment of the current facts and circumstances; this in turn led to significant auditor judgment, subjectivity, and effort in
performing procedures and evaluating management’s significant assumptions related to transport pathways which will require remedial actions, the
types of interim and permanent site surface water and on-site remedies and treatment systems selected and implemented, the estimated cost of
such potential remedies and treatment systems, and any related OM&M requirements. Additionally, the audit effort involved the use of professionals
with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s determination and
valuation of the accrued liabilities associated with the Fayetteville Works on-site surface water and groundwater remediation activities, as well as the
related financial statement disclosures. These procedures also included, among others, (i) testing management’s process for determining the
estimate for the accrued liabilities associated with the Fayetteville on-site surface water and groundwater remediation activities; (ii) testing the
reasonableness of management’s assumptions related to the transport pathways which will require remedial actions, the types of interim and
permanent site surface water and on-site remedies and treatment systems selected and implemented, the estimated cost of such potential remedies
and treatment systems selected and implemented, and any related OM&M requirements, which involved comparing the cost estimates developed by
management to third party evidence, and comparing actual and historical costs used to develop the estimates, as applicable; (iii) obtaining and
evaluating responses to letters of audit inquiry from legal counsel; and (iv) evaluating the sufficiency of the Company’s disclosures related to the
matter. Professionals with specialized skill and knowledge were used to assist in evaluating the estimated costs resulting from the Consent Order,
the Addendum, CAP and management’s assessment of the current facts and circumstances.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 11, 2022
We have served as the Company’s auditor since 2014.
F-4
The Chemours Company
Consolidated Statements of Operations
(Dollars in millions, except per share amounts)
Net sales
Cost of goods sold
Gross profit
Selling, general, and administrative expense
Research and development expense
Restructuring, asset-related, and other charges
Total other operating expenses
Equity in earnings of affiliates
Interest expense, net
Loss on extinguishment of debt
Other income (expense), net
Income (loss) before income taxes
Provision for (benefit from) income taxes
Net income (loss)
Net income (loss) attributable to Chemours
Per share data
Basic earnings (loss) per share of common stock
Diluted earnings (loss) per share of common stock
2021
$
$
$
Year Ended December 31,
2020
$
$
$
6,345
4,964
1,381
592
107
6
705
43
(185 )
(21 )
163
676
68
608
608
3.69
3.60
4,969
3,902
1,067
527
93
80
700
23
(210 )
(22 )
21
179
(40 )
219
219
1.33
1.32
2019
$
$
$
5,526
4,463
1,063
548
80
87
715
29
(208 )
—
(293 )
(124 )
(72 )
(52 )
(52 )
(0.32 )
(0.32 )
See accompanying notes to the consolidated financial statements.
F-5
The Chemours Company
Consolidated Statements of Comprehensive Income
(Dollars in millions)
Pre-tax
2021
Tax
After-tax
$
608
Year Ended December 31,
2020
Tax
Pre-tax
After-tax
$
219
Pre-tax
2019
Tax
After-tax
$
(52 )
Net income (loss)
Other comprehensive income (loss):
Hedging activities:
Unrealized gain (loss) on net
investment hedge
Unrealized gain (loss) on
cash flow hedge
Reclassifications to net
income - cash flow hedge
Hedging activities, net
Cumulative translation adjustment
Defined benefit plans:
Additions to accumulated
other
comprehensive loss:
Net (loss) gain
Prior service (cost)
benefit
Curtailment gain
Effect of foreign
exchange rates
Reclassifications to net
income:
Amortization of actuarial
loss
Amortization of prior
service gain
Settlement loss
Defined benefit plans, net
Other comprehensive (loss) income
Comprehensive income
Comprehensive income attributable
to Chemours
$
$
73
$
12
4
89
(116 )
(22 )
—
—
6
7
(2 )
1
(10 )
$
(18 )
(2 )
(1 )
(21 )
—
6
—
—
—
(2 )
—
—
4
$
55
$
(88 )
$
(8 )
(3 )
(99 )
111
4
(1 )
4
(9 )
9
(3 )
5
9
$
10
3
68
(116 )
(16 )
—
—
6
5
(2 )
1
(6 )
(54 )
554
554
$
22
1
—
23
—
(1 )
—
(1 )
—
(2 )
—
(1 )
(5 )
$
(66 )
$
20
$
6
(10 )
16
2
(144 )
5
—
7
18
(2 )
383
267
$
$
(7 )
(3 )
(76 )
111
3
(1 )
3
(9 )
7
(3 )
4
4
39
258
258
(5 )
(1 )
1
(5 )
—
31
(1 )
—
—
(4 )
—
(91 )
(65 )
15
5
(9 )
11
2
(113 )
4
—
7
14
(2 )
292
202
215
163
$
163
See accompanying notes to the consolidated financial statements.
F-6
The Chemours Company
Consolidated Balance Sheets
(Dollars in millions, except per share amounts)
December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents
Accounts and notes receivable, net
Inventories
Prepaid expenses and other
Total current assets
Property, plant, and equipment
Less: Accumulated depreciation
Property, plant, and equipment, net
Operating lease right-of-use assets
Goodwill
Other intangible assets, net
Investments in affiliates
Restricted cash and restricted cash equivalents
Other assets
Total assets
Liabilities
Current liabilities:
Accounts payable
Compensation and other employee-related cost
Short-term and current maturities of long-term debt
Current environmental remediation
Other accrued liabilities
Total current liabilities
Long-term debt, net
Operating lease liabilities
Long-term environmental remediation
Deferred income taxes
Other liabilities
Total liabilities
Commitments and contingent liabilities
Equity
Common stock (par value $0.01 per share; 810,000,000 shares authorized;
191,860,159 shares issued and 161,046,732 shares outstanding at
December 31, 2021;
190,239,883 shares issued and 164,920,648 shares outstanding at December 31, 2020)
Treasury stock, at cost (30,813,427 shares at December 31, 2021; 25,319,235 at
December 31, 2020)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Chemours stockholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity
$
$
$
$
1,451
720
1,099
75
3,345
9,232
(6,078 )
3,154
227
102
6
169
100
447
7,550
1,162
173
25
173
325
1,858
3,724
179
389
49
269
6,468
2
(1,247 )
944
1,746
(364 )
1,081
1
1,082
7,550
$
$
$
$
1,105
511
939
78
2,633
9,582
(6,108 )
3,474
236
153
14
167
—
405
7,082
844
107
21
95
375
1,442
4,005
194
295
36
295
6,267
2
(1,072 )
890
1,303
(310 )
813
2
815
7,082
See accompanying notes to the consolidated financial statements.
F-7
The Chemours Company
Consolidated Statements of Stockholders’ Equity
(Dollars in millions, except per share amounts)
Common Stock
Treasury Stock
Amount
Shares
Amount
Additional
Paid-in Capital
860
$
Retained
Earnings
$
1,466
Accumulated
Other
Comprehensive
(Loss) Income
(564 )
$
Non-controlling
Interests
Total Equity
$
6
$
1,020
Balance at January 1, 2019
Common stock issued -
compensation plans
Exercise of stock options, net
Purchases of treasury stock, at cost
Stock-based compensation expense
Cancellation of unissued stock
awards withheld to cover taxes
Net loss
Dividends declared on common
shares ($1.00 per share)
Other comprehensive income
Balance at December 31, 2019
Common stock issued -
compensation plans
Exercise of stock options, net
Stock-based compensation expense
Cancellation of unissued stock
awards withheld to cover taxes
Net income
Dividends declared on common
shares ($1.00 per share)
Dividends to non-controlling
interests
Other comprehensive income
Balance at December 31, 2020
Common stock issued -
compensation plans
Exercise of stock options, net
Purchases of treasury stock, at cost
Stock-based compensation expense
Cancellation of unissued stock
awards withheld to cover taxes
Net income
Dividends declared on common
shares ($1.00 per share)
Dividends to non-controlling
interests
Other comprehensive loss
Balance at December 31, 2021
Shares
187,204,567
$
1,098,542
590,369
—
—
—
—
—
—
188,893,478
222,665
1,123,740
—
—
—
—
—
—
190,239,883
264,908
1,355,368
—
—
—
—
—
—
—
191,860,159
$
2
—
—
—
—
—
—
—
—
2
—
—
—
—
—
—
—
—
2
—
—
—
—
—
—
—
—
—
2
16,424,093
$
—
—
8,895,142
—
—
—
—
—
25,319,235
—
—
—
—
—
—
—
—
25,319,235
(39,554 )
—
5,533,746
—
—
—
—
(750 )
—
—
(322 )
—
—
—
—
—
(1,072 )
—
—
—
—
—
—
—
—
(1,072 )
2
—
(177 )
—
—
—
—
—
—
30,813,427
$
—
—
(1,247 )
$
—
—
944
$
1
9
—
19
(30 )
—
—
—
859
1
16
16
(2 )
—
—
—
—
890
(1 )
23
—
34
(2 )
—
—
(1 )
—
—
—
—
(52 )
(164 )
—
1,249
(1 )
—
—
—
219
(164 )
—
—
1,303
(1 )
—
—
—
—
608
(164 )
—
—
1,746
—
—
—
—
—
—
—
215
(349 )
—
—
—
—
—
—
—
39
(310 )
—
—
—
—
—
—
—
—
(54 )
(364 )
$
$
—
—
—
—
—
—
—
—
6
—
—
—
—
—
—
(4 )
—
2
—
—
—
—
—
—
—
(1 )
—
1
—
9
(322 )
19
(30 )
(52 )
(164 )
215
695
—
16
16
(2 )
219
(164 )
(4 )
39
815
—
23
(177 )
34
(2 )
608
(164 )
(1 )
(54 )
1,082
$
See accompanying notes to the consolidated financial statements.
F-8
The Chemours Company
Consolidated Statements of Cash Flows
(Dollars in millions)
Cash flows from operating activities
Net income (loss)
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities:
2021
Year Ended December 31,
2020
2019
$
608
$
219
$
Depreciation and amortization
Gain on sales of assets and businesses
Equity in earnings of affiliates, net
Loss on extinguishment of debt
Amortization of debt issuance costs and issue discounts
Deferred tax benefit
Asset-related charges
Stock-based compensation expense
Net periodic pension cost
Defined benefit plan contributions
Other operating charges and credits, net
Decrease (increase) in operating assets:
Accounts and notes receivable
Inventories and other operating assets
(Decrease) increase in operating liabilities:
Accounts payable and other operating liabilities
Cash provided by operating activities
Cash flows from investing activities
Purchases of property, plant, and equipment
Acquisition of business, net
Proceeds from sales of assets and businesses, net of cash divested
Proceeds from life insurance policies
Foreign exchange contract settlements, net
Cash provided by (used for) investing activities
Cash flows from financing activities
Proceeds from issuance of debt
Proceeds from accounts receivable securitization facility
Repayments on accounts receivable securitization facility
Proceeds from revolving loan
Repayments on revolving loan
Debt repayments
Payments related to extinguishment of debt
Payments of debt issuance costs
Payments on finance leases
Deferred acquisition-related consideration
Purchases of treasury stock, at cost
Proceeds from exercised stock options, net
Payments related to tax withholdings on vested stock awards
Payments of dividends to the Company's common shareholders
Distributions to non-controlling interest shareholders
Cash used for financing activities
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
Cash, cash equivalents, restricted cash, and restricted cash equivalents at January 1,
Cash, cash equivalents, restricted cash, and restricted cash equivalents at December 31,
Supplemental cash flows information
Cash paid during the year for:
Interest, net of amounts capitalized
Income taxes, net of refunds
Non-cash investing and financing activities:
Purchases of property, plant, and equipment included in accounts payable
Obligations incurred under build-to-suit lease arrangement
Non-cash financing arrangements
Treasury stock repurchased, not settled
Deferred payments related to acquisition of business
$
$
$
317
(115 )
(11 )
21
9
(77 )
—
34
6
(17 )
18
(225 )
(202 )
454
820
(277 )
—
508
1
(12 )
220
650
—
—
—
—
(854 )
(18 )
(11 )
(10 )
—
(173 )
23
(2 )
(164 )
(1 )
(560 )
(34 )
446
1,105
1,551
$
$
180
149
$
89
—
—
4
—
320
(8 )
—
22
9
(120 )
22
16
14
(21 )
(22 )
175
126
55
807
(267 )
—
5
1
27
(234 )
800
12
(122 )
300
(300 )
(943 )
(16 )
(10 )
(6 )
(10 )
—
16
(2 )
(164 )
(4 )
(449 )
38
162
943
1,105
208
78
31
—
16
—
—
$
$
$
(52 )
311
(10 )
(3 )
—
9
(165 )
43
19
381
(19 )
(2 )
191
116
(169 )
650
(481 )
(10 )
9
1
(2 )
(483 )
—
128
(18 )
150
(150 )
(19 )
—
—
(3 )
—
(322 )
9
(30 )
(164 )
—
(419 )
(6 )
(258 )
1,201
943
204
85
85
40
11
—
15
See accompanying notes to the consolidated financial statements.
F-9
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 1. Background and Description of the Business
The Chemours Company (“Chemours”, or the “Company”) is a leading, global provider of performance chemicals that are key inputs in end-products
and processes in a variety of industries. The Company delivers customized solutions with a wide range of industrial and specialty chemical products
for markets, including coatings, plastics, refrigeration and air conditioning, transportation, semiconductor and consumer electronics, general
industrial, and oil and gas. The Company’s principal products include titanium dioxide (“TiO2”) pigment, refrigerants, industrial fluoropolymer resins,
and performance chemicals and intermediates. Chemours manages and reports its operating results through four reportable segments: Titanium
Technologies, Thermal & Specialized Solutions, Advanced Performance Materials, and Chemical Solutions. The Titanium Technologies segment is
a leading, global provider of TiO2 pigment, a premium white pigment used to deliver whiteness, brightness, opacity, and protections in a variety of
applications. The Thermal & Specialized Solutions segment is a leading, global provider of refrigerants, thermal management solutions, propellants,
blowing agents, and specialty solvents. The Advanced Performance Materials segment is a leading, global provider of high-end polymers and
advanced materials that deliver unique attributes, including low friction coefficients, extreme temperature resistance, weather resistance, ultraviolet
and chemical resistance, and electrical insulation. The Chemical Solutions segment was a leading provider of industrial chemicals used in gold
production prior to the Mining Solutions business sale and continues to be a leading provider of chemicals used in industrial and consumer
applications.
Chemours has manufacturing facilities, sales centers, administrative offices, and warehouses located throughout the world. Chemours’ operations
are primarily located in the U.S., Canada, Mexico, Brazil, the Netherlands, Belgium, China, Taiwan, Japan, Switzerland, Singapore, Hong Kong,
India, and France. At December 31, 2021, the Company operated 29 major production facilities globally, of which eight were dedicated to Titanium
Technologies, eight were dedicated to Thermal & Specialized Solutions, 10 were dedicated to Advanced Performance Materials, and three
supported multiple segments.
Chemours began operating as an independent company on July 1, 2015 (the “Separation Date”) after separating from E.I. DuPont de Nemours and
Company (“EID”) (the “Separation”). The Separation was completed pursuant to a separation agreement and other agreements with EID, including
an employee matters agreement, a tax matters agreement, a transition services agreement, and an intellectual property cross-license agreement.
These agreements govern the relationship between Chemours and EID following the Separation and provided for the allocation of various assets,
liabilities, rights, and obligations at the Separation Date. On August 31, 2017, EID completed a merger with The Dow Chemical Company (“Dow”).
Following their merger, EID and Dow engaged in a series of reorganization steps and, in 2019, separated into three publicly-traded companies
named Dow Inc., DuPont de Nemours, Inc. (“DuPont”), and Corteva, Inc. (“Corteva”).
Unless the context otherwise requires, references herein to “The Chemours Company”, “Chemours”, “the Company”, “our Company”, “we”, “us”, and
“our” refer to The Chemours Company and its consolidated subsidiaries. References herein to “EID” refer to E. I. du Pont de Nemours and
Company, which is Chemours’ former parent company and is now a subsidiary of Corteva.
Note 2. Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles
(“GAAP”). In the opinion of management, all adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation
of the Company’s financial position and results of operations have been included for the periods presented herein. The notes that follow are an
integral part of the Company’s consolidated financial statements.
Certain prior period amounts have been reclassified to conform to the current period presentation, the effect of which was not material to the
Company’s consolidated financial statements.
Considerations related to the current novel coronavirus disease (“COVID-19”)
In the preparation of these financial statements and related disclosures, management has assessed the impact of COVID-19 on its results,
estimates, assumptions, forecasts, and accounting policies and made additional disclosures, as necessary. As the COVID-19 situation is
unprecedented and ever evolving, future events and effects related to the illness cannot be determined with precision, and actual results could
significantly differ from estimates or forecasts.
F-10
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 3. Summary of Significant Accounting Policies
Preparation of Financial Statements
The consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the
consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Management’s estimates are
based on historical experiences, facts, and circumstances available at the time and various other assumptions that management believes are
reasonable. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of Chemours and its subsidiaries, as well as entities in which a controlling interest is
maintained. For those consolidated subsidiaries in which the Company’s ownership is less than 100%, the outside shareholders’ interests are shown
as non-controlling interests. Investments in companies in which Chemours, directly or indirectly, owns 20% to 50% of the voting stock, or has the
ability to exercise significant influence over the operating and financial policies of the investee, are accounted for using the equity method of
accounting. As a result, Chemours’ share of the earnings or losses of such equity affiliates is included in the consolidated statements of operations,
and Chemours’ share of such equity affiliates’ equity is included in the consolidated balance sheets.
The Company assesses the requirements related to the consolidation of any variable interest entity (“VIE”), including a qualitative assessment of
power and economics that considers which entity has the power to direct the activities that most significantly impact the VIE’s economic
performance, and has the right to receive any benefits or the obligation to absorb any losses of the VIE. No such VIE was consolidated by the
Company for the periods presented.
All intercompany accounts and transactions were eliminated in the preparation of the accompanying consolidated financial statements.
Revenue Recognition
Chemours recognizes revenue using a five-step model, resulting in revenue being recognized as performance obligations within a contract have
been satisfied. The steps within that model include: (i) identifying the existence of a contract with a customer; (ii) identifying the performance
obligations within the contract; (iii) determining the contract’s transaction price; (iv) allocating the transaction price to the contract’s performance
obligations; and, (v) recognizing revenue as the contract’s performance obligations are satisfied. A contract with a customer exists when: (i) the
Company enters into an enforceable agreement that defines each party’s rights regarding the goods or services to be transferred, and the related
payment terms; (ii) the agreement has commercial substance; and, (iii) it is probable that the Company will collect the consideration to which it is
entitled in the exchange. A performance obligation is a promise in a contract to transfer a distinct good or service, or a series of distinct goods or
services, to a customer. The transaction price is the customary amount of consideration that the Company expects to be entitled to in exchange for a
transfer of the promised goods or services to a customer, excluding any amounts collected by the Company on behalf of third parties (e.g., sales and
use taxes). Judgment is required to apply the principles-based, five-step model for revenue recognition. Management is required to make certain
estimates and assumptions about the Company’s contracts with its customers, including, among others, the nature and extent of its performance
obligations, its transaction price amounts and any allocations thereof, the critical events which constitute satisfaction of its performance obligations,
and when control of any promised goods or services is transferred to its customers.
The Company’s revenue from contracts with customers is reflected in the consolidated statements of operations as net sales, the vast majority of
which represents product sales that consist of a single performance obligation. Product sales to customers are made under a purchase order (“PO”),
or in certain cases, in accordance with the terms of a master services agreement (“MSA”) or similar arrangement, which documents the rights and
obligations of each party to the contract. When a customer submits a PO for product or requests product under an MSA, a contract for a specific
quantity of distinct goods at a specified price is created, and the Company’s performance obligation under the contract is satisfied when control of
the product is transferred to the customer, which is indicated by shipment of the product and the transfer of title and the risk of loss to the customer.
Revenue is recognized on consignment sales when control transfers to the customer, generally at the point of customer usage of the product. The
transaction price for product sales is generally the amount specified in the PO or in the request under an MSA; however, as is common in Chemours’
industry, the Company offers variable consideration in the form of rebates, volume discounts, early payment discounts, pricing based on formulas or
indices, price matching, and guarantees to certain customers. Such amounts are included in the Company’s estimated transaction price using either
the expected value method or the most-likely amount, depending on the nature of the variable consideration included in the contract. The Company
regularly assesses its customers’ creditworthiness, and product sales are made based on established credit limits. Payment terms for the Company’s
invoices are typically less than 90 days.
F-11
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The Company also licenses the right to access certain of its trademarks to customers under specified terms and conditions in certain arrangements,
which is recognized as a component of net sales in the consolidated statements of operations. Under such arrangements, the Company may receive
a royalty payment for a trademark license that is entered into on a stand-alone basis or incorporated into an overall product sales arrangement.
Royalty income is generally based on customer sales and recognized under the sales-based exception as the customer sale occurs. When minimum
guaranteed royalty amounts are included in the transaction price, the Company recognizes royalty income ratably over the license period for the
minimum amount. When there is no consideration specified for the use of the Company’s trademark, the entire transaction price is recognized in
connection with the transfer of control of product. Royalty income resulting from the right to use the Company’s technology is considered outside the
scope of revenue recognition under GAAP as it is not a part of the Company’s ongoing major or central activities, and is recognized as a component
of other income (expense), net in the consolidated statements of operations in accordance with agreed-upon terms at the point or points in time that
performance obligations are satisfied.
Consistent with the fact that the vast majority of the Company’s payment terms are less than 90 days from the point at which control of the promised
goods or services is transferred, no adjustments have been made for the effects of a significant financing component. Additionally, the Company has
elected to recognize the incremental costs associated with obtaining contracts as an expense when incurred if the amortization period of the assets
that the Company would have recognized is one year or less. Amounts billed to customers for shipping and handling fees are considered a fulfillment
cost and are included in net sales, and the costs incurred by the Company for the delivery of goods are classified as a component of the cost of
goods sold in the consolidated statements of operations.
Research and Development Expense
Research and development (“R&D”) costs are expensed as incurred. R&D expenses include costs (primarily consisting of employee costs, materials,
contract services, research agreements, and other external spend) relating to the discovery and development of new products, enhancement of
existing products, and regulatory approval of new and existing products.
Provision for (Benefit from) Income Taxes
The provision for (benefit from) income taxes is determined using the asset and liability approach of accounting for income taxes. Under this
approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered
or paid. The provision for (benefit from) income taxes represents income taxes paid or payable for the current year, plus the change in deferred taxes
during the year. Deferred taxes result from differences between the financial and tax bases of Chemours’ assets and liabilities and are adjusted for
changes in tax rates and tax laws when changes are enacted. The Company’s deferred tax assets and liabilities are presented on a net basis by
jurisdictional filing group. Net deferred tax assets are presented as a component of other assets, while net deferred tax liabilities are presented as a
component of deferred income taxes on the Company’s consolidated balance sheets. Valuation allowances are recorded to reduce deferred tax
assets when it is more-likely-than-not that a tax benefit will not be realized.
Chemours recognizes income tax positions that meet the more-likely-than-not threshold and accrues any interest related to unrecognized income tax
positions in the provision for (benefit from) income taxes in the consolidated statements of operations. The Company also recognizes income tax-
related penalties in the provision for (benefit from) income taxes.
Earnings Per Share
Chemours presents both basic earnings per share and diluted earnings per share. Basic earnings per share excludes dilution and is computed by
dividing the total net income (loss) attributable to Chemours by the weighted-average number of shares outstanding for the period. Diluted earnings
per share reflects the dilution that could occur if the Company’s outstanding stock-based compensation awards, including any unvested restricted
shares, were vested and exercised, thereby resulting in the issuance of common stock as determined under the treasury stock method. In periods
where the Company incurs a net loss, stock-based compensation awards are excluded from the calculation of earnings per share as their inclusion
would have an anti-dilutive effect.
Cash and Cash Equivalents
Cash and cash equivalents generally include cash, time deposits, or highly liquid investments with maturities of three months or less at the time of
acquisition.
F-12
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Accounts and Notes Receivable and Allowance for Doubtful Accounts
Accounts and notes receivables are recognized net of an allowance for doubtful accounts. The allowance for doubtful accounts reflects the best
estimate of losses inherent in Chemours’ accounts and notes receivable portfolio, which is determined by assessing expected credit losses on the
basis of historical experience, specific allowances for known troubled accounts, and other available evidence. Accounts and notes receivable are
written off when management determines that they are uncollectible.
Inventories
Chemours’ inventories are valued at the lower of cost or market or net realizable value, where applicable. Cost of inventories held at substantially all
U.S. locations are determined using the last-in, first-out (“LIFO”) method, while cost of inventories held outside the U.S. are determined using the
average cost method. The elements of cost in inventories include raw materials, direct labor, and manufacturing overhead. Stores and supplies are
valued at the lower of cost or net realizable value, and cost is generally determined by the average cost method.
Property, Plant, and Equipment
Property, plant, and equipment is carried at cost and is depreciated using the straight-line method. Substantially all equipment and buildings are
depreciated over useful lives ranging from 15 to 25 years. Capitalizable costs associated with computer software for internal use are amortized on a
straight-line basis over five to seven years. When assets are surrendered, retired, sold, or otherwise disposed of, their gross carrying values and
related accumulated depreciation are removed from the consolidated balance sheets and are included in the determination of any gain or loss on
such disposals.
Repair and maintenance costs that materially add to the value of the asset or prolong its useful life are capitalized and depreciated based on their
extension to the asset’s useful life. Capitalized repair and maintenance costs are recorded on the consolidated balance sheets as a component of
other assets.
Impairment of Long-lived Assets
Chemours evaluates the carrying value of its long-lived assets to be held and used when events or changes in circumstances indicate the carrying
value may not be recoverable. For the purposes of recognition or measurement of an impairment charge, the assessment is performed on the asset
or asset group at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.
To determine the level at which the assessment is performed, Chemours considers factors such as revenue dependency, shared costs, and the
extent of vertical integration. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from
the use and eventual disposition of the asset or asset group are separately identifiable and are less than its carrying value. In that event, a loss is
recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. The fair value methodology used is an
estimate of fair market value, which is made based on prices of similar assets or other valuation methodologies, including present value techniques.
Long-lived assets to be disposed of by means other than sale are classified as held for use until their disposal. Long-lived assets to be disposed of
by sale are classified as held for sale and are reported at the lower of carrying amount or fair market value, less the estimated cost to sell.
Depreciation is discontinued for any long-lived assets classified as held for sale.
F-13
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Leases
The Company’s lease assets and lease liabilities are recognized on the lease commencement date in an amount that represents the present value of
future lease payments. Operating leases are included in operating lease right-of-use assets, other accrued liabilities, and operating lease liabilities
on the Company’s consolidated balance sheets. Finance leases are included in property, plant, and equipment, net, short-term and current
maturities of long-term debt, and long-term debt, net, on the Company’s consolidated balance sheets. The Company’s incremental borrowing rate,
which is based on information available at the adoption date of January 1, 2019 for existing leases and the commencement date for leases
commencing after the adoption date, is used to determine the present value of lease payments. The Company combines lease components with
non-lease components for most classes of assets, except for certain manufacturing facilities or when the non-lease component is significant to the
lease component.
The Company does not recognize leases with an initial term of 12 months or less on its consolidated balance sheets and will recognize those lease
payments in the consolidated statements of operations on a straight-line basis over the lease term. Certain leases contain variable payments which
are based on usage or operating costs, such as utilities and maintenance. These payments are not included in the measurement of the right-of-use
asset or lease liability due to the uncertainty of the payment amount and are recorded as lease expense in the period incurred. Leases with the
options to extend their term or terminate early are reflected in the lease term when it is reasonably certain that the Company will exercise such
options.
Goodwill and Other Intangible Assets
The excess of the purchase price over the estimated fair value of the net assets acquired in a business combination, including any identified
intangible assets, is recorded as goodwill. Chemours tests its goodwill for impairment at least annually on October 1; however, these tests are
performed more frequently when events or changes in circumstances indicate that the asset may be impaired. Goodwill is evaluated for impairment
at the reporting unit level, which is defined as an operating segment, or one level below an operating segment. A reporting unit is the level at which
discrete financial information is available and reviewed by business management on a regular basis. An impairment exists when the carrying value of
a reporting unit exceeds its fair value. The amount of impairment loss recognized in the consolidated statements of operations is equal to the excess
of a reporting unit’s carrying value over its fair value, which is limited to the total amount of goodwill allocated to the reporting unit.
Chemours has the option to first qualitatively assess whether it is more-likely-than-not that an impairment exists for a reporting unit. Such qualitative
factors include, among other things, prevailing macroeconomic conditions, industry and market conditions, changes in costs associated with raw
materials, labor, or other inputs, the Company’s overall financial performance, and certain other entity-specific events that impact Chemours’
reporting units. When performing a quantitative test, the Company weights the results of an income-based valuation technique, the discounted cash
flows method, and a market-based valuation technique, the guideline public companies method, to determine its reporting units’ fair values.
Definite-lived intangible assets, such as purchased and licensed technology, patents, trademarks, and customer lists, are amortized over their
estimated useful lives, generally for periods ranging from five to 20 years. The reasonableness of the useful lives of these assets is periodically
evaluated.
Investments in Affiliates
The Company uses the equity method of accounting for its investments in and earnings of affiliates. The Company considers whether the fair value
of any of its equity method investments has declined below their carrying value whenever adverse events or changes in circumstances indicate that
recorded values may not be recoverable. If the Company considers any such decline to be other than temporary, based on various factors, a write-
down would be recorded to the estimated fair value.
Restricted Cash and Restricted Cash Equivalents
The Company classifies cash and cash equivalents that are legally or contractually restricted for withdrawal or usage as restricted cash and
restricted cash equivalents. Chemours restricted cash and restricted cash equivalents includes cash and cash equivalents deposited in an escrow
account as per the terms of the Company’s Memorandum of Understanding (“MOU”) agreement which is further discussed in “Note 22 –
Commitments and Contingent Liabilities”.
F-14
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Environmental Liabilities and Expenditures
Chemours accrues for environmental remediation matters when it is probable that a liability has been incurred and the amount of the liability can be
reasonably estimated. Where the available information is only sufficient to establish a range of probable liability, and no point within the range is
more likely than any other, the lower end of the range has been used.
Estimated liabilities are determined based on existing remediation laws and technologies and the Company’s planned remedial responses, which are
derived from environmental studies, sampling, testing, and analyses. Inherent uncertainties exist in such evaluations, primarily due to unknown
environmental conditions, changing governmental regulations regarding liability, and emerging remediation technologies. These liabilities, which are
undiscounted, are adjusted periodically as remediation efforts progress and as additional technological, regulatory, and legal information becomes
available.
Environmental liabilities and expenditures include claims for matters that are liabilities of EID and its subsidiaries, which Chemours may be required
to indemnify pursuant to the Separation-related agreements executed prior to the Separation. These accrued liabilities are undiscounted and do not
include claims against third parties.
Costs related to environmental remediation are charged to expense in the period that the associated liability is accrued and are reflected as a
component of the cost of goods sold for on-site remediation costs or as a component of selling, general, and administrative expense for off-site
remediation costs in the consolidated statements of operations. Other environmental costs are also charged to expense in the period incurred,
unless they extend the useful life of the property, increase the property’s capacity, and/or reduce or prevent contamination from future operations, in
which case they are capitalized and amortized. Pursuant to the binding MOU entered into between Chemours, DuPont, Corteva, and EID, as further
discussed in “Note 22 – Commitments and Contingent Liabilities”, costs specific to potential future legacy per- and polyfluoroalkyl substances
(“PFAS”) liabilities are subject to a cost-sharing arrangement between the parties. Any recoveries of Qualified Spend (as further described in “Note
22 – Commitments and Contingent Liabilities” and as defined in the MOU) from DuPont and/or Corteva under the cost-sharing arrangement will be
recognized as an offset to the Company’s cost of goods sold or selling, general, and administrative expense, as applicable, when realizable. Any
Qualified Spend incurred by DuPont and/or Corteva under the cost-sharing arrangement will be recognized in the Company’s cost of goods sold or
selling, general, and administrative expense, as applicable, when the amounts of such costs are probable and estimable.
Asset Retirement Obligations
Chemours records its asset retirement obligations at their fair value at the time the liability is incurred. Fair value is measured using the expected
future cash outflows discounted at Chemours’ credit-adjusted, risk-free interest rate, which is considered to be a Level 3 input within the fair value
hierarchy. Accretion expense is recognized as an operating expense within the cost of goods sold in the consolidated statements of operations,
using the credit-adjusted, risk-free interest rate in effect when the liability was recognized. The associated asset retirement costs are capitalized as
part of the carrying amount of the long-lived asset and are depreciated over the estimated remaining useful life of the asset, generally for periods
ranging from two to 25 years.
Insurance
Chemours insures for certain risks where permitted by law or regulation, including workers’ compensation, vehicle liability, and employee-related
benefits. Liabilities associated with these risks are estimated in part by considering any historical claims experience, demographic factors, and other
actuarial assumptions. For certain other risks, the Company uses a combination of third-party insurance and self-insurance, reflecting its
comprehensive review of relevant risks. A receivable for an insurance recovery is generally recognized when the loss has occurred and collection is
considered probable.
Litigation
Chemours accrues for litigation matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably
estimated. Where the available information is only sufficient to establish a range of probable liability, and no point within the range is more likely than
any other, the lower end of the range has been used. When a material loss contingency is reasonably possible, but not probable, the Company does
not record a liability, but instead discloses the nature of the matter and an estimate of the loss or range of loss, to the extent such estimate can be
made. Litigation-related liabilities and expenditures included in the consolidated financial statements include legal matters that are liabilities of EID
and its subsidiaries, which Chemours may be required to indemnify pursuant to the Separation-related agreements executed prior to the Separation.
Legal costs, such as outside counsel fees and expenses, are charged to expense in the period that services are rendered.
F-15
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Treasury Stock
Chemours accounts for repurchases of the Company’s common stock as treasury stock using the cost method, whereby the entire cost of the
acquired common stock is recorded as treasury stock. The cost of treasury stock re-issued is determined using the first-in, first-out (“FIFO”) method.
Stock-based Compensation
Chemours’ stock-based compensation consists of stock options, restricted stock units (“RSUs”), and performance share units (“PSUs”) awarded to
employees and non-employee directors. Stock options and PSUs are measured at their fair value on the grant date or date of modification, as
applicable. RSUs are measured at the stock price on the grant date or date of modification, as applicable. The Company recognizes compensation
expense on a straight-line basis over the requisite service and/or performance period, as applicable. Forfeitures of awards are accounted as a
reduction in stock-based compensation expense in the period such awards are forfeited.
Financial Instruments
In the ordinary course of business, Chemours enters into contractual arrangements to reduce its exposure to foreign currency and interest rate risks.
The Company has established a financial risk management program, which currently includes four distinct risk management instruments: (i) foreign
currency forward contracts, which are used to minimize the volatility in the Company’s earnings related to foreign exchange gains and losses
resulting from remeasuring its monetary assets and liabilities that are denominated in non-functional currencies; (ii) foreign currency forward
contracts, which are used to mitigate the risks associated with fluctuations in the euro against the U.S. dollar for forecasted U.S. dollar-denominated
inventory purchases in certain of the Company’s international subsidiaries that use the euro as their functional currency; (iii) interest rate swaps,
which are used to mitigate the volatility in the Company’s cash payments for interest due to fluctuations in LIBOR, as is applicable to the portion of
the Company’s senior secured term loan facility denominated in U.S. dollars; and, (iv) euro-denominated debt, which is used to reduce the volatility
in stockholders’ equity caused by changes in foreign currency exchange rates of the euro with respect to the U.S. dollar for certain of its international
subsidiaries that use the euro as their functional currency. The Company’s financial risk management program reflects varying levels of exposure
coverage and time horizons based on an assessment of risk. The program operates within Chemours’ financial risk management policies and
guidelines, and the Company does not enter into derivative financial instruments for trading or speculative purposes.
The Company’s foreign currency forward contracts that are used as a net monetary assets and liabilities hedge are not part of a cash flow hedge
program or a fair value hedge program, and have not been designated as a hedge. For these instruments, all gains and losses resulting from the
revaluation of derivative assets and liabilities are recognized in other income (expense), net in the consolidated statements of operations during the
period in which they occur, and any such gains or losses are intended to be offset by any gains or losses on the underlying asset or liability. For the
Company’s foreign currency forward contracts that have been designated under a cash flow hedge program, all gains and losses resulting from the
revaluation of the derivative instruments are recognized as a component of accumulated other comprehensive loss on the consolidated balance
sheets during the period in which they occur, and are reclassified to the cost of goods sold in the consolidated statements of operations during the
period in which the underlying transactions affect earnings, or when it becomes probable that the forecasted transactions will not occur. For the
Company’s interest rate swaps that have been designated under a cash flow hedge program, all gains and losses resulting from the revaluation of
the derivative instruments are recognized as a component of accumulated other comprehensive loss on the consolidated balance sheets during the
period in which they occur, and are reclassified to interest expense, net in the consolidated statements of operations during the period in which the
underlying transaction affects earnings. For the Company’s euro-denominated debt instruments, which are designated as a net investment hedge,
changes due to remeasurement are included in accumulated other comprehensive loss on the consolidated balance sheets. Chemours’ uses the
spot method to evaluate the effectiveness of its net investment hedge.
Financial instruments are reported on a gross basis on the consolidated balance sheets.
F-16
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Foreign Currency Translation
Chemours identifies its separate and distinct foreign entities and groups them into two categories: (i) extensions of the parent (U.S. dollar functional
currency); and, (ii) self-contained (local functional currency). If a foreign entity does not align with either category, factors are evaluated, and a
judgment is made to determine the functional currency. Chemours changes the functional currency of its separate and distinct foreign entities only
when significant changes in economic facts and circumstances clearly indicate that the functional currency has changed.
During the periods covered by the consolidated financial statements, part of Chemours’ business operated within foreign entities. For foreign entities
where the U.S. dollar is the functional currency, all foreign currency-denominated asset and liability amounts are remeasured into U.S. dollars at
end-of-period exchange rates, with the exception of inventories, prepaid expenses, property, plant, and equipment, goodwill, and other intangible
assets. These aforementioned assets are remeasured at historical exchange rates. Foreign currency-denominated revenue and expense amounts
are measured at exchange rates in effect during the period, with the exception of expenses related to any balance sheet amounts remeasured at
historical exchange rates. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities
are included in other income (expense), net in the consolidated statements of operations in the period in which they occurred.
For foreign entities where the local currency is the functional currency, assets and liabilities denominated in local currencies are translated into U.S.
dollars at end-of-period exchange rates, and the resulting translation adjustments are reported as a component of accumulated other comprehensive
loss on the consolidated balance sheets. Assets and liabilities denominated in currencies other than the functional currency are remeasured into the
functional currency prior to translation into U.S. dollars, and the resulting exchange gains or losses are included in other income (expense), net in the
consolidated statements of operations in the period in which they occurred. Revenues and expenses are translated into U.S. dollars at average
exchange rates in effect during the period.
Defined Benefit Plans
Chemours has defined benefit plans covering certain of its employees outside of the U.S. The benefits of these plans, which primarily relate to
pension, are accrued over the employees’ service periods. The Company uses actuarial methods and assumptions in the valuation of its defined
benefit obligations and the determination of any net periodic pension income or expense. Any differences between actual and expected results, or
changes in the value of defined benefit obligations and plan assets, if any, are not recognized in earnings as they occur. Rather, they are
systematically recognized over subsequent periods.
Fair Value Measurement
Fair value is defined as the exit price, the price that would be received to sell an asset or transfer a liability in an orderly transaction between market
participants at the measurement date. Under the accounting for fair value measurements and disclosures, a fair value hierarchy was established to
prioritize the valuation inputs used to measure fair value. The hierarchy gives highest priority to unadjusted, quoted prices in active markets for
identical assets and liabilities (i.e., Level 1 measurements) and lowest priority to unobservable inputs (i.e., Level 3 measurements). A financial
instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
Chemours applies the following valuation hierarchy in measuring the fair values of its assets and liabilities:
•
•
•
Level 1 – Quoted prices in active markets for identical assets and liabilities;
Level 2 – Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar
items in markets that are not active, inputs other than quoted prices that are observable, such as interest rate and yield curves, and
market-corroborated inputs); and,
Level 3 – Unobservable inputs for the asset or liability, which are valued based on management’s estimates of assumptions that market
participants would use in pricing the asset or liability.
F-17
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Assets and Liabilities Held for Sale
The Company classifies long-lived assets or disposal groups as held for sale in the period when the following held for sale criteria are met: (i) the
Company commits to a plan to sell; (ii) the long-lived asset or disposal group is available for immediate sale in its present condition subject only to
terms that are usual and customary for sales of such long-lived assets or disposal groups; (iii) an active program to locate a buyer and other actions
required to complete the plan to sell have been initiated; (iv) the sale is probable within one year; (v) the asset or disposal group is being actively
marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) it is unlikely that significant changes to the plan will be made
or that the plan will be withdrawn. Long-lived assets and disposal groups classified as held for sale are measured at the lower of their carrying
amount or fair value less costs to sell. The Company ceases depreciation, amortization, and interest for a disposal group upon it being classified as
held for sale.
Recent Accounting Pronouncements
Accounting Guidance Issued and Not Yet Adopted
Facilitation of the Effects of Reference Rate Reform on Financial Reporting
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on
Financial Reporting (“ASU No. 2020-04”). The amendments in this update provide optional guidance for a limited period of time to ease the potential
burden associated with accounting for contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate
(“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. ASU No. 2020-04 is effective March 12, 2020 through
December 31, 2022. The Company does not expect the impacts of adopting ASU No. 2020-04 to be material to its financial position, results of
operations and cash flows.
Accounting for Contract Assets and Contract Liabilities from Contracts with Customers
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from
Contracts with Customers (“ASU No. 2021-08”), which requires contract assets and contract liabilities acquired in a business combination to be
recognized in accordance with Topic 606 as if the acquirer had originated the contracts. The guidance will be effective for fiscal years beginning after
December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the
impacts the adoption of this standard will have on its consolidated financial statements.
Disclosures by Business Entities About Government Assistance
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities About Government
Assistance (“ASU No. 2021-10”), which requires annual disclosures about transactions with a government that are accounted for by applying a grant
or contribution accounting model by analogy. The guidance will be effective for fiscal years beginning after December 15, 2021 with early adoption
permitted. The Company is currently evaluating the impacts the adoption of this standard will have on its consolidated financial statements.
Recently Adopted Accounting Guidance
Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU No. 2019-
12”). The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740,
as well as improve consistency of application by clarifying and amending existing guidance. The Company adopted ASU No. 2019-12 on January 1,
2021, the effect of which was not material on its financial position, results of operations, and cash flows.
F-18
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 4. Acquisitions and Divestitures
Beaumont Land Sale
On December 22, 2021, the Company entered into an agreement to sell land related to the Beaumont former operating site for cash consideration of
approximately $17 (the “Beaumont Transaction”). There were no material assets or liabilities classified as held for sale at December 31, 2021. This
sale will be recorded as part of the Company’s Chemical Solutions segment. The Beaumont Transaction is expected to close in the first quarter of
2022, subject to customary closing conditions, including regulatory approvals.
Divestiture of Mining Solutions
On July 26, 2021, the Company entered into a definitive agreement with Manchester Acquisition Sub LLC, a Delaware limited liability company and a
subsidiary of Draslovka Holding a.s., to sell the Mining Solutions business of its Chemical Solutions segment for cash consideration of approximately
$520 (the “Mining Solutions Transaction”). The Company completed the sale on December 1, 2021 and received net cash proceeds of $508, net of
$13 cash divested. Upon completion of the sale, the Company also recorded a net pre-tax gain on sale of $112 in other income (expense), net in the
consolidated statements of operations, inclusive of $21 of transaction costs. The sale of the Mining Solutions business does not represent a strategic
shift that will have a major effect on the Company’s operations and financial results. Accordingly, the disposal group is not classified as a
discontinued operation.
Divestiture of Methylamines and Methylamides
In December 2019, the Company entered into an asset purchase agreement with Belle Chemical Company (“Belle”), a subsidiary of Cornerstone
Chemical Company, whereby Belle agreed to acquire the Methylamines and Methylamides business of Chemours’ Chemical Solutions segment for a
negligible purchase price, subject to customary working capital and other adjustments, but not to exceed a loss on sale of $2. The Company
completed the sale and, in December 2019, subsequent to working capital adjustments, received cash proceeds of $2. Prior to the completion of the
sale, in the second half of 2019, the Company recorded accelerated depreciation of $34, which was recorded as a component of restructuring, asset-
related, and other charges in the consolidated statements of operations. Upon completion of the sale, the Company also recorded an additional pre-
tax loss on sale of $2, net of a benefit from working capital adjustments, in other income (expense), net in the consolidated statements of operations.
Sale of Oakley, California
In September 2019, the Company sold its Oakley, California site to a third party for $7, of which $4 was received at closing. Receipt of the remaining
$3 of proceeds was contingent upon the completion of certain environmental remediation activities at the site; these environmental remediation
activities were completed, and the associated proceeds were received, in 2020. In connection with the sale, Chemours retained $10 in existing
environmental remediation liabilities. $3 and $4 of environmental remediation liabilities remained on the Company’s consolidated balance sheets at
December 31, 2021 and 2020, respectively. The Company recognized a $6 gain on the sale, inclusive of the aforementioned $3 of proceeds
received in 2020. The remaining portion of the gain previously deferred was recognized in 2020 upon the Company’s completion of certain
environmental remediation activities at the site.
F-19
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Acquisition of Southern Ionics Minerals, LLC
In August 2019, the Company, through its wholly-owned subsidiary, The Chemours Company FC, LLC, entered into a Membership Interest
Purchase Agreement to acquire all of the outstanding stock of Southern Ionics Minerals, LLC (“SIM”) for an estimated total consideration of
approximately $25, which included customary working capital and other adjustments made within a specified time period. SIM was a privately-held
minerals exploration, mining, and manufacturing company headquartered in Jacksonville, Florida. SIM mines and processes titanium and zirconium
mineral sands, and this acquisition expanded Chemours’ flexibility and scalability to internally source ore in the Company’s Titanium Technologies
segment. The aggregate purchase price of $25 included an upfront payment of $10, an additional installment payment of $10, and contingent
considerations with an estimated fair value of $5. The additional installment payment of $10 was made during the third quarter of 2020. The
Company accounted for the acquisition of SIM as a business combination, and as such, all assets acquired and liabilities assumed were recorded at
their estimated fair values.
The purchase consideration was primarily assigned to the property, plant, and equipment of the acquired business, and there was no goodwill
associated with the transaction. These amounts were subject to further adjustment during the applicable measurement period as additional
information was obtained, including the finalization of a third-party appraisal. The Company completed its assessment during the fourth quarter of
2019, and no subsequent adjustments were made to these amounts.
The Company’s consolidated financial statements include SIM’s results of operations from August 1, 2019, the date of acquisition. Net sales and net
income (loss) attributable to Chemours contributed by SIM during this period were not material to the Company’s or its Titanium Technologies
segment’s results of operations. Acquisition-related expenses amounted to less than $1 for the year ended December 31, 2019 and are included as
a component of selling, general, and administrative expense in the consolidated statements of operations.
F-20
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 5. Net Sales
Disaggregation of Net Sales
The following table sets forth a disaggregation of the Company’s net sales by geographic region and segment and product group for the years ended
December 31, 2021, 2020, and 2019.
2021
Year Ended December 31,
2020
2019
Net sales by geographic region (1)
North America:
Titanium Technologies
Thermal & Specialized Solutions
Advanced Performance Materials
Chemical Solutions
Total North America
Asia Pacific:
Titanium Technologies
Thermal & Specialized Solutions
Advanced Performance Materials
Chemical Solutions
Total Asia Pacific
Europe, the Middle East, and Africa:
Titanium Technologies
Thermal & Specialized Solutions
Advanced Performance Materials
Chemical Solutions
Total Europe, the Middle East, and Africa
Latin America (2):
Titanium Technologies
Thermal & Specialized Solutions
Advanced Performance Materials
Chemical Solutions
Total Latin America
Total net sales
Net sales by segment and product group
Titanium Technologies:
Titanium dioxide and other minerals
Thermal & Specialized Solutions:
Refrigerants
Foam, propellants, and other
Advanced Performance Materials:
Fluoropolymers and advanced materials
Chemical Solutions:
Mining solutions
Performance chemicals and intermediates
Total net sales
$
$
1,019
635
494
169
2,317
1,049
160
595
23
1,827
829
313
254
16
1,412
458
149
54
128
789
6,345
$
$
776
520
407
211
1,914
778
134
450
22
1,384
528
331
202
25
1,086
320
120
45
100
585
4,969
$
$
$
3,355
$
2,402
$
973
284
1,397
237
99
6,345
$
889
216
1,104
203
155
4,969
$
$
727
592
512
313
2,144
809
166
507
61
1,543
474
408
258
23
1,163
335
152
53
136
676
5,526
2,345
1,086
232
1,330
268
265
5,526
(1) Net sales are attributed to countries based on customer location.
(2)
Latin America includes Mexico.
Substantially all of the Company’s net sales are derived from goods and services transferred at a point in time. The Company’s net sales from
trademark licensing royalties were not significant for the years ended December 31, 2021, 2020, and 2019.
F-21
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Contract Balances
The Company’s assets and liabilities from contracts with customers constitute accounts receivable - trade, deferred revenue, and customer rebates.
An amount for accounts receivable - trade is recorded when the right to consideration under a contract becomes unconditional. An amount for
deferred revenue is recorded when consideration is received prior to the conclusion that a contract exists, or when a customer transfers
consideration prior to the Company satisfying its performance obligations under a contract. Customer rebates represent an expected refund liability
to a customer based on a contract. In contracts with customers where a rebate is offered, it is generally applied retroactively based on the
achievement of a certain sales threshold. As revenue is recognized, the Company estimates whether or not the sales threshold will be achieved to
determine the amount of variable consideration to include in the transaction price.
The following table sets forth the Company’s contract balances from contracts with customers at December 31, 2021 and 2020.
Contract assets:
Accounts receivable - trade, net (Note 11)
Contract liabilities:
Deferred revenue (Note 19 & Note 21)
Customer rebates (Note 19)
December 31,
2021
2020
$
$
644
$
$
5
83
449
12
69
Changes in the Company’s deferred revenue balances resulting from additions for advance payments and deductions for amounts recognized in net
sales during the years ended December 31, 2021 and 2020 were not significant. For the years ended December 31, 2021 and 2020, the amount of
net sales recognized from performance obligations satisfied in prior periods (e.g., due to changes in transaction price) was not significant.
Contract asset balances or capitalized costs associated with obtaining or fulfilling customer contracts were not significant as of December 31, 2021
and 2020.
Remaining Performance Obligations
Certain of the Company’s MSAs or other arrangements contain take-or-pay clauses, whereby customers are required to purchase a fixed minimum
quantity of product during a specified period, or pay the Company for such orders, even if not requested by the customer. The Company considers
these take-or-pay clauses to be an enforceable contract, and as such, the legally-enforceable minimum amounts under such an arrangement are
considered to be outstanding performance obligations on contracts with an original expected duration greater than one year. At December 31, 2021,
Chemours had $5 of remaining performance obligations. The Company expects to recognize approximately 92% of its remaining performance
obligations as revenue in 2022 and approximately 8% as revenue in 2023. The Company applies the allowable practical expedient and does not
include remaining performance obligations that have original expected durations of one year or less, or amounts for variable consideration allocated
to wholly-unsatisfied performance obligations or wholly-unsatisfied distinct goods that form part of a single performance obligation, if any. Amounts
for contract renewals that are not yet exercised by December 31, 2021 are also excluded.
F-22
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 6. Research and Development Expense
The following table sets forth the Company’s R&D expense by segment for the years ended December 31, 2021, 2020, and 2019.
Titanium Technologies
Thermal & Specialized Solutions
Advanced Performance Materials
Chemical Solutions
Corporate and Other
Total research and development expense
Note 7. Restructuring, Asset-related, and Other Charges
2021
Year Ended December 31,
2020
2019
$
$
36
20
46
2
3
107
$
$
31
18
41
2
1
93
$
$
29
17
31
2
1
80
The following table sets forth the components of the Company’s restructuring, asset-related, and other charges for the years ended December 31,
2021, 2020, and 2019.
Restructuring and other charges:
Employee separation charges
Decommissioning and other charges
Total restructuring and other charges
Asset-related charges
Total restructuring, asset-related, and other charges
2021
Year Ended December 31,
2020
2019
$
$
(2 )
8
6
—
6
$
$
17
41
58
22
80
$
$
21
23
44
43
87
F-23
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following table sets forth the impacts of the Company’s restructuring programs to segment earnings for the years ended December 31, 2021,
2020, and 2019.
2021
Year Ended December 31,
2020
2019
$
Restructuring charges:
Plant and product line closures:
Chemical Solutions
Corporate and Other
Total plant and product line closures
2017 Restructuring Program:
Titanium Technologies
Thermal & Specialized Solutions
Advanced Performance Materials
Corporate and Other
Total 2017 Restructuring Program
2018 Restructuring Program:
Corporate and Other
Total 2018 Restructuring Program
2019 Restructuring Program:
Titanium Technologies
Thermal & Specialized Solutions
Advanced Performance Materials
Chemical Solutions
Corporate and Other
Total 2019 Restructuring Program
2020 Restructuring Program:
Titanium Technologies
Thermal & Specialized Solutions
Advanced Performance Materials
Chemical Solutions
Corporate and Other
Total 2020 Restructuring Program
Total restructuring charges
Asset-related charges:
Titanium Technologies
Advanced Performance Materials
Chemical Solutions
Corporate and Other
Total asset-related charges
Other charges:
Titanium Technologies
Advanced Performance Materials
Chemical Solutions
Total other charges
Total restructuring, asset-related, and other charges
$
F-24
$
13
—
13
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1 )
—
—
(1 )
12
—
—
—
—
—
—
1
(7 )
(6 )
$
6
$
4
1
5
—
—
—
(1 )
(1 )
—
—
—
1
2
—
—
3
3
1
3
1
5
13
20
—
10
8
4
22
1
—
37
38
80
$
2
18
20
1
1
1
—
3
(1 )
(1 )
5
3
4
1
9
22
—
—
—
—
—
—
44
9
—
34
—
43
—
—
—
—
87
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Other Charges
Chemical Solutions
In connection with the construction work at the Mining Solutions facility in Gomez Palacio, Durango, Mexico, the Company had previously entered
into an agreement with a third-party services provider. In 2020, the Company entered into dispute resolution with the third-party services provider,
resulting in a $26 charge related to probable contract termination fees, as well as immediate recognition of $11 of other related prepaid costs for a
total of $37 in Other Charges. During 2021, the Company and the third-party services provider reached an agreement to terminate the contractual
relationship resulting in a payment of $26 for the aforementioned contract termination fees and, in exchange, the Company received title to
approximately $22 of assets classified as construction-in-process, of which only approximately $9 were expected to be used by the Company when
construction resumed. Accordingly, approximately $13 was recognized in impairment charges in 2021, offset by $22 of the liability recorded in 2020
being reversed in 2021, resulting in a net $9 gain in Other Charges. Additionally, during the year ended December 31, 2021, the Company incurred
$2 of freight charges associated with transportation of the impaired assets. In December 2021, the assets at the Mining Solutions facility in Gomez
Palacio, Durango, Mexico were sold as part of the Mining Solutions Transaction.
Plant and Product Line Closures and Asset-related Charges
Titanium Technologies
In December 2019, in an effort to improve the profitability of the Company’s Titanium Technologies segment, management approved the
discontinuation of the titanium tetrachloride production line at the Company’s New Johnsonville, Tennessee site. For the year ended December 31,
2019, the Company recorded accelerated depreciation of $9. The Company does not expect to incur material decommissioning and dismantling-
related charges related to the discontinuation of this production line.
Advanced Performance Materials
In the year ended December 31, 2020, in connection with various property, plant, and equipment and other asset impairments, the Company
recorded asset-related charges of $10.
Chemical Solutions
In 2015, the Company announced its completion of the strategic review of its Reactive Metals Solutions business and the decision to stop production
at its Niagara Falls, New York manufacturing plant. Following the closure of the facility, the Company incurred decommissioning and dismantling-
related charges of $2, $2, and $2 for the years ended December 31, 2021, 2020, and 2019, respectively. The Company expects to incur and spend
approximately $1 related to additional restructuring charges for similar activities by the end of 2022, all of which relate to Chemical Solutions.
Through December 31, 2021, the Company has incurred, in the aggregate, $42 in restructuring charges related to these activities, excluding asset-
related charges.
In 2019, in an effort to improve the profitability of the Company’s Chemical Solutions segment, the Company announced plans to exit its
Methylamines and Methylamides business at its Belle, West Virginia manufacturing plant, which culminated in the completed exit and sale of the
business in December 2019. As a result, for the year ended December 31, 2019, the Company recorded accelerated depreciation of $34. The
Company does not expect to incur additional charges related to the exit of the Methylamines and Methylamides business. Refer to “Note 4 –
Acquisitions and Divestitures” for further details.
In 2020, the Company completed a business review of its Aniline business. It was determined that the Aniline business was not core to the
Company’s future strategy, and production ceased at the Pascagoula, Mississippi manufacturing plant in the fourth quarter of 2020. As a result,
during the year ended December 31, 2020, the Company recorded asset-related charges of $10, which are primarily comprised of $6 for property,
plant, and equipment and other asset impairments, as well as $4 for environmental remediation liabilities to be paid over a period of approximately
16 years. The Company also recorded employee separation-related liabilities of $2. In conjunction with this decision, approximately 20 employees
separated from the Company through the end of 2021 with approximately 15 additional employees separating from the Company during the first
quarter of 2022. At December 31, 2021, $1 remained as an employee separation-related liability, and the remaining severance payments are
expected to be made by the first quarter of 2022. Furthermore, the Company recorded decommissioning and dismantling-related charges of $12 for
the year ended December 31, 2021. The future net cash outflows associated with these exit costs are not expected to be material.
F-25
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Corporate and Other
In 2018, the Company began a project to demolish and remove several dormant, unused buildings at its Chambers Works site in Deepwater, New
Jersey, which were assigned to Chemours in connection with its Separation from EID and never used in Chemours’ operations. For the years ended
December 31, 2020 and 2019, the Company incurred $1 and $18, respectively, in additional decommissioning and dismantling-related charges
associated with these efforts. Through December 31, 2021, the Company has incurred, in the aggregate, $28 in restructuring charges related to
these activities. The Company does not currently expect to incur additional charges related to these activities at its Chambers Works site, and any
remaining future charges and cash outflows associated with these activities are not expected to be material.
2017 Restructuring Program
In 2017, the Company announced certain restructuring activities designed to further the cost savings and productivity improvements outlined under
management’s transformation plan. These activities include, among other efforts: (i) outsourcing and further centralizing certain business process
activities; (ii) consolidating existing, outsourced third-party information technology (“IT”) providers; and, (iii) implementing various upgrades to the
Company’s current IT infrastructure. In connection with these corporate function efforts, the Company recorded $3 in restructuring-related charges
for year ended December 31, 2019.
In 2017, the Company also announced a voluntary separation program (“VSP”) for certain eligible U.S. employees in an effort to better manage the
anticipated future changes to its workforce. Employees who volunteered for and were accepted under the VSP received certain financial incentives
above the Company’s customary involuntary termination benefits to end their employment with Chemours after providing a mutually agreed-upon
service period. Approximately 300 employees separated from the Company through the end of 2018. An accrual representing the majority of these
termination benefits, amounting to $18, was recognized in the fourth quarter of 2017. The remaining $9 of incremental, one-time financial incentives
under the VSP were recognized over the period that each participating employee continued to provide service to Chemours.
The cumulative amount incurred, in the aggregate, for the Company’s 2017 Restructuring Program amounted to $61 at December 31, 2021. The
Company has substantially completed all actions related to this program.
2018 Restructuring Program
In 2018, management initiated a restructuring program of the Company’s corporate functions and recorded the related estimated severance costs of
$5. The Company has substantially completed all actions related to this program.
2019 Restructuring Program
In 2019, management initiated a severance program of the Company’s corporate functions and businesses, and the majority of employees
separated from the Company during the fourth quarter of 2019. For the years ended December 31, 2020 and 2019, the Company recorded charges
for its 2019 Restructuring Program of $3 and $22, respectively. Through December 31, 2021, the cumulative amount incurred for the Company’s
2019 Restructuring Program amounted to $25. The Company has substantially completed all actions related to this program.
2020 Restructuring Program
In 2020, management initiated a severance program that was largely attributable to further aligning the cost structure of the Company’s businesses
and corporate functions with its strategic and financial objectives. Through December 31, 2021, the cumulative amount incurred for the Company’s
2020 Restructuring Program amounted to $12 and the Company has substantially completed all actions related to this program.
F-26
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following table sets forth the change in the Company’s employee separation-related liabilities associated with its restructuring programs for the
years ended December 31, 2021 and 2020.
Chemical Solutions
Site Closures
2017
Restructuring
Program
2019
Restructuring
Program
2020
Restructuring
Program
Total
Balance at January 1, 2020
Charges (credits) to income
Payments
Balance at December 31, 2020
Credits to income
Payments
Balance at December 31, 2021
$
$
—
2
—
2
(1 )
—
1
$
$
1
(1 )
—
—
—
—
—
$
$
14
3
(15 )
2
—
(2 )
—
$
$
—
13
(10 )
3
(1 )
(2 )
—
$
$
15
17
(25 )
7
(2 )
(4 )
1
At December 31, 2021 and 2020, there were no significant outstanding liabilities related to the Company’s decommissioning and other restructuring-
related charges.
Note 8. Other Income (Expense), Net
The following table sets forth the components of the Company’s other income (expense), net for the years ended December 31, 2021, 2020, and
2019.
2021
Year Ended December 31,
2020
2019
Leasing, contract services, and miscellaneous income (1)
Royalty income (2)
Gain on sales of assets and businesses (3)
Exchange gains (losses), net (4)
Non-operating pension and other post-retirement employee benefit
income (cost) (5)
Total other income (expense), net
$
$
$
14
22
115
3
9
163
$
$
20
18
8
(26 )
1
21
$
51
16
10
(2 )
(368 )
(293 )
(1)
Leasing, contract services, and miscellaneous income includes European Union fluorinated greenhouse gas quota authorization sales of $3, $3, and $41 for the years ended
December 31, 2021, 2020, and 2019, respectively.
(2) Royalty income for the years ended December 31, 2021, 2020, and 2019 is primarily from technology licensing.
(3) For the year ended December 31, 2021, gain on sale includes a net pre-tax gain on sale of $112 associated with the sale of the Company’s Mining Solutions business of its
Chemical Solutions segment which is further discussed in “Note 4 – Acquisitions and Divestitures”. For the year ended December 31, 2020, gain on sale includes a $6 gain
associated with the sale of the Company’s Oakley, California site, which was contingent upon the completion of certain environmental remediation activities at the site. For
the year ended December 31, 2019, gain on sale includes a non-cash gain of $9 recognized in connection with the Company’s sale of its Repauno, New Jersey site; that was
previously deferred and subsequently realized after certain environmental obligations were fulfilled.
(4) Exchange gains (losses), net includes gains and losses on the Company’s foreign currency forward contracts that have not been designated as a cash flow hedge.
(5) Non-operating pension and other post-retirement employee benefit income (cost) represents the components of net periodic pension income (cost), excluding the service
cost component. The year ended December 31, 2019 includes a $380 settlement loss related to a significant portion of the Company’s Netherlands pension plan, specific to
the vested pension benefits of the inactive participants. Refer to “Note 27 – Long-term Employee Benefits” for further details.
F-27
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 9. Income Taxes
The following table sets forth the components of the Company’s provision for (benefit from) income taxes for the years ended December 31, 2021,
2020, and 2019.
Current tax expense (benefit):
U.S. federal
U.S. state and local
International
Total current tax expense
Deferred tax expense (benefit):
U.S. federal
U.S. state and local
International
Total deferred tax benefit
$
Total provision for (benefit from) income taxes
$
2021
Year Ended December 31,
2020
2019
$
60
12
72
144
(69 )
(6 )
(1 )
(76 )
$
68
4 $
1
75
80
(86 )
(12 )
(22 )
(120 )
(40 ) $
The following table sets forth the components of the Company’s deferred tax assets and liabilities at December 31, 2021 and 2020.
Deferred tax assets:
Environmental and other liabilities
Employee related and benefit items
Other assets and accrual liabilities
Tax attribute carryforwards
Operating lease liability
Total deferred tax assets
Less: Valuation allowance
Total deferred tax assets, net
Deferred tax liabilities:
Property, plant, and equipment and intangible assets
LIFO inventories
Operating lease asset
Other liabilities
Total deferred tax liabilities
Deferred tax assets, net
December 31,
2021
2020
$
$
162
64
101
91
56
474
(8 )
466
(244 )
(18 )
(53 )
(30 )
(345 )
121
$
$
Amounts in the table above have been reclassified for certain prior year balances. The overall impact on the table is immaterial.
13
(1 )
79
91
(77 )
(5 )
(81 )
(163 )
(72 )
124
50
43
141
60
418
(24 )
394
(257 )
(12 )
(56 )
(9 )
(334 )
60
F-28
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following table sets forth an analysis of the Company’s effective tax rates for the years ended December 31, 2021, 2020, and 2019.
2021
Year Ended December 31,
2020
2019
$
%
$
%
$
%
Statutory U.S. federal income tax rate
State income taxes, net of federal benefit
Lower effective tax rate on international operations, net
Foreign-derived intangible income deduction
Goodwill
Depletion
Exchange gains
Provision to return and other adjustments
Valuation allowance
Stock-based compensation
Executive compensation limitation
R&D credit
Uncertain tax positions
Other, net
Total effective tax rate
$
$
142
3
(19 )
(12 )
10
(7 )
(13 )
(11 )
(16 )
(4 )
3
(6 )
(3 )
1
68
21.0 % $
0.4 %
(2.8 )%
(1.8 )%
1.5 %
(1.0 )%
(1.9 )%
(1.6 )%
(2.4 )%
(0.6 )%
0.4 %
(0.9 )%
(0.4 )%
0.2 %
10.1 % $
38
(11 )
(34 )
—
—
(6 )
—
(37 )
13
—
1
(7 )
(1 )
4
(40 )
21.0 % $
(6.1 )%
(19.0 )%
— %
— %
(3.4 )%
— %
(20.6 )%
7.3 %
— %
0.6 %
(3.8 )%
(0.5 )%
2.2 %
(22.3 )% $
(26 )
(7 )
(28 )
—
—
(5 )
(7 )
(4 )
8
(14 )
9
(6 )
7
1
(72 )
21.0 %
5.6 %
22.7 %
— %
— %
4.0 %
5.6 %
3.2 %
(6.5 )%
11.4 %
(7.3 )%
4.8 %
(5.6 )%
(0.8 )%
58.1 %
The following table sets forth the Company’s income (loss) before income taxes for its U.S. and international operations for the years ended
December 31, 2021, 2020, and 2019.
U.S. operations (including exports)
International operations
Total income (loss) before income taxes
Other Matters
2021
Year Ended December 31,
2020
2019
$
$
44
632
676
$
$
(136 ) $
315
179
$
(375 )
251
(124 )
Management asserts that it is indefinitely reinvested with respect to all undistributed earnings prior to 2018 and, therefore, has not recorded deferred
tax liabilities with respect to those earnings. Beginning in 2018, management determined that the Company’s earnings from certain foreign
subsidiaries are not indefinitely reinvested and presumed such earnings will be distributed to the U.S. At December 31, 2021 and 2020, deferred tax
liabilities for the foreign subsidiaries that are not indefinitely reinvested were not material to the Company’s consolidated financial statements. At
December 31, 2021, the amount of indefinitely reinvested unremitted earnings was approximately $602. The potential tax implications of the
repatriation of unremitted earnings are driven by the facts at the time of distribution; however, due to U.S. tax reform and the U.S. Transition Tax, the
incremental cost to repatriate earnings is expected to be primarily related to withholding taxes and is not expected to be material.
For the year ended December 31, 2021, the Company recorded $1 of valuation allowance on certain foreign tax credits. For the year ended
December 31, 2020, the Company recorded $12 of valuation allowance on certain foreign subsidiary net deferred tax assets and $2 of valuation
allowance on certain foreign tax credits.
In connection with the classification of assets held for sale during the third quarter of 2021 related to the sale of the Mining Solutions Business on
December 1, 2021, the Company recorded an income tax benefit of $16 related to the release of a valuation allowance on the deferred tax assets of
one of its Mexican subsidiaries. The Company has evaluated all available positive and negative evidence, including the impact of the sale of the
Mining Solutions business, as well as the future projections of profitability for the entity post sale. As a result, the Company determined that all of its
deferred tax assets related to the Mexican subsidiary are more likely than not to be realized and accordingly reversed the valuation allowance
against those deferred tax assets.
F-29
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Under the tax laws of various jurisdictions in which the Company operates, deductions or credits that cannot be fully utilized for tax purposes during
the current year may be carried forward or back, subject to statutory limitations, to reduce taxable income or taxes payable in future or prior years. At
December 31, 2021, the Company’s U.S state tax losses amounted to $4, which substantially expire between 2036 and 2039. The Company has
foreign net operating losses of $12, which expire between 2026 and 2031, and $8 of certain foreign tax credits, which expire between 2025 and
2031.
Each year, Chemours and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and non-U.S. jurisdictions.
The following table sets forth the Company’s significant jurisdictions’ tax returns that are subject to examination by their respective taxing authorities
for the open years listed.
Jurisdiction
China
India
Mexico
Netherlands
Singapore
Switzerland
Taiwan
U.S.
Open Years
2015 through 2021
2015 through 2021
2015 through 2021
2017 through 2021
2017 through 2021
2018 through 2021
2015 through 2021
2017 through 2021
Positions challenged by the taxing authorities may be settled or appealed by Chemours and/or EID in accordance with the tax matters agreement.
As a result, income tax uncertainties are recognized in the Company’s consolidated financial statements in accordance with accounting for income
taxes, when applicable.
The following table sets forth the change in the Company’s unrecognized tax benefits for the years ended December 31, 2021, 2020, and 2019.
2021
Year Ended December 31,
2020
2019
7 $
(1 )
—
(1 )
5 $
4 $
(1 )
1
9 $
(2 )
1
(1 )
7 $
8 $
1
1
2
—
7
—
9
9
—
—
Balance at January 1,
Gross amounts of decreases in unrecognized tax benefits as a result of
adjustments to tax provisions taken during the prior period
Gross amounts of increases in unrecognized tax benefits as a result of
tax positions taken during the current period
Reduction to unrecognized tax benefits as a result of a lapse of the
applicable statute of limitations
Balance at December 31,
Total unrecognized tax benefits, if recognized, that would impact the
effective tax rate
Total amount of interest and penalties recognized in the consolidated
statements of operations
Total amount of interest and penalties recognized in the consolidated
balance sheets
$
$
$
F-30
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following table sets forth a rollforward of the Company’s deferred tax asset valuation allowance for the years ended December 31, 2021, 2020,
and 2019.
Balance at January 1,
Net charges to income tax expense
Release of valuation allowance
Balance at December 31,
Note 10. Earnings Per Share of Common Stock
2021
Year Ended December 31,
2020
2019
$
$
$
24
—
(16 )
$
8
10
14
—
24
$
$
2
8
—
10
The following table sets forth the reconciliations of the numerators and denominators of the Company’s basic and diluted earnings per share
calculations for the years ended December 31, 2021, 2020, and 2019.
Numerator:
Net income (loss) attributable to Chemours
$
608
$
219
$
(52 )
2021
Year Ended December 31,
2020
2019
Denominator:
Weighted-average number of common shares
outstanding - basic
Dilutive effect of the Company’s employee
compensation plans (1)
Weighted-average number of common shares
outstanding - diluted (1)
164,943,575
164,681,827
164,816,839
3,754,864
1,664,702
—
168,698,439
166,346,529
164,816,839
Basic earnings (loss) per share of common stock
Diluted earnings (loss) per share of common stock (1)
$
$
3.69
3.60
$
1.33
1.32
(0.32 )
(0.32 )
(1)
In periods where the Company incurs a net loss, the impact of potentially dilutive securities is excluded from the calculation of earnings per share as its inclusion would have
an anti-dilutive effect.
The following table sets forth the average number of stock options that were anti-dilutive and, therefore, were not included in the Company’s diluted
earnings per share calculations for the years ended December 31, 2021, 2020, and 2019.
Average number of stock options
2021
Year Ended December 31,
2020
2019
1,500,577
3,839,845
2,206,609
F-31
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 11. Accounts and Notes Receivable, Net
The following table sets forth the components of the Company’s accounts and notes receivable, net at December 31, 2021 and 2020.
Accounts receivable - trade, net (1)
VAT, GST, and other taxes (2)
Other receivables (3)
Total accounts and notes receivable, net
December 31,
2021
2020
$
$
644
41
35
720
$
$
449
49
13
511
(1) Accounts receivable - trade, net includes trade notes receivable of $17 and less than $1 and is net of allowances for doubtful accounts of $5 and $7 at December 31, 2021
and 2020, respectively. Such allowances are equal to the estimated uncollectible amounts.
(2) Value added tax (“VAT”) and goods and services tax (“GST”) for various jurisdictions.
(3) Other receivables consist of derivative instruments, advances and other deposits.
Accounts and notes receivable are carried at amounts that approximate fair value. Bad debt expense amounted to $2, $3 and less than $1 for the
years ended December 31, 2021, 2020 and 2019, respectively.
Note 12. Inventories
The following table sets forth the components of the Company’s inventories at December 31, 2021 and 2020.
Finished products
Semi-finished products
Raw materials, stores, and supplies
Inventories before LIFO adjustment
Less: Adjustment of inventories to LIFO basis
Total inventories
December 31,
2021
2020
$
$
704
192
475
1,371
(272 )
1,099
$
$
579
180
433
1,192
(253 )
939
Inventory values, before LIFO adjustment, are generally determined by the average cost method, which approximates current cost. Inventories are
valued under the LIFO method at substantially all of the Company’s U.S. locations, which comprised $650 and $585 (or 47% and 49%, respectively)
of inventories before the LIFO adjustments at December 31, 2021 and 2020, respectively. The remainder of the Company’s inventory held in
international locations and certain U.S. locations is valued under the average cost method.
During 2021, inventory reductions in the Company’s Titanium Technologies segment resulted in liquidations of LIFO inventory layers carried at lower
costs prevailing in prior years as compared to current-year costs. During the year ended December 31, 2021, the benefit to net income (loss)
attributable to Chemours from the liquidation of LIFO inventory was $8 or $0.05 on basic earnings (loss) per share of common stock.
F-32
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 13. Property, Plant, and Equipment, Net
The following table sets forth the components of the Company’s property, plant, and equipment, net at December 31, 2021 and 2020.
Equipment
Buildings
Construction-in-progress
Land
Mineral rights
Property, plant, and equipment
Less: Accumulated depreciation
Total property, plant, and equipment, net
December 31,
2021
2020
$
$
7,559
1,168
361
108
36
9,232
(6,078 )
3,154
$
$
7,816
1,198
421
111
36
9,582
(6,108 )
3,474
Property, plant, and equipment, net included gross assets under finance leases of $95 and $86 at December 31, 2021 and 2020, respectively.
Interest expense capitalized as part of property, plant, and equipment, net amounted to $5, $4, and $10 for the years ended December 31, 2021,
2020, and 2019, respectively.
Depreciation expense amounted to $309, $313, and $304 for the years ended December 31, 2021, 2020, and 2019, respectively.
Note 14. Leases
The Company leases certain office space, laboratory space, equipment, railcars, tanks, barges, tow boats, and warehouses. Lease expense is
recognized over the term of these leases on a straight-line basis. The Company’s leases have remaining terms of up to 25 years. Some leases of
equipment contain immaterial amounts of residual value guarantees. Leases with an initial term of 12 months or less are not recorded on the
consolidated balance sheets.
The following table sets forth the Company’s lease assets and lease liabilities and their balance sheet locations at December 31, 2021 and 2020.
Lease assets:
Operating lease right-of-use assets
Finance lease assets
Total lease assets
Lease liabilities:
Current:
Operating lease liabilities
Finance lease liabilities
Total current lease liabilities
Non-current:
Operating lease liabilities
Finance lease liabilities
Total non-current lease liabilities
Total lease liabilities
Balance Sheet Location
2021
2020
December 31,
Operating lease right-of-use assets
Property, plant, and equipment, net (Note 13)
$
$
Other accrued liabilities (Note 19)
Short-term and current maturities of long-term
debt (Note 20)
$
Operating lease liabilities
Long-term debt, net (Note 20)
$
227
69
296
$
$
59
$
12
71
179
60
239
310
$
236
69
305
57
7
64
194
67
261
325
F-33
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following table sets forth the components of the Company’s lease cost for the years ended December 31, 2021, 2020 and 2019.
Operating lease cost
Short-term lease cost
Variable lease cost
Finance lease cost:
Amortization of lease assets
Interest on lease liabilities
Total lease cost
2021
Year Ended December 31,
2020
2019
$
$
$
66
7
21
12
4
110
$
$
88
5
20
8
4
125
$
The following table sets forth the cash flows related to the Company’s leases for the years ended December 31, 2021, 2020 and 2019.
2021
Year Ended December 31,
2020
2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Non-cash lease liabilities activity:
Leased assets obtained in exchange for new operating lease liabilities
Leased assets obtained in exchange for new finance lease liabilities
$
$
70 $
4
10
45 $
14
91 $
4
6
23 $
19
99
5
16
5
2
127
101
2
3
48
62
The following table sets forth the weighted-average terms and weighted-average discount rates for the Company’s leases at December 31, 2021 and
2020.
December 31,
2021
2020
Weighted-average remaining lease term (years):
Operating leases
Finance leases
Weighted-average discount rate:
Operating leases
Finance leases
11.0
6.3
5.30 %
4.80 %
The following table sets forth the Company’s lease liabilities’ maturities for the next five years and thereafter.
Finance Leases
$
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less: Imputed interest
Present value of lease liabilities
Operating Leases
61
$
46
37
29
25
93
291
(53 )
238
$
F-34
$
8.6
7.9
5.00 %
5.40 %
75
60
50
42
38
112
377
(67 )
310
Total
$
$
14
14
13
13
13
19
86
(14 )
72
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The Chemours Discovery Hub
In October 2017, Chemours executed a build-to-suit lease agreement to construct a new 312,000-square-foot R&D facility located in the Science,
Technology, and Advanced Research campus of the University of Delaware (“UD”) in Newark, Delaware (“Chemours Discovery Hub”). Chemours
was deemed to be the owner for accounting purposes during construction of the facility. Construction was completed in the fourth quarter of 2019,
and, upon its completion, Chemours evaluated whether a sale occurred for purposes of sale-leaseback accounting treatment. The Company
determined that this transaction did not qualify for sale-leaseback accounting, and, as a result, the leasing arrangement is considered to be a
financing transaction. At completion of the construction, the build-to-suit lease liability was reclassified as a financing obligation within long-term debt,
net, and the build-to-suit lease asset was capitalized in property, plant and equipment, net. At December 31, 2021 and 2020, a financing obligation of
$93 and $94, respectively, and property, plant, and equipment of $88 and $92, respectively, are recorded on the Company’s consolidated balance
sheet.
The following table sets forth the Company’s minimum future payments due for the next five years and thereafter related to the Chemours Discovery
Hub financing obligation.
2022
2023
2024
2025
2026
Thereafter
Total payments
Note 15. Goodwill and Other Intangible Assets, Net
Goodwill
$
$
6
7
7
7
7
147
181
The following table sets forth the changes in the carrying amount of the Company’s goodwill by segment for the years ended December 31, 2021
and 2020.
Balance at January 1, 2020
Balance at December 31, 2020
Divestitures
Balance at December 31, 2021
Titanium
Technologies
Thermal &
Specialized
Solutions
Advanced
Performance
Materials
Chemical
Solutions
Total
$
$
13 $
13
—
13 $
33 $
33
—
$
33
56 $
56
—
$
56
51 $
51
(51 )
—
$
153
153
(51 )
102
Chemours consists of four operating segments: Titanium Technologies, Thermal & Specialized Solutions, Advanced Performance Materials, and
Chemical Solutions. In 2020, the Company’s reporting units were consistent with its operating segments, with the exception of the Chemical
Solutions segment, which was comprised of the Mining Solutions and Performance Chemicals and Intermediates reporting units. In 2021, following
the Mining Solutions Transaction, the Company’s reporting units are consistent with its operating segments. For the year ended December 31, 2020
the Company did not have any adjustments to or transfers of its goodwill balances. For the year ended December 31, 2021, $51 of goodwill was
allocated to the disposal group in determining the gain on sale of the Mining Solutions business. The Company tested the goodwill balances
attributable to each of its reporting units for potential impairment on October 1, 2021 and 2020, the dates of Chemours’ annual goodwill assessment.
No goodwill impairments were recorded for the years ended December 31, 2021 and 2020, as the fair values of the Company’s reporting units that
carry goodwill exceeded each respective reporting unit’s carrying amount on October 1, 2021 and 2020.
The total accumulated impairment losses included in the Company’s goodwill balance at December 31, 2021 and 2020 amounted to $4.
F-35
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Other Intangible Assets, Net
The following table sets forth the gross carrying amounts and accumulated amortization of the Company’s other intangible assets by major class at
December 31, 2021 and 2020.
Customer lists
Customer relationships
Patents
Purchased trademarks
Purchased and licensed technology
Other (1)
Total other intangible assets
Cost
2
22
19
—
3
10
56
$
$
$
December 31, 2021
Accumulated
Amortization
(2 )
(16 )
(19 )
—
(3 )
(10 )
(50 )
$
Net
Cost
$
$
—
6
—
—
—
—
6
$
$
9
22
19
5
3
10
68
$
December 31, 2020
Accumulated
Amortization
(9 )
(12 )
(19 )
(3 )
(3 )
(8 )
(54 )
$
Net
—
10
—
2
—
2
14
$
$
(1) Represents non-cash favorable supply contracts acquired in connection with the sale of the Sulfur business in 2016 based on the present value of the difference between
their contractual cash flows and estimated cash flows had the contracts been executed at a determinable market price. These contract intangibles were amortized to cost of
goods sold over the remaining life of the supply contracts through 2021.
The aggregate pre-tax amortization expense for definite-lived intangible assets was $8, $7, and $ 7 for the years ended December 31, 2021, 2020,
and 2019, respectively. The estimated aggregate pre-tax amortization expense for 2022 and 2023 is $5 and $1. No pre-tax amortization expense is
estimated for 2024, 2025, and 2026. Definite-lived intangible assets are amortized over their estimated useful lives, generally for periods ranging
from five to 20 years. The reasonableness of the useful lives of these assets is periodically evaluated. The Company does not have any indefinite-
lived intangible assets.
Note 16. Investments in Affiliates
The Company holds investments in companies where it, directly or indirectly, owns 20% to 50% of the voting stock, or has the ability to exercise
significant influence over the operating and financial policies of the investee.
The following table sets forth the jurisdiction, carrying value, and ownership percentages of the Company’s investments in affiliates at December 31,
2021 and 2020.
December 31, 2021
December 31, 2020
Investee
Chemours-Mitsui Fluorochemicals Company, Ltd.
The Chemours Chenguang Fluoromaterials Company Limited
Changshu 3F Zhonghao New Chemical Materials Co., Ltd.
Jurisdiction
Japan
China
China
Carrying Value
$
98
33
38
169
Ownership
50.0%
50.0%
10.0%
Carrying Value
$
$
104
32
31
167
Ownership
50.0%
50.0%
10.0%
$
The following table sets forth the changes in the Company’s investments in affiliates for the years ended December 31, 2021, 2020, and 2019.
Balance at January 1,
Equity in earnings of affiliates
Dividends
Currency translation and other
Balance at December 31,
2021
Year Ended December 31,
2020
2019
$
$
167 $
43
(30 )
(11 )
169 $
162 $
23
(25 )
7
167 $
160
29
(28 )
1
162
The Company engages in transactions with its equity method investees in the ordinary course of business. For the years ended December 31, 2021,
2020, and 2019, net sales to the Company’s equity method investees amounted to $144, $98, and $135, respectively, and purchases from the
Company’s equity method investees amounted to $180, $133, and $249, respectively.
F-36
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 17. Other Assets
The following table sets forth the components of the Company’s other assets at December 31, 2021 and 2020.
Capitalized repair and maintenance costs
Pension assets (1)
Deferred income taxes
Miscellaneous
Total other assets
December 31,
2021
2020
$
$
195
55
171
26
447
$
$
(1) Pension assets represents the funded status of certain of the Company’s long-term employee benefit plans.
Note 18. Accounts Payable
The following table sets forth the components of the Company’s accounts payable at December 31, 2021 and 2020.
Trade payables
VAT and other payables
Total accounts payable
Note 19. Other Accrued Liabilities
December 31,
2021
2020
$
$
1,141
21
1,162
$
$
The following table sets forth the components of the Company’s other accrued liabilities at December 31, 2021 and 2020.
Employee separation costs
Accrued litigation (1)
Asset retirement obligations (1)
Income taxes
Customer rebates
Deferred revenue
Accrued interest
Operating lease liabilities (2)
Miscellaneous (3)
Total other accrued liabilities
December 31,
2021
2020
$
$
2
36
14
43
83
3
17
59
68
325
$
$
198
79
95
33
405
820
24
844
7
37
13
64
69
7
18
57
103
375
(1) Represents the current portions of accrued litigation and asset retirement obligations, which are discussed further in “Note 22 – Commitments and Contingent Liabilities”.
(2) Represents the current portion of operating lease liabilities, which are discussed further in “Note 14 – Leases”.
(3) Miscellaneous primarily includes accruals related to utility expenses, property taxes, a workers compensation indemnification liability and other miscellaneous expenses.
F-37
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 20. Debt
The following table sets forth the components of the Company’s debt at December 31, 2021 and 2020.
Senior secured term loans:
Tranche B-2 U.S. dollar term loan due April 2025
Tranche B-2 euro term loan due April 2025
(€337 at December 31, 2021 and €340 at December 31, 2020)
Senior unsecured notes:
7.000% due May 2025
4.000% due May 2026
(€450 at December 31, 2021 and 2020)
5.375% due May 2027
5.750% due November 2028
4.625% due November 2029
Finance lease liabilities
Financing obligation (1)
Total debt principal
Less: Unamortized issue discounts
Less: Unamortized debt issuance costs
Less: Short-term and current maturities of long-term debt
Total long-term debt, net
December 31,
2021
2020
$
776
$
381
—
510
500
800
650
72
93
3,782
(5 )
(28 )
(25 )
3,724
$
$
875
417
750
551
500
800
—
74
94
4,061
(7 )
(28 )
(21 )
4,005
(1) At December 31, 2021 and 2020, financing obligation includes $93 and $94, respectively, in connection with the financed portion of the Chemours Discovery Hub. Refer to
“Note 14 – Leases” for further details.
Senior Secured Credit Facilities
The Company’s credit agreement, as amended and restated on April 3, 2018, (“Credit Agreement”) provides for a seven-year, senior secured term
loan facility and a five-year, $800 senior secured revolving credit facility (“Revolving Credit Facility”) (collectively, the “Senior Secured Credit
Facilities”). On October 7, 2021, the Company entered into an amendment to the Credit Agreement (“Credit Agreement Amendment”) to, among
other things, increase the aggregate commitment amount under the Revolving Credit Facility to $900 and extend the stated maturity date to October
7, 2026 (from April 3, 2023). The Credit Agreement is subject to a springing maturity in the event that the senior secured term loans due April 2025
and the senior unsecured notes due in May 2026 are not redeemed, repaid, modified, and/or refinanced within the 91-day period prior to their
maturity date.
The senior secured term loan facility under the Senior Secured Credit Facilities provides for a class of term loans, denominated in U.S. dollars, in an
aggregate principal amount of $900 (“Dollar Term Loan”) and a class of term loans, denominated in euros, in an aggregate principal amount of €350
(“Euro Term Loan”) (collectively, the “Term Loans”). The Dollar Term Loan bears a variable interest rate equal to, at the election of the Company,
adjusted LIBOR plus 1.75% or adjusted base rate plus 0.75%, subject to an adjusted LIBOR or an adjusted base rate floor of 0.00% or 1.00%,
respectively. The Euro Term Loan bears a variable interest rate equal to adjusted EURIBOR plus 2.00%, subject to an adjusted EURIBOR floor of
0.50%. The Term Loans will mature on April 3, 2025, and are subject to acceleration in certain circumstances.
At December 31, 2021, the effective interest rates on the Dollar Term Loan and the Euro Term Loan were 1.9% and 2.5%, respectively.
For the years ended December 31, 2021, 2020, and 2019, the Company made term loan repayments of $13 on its Term Loans. During 2021, the
Company repurchased through open market transactions, an aggregate principal amount of $37 and made an optional prepayment of $54 on its
senior secured term loans.
F-38
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The proceeds of any loans made under the Revolving Credit Facility can be used for working capital needs and other general corporate purposes,
including permitted acquisitions, as defined in the Credit Agreement. The Revolving Credit Facility bears a variable interest rate range based on the
Company’s total net leverage ratio, as defined in the Credit Agreement, between (i) a 0.25% and a 1.00% spread for adjusted base rate loans, and
(ii) a 1.25% and a 2.00% spread for LIBOR and EURIBOR loans. In addition, the Company is required to pay a commitment fee on the average daily
unused amount of the Revolving Credit Facility within an interest rate range based on its total net leverage ratio, between 0.10% and 0.25%. At
December 31, 2021, commitment fees on the Revolving Credit Facility were assessed at a rate of 0.15% per annum.
On April 8, 2020, as a precautionary measure in light of macroeconomic uncertainties driven by COVID-19, the Company drew $300 from its
Revolving Credit Facility; the borrowings were subsequently repaid during the third quarter of 2020. In the second quarter of 2019, the Company
drew $150 under its Revolving Credit Facility for general corporate purposes; the borrowings were subsequently repaid during the third quarter of
2019. No borrowings were outstanding under the Revolving Credit Facility at December 31, 2021 and 2020. Chemours also had $107 and $102 in
letters of credit issued and outstanding under the Revolving Credit Facility at December 31, 2021 and 2020, respectively.
Under the Credit Agreement, solely with respect to the Revolving Credit Facility, the Company is required to maintain a senior secured net leverage
ratio not to exceed 2.00 to 1.00 in each quarter, through the date of maturity. In addition, the Credit Agreement contains customary affirmative and
negative covenants that, among other things, limit or restrict the Company’s and its subsidiaries’ ability, subject to certain exceptions, to incur
additional indebtedness or liens, pay dividends, and engage in certain transactions, including mergers, acquisitions, asset sales, or investments,
outside of specified carve-outs. The Credit Agreement also contains customary representations and warranties and events of default. The Company
was in compliance with its debt covenants at December 31, 2021 and 2020.
The Company’s obligations under the Senior Secured Credit Facilities are guaranteed on a senior secured basis by all of its material domestic
subsidiaries, which are also guarantors of the Company’s outstanding notes, subject to certain exceptions. The obligations under the Senior Secured
Credit Facilities are also, subject to certain exceptions, secured by a first priority lien on substantially all of the Company’s assets and substantially all
of the assets of its wholly-owned, material domestic subsidiaries, including 100% of the stock of certain of its domestic subsidiaries and 65% of the
stock of certain of its foreign subsidiaries.
Senior Unsecured Notes
Senior Unsecured Notes Due May 2025
On May 12, 2015, Chemours issued an aggregate principal amount of $2,503 in senior unsecured notes consisting of an aggregate principal amount
of $1,350 6.625% senior unsecured notes due May 2023, denominated in U.S. dollars (the “2023 Dollar Notes”), an aggregate principal amount of
€360 6.125% senior unsecured notes due May 2023, denominated in euros (the “2023 Euro Notes”), and an aggregate principal amount of $750
7.000% senior unsecured notes due May 2025, denominated in U.S dollars (the “2025 Notes”) (collectively, the “Original Notes”). The Original Notes
required payment of principal at maturity and payments of interest semi-annually in cash and in arrears on May 15 and November 15 of each year.
The proceeds from the Original Notes were issued to fund a cash distribution to EID in connection with the Separation. The Company purchased or
redeemed, as applicable, all of the outstanding 2023 Euro Notes and a $250 aggregate principal amount of the 2023 Dollar Notes during the year
ended December 31, 2018. The Company purchased or redeemed, as applicable, the remaining $908 aggregate principal amount of the 2023 Dollar
Notes during the year ended December 31, 2020. The Company purchased or redeemed, as applicable, the $750 aggregate principal amount of the
2025 Notes during the year ended December 31, 2021.
Senior Unsecured Notes Due May 2027
On May 23, 2017, the Company issued a $500 aggregate principal amount of 5.375% senior unsecured notes due May 2027 (the “2027 Notes”). The
2027 Notes require payment of principal at maturity and interest semi-annually in cash and in arrears on May 15 and November 15 of each year. The
Company received proceeds of $489, net of an original issue discount of $5 and underwriting fees and other related expenses of $6, which are
deferred and amortized to interest expense using the effective interest method over the term of the 2027 Notes. A portion of the net proceeds from
the 2027 Notes was used to pay the $335 of the First MDL Settlement, as discussed in “Note 22 – Commitments and Contingent Liabilities”. The
remaining proceeds from the 2027 Notes were available for general corporate purposes.
F-39
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The 2027 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured unsubordinated basis by each of the
Company’s existing and future direct and indirect domestic restricted subsidiaries that (i) incurs or guarantees indebtedness under the Senior
Secured Credit Facilities, or (ii) guarantees certain other indebtedness of the Company or any guarantor in an aggregate principal amount in excess
of $100. The guarantees of the 2027 Notes will rank equally with all other senior indebtedness of the guarantors. The 2027 Notes rank equally in
right of payment to all of the Company’s existing and future unsecured unsubordinated debt and are senior in right of payment to all of its existing
and future debt that is by its terms expressly subordinated in right of payment to the 2027 Notes. The 2027 Notes are subordinated to indebtedness
under the Senior Secured Credit Facilities, as well as any future secured debt to the extent of the value of the assets securing such debt, and
structurally subordinated to the liabilities of any non-guarantor subsidiaries.
Pursuant to the terms of the indenture governing the 2027 Notes, the Company is obligated to offer to purchase the 2027 Notes at a price of 101% of
the principal amount, together with accrued and unpaid interest, if any, up to, but not including, the date of purchase, upon the occurrence of certain
change of control events. The Company may redeem the 2027 Notes, in whole or in part, at an amount equal to 100% of the aggregate principal
amount plus a specified “make-whole” premium and accrued and unpaid interest, if any, to the date of purchase prior to February 15, 2027. The
Company may also redeem some or all of the 2027 Notes by means other than a redemption, including tender offer and open market repurchases.
Senior Unsecured Notes Due May 2026
On June 6, 2018, the Company issued an aggregate principal amount of €450 4.000% senior unsecured notes due May 2026, denominated in euros
(the “2026 Euro Notes”). The 2026 Euro Notes require payment of principal at maturity and payments of interest semi-annually in cash and in arrears
on May 15 and November 15 of each year. The Company received net proceeds of €445, which, together with cash on hand, were used to purchase
or redeem, as the case may be, all of the outstanding 2023 Euro Notes and a $250 aggregate principal amount of the 2023 Dollar Notes pursuant to
a tender offer and the redemption of the 2023 Euro Notes, as well as pay for any fees and expenses in connection therewith. In connection with the
concurrent redemption of the 2023 Euro Notes and issuance of the 2026 Euro Notes, the Company incurred a loss on extinguishment of $35 for the
year ended December 31, 2018.
The 2026 Euro Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured unsubordinated basis by each of the
Company’s existing and future direct and indirect domestic restricted subsidiaries that (i) incurs or guarantees indebtedness under the Senior
Secured Credit Facilities, or (ii) guarantees certain other indebtedness of the Company or any guarantor in an aggregate principal amount in excess
of $100. The guarantees of the 2026 Euro Notes will rank equally with all other senior indebtedness of the guarantors. The 2026 Euro Notes also
rank equally in right of payment to all of the Company’s existing and future unsecured unsubordinated debt and are senior in right of payment to all of
its existing and future debt that is, by its terms, expressly subordinated in right of payment to the 2026 Euro Notes. The 2026 Euro Notes are
subordinated to indebtedness under the Senior Secured Credit Facilities, as well as any future secured debt to the extent of the value of the assets
securing such debt, and are structurally subordinated to the liabilities of any non-guarantor subsidiaries.
Pursuant to the terms of the indenture governing the 2026 Euro Notes, the Company is obligated to offer to purchase the 2026 Euro Notes at a price
of 101% of the principal amount, together with accrued and unpaid interest, if any, up to, but not including, the date of purchase, upon the
occurrence of certain change of control events. Prior to May 15, 2021, the Company may redeem the 2026 Euro Notes (i) in whole or in part, at an
amount equal to 100% of the aggregate principal amount plus a specified “make-whole” premium, plus accrued and unpaid interest, if any, up to, but
excluding, the redemption date and (ii) on one or more occasions, up to 35% of the aggregate principal amount of the notes, with the net cash
proceeds of one or more equity offerings at a price equal to 104% of the principal amounts of such notes, plus accrued and unpaid interest, if any, up
to, but excluding, the redemption date. On or after May 15, 2021, the Company may redeem the 2026 Euro Notes at specified redemption prices.
The Company may also redeem some of all of the 2026 Euro Notes by means other than a redemption, including tender offer and open market
repurchases.
F-40
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Senior Unsecured Notes Due November 2028
On November 27, 2020, the Company issued an $800 aggregate principal amount of 5.750% senior unsecured notes due November 2028 (the
“2028 Notes”) in an offering that was exempt from the registration requirements of the Securities Act. The 2028 Notes require payment of principal at
maturity and interest semi-annually in cash and in arrears on May 15 and November 15 of each year. The Company received proceeds of $790, net
of underwriting fees and other related expenses of $10, which are deferred and amortized to interest expense using the effective interest method
over the term of the 2028 Notes. The net proceeds from the 2028 Notes were used, together with cash on hand, to purchase or redeem, as
applicable, the remaining $908 aggregate principal amount of the 2023 Dollar Notes. In connection with the purchase and redemption of the
remaining 2023 Dollar Notes, the Company incurred a loss on extinguishment of $22 for the year ended December 31, 2020.
The 2028 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured unsubordinated basis by each of the
Company’s existing and future direct and indirect domestic restricted subsidiaries that (i) incurs or guarantees indebtedness under the Senior
Secured Credit Facilities, or (ii) guarantees certain other indebtedness of the Company or any guarantor in an aggregate principal amount in excess
of $100. The guarantees of the 2028 Notes will rank equally with all other senior indebtedness of the guarantors. The 2028 Notes rank equally in
right of payment to all of the Company’s existing and future unsecured unsubordinated debt and are senior in right of payment to all of its existing
and future debt that is by its terms expressly subordinated in right of payment to the 2028 Notes. The 2028 Notes are subordinated to indebtedness
under the Senior Secured Credit Facilities, as well as any future secured debt to the extent of the value of the assets securing such debt, and
structurally subordinated to the liabilities of any non-guarantor subsidiaries.
Pursuant to the terms of the indenture governing the 2028 Notes, the Company is obligated to offer to purchase the 2028 Notes at a price of 101% of
the principal amount, together with accrued and unpaid interest, if any, up to, but not including, the date of purchase, upon the occurrence of certain
change of control events. Prior to November 15, 2023, the Company may redeem the 2028 Notes (i) in whole or in part, at an amount equal to 100%
of the aggregate principal amount plus a specified “make-whole” premium and accrued and unpaid interest, if any, to the date of purchase, and (ii)
on one or more occasions, up to 35% of the aggregate principal amount of the notes, with the net cash proceeds of one or more equity offerings at a
price equal to 105.750% of the principal amounts of such notes, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date.
On or after November 15, 2023, the Company may redeem the 2028 Notes at specified redemption prices. The Company may also redeem some or
all of the 2028 Notes by means other than a redemption, including tender offer and open market repurchases.
2023 Dollar Notes Tender Offer and Redemption
On November 12, 2020, the Company commenced an all-cash tender offer to purchase any and all of the outstanding 2023 Dollar Notes for a
purchase price of $1,017.94 per $1,000.00 of principal amount through an early tender deadline of November 25, 2020, and $987.94 per $1,000.00
of principal amount thereafter, through December 10, 2020, the tender expiration date, plus any accrued and unpaid interest thereon (the “2023
Dollar Notes Tender Offer”). In connection with the 2023 Dollar Notes Tender Offer, the Company received consents from the holders of a majority of
the aggregate principal amount of the 2023 Dollar Notes to amend certain provisions of the indenture governing the 2023 Dollar Notes, thereby
allowing the Company to call and redeem the remaining 2023 Dollar Notes outstanding upon two business days’ notice to the noteholders (the “2023
Dollar Notes Redemption”) (collectively, the “2023 Dollar Notes Tender Offer and Redemption”).
The Company completed the 2023 Dollar Notes Tender Offer and Redemption on December 1, 2020 for an aggregate purchase price of $926,
inclusive of an early participation premium of $16 and accrued interest of $2. The 2023 Dollar Notes Tender Offer and Redemption was funded with
the proceeds from the offering of the 2028 Notes and cash on hand.
F-41
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Senior Unsecured Notes Due November 2029
On August 18, 2021, the Company issued a $650 aggregate principal amount of 4.625% senior unsecured notes due November 2029 (the “2029
Notes”) in an offering that was exempt from the registration requirements of the Securities Act. The 2029 Notes require payment of principal at
maturity and interest semi-annually in cash and in arrears on May 15 and November 15 of each year. The Company received proceeds of $642, net
of underwriting fees and other related expenses of $8, which are deferred and amortized to interest expense using the effective interest method over
the term of the 2029 Notes. The net proceeds from the 2029 Notes were used, together with cash on hand, to purchase or redeem, as applicable,
the remaining $750 aggregate principal of the 2025 Notes. In connection with the purchase and redemption of the 2025 Notes, the Company
incurred a loss on extinguishment of $20 for the year ended December 31, 2021.
The 2029 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured unsubordinated basis by each of the
Company’s existing and future direct and indirect domestic restricted subsidiaries that (i) incurs or guarantees indebtedness under the Senior
Secured Credit Facilities, or (ii) guarantees certain other indebtedness of the Company or any guarantor in an aggregate principal amount in excess
of $100. The guarantees of the 2029 Notes will rank equally with all other senior indebtedness of the guarantors. The 2029 Notes rank equally in
right of payment to all of the Company’s existing and future unsecured unsubordinated debt and are senior in right of payment to all of its existing
and future debt that is by its terms expressly subordinated in right of payment to the 2029 Notes. The 2029 Notes are subordinated to indebtedness
under the Senior Secured Credit Facilities, as well as any future secured debt to the extent of the value of the assets securing such debt, and
structurally subordinated to the liabilities of any non-guarantor subsidiaries.
Pursuant to the terms of the indenture governing the 2029 Notes, the Company is obligated to offer to purchase the 2029 Notes at a price of 101% of
the principal amount, together with accrued and unpaid interest, if any, up to, but not including, the date of purchase, upon the occurrence of certain
change of control events. Prior to November 15, 2024, the Company may redeem the 2029 Notes (i) in whole or in part, at an amount equal to 100%
of the aggregate principal amount plus a specified “make-whole” premium and accrued and unpaid interest, if any, up to, but excluding the
redemption date, and (ii) on one or more occasions, up to 35% of the aggregate principal amount of the notes, with the net cash proceeds of one or
more equity offerings at a price equal to 104.625% of the principal amounts of such notes, plus accrued and unpaid interest, if any, up to, but
excluding, the redemption date. On or after November 15, 2024, the Company may redeem the 2029 Notes at specified redemption prices. The
Company may also redeem some or all of the 2029 Notes by means other than a redemption, including tender offer and open market repurchases.
2025 Notes Tender Offer and Redemption
On August 4, 2021, the Company commenced an all-cash tender offer to purchase any and all of the outstanding 2025 Notes for a purchase price of
$1,025.00 per $1,000.00 of principal amount through an early tender deadline of August 17, 2021, and $995.00 per $1,000.00 of principal amount
thereafter, through August 31, 2021, the tender expiration date, plus any accrued and unpaid interest thereon (the “2025 Notes Tender Offer”). In
connection with the 2025 Notes Tender Offer, the Company received consents from the holders of a majority of the aggregate principal amount of
the 2025 Notes to amend certain provisions of the indenture governing the 2025 Notes, thereby allowing the Company to call and redeem the
remaining 2025 Notes outstanding upon two business days’ notice to the noteholders (the “2025 Notes Redemption”) (collectively, the “2025 Notes
Tender Offer and Redemption”). The Company completed the 2025 Notes Tender Offer and Redemption on August 20, 2021 for an aggregate
purchase price of $782, inclusive of an early participation premium of $18 and accrued interest of $14. The 2025 Notes Tender Offer and
Redemption was funded with the proceeds from the offering of the 2029 Notes and cash on hand.
F-42
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Accounts Receivable Securitization Facility
On July 12, 2019, the Company, through a wholly-owned special purpose entity (“SPE”), executed an agreement with a bank for an accounts
receivable securitization facility (“Securitization Facility”) for the purpose of enhancing the Company’s liquidity (the “Original Purchase Agreement”).
Under the Securitization Facility, certain of the Company’s subsidiaries sell their accounts receivable to the SPE, which is a non-guarantor
subsidiary. In turn, the SPE may transfer undivided ownership interests in such receivables to the bank in exchange for cash. The Securitization
Facility permitted the SPE to borrow up to a total of $125, with an option to increase to $200. The bank has a first priority security interest in all
receivables held by the SPE, and the SPE has not granted a security interest to anyone else.
As the SPE previously maintained effective control over the accounts receivable under the Original Purchase Agreement, the transfers of the
ownership interests to the bank did not meet the criteria to account for the transfers as true sales. As a result, the Company accounted for the
transfers as collateralized borrowings. Cash received from the bank was a short-term obligation of the Company, which was fully-collateralized by all
receivables held by the SPE. The Securitization Facility was subject to interest charges against both the amount of outstanding borrowings and the
amount of available but undrawn commitments. The Securitization Facility bore a variable interest rate on outstanding borrowings and a fixed
commitment fee on the average daily undrawn amount. Borrowings under the Securitization Facility were classified in the consolidated balance
sheets as a component of current liabilities due to the short-term nature of the obligation.
On March 9, 2020, the Company, through its wholly-owned SPE, entered into an amended and restated receivables purchase agreement (the
“Amended Purchase Agreement”) under the Securitization Facility. The Amended Purchase Agreement amends and restates, in its entirety, the
Original Purchase Agreement. The Amended Purchase Agreement, among other things, extends the term of the Original Purchase Agreement such
that the SPE may sell certain receivables and request investments and letters of credit until the earlier of March 5, 2021 or a termination event, and
contains customary representations and warranties, as well as affirmative and negative covenants.
Pursuant to the Amended Purchase Agreement, the Company no longer maintains effective control over the transferred receivables, and therefore
accounts for these transfers as sales of receivables. As a result, on March 9, 2020, the Company repurchased the then-outstanding receivables
under the Securitization Facility through repayment of the secured borrowings under the Original Purchase Agreement, resulting in net repayments
of $110 and subsequent sale of $125 of its receivables to the bank during the first quarter of 2020. These sales were transacted at 100% of the face
value of the relevant receivables, resulting in derecognition of the receivables from the Company’s consolidated balance sheets.
On March 5, 2021, the Company, through the SPE, entered into an amendment (the “First Amendment”) to its Amended Purchase Agreement
(together with the First Amendment, the “Purchase Agreement”) to, among other things, extend the term of the Purchase Agreement, such that the
SPE may sell certain receivables and request investments and letters of credit until the earlier of March 6, 2023 or another event that constitutes a
“Termination Date” under the Purchase Agreement. The First Amendment also increases the facility limit under the arrangement from $125 to $150.
On November 24, 2021, the Company, through the SPE, entered into an amendment (the “Second Amendment”) to its Purchase Agreement to,
among other things, extend the term of the Purchase Agreement, such that the SPE may sell certain receivables and request investments and letters
of credit until the earlier of March 6, 2024 or another event that constitutes a “Termination Date” under the Purchase Agreement. As of December 31,
2021, the Securitization Facility is fully utilized.
Cash received from collections of sold receivables is used to fund additional purchases of receivables at 100% of face value on a revolving basis, not
to exceed the facility limit, which is the aggregate purchase limit. For the years ended December 31, 2021 and 2020, the Company received $1,364
and $932, respectively, of cash collections on receivables sold under the Amended Purchase Agreement, following which it sold and derecognized
$1,389 and $932, respectively, of incremental accounts receivable. The Company maintains continuing involvement as it acts as the servicer for the
sold receivables and guarantees payment to the bank. As collateral against the sold receivables, the SPE maintains a certain level of unsold
receivables, which amounted to $76 and $33 at December 31, 2021 and 2020, respectively. During the years ended December 31, 2021 and 2020,
the Company incurred $3 and $2, respectively, of fees associated with the Securitization Facility. Costs associated with the sales of receivables are
reflected in the Company’s consolidated statements of operations for the periods in which the sales occur.
Other
In 2020, the Company entered into a financing arrangement, by which an external financing company funded certain of the Company’s annual
insurance premiums for $16, and subsequently repaid in full for the year ended December 31, 2020. In 2019, the Company entered into a similar
financing arrangement for $11, of which $5 was repaid during the year ended December 31, 2019 and the remainder in 2020.
F-43
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Maturities
The Company has required quarterly principal payments related to the Senior Secured Credit Facilities equivalent to 1.00% per annum through
December 2024, with the balance due at maturity. Also, following the end of each fiscal year commencing on the year ended December 31, 2019, on
an annual basis, the Company is required to make additional principal payments depending on leverage levels, as defined in the Credit Agreement,
equivalent to up to 50% of excess cash flows based on certain leverage targets with step-downs to 25% and 0% as actual leverage decreases to
below a 3.50 to 1.00 leverage target. The Company was not required to make additional principal payments in 2021.
The following table sets forth the Company’s debt principal maturities for the next five years and thereafter.
2022
2023
2024
2025
2026
Thereafter
Total principal maturities on debt
Debt Fair Value
$
$
13
13
13
1,118
510
1,950
3,617
The following table sets forth the estimated fair values of the Company’s senior debt issues, which are based on quotes received from third-party
brokers, and are classified as Level 2 financial instruments in the fair value hierarchy.
Senior secured term loans:
Tranche B-2 U.S. dollar term loan due April 2025
Tranche B-2 euro term loan due April 2025
(€337 at December 31, 2021 and €340 at December 31,
2020)
Senior unsecured notes:
7.000% due May 2025
4.000% due May 2026
(€450 at December 31, 2021 and 2020)
5.375% due May 2027
5.750% due November 2028
4.625% due November 2029
Total senior debt principal
Less: Unamortized issue discounts
Less: Unamortized debt issuance costs
Total senior debt, net
December 31, 2021
December 31, 2020
Carrying Value
Fair Value
Carrying Value
Fair Value
$
776 $
769 $
875 $
862
381
378
417
—
—
750
510
500
800
650
3,617 $
(5 )
(28 )
3,584
518
538
846
645
3,694
$
551
500
800
—
3,893 $
(7 )
(28 )
3,858
413
774
551
536
821
—
3,957
$
F-44
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 21. Other Liabilities
The following table sets forth the components of the Company’s other liabilities at December 31, 2021 and 2020.
Employee-related costs (1)
Accrued litigation (2)
Asset retirement obligations (2)
Deferred revenue
Miscellaneous (3)
Total other liabilities
December 31,
2021
2020
$
$
94
50
62
2
61
269
$
$
108
51
63
5
68
295
(1) Employee-related costs primarily represents liabilities associated with the Company’s long-term employee benefit plans.
(2) Represents the long-term portions of accrued litigation and asset retirement obligations, which are discussed further in “Note 22 – Commitments and Contingent Liabilities”.
(3) Miscellaneous primarily includes an accrued workers compensation indemnification liability of $32 and $37 at December 31, 2021 and 2020, respectively.
Note 22. Commitments and Contingent Liabilities
Asset Retirement Obligations
Chemours has recorded asset retirement obligations, which are primarily inclusive of costs related to closure, reclamation, and removal for mining
operations relative to the extraction of titanium ore and other saleable minerals in the Titanium Technologies segment; and, cap, cover, and post-
closure maintenance of landfills in all segments.
The following table sets forth the activity in the Company’s asset retirement obligations for the years ended December 31, 2021, 2020 and 2019.
Balance at January 1,
Obligations incurred or acquired
Increase (decrease) in estimated cash outflows
Accretion expense
Settlements and payments
Balance at December 31,
Current portion
Non-current portion
2021
Year Ended December 31,
2020
2019
$
76
—
1
2
(3 )
$
76
$
14
62
$
76
12
(14 )
4
(2 )
$
76
$
13
63
66
5
4
4
(3 )
76
7
69
$
$
$
F-45
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Litigation Overview
In addition to the matters discussed below, the Company and certain of its subsidiaries, from time to time, are subject to various lawsuits, claims,
assessments, and proceedings with respect to product liability, intellectual property, personal injury, commercial, contractual, employment,
governmental, environmental, anti-trust, and other such matters that arise in the ordinary course of business. In addition, Chemours, by virtue of its
status as a subsidiary of EID prior to the Separation, is subject to or required under the Separation-related agreements executed prior to the
Separation to indemnify EID against various pending legal proceedings. It is not possible to predict the outcomes of these various lawsuits, claims,
assessments, or proceedings. Except as noted below, while management believes it is reasonably possible that Chemours could incur losses in
excess of the amounts accrued, if any, for the aforementioned proceedings, it does not believe any such loss would have a material impact on the
Company’s consolidated financial position, results of operations, or cash flows. Disputes between Chemours and EID may arise regarding
indemnification matters, including disputes based on matters of law or contract interpretation. Should disputes arise, they could materially adversely
affect Chemours.
The Company accrues for litigation matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably
estimated. Where the available information is only sufficient to establish a range of probable liability, and no point within the range is more likely than
any other, the lower end of the range has been used. When a material loss contingency is reasonably possible, but not probable, the Company does
not record a liability, but instead discloses the nature of the matter and an estimate of the loss or range of loss, to the extent such estimate can be
made. Legal costs such as outside counsel fees and expenses are recognized in the period in which the expense was incurred. Management
believes the Company’s litigation accruals are appropriate based on the facts and circumstances for each matter, which are discussed in further
detail below.
The following table sets forth the components of the Company’s accrued litigation at December 31, 2021 and 2020.
Asbestos
PFOA (1)
All other matters (2)
Total accrued litigation
December 31,
2021
2020
$
$
33 $
23
30
86 $
34
50
4
88
(1) At December 31, 2020, PFOA includes $29 associated with the Company’s portion of the costs to settle PFOA multi-district litigation in Ohio, which was paid in 2021.
(2) At December 31, 2021, all other matters includes $25, which was paid in January 2022, associated with the Company’s portion of the costs to enter into the Settlement
Agreement, Limited Release, Waiver and Covenant Not to Sue reflecting Chemours, DuPont, Corteva, EID and the State of Delaware’s agreement to settle and fully resolve
claims alleged against the companies. For information regarding this matter, refer to “PFAS” within this “Note 22 – Commitments and Contingent Liabilities”.
The following table sets forth the current and long-term components of the Company’s accrued litigation and their balance sheet locations at
December 31, 2021 and 2020.
Accrued Litigation:
Current accrued litigation (1)
Long-term accrued litigation
Total accrued litigation
Balance Sheet Location
2021
2020
December 31,
Other accrued liabilities (Note 19)
Other liabilities (Note 21)
$
$
36
50
86
$
$
37
51
88
(1) At December 31, 2021, current accrued litigation includes $25, which was paid in January 2022, associated with the Company’s portion of the costs to enter into the
Settlement Agreement, Limited Release, Waiver and Covenant Not to Sue reflecting Chemours, DuPont, Corteva, EID, and the State of Delaware’s agreement to settle and
fully resolve claims alleged against the companies. For information regarding this matter, refer to “PFAS” within this “Note 22 – Commitments and Contingent Liabilities”. At
December 31, 2020, current accrued litigation includes $29 associated with the Company’s portion of the costs to settle PFOA multi-district litigation in Ohio, which was paid
in 2021.
F-46
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Memorandum of Understanding (the “MOU”) with DuPont, Corteva and EID
In January 2021, Chemours, DuPont, Corteva, and EID, a subsidiary of Corteva, entered into a binding MOU, reflecting the parties’ agreement to
share potential future legacy liabilities relating to per- and polyfluoroalkyl substances (“PFAS”) arising out of pre-July 1, 2015 conduct (i.e.,
“Indemnifiable Losses”, as defined in the separation agreement, dated as of June 26, 2015, as amended, between EID and Chemours (the
“Separation Agreement”)) until the earlier to occur of: (i) December 31, 2040; (ii) the day on which the aggregate amount of Qualified Spend is equal
to $4,000; or, (iii) a termination in accordance with the terms of the MOU (e.g., non-performance of the escrow funding requirements pursuant to the
MOU by any party). As defined in the MOU, Qualified Spend includes:
• All Indemnifiable Losses (as defined in the Separation Agreement), including punitive damages, to the extent relating to, arising out of, by
reason of, or otherwise in connection with PFAS Liabilities as defined in the MOU (including any mutually agreed-upon settlements);
• Any costs or amounts to abate, remediate, financially assure, defend, settle, or otherwise pay for all pre-July 1, 2015 PFAS Liabilities or
exposure, regardless of when those liabilities are manifested; includes Natural Resources Damages claims associated with PFAS
Liabilities;
•
Fines and/or penalties from governmental agencies for legacy EID PFAS emissions or discharges prior to the spin-off; and,
• Site-Related GenX Claims as defined in the MOU.
The parties have agreed that, during the term of the cost-sharing arrangement, Chemours will bear half of the cost of such future potential legacy
PFAS liabilities, and DuPont and Corteva will collectively bear the other half of the cost of such future potential legacy PFAS liabilities up to an
aggregate $4,000. Any recoveries of Qualified Spend from DuPont and/or Corteva under the cost-sharing arrangement will be recognized as an
offset to the Company’s cost of goods sold or selling, general, and administrative expense, as applicable, when realizable. Any Qualified Spend
incurred by DuPont and/or Corteva under the cost-sharing arrangement will be recognized in the Company’s cost of goods sold or selling, general,
and administrative expense, as applicable, when the amounts of such costs are probable and estimable or expensed as incurred with respect to
period costs, such as legal expenses. During the year ended December 31, 2021, the Company incurred expenditures subject to cost-sharing as
Qualified Spend under the MOU of approximately $100, half of which is subject to recovery from DuPont and Corteva. During the year ended
December 31, 2021, the Company received $36 of recovery from DuPont and Corteva.
After the term of this arrangement, Chemours’ indemnification obligations under the Separation Agreement would continue unchanged, subject in
each case to certain exceptions set out in the MOU. Pursuant to the terms of the MOU, the parties have agreed to release certain claims regarding
Chemours’ Delaware lawsuit and confidential arbitration (concerning the indemnification of specified liabilities that EID assigned to Chemours in its
spin-off), including that Chemours has released any claim set forth in the complaint filed in the Delaware lawsuit, any other similar claims arising out
of or resulting from the facts recited by Chemours in the complaint or the process and manner in which EID structured or conducted the spin-off, and
any other claims that challenge the spin-off or the assumption of Chemours Liabilities (as defined in the Separation Agreement) by Chemours and
the allocation thereof, subject in each case to certain exceptions set out in the MOU. The parties have further agreed not to bring any future,
additional claims regarding the Separation Agreement or the MOU outside of arbitration.
In order to support and manage the payments for potential future PFAS liabilities, the parties have also agreed to establish an escrow account. The
MOU provides that: (i) no later than each of September 30, 2021 and September 30, 2022, Chemours shall deposit $100 into an escrow account and
DuPont and Corteva shall together deposit $100 in the aggregate into an escrow account, and (ii) no later than September 30 of each subsequent
year through and including 2028, Chemours shall deposit $50 into an escrow account and DuPont and Corteva shall together deposit $50 in the
aggregate into an escrow account. Subject to the terms and conditions set forth in the MOU, each party may be permitted to defer funding in any
year (excluding 2021). Additionally, if on December 31, 2028, the balance of the escrow account (including interest) is less than $700, Chemours will
make 50% of the deposits and DuPont and Corteva together will make 50% of the deposits necessary to restore the balance of the escrow account
to $700. Such payments will be made in a series of consecutive annual equal installments commencing on September 30, 2029 pursuant to the
escrow account replenishment terms as set forth in the MOU. Any funds that remain in escrow at termination of the MOU will revert to the party that
deposited them. As such, future payments made by the Company into the escrow account will remain an asset of Chemours, and such payments will
be reflected as a transfer to restricted cash and restricted cash equivalents on its consolidated balance sheets. As per the terms of the MOU, the
Company deposited $100 into an escrow account in September 2021, which is recognized as restricted cash and restricted cash equivalents on its
consolidated balance sheets at December 31, 2021. No withdrawals are permitted from the escrow account before January 2026, except for funding
mutually agreed-upon third-party settlements in excess of $125. Starting in January 2026, withdrawals may be made from the escrow account to
fund Qualified Spend if the parties’ aggregate Qualified Spend in that particular year is greater than $200. Starting in January 2031, the amounts in
the escrow account can be used to fund any Qualified Spend. Future payments from the escrow account for potential future PFAS liabilities will be
reflected on the Company’s consolidated statement of cash flows at that point in time.
The parties will cooperate in good faith to enter into additional agreements reflecting the terms set forth in the MOU.
F-47
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Asbestos
In the Separation, EID assigned its asbestos docket to Chemours. At December 31, 2021 and 2020, there were approximately 1,000 and 1,100
lawsuits pending against EID alleging personal injury from exposure to asbestos, respectively. These cases are pending in state and federal court in
numerous jurisdictions in the U.S. and are individually set for trial. A small number of cases are pending outside of the U.S. Most of the actions were
brought by contractors who worked at sites between the 1950s and the 1990s. A small number of cases involve similar allegations by EID
employees or household members of contractors or EID employees. Finally, certain lawsuits allege personal injury as a result of exposure to EID
products.
At December 31, 2021 and 2020, Chemours had accruals of $33 and $34 related to these matters, respectively.
Benzene
In the Separation, EID assigned its benzene docket to Chemours. At December 31, 2021 and 2020, there were 19 and 17 cases pending against
EID alleging benzene-related illnesses, respectively. These cases consist of premises matters involving contractors and deceased former employees
who claim exposure to benzene while working at EID sites primarily in the 1960s through the 1980s, and product liability claims based on alleged
exposure to benzene found in trace amounts in aromatic hydrocarbon solvents used to manufacture EID products such as paints, thinners, and
reducers.
Management believes that a loss is reasonably possible as to the docket as a whole; however, given the evaluation of each benzene matter is highly
fact-driven and impacted by disease, exposure, and other factors, a range of such losses cannot be reasonably estimated at this time.
In May 2021, the Company and EID filed suit in Delaware state court against multiple insurance companies for breach of their contractual obligations
to indemnify Chemours and EID against liabilities, costs and losses relating to benzene litigation which are covered under liability insurance policies
purchased by EID during the period 1967 to 1986. EID and Chemours are seeking payment of all costs and settlement amounts for past and future
benzene cases falling under those policies. The outcome of this matter is not expected to have a material impact on Chemours’ results of operations
or financial position.
PFOA
Chemours does not, and has never, used “PFOA” (collectively, perfluorooctanoic acids and its salts, including the ammonium salt) as a polymer
processing aid nor sold it as a commercial product. Prior to the Separation, the performance chemicals segment of EID made PFOA at its
Fayetteville Works site in Fayetteville, North Carolina (“Fayetteville”) and used PFOA as a processing aid in the manufacture of fluoropolymers and
fluoroelastomers at certain sites, including: Washington Works, Parkersburg, West Virginia; Chambers Works, Deepwater, New Jersey; Dordrecht
Works, Netherlands; Changshu Works, China; and, Shimizu, Japan. These sites are now owned and/or operated by Chemours.
At December 31, 2021 and 2020, Chemours maintained accruals of $23 and $21, respectively, related to PFOA matters under the Leach Settlement,
EID’s obligations under agreements with the U.S. Environmental Protection Agency (the “EPA”), and voluntary commitments to the New Jersey
Department of Environmental Protection (the “NJ DEP”). These obligations and voluntary commitments include surveying, sampling, and testing
drinking water in and around certain Company sites, and offering treatment or an alternative supply of drinking water if tests indicate the presence of
PFOA in drinking water at or greater than the state or the national health advisory. The Company will continue to work with EPA and other authorities
regarding the extent of work that may be required with respect to these matters.
F-48
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Leach Settlement
In 2004, EID settled a class action captioned Leach v. DuPont, filed in West Virginia state court, alleging that approximately 80,000 residents living
near the Washington Works facility had suffered, or may suffer, deleterious health effects from exposure to PFOA in drinking water. Among the
settlement terms, EID funded a series of health studies by an independent science panel of experts (“C8 Science Panel”) to evaluate available
scientific evidence on whether any probable link exists, as defined in the settlement agreement, between exposure to PFOA and disease.
The C8 Science Panel found probable links, as defined in the settlement agreement, between exposure to PFOA and pregnancy-induced
hypertension, including preeclampsia, kidney cancer, testicular cancer, thyroid disease, ulcerative colitis, and diagnosed high cholesterol. Under the
terms of the settlement, EID is obligated to fund up to $235 for a medical monitoring program for eligible class members and pay the administrative
costs associated with the program, including class counsel fees. The court-appointed Director of Medical Monitoring implemented the program, and
testing is ongoing with associated payments to service providers disbursed from an escrow account which the Company replenishes pursuant to the
settlement agreement. Through December 31, 2021, approximately $1.7 has been disbursed from escrow related to medical monitoring. While it is
reasonably possible that the Company will incur additional costs related to the medical monitoring program, such costs cannot be reasonably
estimated due to uncertainties surrounding the level of participation by eligible class members and the scope of testing.
In addition, under the Leach settlement agreement, EID must continue to provide water treatment designed to reduce the level of PFOA in water to
six area water districts and private well users. At Separation, this obligation was assigned to Chemours, and $23 and $21 was accrued for these
matters at December 31, 2021 and 2020, respectively.
PFOA Leach Class Personal Injury
Further, under the Leach settlement, class members may pursue personal injury claims against EID only for those diseases for which the C8
Science Panel determined a probable link exists. Approximately 3,500 lawsuits were subsequently filed in various federal and state courts in Ohio
and West Virginia and consolidated in multi-district litigation (“MDL”) in Ohio federal court. These were resolved in March 2017 when EID entered
into an agreement settling all MDL cases and claims, including all filed and unfiled personal injury cases and claims that were part of the plaintiffs’
counsel’s claims inventory, as well as cases tried to a jury verdict (the “First MDL Settlement”) for $670.7 in cash, with half paid by Chemours, and
half paid by EID.
Concurrently with the First MDL Settlement, EID and Chemours agreed to a limited sharing of potential future PFOA costs (i.e., “Indemnifiable
Losses”, as defined in the Separation Agreement between EID and Chemours) for a period of five years. The cost-sharing agreement entered
concurrently with the First MDL Settlement has been superseded by the binding MOU addressing certain PFAS matters and costs. For more
information on this matter refer to “Memorandum of Understanding (the “MOU”) with Dupont, Corteva and EID” within this “Note 22 – Commitments
and Contingent Liabilities”.
While all MDL lawsuits were dismissed or resolved through the First MDL Settlement, the First MDL Settlement did not resolve PFOA personal injury
claims of plaintiffs who did not have cases or claims in the MDL or personal injury claims based on diseases first diagnosed after February 11, 2017.
Approximately 96 plaintiffs filed matters after the First MDL Settlement. In January 2021, EID and Chemours entered into settlement agreements
with counsel representing these plaintiffs, providing for a settlement of all but one of the 96 then filed and pending cases, as well as additional pre-
suit claims, under which those cases and claims of settling plaintiffs were resolved for approximately $83 (the “Second MDL Settlement”). Chemours
contributed approximately $29, and DuPont and Corteva each contributed approximately $27 to the Second MDL Settlement which were paid during
the year ended December 31, 2021.
The single matter not included in the Second MDL Settlement is a testicular cancer case tried in March 2020 to a verdict of $40 in compensatory and
emotional distress damages and $10 in loss of consortium damages. The jury found that EID’s conduct did not warrant punitive damages. In March
2021, the trial court issued post trial rulings which reduced the consortium damages to $0.25. The Company has appealed the verdict. Management
believes that the probability of a loss regarding the verdict is remote, given numerous meritorious grounds for pending post-trial motions and appeal.
State of Ohio
In February 2018, the State of Ohio initiated litigation against EID regarding historical PFOA emissions from the Washington Works site. Chemours
is an additional named defendant. Ohio alleges damage to natural resources and fraudulent transfer in the spin-off that created Chemours and seeks
damages including remediation and other costs and punitive damages.
F-49
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
PFAS
EID and Chemours have received governmental and regulatory inquiries and have been named in other litigations, including class actions, brought
by individuals, municipalities, businesses, and water districts alleging exposure to and/or contamination from PFAS, including PFOA. Many actions
include an allegation of fraudulent transfer in the spin-off that created Chemours. Chemours has declined EID’s requests for indemnity for fraudulent
transfer claims.
Chemours has responded to letters and inquiries from governmental law enforcement entities regarding PFAS, including in January 2020, a letter
informing it that the U.S. Department of Justice, Consumer Protection Branch, and the United States Attorney’s Office for the Eastern District of
Pennsylvania are considering whether to open a criminal investigation under the Federal Food, Drug, and Cosmetic Act and asking that it retain its
documents regarding PFAS and food contact applications. In July 2020, Chemours received a grand jury subpoena for documents. The Company is
presently unable to predict the duration, scope, or result of any potential governmental, criminal, or civil proceeding that may result, the imposition of
fines and penalties, and/or other remedies. The Company is also unable to develop a reasonable estimate of a possible loss or range of losses, if
any.
Fayetteville Works, Fayetteville, North Carolina
For information regarding the Company’s ongoing litigation and environmental remediation matters at Fayetteville, refer to “Fayetteville Works,
Fayetteville, North Carolina” under the “Environmental Overview” within this “Note 22 – Commitments and Contingent Liabilities”.
Aqueous Film Forming Foam Matters
Chemours does not, and has never, manufactured nor sold aqueous film forming foam (“AFFF”). Numerous defendants, including EID and
Chemours, have been named in approximately 2,000 matters, involving AFFF, which is used to extinguish hydrocarbon-based (i.e., Class B) fires
and subject to U.S. military specifications. Most matters have been transferred to or filed directly into a multi-district litigation (“AFFF MDL”) in South
Carolina federal court or identified by a party for transfer. The matters pending in the AFFF MDL allege damages as a result of contamination, in
most cases due to migration from military installations or airports, or personal injury from exposure to AFFF. Plaintiffs seek to recover damages for
investigating, monitoring, remediating, treating, and otherwise responding to the contamination. Others have claims for personal injury, property
diminution, and punitive damages.
In March 2021, ten water provider cases within the AFFF MDL were approved by the court for purposes of commencing initial discovery (Tier One
discovery) and in October 2021, the court approved three of these cases for additional discovery (Tier Two discovery). Upon conclusion of Tier Two
discovery, one of the three water provider cases will be selected for the first bellwether trial, with the case being called for jury selection and/or trial
on or after January 1, 2023.
There are AFFF lawsuits pending outside the AFFF MDL that have not been designated by a party for inclusion in the MDL. These matters
identifying EID and/or Chemours as a defendant are:
Valero Refining (“Valero”) has five pending state court lawsuits filed commencing in June 2019 regarding its Tennessee, Texas, Oklahoma,
California, and Louisiana facilities. These lawsuits allege that several defendants that designed, manufactured, marketed, and/or sold AFFF or PFAS
incorporated into AFFF have caused Valero to incur damages and costs including remediation, AFFF disposal, and replacement. Valero also alleges
fraudulent transfer.
In New York, four individuals filed a lawsuit against numerous defendants including Chemours. The lawsuit alleges personal injury resulting from
exposure to AFFF in Long Island drinking water and violation of New York Uniform Fraudulent Conveyance Act. Plaintiffs seek compensatory and
punitive damages and medical monitoring.
In Texas, a lawsuit was filed against numerous defendants including Chemours, DuPont and Corteva. The lawsuit alleges personal injury from
occupational exposure to AFFF. Plaintiffs seek compensatory and punitive damages.
F-50
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
State Natural Resource Damages Matters
In addition to the State of New Jersey actions (as detailed below) and the State of Ohio action (as detailed above), the states of Vermont, New
Hampshire, New York, Michigan, North Carolina, Mississippi, Alaska and Pennsylvania have filed lawsuits against defendants, including EID and
Chemours, relating to the alleged contamination of state natural resources with PFAS compounds either from AFFF and/or other sources. These
lawsuits seek damages including costs to investigate, clean up, restore, treat, monitor, or otherwise respond to contamination of natural resources.
The lawsuits include counts for fraudulent transfer.
Chemours has engaged with the State of Delaware regarding potential similar causes of action for PFAS and other contaminants. On July 13, 2021,
Chemours, DuPont, Corteva, and EID entered into a settlement agreement with the State of Delaware to settle such potential claims, including for
environmental releases or sales of products containing PFAS or other known contaminants. Under the agreement, in January 2022, the companies
paid a total amount of $50 to the State of Delaware, which shall be utilized to fund a Natural Resources and Sustainability Trust (the “Trust”) to be
used for environmental restoration and enhancement of resources, sampling and analysis, community environmental justice and equity grants, and
other natural resource needs. Chemours contributed $25 to the settlement and the remaining $25 was divided between DuPont and Corteva which
shall be treated as Qualified Spend under the MOU. If the companies enter into a proportionally similar agreement to settle or resolve claims of
another state for PFAS-related natural resource damages, for an amount greater than $50, the companies may be required to make one or more
supplemental payment(s) directly to the Trust, with such payment(s) not to exceed $25 in the aggregate. At this time, the Company has concluded
the probability of loss as to any supplemental payment(s) under the settlement agreement to be remote.
Other PFAS Matters
In New York courts, EID has been named in approximately 40 lawsuits, which are not part of the Leach class, brought by individual plaintiffs alleging
negligence and other claims in the release of PFAS, including PFOA, into drinking water against current and former owners and suppliers of a
manufacturing facility in Hoosick Falls, New York. Two additional lawsuits have been filed by a business seeking to recover its losses and by nearby
property owners and residents in a putative class action. The lawsuit filed by the business was dismissed, but the claims by the individual business
owner were allowed to proceed. Furthermore, 13 Long Island water suppliers have filed lawsuits against several defendants including EID and
Chemours alleging PFAS, PFOA, and PFOS contamination through releases from industrial and manufacturing facilities and business locations
where PFAS-contaminated water was used for irrigation and sites where consumer products were disposed. Claims vary between matters but
include claims of personal injury alleging various disease conditions, product liability, negligence, nuisance, trespass and fraudulent transfer. All
matters are seeking compensatory and punitive damages and, in certain cases, medical monitoring, declaratory and/or injunctive relief. In January
2022, Chemours filed a third-party claim for indemnity in connection with one of the Long Island water supplier matters.
In New York and New Jersey, lawsuits were filed by Suez Water against several defendants, including EID and Chemours, alleging damages from
PFAS releases into the environment, including PFOA and PFOS, that impacted water sources that the utilities use to provide water, as well as
products liability, negligence, nuisance, and trespass. Defendants filed motions to dismiss the complaints in both matters. The motion was denied in
the Suez Water New Jersey lawsuit in October 2021. In January 2022, the court granted defendants’ motion to dismiss in the Suez New York lawsuit
without prejudice and the plaintiff filed a second amended complaint in February 2022.
In New Jersey, lawsuits were filed against several defendants including EID and Chemours. The lawsuits include eight lawsuits alleging that
defendants are responsible for PFAS contamination, including PFOA and PFOS, in groundwater and drinking water. In addition, six lawsuits were
filed alleging exposure to PFAS and other chemicals, including two lawsuits by parents on behalf of their adult children claiming pre-natal exposure,
resulted in the children’s cognitive delays, neurological, genetic, and autoimmune conditions. Furthermore, four additional lawsuits were filed with
similar allegations of personal injury. Plaintiffs seek certain damages including putative damages.
In Georgia and Alabama lawsuits were filed against numerous carpet manufacturers and suppliers and former suppliers, including EID and
Chemours. The lawsuits include a matter filed by the Water Works and Sewer Board of the Town of Centre, Alabama and a matter filed by the City of
Rome, Georgia alleging negligence, nuisance, and trespass in the release of PFAS, including PFOA, into a river leading to the town’s water source.
Additionally, a putative class action was filed on behalf of customers of the Rome, Georgia water division and the Floyd County, Georgia water
department alleging negligence and nuisance and related to the release of perfluorinated compounds, including PFOA, into a river leading to their
water sources.
In Ohio, a putative class action was filed against several defendants including 3M, EID and Chemours seeking class action status for U.S. residents
having a detectable level of PFAS in their blood serum. The complaint seeks declaratory and injunctive relief, including the establishment of a “PFAS
Science Panel”.
F-51
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
In California, several lawsuits were filed in state court against several defendants, including EID and Chemours. The lawsuits include matters filed by
Golden State Water Company, 11 southern California public water systems, the City of Corona, California and the Corona Utility Authority that allege
manufacturers of PFOA and PFOS are responsible for contaminating the drinking water supply. An additional matter was filed by the Atascadero
Mutual Water Company in San Luis Obispo County, California alleging damages to drinking water supply from PFAS releases, including PFOA and
PFOS, into the environment. The Golden State Water Company matter was dismissed on defendants’ motion regarding jurisdiction grounds.
In Delaware, a putative class action was filed against two electroplating companies, 3M and EID, alleging responsibility for PFAS contamination,
including PFOA and PFOS, in drinking water and the environment in the nearby community. Although initially named in the lawsuit, Chemours was
subsequently dismissed. The putative class of residents alleges negligence, nuisance, trespass, and other claims and seeks medical monitoring,
personal injury and property damages, and punitive damages.
In West Virginia, a lawsuit was filed by the Weirton Area Water Board and City of Weirton, West Virginia, against several defendants including EID
and Chemours alleging PFAS, PFOA and PFOS contamination through releases from the manufacture, sale, and use of PFAS and from facilities
owned by AccelorMittal. The matter was transferred to the AFFF MDL in January 2021.
In Maine, the owners of a dairy farm filed a lawsuit against several defendants including EID and Chemours alleging that their dairy farm was
contaminated by PFAS, including perfluorooctanesulfonic acid (“PFOS”) and PFOA present in treated municipal sewer sludge used in agricultural
spreading applications on their farm. This lawsuit has since been dismissed.
In the Netherlands, Chemours, along with DuPont and Corteva, received a civil summons filed before the Court of Rotterdam by four municipalities
(Dordrecht, Papendrecht, Sliedrecht and Molenlanden) seeking liability declarations relating to the Dordrecht site’s operations and emissions.
Chemours reviewed the summons and filed a statement of defense during the fourth quarter of 2021. At this time, management believes that a loss
related to this matter is remote.
Chemours Washington Works discharges, through outfalls at the site, wastewater and stormwater pursuant to a National Pollutant Discharge
Elimination System (“NPDES”) permit issued by the West Virginia Department of Environmental Protection (“WV DEP”). In connection with actions
being taken by Chemours to comply with certain NPDES effluent limits, including for PFOA and hexafluoropropylene oxide dimer acid, Chemours
submitted a permit modification to WV DEP relating to groundwater abatement for certain process water used at the facility, a temperature reduction
project and realigning discharge flows to certain outfalls. In July 2021, EPA provided a specific objection to the draft modification based on Clean
Water Act (“CWA”) regulations and requirements. In August 2021, WV DEP issued a NPDES permit modification to provide for the start-up of an
abatement unit at the facility and to extend compliance dates for certain limits to December 2021 due to delays from the COVID-19 pandemic. In
September 2021, WV DEP issued a further NPDES modification, including for the operation of an abatement unit from the site’s Ranney Well, and
the site is taking additional actions to reduce PFAS discharges associated with wet weather flows and continuing to assess future stormwater
discharges and permitting.
F-52
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
New Jersey Department of Environmental Protection Directives and Litigation
In March 2019, NJ DEP issued two Directives and filed four lawsuits against Chemours and other defendants. The Directives are: (i) a state-wide
PFAS Directive issued to EID, DowDuPont, DuPont Specialty Products USA (“DuPont SP USA”), Solvay S.A., 3M, and Chemours seeking a meeting
to discuss future costs for PFAS-related costs incurred by NJ DEP and establishing a funding source for such costs by the Directive recipients, and
information relating to historic and current use of certain PFAS compounds; and, (ii) a Pompton Lakes Natural Resources Damages (“NRD”)
Directive to EID and Chemours demanding $0.1 to cover the cost of preparation of a natural resource damage assessment plan and access to
related documents.
The lawsuits filed in New Jersey state courts by NJ DEP are: (i) in Salem County, against EID, 3M, and Chemours primarily alleging clean-up and
removal costs and damages and natural resource damages under the Spill Act, the Water Pollution Control Act (“WPCA”), the Industrial Site
Recovery Act (“ISRA”), and common law regarding past and present operations at Chambers Works, a site assigned to Chemours at Separation; (ii)
in Middlesex County, against EID, DuPont SP USA, 3M, and Chemours primarily alleging clean-up and removal costs and damages and natural
resource damages under the Spill Act, ISRA, WPCA, and common law regarding past and present operations at Parlin, an EID owned site; (iii) in
Gloucester County, against EID and Chemours primarily alleging clean-up and removal costs and damages and natural resource damages under the
Spill Act, WPCA, and common law regarding past operations at Repauno, a non-operating remediation site assigned to Chemours at Separation
which has been sold; and, (iv) in Passaic County, against EID and Chemours primarily alleging clean-up and removal costs and damages and
natural resource damages under the Spill Act, WPCA, and common law regarding past operations at Pompton Lakes, a non-operating remediation
site assigned to Chemours at Separation. The alleged pollutants listed in the Salem County and Middlesex County matters above include PFAS.
Each lawsuit also alleges fraudulent transfer.
In August 2020, a Second Amended Complaint was filed in each matter, adding fraudulent transfer and other claims against DuPont SP USA,
Corteva, Inc., and DuPont. For the Salem County matter, NJ DEP added claims relating to failure to comply with state directives, including the state-
wide PFAS Directive.
The matters were removed to federal court and consolidated for case management and pretrial purposes. In December 2021, the federal court
entered a consolidated order granting, in part, and denying, in part, a motion to dismiss or strike parts of the Second Amended Complaints. In
January 2022, NJ DEP filed a motion for a preliminary injunction requiring EID and Chemours to establish a remediation funding source (“RFS”) in
the amount of $943 for the Chambers Works site, the majority of which is for non-PFAS remediation items. Chemours is evaluating the motion and,
subject to the discussions regarding overall remediation costs under “Environmental Overview” within this Note 22 – Commitments and Contingent
Liabilities, management believes that a loss is reasonably possible, but not estimable at this time, due to various reasons, including that the motion is
in its early stages and there are significant factual issues and legal questions to be resolved.
EID requested that Chemours defend and indemnify it in these matters. Chemours has accepted the indemnity and defense of EID while reserving
rights and declining EID’s demand as to matters involving other EID entities, as well as ISRA and fraudulent transfer, subject to the terms of the
MOU.
PFOA and PFAS Summary
With the exception of the matters noted otherwise above, management believes that it is reasonably possible that the Company could incur losses
related to PFOA and/or PFAS matters in excess of amounts accrued, but any such losses, which could be material, are not estimable at this time
due to various reasons, including, among others, that such matters are in their early stages and have significant factual issues to be resolved.
U.S. Smelter and Lead Refinery, Inc.
There are six lawsuits, including a putative class action, pending against EID by area residents concerning the U.S. Smelter and Lead Refinery multi-
party Superfund site in East Chicago, Indiana. Several of the lawsuits allege that Chemours is now responsible for EID environmental liabilities. The
lawsuits include allegations for personal injury damages, property diminution, and other damages. At Separation, EID assigned Chemours its former
plant site, which is located south of the residential portion of the Superfund area, and its responsibility for the environmental remediation at the
Superfund site. In one of the six lawsuits, pursuant to a March 2021 court decision, there are no current pending claims against EID or Chemours. In
four of the other lawsuits, pursuant to August 2021 and September 2021 court decisions, the court granted defendants’ motion to dismiss and
plaintiffs have filed motions for leave to file amended complaints. Management believes a loss is reasonably possible, but not estimable at this time
due to various reasons including, among others, that such matters are in their early stages and have significant factual issues to be resolved.
F-53
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Securities Litigation
In October 2019, a putative class action was filed in Delaware federal court against Chemours and certain of its officers. Following appointment of
lead plaintiff, the New York State Teachers’ Retirement System, and counsel, the plaintiff filed an amended complaint alleging that the defendants
violated the Securities and Exchange Act of 1934 by making materially false and misleading statements and omissions in public disclosures
regarding environmental liabilities and litigation matters assigned to Chemours in connection with its spin-off from EID. The amended complaint
seeks a class of purchasers of Chemours stock between February 16, 2017 and August 1, 2019 and demands compensatory damages and fees.
Commencing in July 2020, follow-on derivative lawsuits were filed by individual shareholders in Delaware courts against Chemours, its directors, and
certain of its officers. The lawsuits rely on factual allegations similar to those in the securities action discussed above and allege breach of fiduciary
duty and other claims. On November 1, 2021, those derivative lawsuits filed in the Delaware Court of Chancery were dismissed in their entirety and
the matter is now closed.
Management believes that it is not possible at this time to reasonably assess the outcome of the federal court litigation or to estimate the loss or
range of loss, if any, as the matters are in the early stages with significant issues to be resolved. The Company believes that it has applicable
insurance, and coverage has been accepted by the primary insurance carrier with a reservation of rights for the putative class action matter. If the
Company were not to prevail in the litigations and were to fail to secure insurance coverage or ample insurance coverage, the impact could be
material to the Company’s results of operations, financial position, and cash flows.
Mining Solutions Facility Construction Stoppage
The Company had a Mining Solutions facility in Gomez Palacio, Durango, Mexico, which was under construction and included in the Mining
Solutions Transaction. As of December 31, 2021, all assets at the Mining Solutions facility in Gomez Palacio, Durango, Mexico have transferred
ownership as part of the Mining Solutions Transaction which is further discussed in “Note 4 – Acquisitions and Divestitures”. Additionally, all pending
litigation was contractually transferred, pending assignment of those cases before the court. The Company is not required to indemnify costs
associated with any future litigation matters.
F-54
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Environmental Overview
Chemours, due to the terms of the Separation-related agreements with EID, is subject to contingencies pursuant to environmental laws and
regulations that in the future may require further action to correct the effects on the environment of prior disposal practices or releases of chemical
substances, which are attributable to EID’s activities before it spun-off Chemours. Much of this liability results from the Comprehensive
Environmental Response Compensation and Liability Act (“CERCLA”, often referred to as “Superfund”), the Resource Conservation and Recovery
Act (“RCRA”), and similar federal, state, local, and foreign laws. These laws may require Chemours to undertake certain investigative, remediation,
and restoration activities at sites where ownership was transferred to Chemours under the Separation-related agreements or at sites where EID-
generated waste was disposed before the 2015 separation. The accrual also includes estimated costs related to a number of sites identified for
which it is probable that environmental remediation will be required, but which are not currently the subject of enforcement activities.
Chemours accrues for remediation activities when it is probable that a liability has been incurred and a reasonable estimate of the liability can be
made. Where the available information is sufficient to estimate the amount of liability, that estimate has been used. Where the available information
is only sufficient to establish a range of probable liability, and no point within the range is more likely than any other, the lower end of the range has
been used. Estimated liabilities are determined based on existing remediation laws and technologies and the Company’s planned remedial
responses, which are derived from environmental studies, sampling, testing, and analyses. Inherent uncertainties exist in such evaluations, primarily
due to unknown environmental conditions, changing governmental regulations regarding liability, and emerging remediation technologies. These
accruals are adjusted periodically as remediation efforts progress and as additional technological, regulatory, and legal information becomes
available. Environmental liabilities and expenditures include claims for matters that are liabilities of EID and its subsidiaries, which Chemours may be
required to indemnify pursuant to the Separation-related agreements. These accrued liabilities are undiscounted and do not include claims against
third parties. Costs related to environmental remediation are charged to expense in the period that the associated liability is accrued.
The following table sets forth the Company’s environmental remediation liabilities at December 31, 2021 and 2020 for the four sites that are deemed
the most significant, together with the aggregate liabilities of the 69 other sites.
Chambers Works, Deepwater, New Jersey (1)
Fayetteville Works, Fayetteville, North Carolina (2)
Pompton Lakes, New Jersey
USS Lead, East Chicago, Indiana (3)
All other sites
Total environmental remediation
December 31,
2021
2020
$
$
27
359
42
24
110
562
$
$
20
194
42
12
122
390
(1)
In connection with ongoing discussions with EPA and NJ DEP relating to such remaining work as well as the scope of remedial programs and investigation relating to the
Chambers Works site, in 2021, the Company recorded an adjustment of $7 related to the remediation estimate associated with certain areas of the site relating to historic
industrial activity as well as ongoing remedial programs.
(2) For more information on this matter refer to “Fayetteville Works, Fayetteville, North Carolina” within this “Note 22 – Commitments and Contingent Liabilities”.
(3) The Company recorded $9 to resolve the claims asserted by EPA related to past indirect costs associated with the 2012 Record of Decision (“ROD”), as amended, and the
2014 agreement entered into with EPA and the State of Indiana.
F-55
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following table sets forth the current and long-term components of the Company’s environmental remediation liabilities at December 31, 2021
and 2020.
Current environmental remediation
Long-term environmental remediation
Total environmental remediation
December 31,
2021
2020
$
$
173
389
562
$
$
95
295
390
Typically, the time-frame for a site to go through all phases of remediation (investigation and active clean-up) may take about 15 to 20 years,
followed by several years of operation, maintenance, and monitoring (“OM&M”) activities. Remediation activities, including OM&M activities, vary
substantially in duration and cost from site to site. These activities, and their associated costs, depend on the mix of unique site characteristics,
evolving remediation technologies, and diverse regulatory requirements, as well as the presence or absence of other potentially responsible parties.
In addition, for claims that Chemours may be required to indemnify EID pursuant to the Separation-related agreements, Chemours, through EID, has
limited available information for certain sites or is in the early stages of discussions with regulators. For these sites in particular, there may be
considerable variability between the clean-up activities that are currently being undertaken or planned and the ultimate actions that could be
required. Therefore, considerable uncertainty exists with respect to environmental remediation costs and, under adverse changes in circumstances,
although deemed remote, the potential liability may range up to approximately $660 above the amount accrued at December 31, 2021.
For the years ended December 31, 2021, 2020, and 2019, Chemours incurred environmental remediation expenses of $269, $71, and $200,
respectively.
On October 18, 2021, EPA released its PFAS Strategic Roadmap, identifying a comprehensive approach to addressing PFAS. The PFAS Strategic
Roadmap sets timelines by which EPA plans to take specific actions through 2024, including establishing a national primary drinking water regulation
for PFOA and PFOS and taking Effluent Limitations Guidelines actions to regulate PFAS discharges from industrial categories among other actions.
As provided under its roadmap, EPA also released on the same day its National PFAS Testing Strategy, under which the agency will identify and
select certain PFAS compounds for which it will require PFAS manufacturers to conduct testing pursuant to the Toxic Substances Control Act
(“TSCA”) orders. EPA has indicated that Chemours will receive orders for certain of such compounds, including seven of the testing orders will be
issued for PFAS compounds alleged to be associated with Fayetteville. On October 25, 2021, EPA published a final toxicity assessment for GenX
compounds that decreased the draft reference dose for GenX compounds based on EPA’s review of new studies and analyses. Under the PFAS
Strategic Roadmap, EPA indicated they plan to develop non-regulatory drinking water health advisories for certain PFAS compounds that have final
EPA toxicity assessments, including GenX compounds in the Spring of 2022. The Company is currently evaluating the impact of EPA’s final toxicity
assessment, including new data and analysis utilized by the agency, and has met with the agency to discuss process-related and technical concerns
about the assessment. It is reasonably possible that additional costs could be incurred in connection with EPA’s actions, however, the Company
cannot estimate the potential impact or additional cost due to the uncertainties on the potential drinking water health advisories or other actions. The
environmental remediation liabilities recorded for Fayetteville and certain other sites, such as Washington Works, Parkersburg, West Virginia and
Chambers Works, Deepwater, New Jersey as of December 31, 2021 are based upon the existing Consent Orders, agreements and/or voluntary
commitments with EPA, state and other local regulators and depending on the ultimate outcome of EPA’s actions, could require adjustment to meet
higher drinking water standards.
F-56
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Fayetteville Works, Fayetteville, North Carolina
Fayetteville has been in operation since the 1970s and is located next to the Cape Fear River southeast of the City of Fayetteville, North Carolina.
Hexafluoropropylene oxide dimer acid (“HFPO Dimer Acid”, sometimes referred to as “GenX” or “C3 Dimer Acid”) is manufactured at Fayetteville.
The Company has operated the site since its Separation from EID in 2015.
While the Company believes that discharges from Fayetteville to the Cape Fear River, site surface water, groundwater, and air emissions have not
impacted the safety of drinking water in North Carolina, the Company is cooperating with a variety of ongoing inquiries and investigations from
federal, state, and local authorities, regulators, and other governmental entities including EPA.
Consent Order with North Carolina Department of Environmental Quality (“NC DEQ”)
In September 2017, NC DEQ issued a 60-day notice of intent to suspend the NPDES permit for Fayetteville, and the State of North Carolina filed an
action in North Carolina state court regarding site discharges, seeking a temporary restraining order and preliminary injunction, as well as other
relief, including abatement and site correction. The state court entered a partial consent order resolving NC DEQ’s motion for a temporary restraining
order.
In November 2017, NC DEQ informed the Company that it was suspending the NPDES permit for Fayetteville. The Company thereafter commenced
the capture and separate disposal of all process wastewater from Fayetteville related to the Company’s own operations.
In June 2018, the North Carolina Legislature enacted legislation (i) granting the governor the authority, in certain circumstances, to require a facility
with unauthorized PFAS discharges to cease operations, and (ii) granting the governor the authority, in certain circumstances, to direct NC DEQ
secretary to order a PFAS discharger to establish permanent replacement water supplies for parties whose water was contaminated by the
discharge.
In July 2018, Cape Fear River Watch (“CFRW”), a non-profit organization, sued NC DEQ in North Carolina state court, seeking to require NC DEQ to
take additional actions at Fayetteville. In August 2018, CFRW sued the Company in North Carolina federal court for alleged violations of the CWA
and TSCA, seeking declaratory and injunctive relief and penalties.
In February 2019, the North Carolina Superior Court for Bladen County approved a Consent Order (“CO”) between NC DEQ, CFRW, and the
Company, resolving the State’s and CFRW’s lawsuits and other matters (including Notices of Violation (“NOVs”) issued by the State). Under the
terms of the CO, Chemours paid $13 in March 2019 to cover a civil penalty and investigative costs and agreed to certain compliance measures (with
stipulated penalties for failures to do so), including the following:
•
Install a thermal oxidizer (“TO”) to control all PFAS in process streams from certain processes at Fayetteville at an efficiency of 99.99%;
• Develop, submit, and implement, subject to approval from NC DEQ and CFRW, a plan for interim actions that are economically and
technologically feasible to achieve the maximum PFAS reduction from Fayetteville to the Cape Fear River within a two-year period;
• Develop and implement, subject to approval, a Corrective Action Plan (“CAP”) that complies with North Carolina’s groundwater standards
and guidance provided by NC DEQ. At a minimum, the CAP must require Chemours to reduce the total loading of PFAS originating from
Fayetteville to surface water by at least 75% from baseline, as defined by the CO; and,
• Provide and properly maintain permanent drinking water supplies, including via whole-building filtration units and reverse osmosis (“RO”)
units to qualifying surrounding properties with private drinking water wells.
In August 2020, NC DEQ, CFRW, and the Company reached agreement on the terms of an addendum to the CO (the “Addendum”), which includes
procedures for implementing specified remedial measures for reducing PFAS loadings from Fayetteville to the Cape Fear River. The Addendum also
includes stipulated financial penalties, inclusive of daily and weekly fines for untimeliness in meeting deadlines for construction, installation, and
other requirements, as well as intermittent performance-based fines for noncompliance in meeting PFAS loading reduction requirements and
removal efficiency targets. After a period of public comment, the Addendum was approved by the North Carolina Superior Court for Bladen County
on October 12, 2020. A Motion to Intervene filed by Cape Fear Public Utility Authority was denied.
F-57
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following table sets forth the on-site and off-site components of the Company’s accrued environmental remediation liabilities related to PFAS at
Fayetteville at December 31, 2021 and 2020.
On-site remediation
Off-site groundwater remediation
Total Fayetteville environmental remediation
December 31,
2021
2020
$
$
289
70
359
$
$
140
54
194
The following table sets forth the current and long-term components of the Company’s accrued environmental remediation liabilities related to PFAS
at Fayetteville at December 31, 2021 and 2020.
Current environmental remediation
Long-term environmental remediation
Total Fayetteville environmental remediation
Emissions to air
December 31,
2021
2020
$
$
114
245
359
$
$
39
155
194
Fayetteville operates multiple permitted air discharge stacks, blowers, and vents as part of its manufacturing activities. A TO became fully
operational at the site on December 27, 2019, and Chemours switched to the permitted operating scenario for the TO on December 31, 2019 as set
forth in the CO. The TO is designed to reduce aerial PFAS emissions from Fayetteville, and testing results showed that the TO is controlling PFAS
emissions at an average efficiency exceeding 99.999%. Testing was conducted by Chemours and monitored by the North Carolina Division of Air
Quality (“NC DAQ”). The cost related to the installation of the TO were capitalized in accordance with the Company’s policy.
Off-site replacement drinking water supplies
The CO requires the Company to provide permanent replacement drinking water supplies, including via connection to public water supply, whole
building filtration units and/or RO units, to qualifying surrounding residents, businesses, schools, and public buildings with private drinking water
wells. Qualifying surrounding properties with private drinking water wells that have tested above the state provisional health goal of 140 parts per
trillion (“ppt”) for GenX may be eligible for public water or a whole building filtration system. Qualifying surrounding properties with private drinking
water wells that have tested above 10 ppt for GenX or other perfluorinated compounds (“Table 3 Compounds”) are eligible for three under-sink RO
units. The Company provides bottled drinking water to a qualifying property when it becomes eligible for a replacement drinking water supply, and
continues to provide delivery of bottled drinking water to the property until the eligible supply is established or installed. Under the terms of the CO,
Chemours must make the offer to install a water treatment system to property owners in writing multiple times, and property owners have
approximately one year to accept the Company’s offer before it expires.
The Company’s estimated liability for off-site replacement drinking water supplies is based on management’s assessment of the current facts and
circumstances for this matter, which are subject to various assumptions that include, but are not limited to, the number of affected surrounding
properties, response rates to the Company’s offer, the timing of expiration of offers made to the property owners, the type of water treatment
systems selected (i.e., whole building filtration or RO units), the cost of the selected water treatment systems, and any related OM&M requirements,
fines and penalties, and other charges contemplated by the CO. For off-site drinking water supplies, OM&M is accrued for 20 years on an
undiscounted basis based on the Company’s current plans under the CO. In September 2021, the Company entered into an agreement with Bladen
County, North Carolina to fund public water system upgrades and connections associated with providing permanent replacement drinking water
supplies under the CO.
At December 31, 2021 and 2020, the Company had $59 and $54 accrued, respectively, for off-site groundwater testing and water treatment system
installations at qualifying third-party properties primarily in Bladen and Cumberland counties surrounding Fayetteville. Off-site installation,
maintenance, and monitoring may be impacted by additional changes in estimates as actual experience may differ from management’s estimates. It
is currently estimated that $59 of disbursements related to off-site replacement drinking water supplies and toxicity studies will be made over
approximately 20 years.
F-58
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
On November 3, 2021, NC DEQ notified Chemours of the potential need to revise its off-site drinking water program under the CO in light of EPA’s
recently published final toxicity assessment for GenX compounds and plan to develop a drinking water health advisory in the Spring of 2022. As
discussed above, the Company cannot estimate the potential impact or additional cost due to the uncertainties on the potential EPA drinking water
health advisories.
Also on November 3, 2021, NC DEQ sent a notice to Chemours regarding PFAS contamination from the Cape Fear River of groundwater monitoring
wells and water supply wells in New Hanover County and potentially three other downstream counties based on new sampling data by NC DEQ and
its determination of Chemours’ obligations for such contamination. NC DEQ directed Chemours to submit, within 90 days of receipt of the notice (due
February 1, 2022), for its review and approval a comprehensive groundwater contamination assessment in such counties, as well as, an updated
drinking water program to provide for sampling under the CO in such counties. The Company submitted its response on February 1, 2022, and
accordingly, for the year ended December 31, 2021, the Company recorded $11 for the assessment and for sampling related to potential PFAS
contamination of groundwater and supply of alternative drinking water in New Hanover and three other downstream counties. The liability is based
on management’s preliminary assessment of the facts and circumstances for this matter. The estimated liability was based on certain assumptions,
which management believes are reasonable under the circumstances and include, but are not limited to, implementation of the soil and groundwater
assessment, the source and cause of PFAS contamination within the four counties, the estimated number of properties at which sampling is
conducted and whether such property will qualify for an alternative drinking water supply, other potentially responsible parties and the method of
long-term alternative water supply, if any.
Management’s estimate of the ultimate liability for this matter is dependent upon obtaining additional information, including, but not limited to, those
items identified above. Given the level of uncertainties noted above, the Company is not able to provide a reasonable high-end estimate beyond the
$11 accrued at December 31, 2021. The ultimate resolution of this matter could have a material adverse effect on the Company’s financial position,
results of operations and cash flow.
On-site surface water and groundwater remediation
Abatement and remediation measures already taken by Chemours, including the capture and disposal of its operations’ process wastewater and
other interim actions, have addressed and abated nearly all PFAS discharges from the Company’s continuing operations at Fayetteville. However,
the Company continues to have active dialogue with NC DEQ and other stakeholders regarding the potential remedies that are both economically
and technologically feasible to achieve the CO and Addendum objectives related to the impact of site surface water and groundwater from historical
operations.
In 2019, the Company completed and submitted its Cape Fear River PFAS Loading Reduction Plan - Supplemental Information Report and its CAP
to NC DEQ. The Supplemental Information Report provided information to support the evaluation of potential interim remedial options to reduce
PFAS loadings to surface waters. The CAP described potential long-term remediation activities to address PFAS in on-site groundwater and surface
waters at the site, in accordance with the requirements of the CO and the North Carolina groundwater standards, and built upon the previous
submissions to NC DEQ. The NC DEQ received comments on the CAP during a public comment period, and the Company is awaiting formal
response to the CAP from NC DEQ. With respect to the CO, the Addendum was approved by the North Carolina Superior Court for Bladen County
on October 12, 2020 and establishes the procedure to implement specified remedial measures for reducing PFAS loadings from Fayetteville to the
Cape Fear River, including construction of a barrier wall with a groundwater extraction system to be completed by March 15, 2023.
The Company’s estimated liability for the remediation activities that are probable and estimable is based on the CO, the Addendum, the CAP, and
management’s assessment of the current facts and circumstances, which are subject to various assumptions including the transport pathways (being
pathways by which PFAS reaches the Cape Fear River) which will require remedial actions, the types of interim and permanent site surface water
and on-site remedies and treatment systems selected and implemented, the estimated cost of such potential remedies and treatment systems, any
related OM&M requirements, and other charges contemplated by the CO and the Addendum.
F-59
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Following issuance of an NPDES permit by NC DEQ on September 18, 2020, the Company began operation of a capture and treatment system from
the site’s old outfall channel on September 30, 2020. In January 2021, the operation of the old outfall treatment system was interrupted on two
occasions, and notice was provided to NC DEQ of the low treatment flow conditions through the system. On January 26, 2021, the Company
received an NOV from NC DEQ, alleging violations of the CO and the NPDES water permit arising from the design and operation of the treatment
system related to the old outfall. The Company and its third-party service provider have taken, and continue to take, interim actions intended to
improve the operation of the old outfall treatment system and address challenges posed by substantial rain events, sediment loading into the system,
and variability in water influent conditions. In addition, the Company and its third-party service provider are actively working on long-term
enhancements to the treatment system based on learnings from the recent challenges. An incremental $64 was accrued in 2021, representing
approximately $3 per year for 20 years of estimated operation of the system, primarily related to the probable enhancements and the long-term
operation of the water treatment system in accordance with the requirements of the CO. System enhancements completed or being implemented
consist of a holding pond, installation of new ultra-filtration units and additional water pretreatment equipment which is anticipated to be completed by
the second quarter of 2022.
In 2021, work commenced on the detailed engineering design of the barrier wall and refinement of models for the planned groundwater extraction
system. Engineering designs for the Company’s major construction projects are typically reviewed at 30, 60 and 90% complete. In June 2021, the
Company reviewed the 30% complete design and associated preliminary vendor estimates for the construction and operation of a barrier wall and
groundwater treatment system at Fayetteville. Following the completion of the 30% design, the Company recorded $109 of additional accrual as
further discussed below.
The current planned construction site of the future barrier wall, that will address both on-site groundwater and long-term seep remediation, is
expected to be located at an approximately 30 feet higher elevation above the Cape Fear River as compared to the initial, conceptual design that
was prepared in support of the CAP submission to NC DEQ on December 31, 2019, which addressed groundwater only. The CAP submission unit
cost estimate was the principal basis of unit costs for the Company’s liability estimates through March 31, 2021. It was determined, based upon the
30% design information completed during the second quarter of 2021, that there was significantly increased construction complexity and related
vendor and other design costs to be incurred. For example, the steep slope of the revised construction site results in the depth of the wall increasing
from the original estimates of approximately 65 feet to approximately 85 feet below ground along most of its length. Construction of approximately 64
pumping wells, a more than 50% increase from the conceptual design, are expected to be required to extract groundwater for treatment based on
studies of groundwater flows that were completed in May 2021. The wells will also need to be drilled deeper into the ground based on the revised
location. A 2-mile access road, with retaining walls above and below the road to reduce slope erosion and landslides, will now be required for large,
heavy construction equipment to access the barrier wall location safely. The estimated cost for construction as a result of these changes is based on
third-party contractor estimates provided in late May 2021. Together, all these modifications to the design resulted in an additional $49 accrual for
construction of the barrier wall in 2021.
In addition, the volume of groundwater, seep water, and stormwater (up to a 0.5 inch rain event in any 24 hours period per the Addendum)
intercepted for treatment is estimated to be up to a maximum of 1,500 gallons per minute (“gpm”) based on groundwater flow modeling completed in
the second quarter of 2021. Until the pre-design investigation and groundwater modeling was complete, the volume of water captured for treatment
was estimated to be approximately 1,200 gpm, and the pretreatment requirements to remove dissolved solids had not been determined. Hence, the
Company determined in 2021 that construction of a larger treatment plant than previously considered in the conceptual design and previous cost
estimates was required. Consistent with prior periods, the Company accrued 20 years of ongoing monitoring and maintenance for Fayetteville
environmental remediation systems based on the CO and Addendum. The revised estimate to process higher volumes of groundwater than originally
contemplated resulted in an additional accrual (change in estimate) of $60 in 2021 related to estimated higher power consumption, ongoing
monitoring, pretreatment, filtering supplies, principally carbon and regular maintenance of the system over a 20-year period of estimated operation
starting in 2023.
In August 2021, the Company reviewed the 60% complete design and associated updated preliminary vendor estimates, which was submitted to NC
DEQ for review and approval. There were no changes in estimate upon completing the review of the 60% design. Additionally, applications for the
necessary permit for the groundwater extraction system have been submitted.
F-60
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
On September 15, 2021, the Company received a ‘conditional approval’ of the 60% design of the barrier wall and groundwater extraction and
treatment system which included comments that NC DEQ requested the Company to address within forty-five days (i.e., by October 30). The
Company responded to the comments on October 5, 2021. The Company believes that the design of the barrier wall and groundwater extraction and
treatment system meets the requirements for this project under the Addendum. However, it is reasonably possible that additional costs could be
incurred for the project, or that the 90% design completion or project construction work be delayed, pending resolution of NC DEQ comments. These
costs are not estimable at this time due to the uncertainty around the objective and scope of NC DEQ comments as well as additional design basis
that may be required. The NC DEQ’s comments also addressed other onsite remediation activities under the CO, but unrelated to the design of the
barrier wall and groundwater treatment system. It is reasonably possible that additional costs could be incurred to address the areas raised by NC
DEQ, but cannot be estimated at this time as it would require additional pre-design investigation work that has not yet been scoped or performed.
Pre-construction site preparation activities are in progress and construction of the water treatment facility is expected to commence in 2022.
Construction of the barrier wall is expected to commence in 2022 with completion planned in the first quarter of 2023. At December 31, 2021, several
significant uncertainties remain, principally related to the resolution of comments received from NC DEQ on the 60% design, an extension of the
barrier wall along Willis Creek at the northern end of the site, additional wetlands mitigation fees, finalization of the volume of water to be treated,
contract negotiations with key construction and water treatment vendors and the estimated future time period of OM&M. Accordingly, the Company
has increased the upper range of its cost estimates for the barrier wall and groundwater OM&M from $111 at December 31, 2020 to $305 at
December 31, 2021, of which $170 is accrued. The Company has not accrued for the incremental costs in the upper range, including the extension
of the barrier wall. While the Company believes that extension of the barrier wall along Willis Creek is technically impracticable and not necessary to
comply with the terms of the CO and Addendum, an estimate of the cost for the barrier wall extension was included in the upper range of the cost
estimate of approximately $30.
The final cost of the on-site groundwater treatment system primarily depends on receiving timely NC DEQ design and permit approvals and thus the
timely finalization of certain significant design details, notably the actual barrier wall location, depth, and length, number and configuration of
extraction wells, water extraction rates and estimated carbon usage. Pending resolution of NC DEQ comments on the 60% design, the engineering
design is expected to be approximately 90% complete in the first quarter of 2022, which will form the basis of a submission for the approval by NC
DEQ which is required to be submitted by the Company as provided by the Addendum. Per the Addendum, NC DEQ shall use best efforts to
complete its review and notify the Company whether the design is approved within 30 days after submittal. If not approved within 30 days,
subsequent deadlines shall be extended by the time required for NC DEQ approval in excess of 30 days. Unanticipated schedule delays or other
factors beyond the Company’s control could lead to further increases in the cost of the barrier wall and groundwater treatment system, which could
be material. Changes in estimates are recorded in results of operations in the period that the events and circumstances giving rise to such changes
occur. If the Company does not achieve project completion of the barrier wall and groundwater treatment system by March 15, 2023, subject to
extensions provided above, the Addendum specifies penalties of $0.15 plus an additional $0.02 per week until installation is completed.
Accordingly, based on the CO, the Addendum, the CAP, and management’s plans, which are based on current regulations and technology, the
Company has accrued $289 and $140 at December 31, 2021 and 2020, respectively, related to the estimated cost of on-site remediation, which is
within the existing estimated range of potential outcomes, based on current potential remedial options, and projected to be paid over a period of
approximately 20 years. The final costs of any selected remediation will depend primarily on the final approved design and actual labor and material
costs. Accordingly, as discussed above, during 2021, the Company revised, in accordance with ASC 250 – Accounting Changes and Error
Corrections, its estimated liability to comply with the CO and Addendum. In accordance with ASC 410 – Asset Retirement and Environmental
Obligations, these amounts were recorded as a component of cost of goods sold as the Company only capitalizes environmental costs if the costs
extend the useful life of the property, increase the property’s capacity, and/or reduce or prevent contamination from future operations.
It is possible that issues relating to site discharges in various transport pathways, the selection of remediation alternatives to achieve PFAS loading
reductions, or the operating effectiveness of the TO could result in further litigation and/or regulatory demands with regards to Fayetteville, including
potential permit modifications or penalties under the CO and the Addendum. It is also possible that, as additional data is collected on the transport
pathways and dialogue continues with NC DEQ and other stakeholders, the type or extent of remediation actions required to achieve the objectives
committed to in the CO may change (increase or decrease) or remediation activities could be delayed. If such issues arise, or if the CO is further
amended, an additional loss is reasonably possible, but not estimable at this time. With respect to the Addendum, at this time, the Company believes
that payment of any of the stipulated financial penalties for untimeliness or noncompliance is remote.
F-61
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Other matters related to Fayetteville
In February 2019, the Company received an NOV from EPA, alleging certain TSCA violations at Fayetteville. Matters raised in the NOV could have
the potential to affect operations at Fayetteville. For this NOV, the Company responded to EPA in March 2019, asserting that the Company has not
violated environmental laws. The Company also received an NOV in April 2020 from NC DEQ, alleging an air permit violation under the North
Carolina Administrative Code. As of December 31, 2021, management does not believe that a loss is probable.
In June 2020, the Company received an NOV from NC DEQ, alleging violations of the North Carolina Solid Waste Generator Requirements in
connection with clearing land and yard waste materials to a landfill during construction of the water treatment plant required for remediation under
the CO. The Company responded that it did not commit a violation and had addressed any concerns prior to issuance of the NOV. In March 2021,
the Company received a compliance order associated with the June 2020 NOV. The NOV has been resolved and the matter is now closed.
In August 2021, the Company received a NOV from NC DEQ alleging violations of the facility’s Title V air permit for failure to reduce facility-wide
annual emissions of GenX compounds and failure to properly operate and maintain a carbon absorber unit. The Company provided a response to
the NOV in September 2021. In October 2021, the Company received two civil penalty assessments totaling $0.3 associated with the NOV. In
November 2021, the Company appealed the civil penalty assessments in North Carolina’s Office of Administrative Hearings and a hearing in the
matter is scheduled in May 2022.
In 2019, civil actions were filed against EID and Chemours in North Carolina federal court relating to discharges from Fayetteville. These actions
include a consolidated action brought by public water suppliers seeking damages and injunctive relief, a consolidated purported class action seeking
medical monitoring, and property damage and/or other monetary and injunctive relief on behalf of the putative classes of property owners and
residents in areas near or that draw drinking water from the Cape Fear River, and two actions encompassing approximately 1,300 private well
owners seeking compensatory and punitive damages. Ruling on the Company’s motions in April 2019, the court dismissed the medical monitoring,
injunctive demand, and many other alleged causes of actions in these lawsuits. It is possible that additional litigation may be filed against the
Company and/or EID concerning the discharges.
In addition to natural resource damages matter filed by the State of North Carolina (as discussed within the “PFAS” section of this “Note 22 –
Commitments and Contingent Liabilities”), in September 2020, three additional lawsuits were filed in North Carolina state court against Chemours
and EID, as well as other defendants. One of the lawsuits is a putative class action on behalf of residents who are served by the Cape Fear Public
Water utility, alleges negligence, nuisance, and other claims related to the release of perfluorinated compounds from Fayetteville, and seeks
compensatory and punitive damages and medical monitoring. The other two lawsuits were filed on behalf of individuals residing near Fayetteville and
allege negligence, nuisance, and other claims related to the release of perfluorinated compounds. The individuals seek compensatory property
damages, punitive damages, and, in some cases, medical monitoring. All three lawsuits allege fraudulent transfer against EID and other EID entities,
but not against Chemours. In October 2020, the cases were removed to federal court and then the two lawsuits filed on behalf of individuals were
remanded back to state court.
It is not possible at this point to predict the timing, course, or outcome of all governmental and regulatory inquiries and notices and litigation, and it is
reasonably possible that these matters could have a material adverse effect on the Company’s financial position, results of operations, and cash
flows. In addition, local communities, organizations, and federal and state regulatory agencies have raised questions concerning HFPO Dimer Acid
and other perfluorinated and polyfluorinated compounds at certain other manufacturing sites operated by the Company. It is possible that additional
developments similar to those described above and centering on Fayetteville could arise in other locations.
Other
In addition, in the ordinary course of business, the Company may make certain commitments, including representations, warranties, and indemnities
relating to current and past operations, including environmental remediation and other potential costs related to divested assets and businesses, and
issue guarantees of third-party obligations. The Company accrues for these matters when it is probable that a liability has been incurred and the
amount of the liability can be reasonably estimated. In connection with the sale of the Mining Solutions Business, the Company provided a limited
indemnification with respect to environmental liabilities that may arise from activities prior to the closing date. Such indemnification would not exceed
15% of the purchase price and will expire on December 1, 2026. No liabilities have been recorded at December 31, 2021 with respect to this
indemnification.
F-62
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 23. Equity
2018 Share Repurchase Program
On August 1, 2018, the Company’s board of directors approved a share repurchase program authorizing the purchase of shares of Chemours’
issued and outstanding common stock in an aggregate amount not to exceed $750, plus any associated fees or costs in connection with the
Company’s share repurchases activity (the “2018 Share Repurchase Program”). On February 13, 2019, the Company’s board of directors increased
the authorization amount of the 2018 Share Repurchase Program from $750 to $1,000. Under the 2018 Share Repurchase Program, shares of
Chemours’ common stock can be purchased in the open market from time to time, subject to management’s discretion, as well as general business
and market conditions. The Company’s 2018 Share Repurchase Program became effective on August 1, 2018 and was originally scheduled to
continue through the earlier of its expiration on December 31, 2020 or the completion of repurchases up to the approved amount. On December 8,
2020, the Company’s board of directors approved the extension of the 2018 Share Repurchase Program through December 31, 2022. The program
may be suspended or discontinued at any time. All common shares purchased under the 2018 Share Repurchase Program are expected to be held
as treasury stock and accounted for using the cost method.
The following table sets forth the Company’s share repurchase activity under the 2018 Share Repurchase Program for the years ended December
31, 2021, 2020, and 2019.
Total number of shares purchased
Total amount for shares purchased
Average price paid per share
$
$
5,533,746
177
31.99
$
$
—
—
—
$
$
2021
Year Ended December 31,
2020
2019
8,895,142
322
36.24
Through December 31, 2021, under the 2018 Share Repurchase Program, the Company purchased a cumulative 20,779,745 shares of Chemours’
issued and outstanding common stock, which amounted to $749 at an average share price of $36.05 per share. The aggregate amount of
Chemours’ common stock that remained available for purchase under the 2018 Share Repurchase Program at December 31, 2021 was $251.
F-63
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 24. Stock-based Compensation
The Company’s total stock-based compensation expense amounted to $34, $16, and $19 for the years ended December 31, 2021, 2020, and 2019,
respectively.
In 2017, Chemours’ stockholders approved Chemours’ Equity and Incentive Plan (the “Equity Plan”), which provides for grants to certain employees,
independent contractors, or non-employee directors of the Company of different forms of awards, including stock options, RSUs, and PSUs, with
19,000,000 shares reserved for issuance. The Equity Plan replaced the Company’s prior plan adopted at Separation (the “Prior Plan”). As a result,
no further grants will be made under the Prior Plan.
On April 28, 2021, Chemours’ stockholders approved an amendment and restatement of the Equity Plan to increase the number of shares of the
Company’s common stock reserved for issuance by 3,050,000 shares.
Following the amendment and restatement of the Equity Plan, a total of 22,050,000 shares of the Company’s common stock may be subject to
awards granted under the Equity Plan, less one share for every one share that was subject to an option or stock appreciation right granted after
December 31, 2016 under the Prior Plan, and one-and-a-half shares for every one share that was subject to an award other than an option or stock
appreciation right granted after December 31, 2016 under the Prior Plan. Any shares that are subject to options or stock appreciation rights will be
counted against this limit as one share for every one share granted, and any shares that are subject to awards other than options or stock
appreciation rights will be counted against this limit as one-and-a-half shares for every one share granted. Awards that were outstanding under the
Prior Plan remain outstanding under the Prior Plan in accordance with their terms. The underlying share awards granted under the Prior Plan after
December 31, 2016 that are forfeited, cancelled, or that otherwise do not result in the issuance of shares, will be available for issuance under the
Equity Plan. At December 31, 2021, approximately 11,800,000 shares of the Equity Plan reserve are available for grants.
The Chemours Compensation and Leadership Development Committee determines the long-term incentive mix, including stock options, RSUs, and
PSUs, and may authorize new grants annually.
Stock Options
During the years ended December 31, 2021, 2020, and 2019, Chemours granted non-qualified stock options to certain of its employees, which will
vest over a three-year period and expire 10 years from the date of grant. The fair values of the Company’s stock options are based on the Black-
Scholes valuation model.
The following table sets forth the weighted-average assumptions used at the respective grant dates to determine the fair values of the Company’s
stock option awards granted during the years ended December 31, 2021, 2020, and 2019.
Risk-free interest rate
Expected term (years)
Volatility
Dividend yield
Fair value per stock option
2021
Year Ended December 31,
2020
2019
0.91 %
6.00
63.85 %
4.16 %
9.78 $
0.94 %
6.00
53.18 %
6.93 %
3.74 $
2.53 %
6.00
48.05 %
2.81 %
13.66
$
The Company determined the dividend yield by dividing the expected annual dividend on the Company's stock by the option exercise price. A
historical daily measurement of volatility is determined based on the blended volatilities of Chemours and the average of its peer companies,
adjusted for Chemours’ debt leverage. The risk-free interest rate is determined by reference to the yield on an outstanding U.S. Treasury note with a
term equal to the expected term of the option granted. The expected term is determined using a simplified approach, calculated as the mid-point
between the graded vesting period and the contractual life of the award.
F-64
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following table sets forth Chemours’ stock option activity for the years ended December 31, 2021, 2020, and 2019.
Number of
Shares
(in Thousands)
Weighted-
average
Exercise Price
(per Share)
Weighted-
average
Remaining
Contractual
Term (in Years)
Outstanding, December 31, 2018
Granted
Exercised
Forfeited
Expired
Outstanding, December 31, 2019
Granted
Exercised
Forfeited
Expired
Outstanding, December 31, 2020
Granted
Exercised
Forfeited
Expired
Outstanding, December 31, 2021
Exercisable, December 31, 2021
5,970 $
836
(590 )
(110 )
(50 )
6,056 $
2,778
(1,124 )
(186 )
(165 )
7,359 $
1,153
(1,376 )
(107 )
(62 )
6,967 $
2,597 $
18.45
36.48
14.56
39.06
22.12
20.92
14.42
14.23
23.84
29.99
19.21
24.35
17.01
20.62
36.71
20.32
26.60
Aggregate
Intrinsic Value
(in Thousands)
72,108
4.80 $
4.71 $
19,087
6.21 $
63,894
6.60 $
5.63 $
101,261
26,099
The aggregate intrinsic values in the preceding table represent the total pre-tax intrinsic value (the difference between the Company's closing stock
price on the last trading day at the end of the year and the exercise price, multiplied by the number of in-the-money options) that would have been
received by the option holders had all option holders exercised their in-the-money options at year-end. The amount changes based on the fair
market value of the Company’s stock. The total intrinsic value of all options exercised for the years ended December 31, 2021, 2020, and 2019
amounted to $23, $12, and $2, respectively.
For the years ended December 31, 2021, 2020, and 2019, the Company recorded $10, $9, and $9 in stock-based compensation expense specific to
its stock options, respectively. At December 31, 2021, there was $8 of unrecognized stock-based compensation expense related to stock options,
which is expected to be recognized over a weighted-average period of 1.81 years.
F-65
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Restricted Stock Units
Chemours grants RSUs to key management employees that generally vest over a three-year period and, upon vesting, convert one-for-one to
Chemours’ common stock. The fair value of all stock-settled RSUs is based on the market price of the underlying common stock at the grant date.
RSUs vest contingent upon a time-based vesting condition and do not have explicit performance conditions.
The following table sets forth non-vested RSUs at December 31, 2021, 2020, and 2019.
Non-vested, December 31, 2018
Granted
Vested
Forfeited
Non-vested, December 31, 2019
Granted
Vested
Forfeited
Non-vested, December 31, 2020
Granted
Vested
Forfeited
Non-vested, December 31, 2021
Number of Shares
(in Thousands)
Weighted-average
Grant Date
Fair Value
(per Share)
247
439
(110 )
(30 )
546
585
(161 )
(60 )
910
461
(188 )
(24 )
1,159
$
$
$
$
34.22
26.89
24.98
33.90
29.95
17.01
38.68
25.78
20.51
26.30
24.33
19.96
22.20
For the years ended December 31, 2021, 2020, and 2019, the Company recorded $12, $7, and $7 in stock-based compensation expense specific to
its RSUs, respectively. At December 31, 2021, there was $5 of unrecognized stock-based compensation expense related to RSUs, which is
expected to be recognized over a weighted-average period of 1.07 years.
F-66
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Performance Share Units
Chemours grants PSUs to key senior management employees which, upon vesting, convert one-for-one to Chemours’ common stock if specified
performance goals, including certain market-based conditions, are met over the three-year performance period specified in the grant, subject to
exceptions through the respective vesting period of three years. Each grantee is granted a target award of PSUs, and may earn between 0% and
250% of the target amount depending on the Company’s performance against stated performance goals.
The following table sets forth non-vested PSUs at 100% of target amounts at December 31, 2021, 2020, and 2019.
Non-vested, December 31, 2018
Granted
Vested (1)
Forfeited
Non-vested, December 31, 2019
Granted
Vested
Forfeited
Non-vested, December 31, 2020
Granted
Vested
Forfeited
Non-vested, December 31, 2021
Number of Shares
(in Thousands)
Weighted-average
Grant Date
Fair Value
(per Share)
1,107
240
(761 )
(57 )
529
542
(176 )
(51 )
844
309
(122 )
(276 )
755
$
$
$
$
17.71
44.38
5.07
43.35
39.53
17.14
35.84
27.79
29.05
27.42
52.34
23.26
26.72
(1) During the year ended December 31, 2019, approximately 1,520,000 PSUs granted in 2016 to the Company’s key senior management employees vested, based on the
attainment of certain performance- and market-based conditions. Of the 1,520,000 PSUs that vested during the year ended December 31, 2019, approximately 680,000 non-
issued shares were cancelled to cover the employee portion of income taxes related to such awards.
A portion of the fair value of PSUs was estimated at the grant date based on the probability of satisfying the market-based conditions associated with
the PSUs using the Monte Carlo valuation method, which assesses probabilities of various outcomes of market conditions. The other portion of the
fair value of the PSUs is based on the fair market value of the Company’s stock at the grant date, regardless of whether the market-based conditions
are satisfied. The per unit weighted-average fair value at the date of grant for PSUs granted during the year ended December 31, 2021 was $27.42.
The fair value of each PSU grant is amortized monthly into compensation expense based on its respective vesting conditions over a three-year
period. Compensation cost is incurred based on the Company’s estimate of the final expected value of the award, which is adjusted as required for
the portion based on the performance-based condition. The Company assumes that forfeitures will be minimal and recognizes forfeitures as they
occur, which results in a reduction in compensation expense. As the payout of PSUs includes dividend equivalents, no separate dividend yield
assumption is required in calculating the fair value of the PSUs.
For the years ended December 31, 2021, 2020, and 2019, the Company recorded stock-based compensation expense of $12, a reduction of stock-
based compensation of less than $1, and stock-based compensation expense of $3 specific to its PSUs, respectively. At December 31, 2021, based
on the Company’s assessment of its performance goals, approximately 840,000 additional shares may be awarded under the Equity Plan.
Employee Stock Purchase Plan
Since 2017, the Company has provided employees the opportunity to participate in Chemours’ Employee Stock Purchase Plan (“ESPP”). Under the
ESPP, a total of 7,000,000 shares of Chemours’ common stock is reserved and authorized for issuance to participating employees, as defined by the
ESPP, which excludes executive officers of the Company. The ESPP provides for consecutive 12-month offering periods, each with two purchase
periods in March and September within those offering periods. Participating employees are eligible to purchase the Company’s common stock at a
discounted rate equal to 95% of its fair value on the last trading day of each purchase period. To date, the Company has executed open market
transactions to purchase the Company’s common stock on behalf of its ESPP participants, which amounted to 268,000 shares. The total amount of
Chemours’ common stock received by employees in connection with the ESPP amounted to $6 at December 31, 2021.
F-67
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 25. Accumulated Other Comprehensive Loss
The following table sets forth the changes and after-tax balances of the Company’s accumulated other comprehensive loss for the years ended
December 31, 2021, 2020, and 2019.
Net Investment
Hedge
Cash Flow
Hedge
Cumulative
Translation
Adjustment
Defined Benefit
Plans
Total
Balance at January 1, 2019
Other comprehensive income (loss)
Balance at December 31, 2019
Other comprehensive (loss) income
Balance at December 31, 2020
Other comprehensive income (loss)
Balance at December 31, 2021
$
$
(25 )
15
(10 )
(66 )
(76 )
55
(21 )
$
$
6 $
(4 )
2
(10 )
(8 )
13
5 $
(233 ) $
2
(231 )
111
(120 )
(116 )
(236 ) $
(312 )
202
(110 )
4
(106 )
(6 )
(112 )
$
$
(564 )
215
(349 )
39
(310 )
(54 )
(364 )
Note 26. Financial Instruments
Net Monetary Assets and Liabilities Hedge – Foreign Currency Forward Contracts
At December 31, 2021, the Company had 12 foreign currency forward contracts outstanding with an aggregate gross notional U.S. dollar equivalent
of $254 and an average maturity of one month. At December 31, 2020, the Company had 25 foreign currency forward contracts outstanding with an
aggregate gross notional U.S. dollar equivalent of $688, and an average maturity of one month. Chemours recognized a net loss of $15, a net gain
of $29, and a net loss of $2 for the years ended December 31, 2021, 2020, and 2019, respectively, in other income (expense), net.
Cash Flow Hedge – Foreign Currency Forward Contracts
At December 31, 2021, the Company had 175 foreign currency forward contracts outstanding under its cash flow hedge program with an aggregate
notional U.S. dollar equivalent of $195, and an average maturity of four months. At December 31, 2020, the Company had 144 foreign currency
forward contracts outstanding under its cash flow hedge program with an aggregate notional U.S. dollar equivalent of $101, and an average maturity
of four months. Chemours recognized a pre-tax gain of $10, a pre-tax loss of $4, and a pre-tax gain of $6 for the years ended December 31, 2021,
2020, and 2019, respectively, within accumulated other comprehensive loss. For the year ended December 31, 2021, $2 of loss was reclassified to
the cost of goods sold from accumulated other comprehensive loss. For the years ended December 31, 2020 and 2019, $3, and $10 of gain was
reclassified to the cost of goods sold from accumulated other comprehensive loss, respectively.
The Company expects to reclassify approximately $7 of net gain, based on current foreign currency exchange rates, from accumulated other
comprehensive loss to the cost of goods sold over the next 12 months.
Cash Flow Hedge – Interest Rate Swaps
In 2020, the Company entered into interest rate swaps, the objective of which is to mitigate the volatility in the Company’s cash payments for interest
related to the portion of its senior secured term loan facility denominated in U.S. dollars, which bears a variable interest rate equal to, at the election
of the Company, adjusted LIBOR plus 1.75% or adjusted base rate plus 0.75%, subject to an adjusted LIBOR or an adjusted base rate floor of
0.00% or 1.00%, respectively.
At December 31, 2021, the Company had three interest rate swaps outstanding under its cash flow hedge program with an aggregate notional U.S.
dollar equivalent of $400; each of the interest rate swaps mature on March 31, 2023. Chemours recognized a pre-tax gain of $2 and a pre-tax loss of
$4 for the years ended December 31, 2021 and 2020 within accumulated other comprehensive loss, respectively. For the years ended December
31, 2021 and 2020, $2 and less than $1 of loss were reclassified to interest expense, net from accumulated other comprehensive loss, respectively.
The Company expects to reclassify less than $1 of net loss from accumulated other comprehensive loss to interest expense, net over the next 12
months, based on the current market rate.
F-68
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Net Investment Hedge – Foreign Currency Borrowings
The Company recognized a pre-tax gain of $73, a pre-tax loss of $88 and a pre-tax gain of $20 for the years ended December 31, 2021, 2020, and
2019, respectively, on its net investment hedge within accumulated other comprehensive loss. No amounts were reclassified from accumulated other
comprehensive loss for the Company’s net investment hedges during the years ended December 31, 2021, 2020, and 2019.
Fair Value of Derivative Instruments
The following table sets forth the fair value of the Company’s derivative assets and liabilities at December 31, 2021 and 2020.
Asset derivatives:
Foreign currency forward contracts
not designated as a hedging instrument
Foreign currency forward contracts
designated as a cash flow hedge
Total asset derivatives
Liability derivatives:
Foreign currency forward contracts
not designated as a hedging instrument
Foreign currency forward contracts
designated as a cash flow hedge
Interest rate swaps
designated as a cash flow hedge
Total liability derivatives
Balance Sheet Location
Fair Value Using Level 2 Inputs
December 31, 2021 December 31, 2020
Accounts and notes receivable, net (Note 11)
$
Accounts and notes receivable, net (Note 11)
$
Other accrued liabilities (Note 19)
$
Other accrued liabilities (Note 19)
Other accrued liabilities (Note 19)
$
1 $
5
6 $
1 $
—
—
1 $
4
—
4
1
4
3
8
The Company’s foreign currency forward contracts and interest rate swaps are classified as Level 2 financial instruments within the fair value
hierarchy as the valuation inputs are based on quoted prices and market observable data of similar instruments. For derivative assets and liabilities,
standard industry models are used to calculate the fair value of the various financial instruments based on significant observable market inputs, such
as foreign exchange rates and implied volatilities obtained from various market sources. Market inputs are obtained from well-established and
recognized vendors of market data, and are subjected to tolerance and/or quality checks.
F-69
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Summary of Financial Instruments
The following table sets forth the pre-tax changes in fair value of the Company’s financial instruments for the years ended December 31, 2021, 2020,
and 2019.
Gain (Loss) Recognized In
Cost of
Interest
Other Income
Goods Sold
Expense, Net
(Expense), Net
Accumulated
Other
Comprehensive
Loss
Year Ended December 31,
2021
Foreign currency forward contracts not designated as a
hedging instrument
Foreign currency forward contracts designated as a cash flow
hedge
Interest rate swaps designated as a cash flow hedge
Euro-denominated debt designated as a net investment
hedge
$
2020
Foreign currency forward contracts not designated as a
hedging instrument
Foreign currency forward contracts designated as a cash flow
hedge
Interest rate swaps designated as a cash flow hedge
Euro-denominated debt designated as a net investment
hedge
$
2019
Foreign currency forward contracts not designated as a
hedging instrument
Foreign currency forward contracts designated as a cash flow
hedge
Euro-denominated debt designated as a net investment
hedge
$
— $
— $
(15 ) $
(2 )
—
—
—
(2 )
—
—
—
—
— $
— $
29 $
3
—
—
—
—
—
—
—
—
— $
— $
(2 ) $
10
—
—
—
—
—
—
10
2
73
—
(4 )
(4 )
(88 )
—
6
20
F-70
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 27. Long-term Employee Benefits
Plans Covering Employees in the U.S.
Chemours established a defined contribution plan, which covered all eligible U.S. employees. The purpose of the plan is to encourage employees to
save for their future retirement needs. The plan is a tax-qualified contributory profit-sharing plan, with cash or deferred arrangement, and any eligible
employee of Chemours may participate. Chemours matches 100% of the first 6% of the employee’s contribution election, and the plan’s matching
contributions vest immediately upon contribution. In 2021, the Company enhanced its previous discretionary retirement savings contribution to
provide eligible employees with a guaranteed annual contribution ranging from 1% to 3% for the first $0.1 of base salary based on age and years of
service.
Plans Covering Employees Outside the U.S.
Pension coverage for employees of Chemours’ non-U.S. subsidiaries is provided, to the extent deemed appropriate, through separate plans
established after the Separation and comparable to the EID plans in those countries. Obligations under such plans are either funded by depositing
funds with trustees, covered by insurance contracts, or unfunded.
In 2019, the Company, through its wholly-owned subsidiary Chemours Netherlands B.V., completed a settlement transaction related to a significant
portion of its Netherlands pension plan. The Company transferred the future risk and administration associated with the $932 of its inactive
participants’ vested pension benefits to a third-party asset management company in the Netherlands. The irrevocability of the transaction was
contingent upon non-objection by the Dutch National Bank, which was received in October 2019. Following the receipt of non-objection, the
responsibility for the associated pension obligation was transferred to the third-party asset management company in December 2019, thereby
eliminating the Company’s exposure to the pension liabilities and formally effecting the settlement. At the time of settlement, a remeasurement of
plan assets and projected benefit obligations was performed, resulting in a $158 decrease to net pension assets and increase to accumulated other
comprehensive loss on the consolidated balance sheet. The cumulative loss associated with the inactive participants’ vested pension benefits was
then immediately reclassified from accumulated other comprehensive loss and recognized in earnings, resulting in a charge of $380 recognized in
other expense, net in the consolidated statements of operations. The projected benefit obligations associated with the plan’s active employees
remained on the Company’s consolidated balance sheet.
The following table sets forth the Company’s net periodic pension (cost) income and amounts recognized in other comprehensive income (loss) for
the years ended December 31, 2021, 2020, and 2019.
2021
Year Ended December 31,
2020
2019
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service gain
Settlement loss
Curtailment gain
Total net periodic pension cost
Net (loss) gain
Prior service (cost) benefit
Amortization of actuarial loss
Amortization of prior service gain
Settlement loss
Curtailment gain
Effect of foreign exchange rates
(Cost) benefit recognized in other comprehensive income
Total changes in plan assets and benefit obligations
recognized in other comprehensive income
$
$
$
$
$
$
(15 )
(5 )
20
(7 )
2
(1 )
—
(6 )
(22 )
—
7
(2 )
1
—
6
(10 )
$
(16 )
$
F-71
(15 ) $
(6 )
17
(9 )
3
(5 )
1
(14 ) $
4
$
(1 )
9
(3 )
5
4
(9 )
9
(5 ) $
(13 )
(17 )
48
(18 )
2
(383 )
—
(381 )
(144 )
5
18
(2 )
383
—
7
267
(114 )
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following table sets forth the pre-tax amounts recognized in accumulated other comprehensive loss at December 31, 2021, 2020, and 2019.
Net loss
Prior service credit
Total amount recognized in accumulated other comprehensive loss
$
$
148
(9 )
139
$
$
143
(12 )
131
$
$
The following table sets forth summarized information on the Company’s pension plans at December 31, 2021 and 2020.
2021
Year Ended December 31,
2020
2019
December 31,
2021
2020
$
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Actuarial loss
Benefits paid
Settlements and transfers
Currency translation
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Plan participants’ contributions
Benefits paid
Settlements and transfers
Currency translation
Fair value of plan assets at end of year
Total funded status at end of year
$
584
15
5
2
19
(4 )
(11 )
(35 )
575
604
17
17
2
(4 )
(11 )
(40 )
585
10
$
$
The following table sets forth the net amounts recognized in the Company’s consolidated balance sheets at December 31, 2021 and 2020.
Non-current assets
Current liabilities
Non-current liabilities
Total net amount recognized
December 31,
2021
2020
$
$
55
(1 )
(44 )
10
$
$
151
(14 )
137
507
15
6
2
33
(2 )
(24 )
47
584
500
55
20
2
(2 )
(21 )
50
604
20
79
(2 )
(57 )
20
The accumulated benefit obligation for all pension plans was $493 and $513 as of December 31, 2021 and 2020, respectively.
For the year ended December 31, 2021, the liability component of the Company’s global pension plans generated a net actuarial loss of $19, driven
by a $40 loss as a result of increases in the Netherlands’ inflation and indexation rates along with a $11 loss due to the rise in the average rate of
global compensation increases. The losses were partially offset by a gain of $32 from a global increase in the discount rates.
The asset component of the Company’s global pension plans realized a loss of $3 due to volatile equity and bond performance.
F-72
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following tables set forth information related to the Company’s pension plans with projected and accumulated benefit obligations in excess of the
fair value of plan assets at December 31, 2021 and 2020.
Pension plans with projected benefit obligation in excess of plan assets
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Pension plans with accumulated benefit obligation in excess of plan assets
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Assumptions
$
$
December 31,
2021
2020
$
142
119
97
December 31,
2021
2020
$
142
119
97
175
148
116
153
131
98
The Company generally utilizes discount rates that are developed by matching the expected cash flows of each benefit plan to various yield curves
constructed from a portfolio of high-quality, fixed income instruments provided by the plans’ actuaries as of the measurement date. The expected
rate of return on plan assets reflects economic assumptions applicable to each country.
The following tables set forth the assumptions that have been used to determine the Company’s benefit obligations and net benefit cost at December
31, 2021 and 2020.
Weighted-average assumptions used to determine benefit obligations
Discount rate
Rate of compensation increase (1)
Interest crediting rate (2)
December 31,
2021
2020
1.4 %
3.4 %
1.0 %
1.0 %
2.5 %
1.3 %
(1) The rate of compensation increase represents the single annual effective salary increase that an average plan participant would receive during the participant’s entire career
at Chemours.
(2) The interest crediting rate, which is applicable only for account balance type plans, represents the single effective annual account balance increase that an average
participant would receive during the participant’s entire career at Chemours.
Weighted-average assumptions used to determine net benefit cost
Discount rate
Rate of compensation increase (1)
Expected return on plan assets
December 31,
2021
2020
1.0 %
2.5 %
1.2 %
1.4 %
2.5 %
3.2 %
(1) The rate of compensation increase represents the single annual effective salary increase that an average plan participant would receive during the participant’s entire career
at Chemours.
F-73
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Plan Assets
Each pension plan’s assets are invested through either an insurance vehicle, a master trust fund, or a stand-alone pension fund. The strategic asset
allocation for each plan is selected by management, together with the pension board, where appropriate, reflecting the results of comprehensive
asset and liability modeling. For assets under its control, Chemours establishes strategic asset allocation percentage targets and appropriate
benchmarks for significant asset classes with the aim of achieving a prudent balance between return and risk. Strategic asset allocations in countries
are selected in accordance with the laws and practices of those countries.
The following table sets forth the weighted-average allocation for the Company’s pension plan assets at December 31, 2021 and 2020.
Cash and cash equivalents
U.S. and non-U.S. equity securities
Fixed income securities
Total weighted-average allocation
December 31,
2021
2020
8 %
37 %
55 %
100 %
7 %
37 %
56 %
100 %
Fixed income securities include corporate-issued, government-issued, and asset-backed securities. Corporate debt investments encompass a range
of credit risk and industry diversification.
Fair value calculations may not be indicative of net realizable value or reflective of future fair values. Furthermore, although Chemours believes its
valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the
fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
F-74
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following tables set forth the fair values of the Company’s pension assets by level within the fair value hierarchy at December 31, 2021 and
2020.
Fair Value Measurements at December 31, 2021
Level 1
Total
Level 2
Asset category:
Debt - government issued
Debt - corporate issued
U.S. and non-U.S. equities
Derivatives - asset position
Cash and cash equivalents
Other
Total pension assets at fair value
Pooled mortgage funds (1)
Total pension assets
$
$
$
$
74
147
217
70
46
3
557
28
585
10
29
44
—
46
—
129
$
$
64
118
173
70
—
3
428
(1) Pooled mortgage funds consist of funds that invest in residential mortgages. These funds generally allow for monthly redemption with 30 days' notice. Timing for redemption
could be delayed based on the priority of our request and the availability of funds. Interests in these funds are valued using the net asset value ("NAV") per share practical
expedient and are not classified in the fair value hierarchy.
Fair Value Measurements at December 31, 2020
Level 1
Total
Level 2
Asset category:
Debt - government issued
Debt - corporate issued
U.S. and non-U.S. equities
Derivatives - asset position
Cash and cash equivalents
Other
Total pension assets at fair value
Pooled mortgage funds (1)
Total pension assets
$
$
$
$
60
158
220
93
43
2
576
28
604
10
42
33
—
43
—
128
$
$
50
116
187
93
—
2
448
(1) Pooled mortgage funds consist of funds that invest in residential mortgages. These funds generally allow for monthly redemption with 30 days' notice. Timing for redemption
could be delayed based on the priority of our request and the availability of funds. Interests in these funds are valued using the NAV per share practical expedient and are not
classified in the fair value hierarchy.
For pension plan assets classified as Level 1 instruments within the fair value hierarchy, total fair value is either the price of the most recent trade at
the time of the market close or the official close price, as defined by the exchange on which the asset is most actively traded on the last trading day
of the period, multiplied by the number of units held without consideration of transaction costs.
For pension plan assets classified as Level 2 instruments within the fair value hierarchy, where the security is frequently traded in less active
markets, fair value is based on the closing price at the end of the period; where the security is less frequently traded, fair value is based on the price
a dealer would pay for the security or similar securities, adjusted for any terms specific to that asset or liability. Market inputs are obtained from well-
established, recognized vendors of market data and subjected to tolerance and/or quality checks. For derivative assets and liabilities, standard
industry models are used to calculate the fair value of the various financial instruments based on significant observable market inputs, such as
foreign exchange rates, commodity prices, swap rates, interest rates, and implied volatilities obtained from various market sources. With the
exception of pooled mortgage funds, pooled funds are valued at the per-unit NAV as determined by the fund manager based on the value of the
underlying traded securities.
F-75
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Cash Flows – Defined Benefit Plans
Employer Contributions
For the years ended December 31, 2021, 2020, and 2019, Chemours contributed $17, $20, and $19, respectively, to its defined benefit plans.
Chemours expects to contribute $12 to its pension plans in 2022. The Company’s future contributions to its defined benefit pension plans are
dependent on market-based discount rates, and, as stated in “Note 2 – Basis of Presentation” to these consolidated financial statements, may differ
due to the impacts of the COVID-19 pandemic on the macroeconomic environment and other factors.
Future Benefit Payments
The following table sets forth the benefit payments that are expected to be paid by the plans over the next five years and the five years thereafter.
2022
2023
2024
2025
2026
2027 to 2031
Cash Flows – Defined Contribution Plan
Employer Contributions
$
11
11
13
14
15
100
For the years ended December 31, 2021, 2020, and 2019, Chemours contributed $28, $27, and $34, respectively, to its defined contribution plan.
Note 28. Supplemental Cash Flow Information
The following table provides a reconciliation of cash and cash equivalents, as reported on the Company’s consolidated balance sheets, to cash, cash
equivalents, restricted cash and restricted cash equivalents, as reported on the Company’s consolidated statements of cash flows.
Cash and cash equivalents
Restricted cash and restricted cash equivalents (1)
Cash, cash equivalents, restricted cash and restricted cash equivalents
$
$
1,451
100
1,551
$
$
1,105
—
1,105
(1) Restricted cash and restricted cash equivalents balance includes cash and cash equivalents deposited in an escrow account as per the terms of the MOU, which is further
discussed in “Note 22 – Commitments and Contingent Liabilities”.
December 31,
2021
2020
F-76
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
Note 29. Geographic and Segment Information
Geographic Information
The following table sets forth the geographic locations of the Company’s net sales for the years ended and property, plant, and equipment, net as of
December 31, 2021, 2020, and 2019.
North America
Asia Pacific
Europe, the Middle East, and Africa
Latin America (2)
Total
2021
Net Sales (1)
$
$
2,317
1,827
1,412
789
6,345
Property, Plant,
and
Equipment, Net
2,309
$
128
322
395
3,154
$
Year Ended December 31,
2020
2019
Net Sales (1)
$
$
1,914
1,384
1,086
585
4,969
Property, Plant,
and
Equipment, Net
2,461
$
121
324
568
3,474
$
Net Sales (1)
$
$
2,144
1,543
1,163
676
5,526
Property, Plant,
and
Equipment, Net
2,533
$
121
294
611
3,559
$
(1) Net sales are attributed to countries based on customer location.
(2)
Latin America includes Mexico.
Segment Information
Chemours’ operations consist of four reportable segments based on similar economic characteristics, the nature of products and production
processes, end-use markets, channels of distribution, and regulatory environments: Titanium Technologies, Thermal & Specialized Solutions,
Advanced Performance Materials, and Chemical Solutions. Corporate costs and certain legal and environmental expenses, stock-based
compensation expenses, and foreign exchange gains and losses arising from the remeasurement of balances in currencies other than the functional
currency of the Company’s legal entities are reflected in Corporate and Other.
Adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) is the primary measure of segment profitability used by
the Company’s Chief Operating Decision Maker (“CODM”) and is defined as income (loss) before income taxes, excluding the following:
•
•
•
•
•
•
interest expense, depreciation, and amortization;
non-operating pension and other post-retirement employee benefit costs, which represents the components of net periodic pension
(income) costs excluding the service cost component;
exchange (gains) losses included in other income (expense), net;
restructuring, asset-related, and other charges;
(gains) losses on sales of assets and businesses; and,
other items not considered indicative of the Company’s ongoing operational performance and expected to occur infrequently, including
Qualified Spend reimbursable by DuPont and/or Corteva as part of the Company's cost-sharing agreement under the terms of the MOU
that were previously excluded from Adjusted EBITDA.
F-77
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following table sets forth certain summary financial information for the Company’s reportable segments as of, and for the years ended,
December 31, 2021, 2020, and 2019.
Year Ended December 31,
2021
Net sales to external customers (2)
Adjusted EBITDA
Depreciation and amortization
Equity in earnings of affiliates
Total assets
Investments in affiliates
Purchases of property, plant, and equipment
$
$
2020
Net sales to external customers (2)
Adjusted EBITDA
Depreciation and amortization
Equity in earnings of affiliates
Total assets
Investments in affiliates
Purchases of property, plant, and equipment
$
2019
Net sales to external customers (2)
Adjusted EBITDA
Depreciation and amortization
Equity in earnings of affiliates
Total assets
Investments in affiliates
Purchases of property, plant, and equipment
Titanium
Technologies
Thermal &
Specialized Solutions
Advanced
Performance
Materials
Chemical Solutions (1)
Segment Total
$
$
$
3,355
809
126
—
2,318
—
104
2,402
510
128
—
2,130
—
89
2,345
505
121
—
2,291
—
121
$
$
$
1,257
412
59
15
1,124
72
26
1,105
354
53
6
1,041
66
28
1,318
398
52
11
1,061
64
32
$
$
$
1,397
261
86
28
1,621
97
103
1,104
126
88
17
1,520
101
109
1,330
180
84
18
1,521
98
169
$
$
$
336
51
16
—
149
—
39
358
73
21
—
531
—
25
533
80
22
—
574
—
40
6,345
1,533
287
43
5,212
169
272
4,969
1,063
290
23
5,222
167
251
5,526
1,163
279
29
5,447
162
362
(1) On July 26, 2021, the Company entered into the Mining Solutions Transaction which closed on December 1, 2021. For further information refer to “Note 4 – Acquisitions and
Divestitures”.
(2) Segment net sales to external customers are provided by product group in “Note 5 – Net Sales”.
The following table sets forth a reconciliation for instances in which the above summary financial information for the Company’s reportable segments
does not sum to consolidated amounts.
Year Ended December 31,
2021
Depreciation and amortization
Total assets
Purchases of property, plant, and equipment
2020
Depreciation and amortization
Total assets
Purchases of property, plant, and equipment
2019
Depreciation and amortization
Total assets
Purchases of property, plant, and equipment
Segment Total
Corporate and Other
Total Consolidated
$
$
$
$
$
$
287
5,212
272
290
5,222
251
279
5,447
362
$
$
$
30
2,338
5
30
1,860
16
32
1,811
119
317
7,550
277
320
7,082
267
311
7,258
481
F-78
The Chemours Company
Notes to the Consolidated Financial Statements
(Dollars in millions, except per share amounts and par values)
The following table sets forth a reconciliation of Segment Adjusted EBITDA to the Company’s consolidated income (loss) before income taxes for the
years ended December 31, 2021, 2020, and 2019.
Segment Adjusted EBITDA
Corporate and Other expenses (excluding items below)
Interest expense, net
Depreciation and amortization
Non-operating pension and other post-retirement employee benefit
income (cost) (1)
Exchange gains (losses), net
Restructuring, asset-related, and other charges (2)
Loss on extinguishment of debt
Gain on sales of assets and businesses (3,4)
Natural disasters and catastrophic events (5)
Transaction costs
Qualified spend recovery (6)
Legal and environmental charges (7,8)
Income (loss) before income taxes
2021
$
$
Year Ended December 31,
2020
2019
1,533
$
(220 )
(185 )
(317 )
9
3
(6 )
(21 )
115
(21 )
(4 )
20
(230 )
$
676
1,063
$
(184 )
(210 )
(320 )
1
(26 )
(80 )
(22 )
8
—
(2 )
—
(49 )
$
179
1,163
(143 )
(208 )
(311 )
(368 )
(2 )
(87 )
—
10
—
(3 )
—
(175 )
(124 )
(1) The year ended December 31, 2019 includes a $380 settlement loss related to a significant portion of the Company’s Netherlands pension plan, specific to the vested
pension benefits of the inactive participants. Refer to “Note 27 – Long-term Employee Benefits” for further details.
(2)
Includes restructuring, asset-related, and other charges, which are discussed in further detail in “Note 7 – Restructuring, Asset-related, and Other Charges”.
(3) The year ended December 31, 2021 includes a net pre-tax gain on sale of $112 associated with the sale of the Company’s Mining Solutions business of its Chemical
Solutions segment which is further discussed in “Note 4 – Acquisitions and Divestitures”.
(4) The year ended December 31, 2020 includes a gain of $6 associated with the sale of the Company’s Oakley, California site, which was contingent upon the completion of
certain environmental remediation activities at the site. The year ended December 31, 2019 includes a non-cash gain of $9 recognized in connection with the Company’s
sale of its Repauno, New Jersey site that was previously deferred and subsequently realized after certain environmental obligations were fulfilled.
(5) Natural disasters and catastrophic events pertains to the total cost of plant repairs and utility charges in excess of historical averages caused by Winter Storm Uri.
(6) Qualified spend recovery represents costs and expenses that were previously excluded from Adjusted EBITDA, reimbursable by DuPont and/or Corteva as part of the
Company's cost-sharing agreement under the terms of the MOU which is discussed in further detail in "Note 22 – Commitments and Contingent Liabilities".
(7)
(8)
Legal charges pertains to litigation settlements, PFOA drinking water treatment accruals, and other legal charges. The year ended December 31, 2020 includes $29 of
charges in connection with the Company’s portion of the costs to settle PFOA multi-district litigation in Ohio. Refer to “Note 22 – Commitments and Contingent Liabilities” for
further details.
In 2021, environmental charges pertains to management’s assessment of estimated liabilities associated with certain non-recurring environmental remediation expenses at
various sites. For the year ended December 31, 2021, environmental charges include $169 related to the construction of the barrier wall, operation of the groundwater
extraction and treatment system, and long-term enhancements to the old outfall treatment system at Fayetteville. In 2020 and 2019, environmental charges pertains to
management’s assessment of estimated liabilities associated with on-site remediation, off-site groundwater remediation, and toxicity studies related to Fayetteville. The year
ended December 31, 2019 includes $168 in additional charges related to the approved final Consent Order associated with certain matters at Fayetteville. Refer to “Note 22
– Commitments and Contingent Liabilities” for further details.
Note 30. Subsequent Events
On January 28, 2022, the Company entered into an agreement to sell its former Aniline business for a purchase price of $15, subject to customary
closing conditions. The sale of the site is expected to close in the first quarter of 2022. In 2020, the Company ceased Aniline production at the
Pascagoula, Mississippi manufacturing plant. As a result, during the year ended December 31, 2020, the Company recorded an impairment and
other restructuring charges which are further discussed in “Note 7 – Restructuring, Asset Related and Other Charges”.
F-79
SUBSIDIARIES OF THE REGISTRANT
Organized Under Laws Of
Exhibit 21
Name
2463297 Ontario Limited
ChemFirst Inc.
Chemours Belgium BVBA
Chemours Chemicals Rus
Chemours Deutschland GmbH
Chemours France SAS
Chemours Hong Kong Holding Limited
Chemours International Operations Sàrl
Chemours Italy S.r.l.
Chemours Kabushiki Kaisha
Chemours Korea Inc.
Chemours Netherlands B.V.
Chemours NL Holding 1 B.V.
Chemours NL Holding 2 B.V.
Chemours NL Holding 4 B.V.
Chemours NL Holding 5 B.V.
Chemours Services Sàrl
Chemours Spain S.L.
Chemours Titanium Technologies (Taiwan) Ltd.
Chemours TR Kimyasal Ürünler Limited Şirketi
Chemours UK Limited
Chemours Vietnam Company Limited
Dordrecht Energy Supply Company (Desco) B.V.
First Chemical Corporation
First Chemical Holdings, LLC
First Chemical Texas, L.P
FT Chemical, Inc.
ICOR International Inc.
Initiatives Inc de México S.A. de C.V.
Noluma International, LLC
PT The Chemours Indonesia
Southern Ionics Minerals, LLC
The Chemours (Changshu) Fluoro Technology Company Limited
The Chemours (Taiwan) Company Limited
The Chemours (Thailand) Company Limited
The Chemours 3F Fluorochemicals (Changshu) Company, Limited
The Chemours Canada Company
The Chemours Chemical (Shanghai) Company Limited
The Chemours China Holding Co., Ltd.
The Chemours Company (Argentina) S.R.L.
The Chemours Company AR, LLC
Canada
Mississippi
Belgium
Russia
Germany
France
Hong Kong
Switzerland
Italy
Japan
Korea
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Switzerland
Spain
Taiwan
Turkey
United Kingdom
Vietnam
Netherlands
Mississippi
Mississippi
Delaware
Texas
Indiana
Mexico
Delaware
Indonesia
Mississippi
China
Taiwan
Thailand
China
Canada
China
China
Argentina
Delaware
The Chemours Company (Australia) Pty Ltd
The Chemours Company Asia Pacific Operations, Inc.
The Chemours Company Delaware Operations, Inc.
The Chemours Company FC, LLC
The Chemours Company Holding US, LLC
The Chemours Company Industria E Comercio de Produtos Quimicos Ltda.
The Chemours Company Mexicana S. de R.L. de C.V.
The Chemours Company Mexico, S. de R.L. de C.V.
The Chemours Company North America, Inc.
The Chemours Company Servicios, S. de R.L. de C.V.
The Chemours Company Singapore Pte. Ltd.
The Chemours Company Worldwide Operations, Inc.
The Chemours Holding Company, S. de R.L. de C.V.
The Chemours India Private Limited
The Chemours Malaysia Sdn. Bhd.
Australia
Delaware
Delaware
Delaware
Delaware
Brazil
Mexico
Mexico
Delaware
Mexico
Singapore
Delaware
Mexico
India
Malaysia
Subsidiaries not listed would not, if considered in the aggregate as a single subsidiary, constitute a significant subsidiary.
LIST OF GUARANTOR SUBSIDIARIES
Exhibit 22
As of December 31, 2021, the following subsidiaries of The Chemours Company (the “Company”) were guarantors of the Company’s 4.000% senior
unsecured notes due May 2026, which are denominated in euros and the 5.375% senior unsecured notes due May 2027 (collectively, the “
Registered Notes”,) which are registered under the Securities Act of 1933, as amended.
Name
ChemFirst Inc.
First Chemical Corporation
First Chemical Holdings, LLC
First Chemical Texas, L.P.
FT Chemical, Inc.
The Chemours Company FC, LLC
Organized Under Laws Of
Mississippi
Mississippi
Mississippi
Delaware
Texas
Delaware
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-205391, 333-205392, 333-205393, 333-
217623, 333-256592) of The Chemours Company of our report dated February 11, 2022 relating to the financial statements and the effectiveness of
internal control over financial reporting, which appears in this Form 10-K.
Exhibit 23
/s/ PricewaterhouseCoopers LLP
New York, New York
February 11, 2022
Exhibit 31.1
1.
2.
3.
4.
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Mark E. Newman, certify that:
I have reviewed this Annual Report on Form 10-K of The Chemours Company;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and,
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control over financial reporting; and,
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information;
and,
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.
Date:
February 11, 2022
By:
/s/ Mark E. Newman
Mark E. Newman
President and Chief Executive Officer
Exhibit 31.2
1.
2.
3.
4.
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Sameer Ralhan, certify that:
I have reviewed this Annual Report on Form 10-K of The Chemours Company;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and,
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control over financial reporting; and,
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information;
and,
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.
Date:
February 11, 2022
By:
/s/ Sameer Ralhan
Sameer Ralhan
Senior Vice President, Chief Financial Officer
Certification of CEO Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1
In connection with the Annual Report of The Chemours Company (the “Company”) on Form 10-K for the year ended December 31, 2021 as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), Mark E. Newman, as Chief Executive Officer of the Company,
hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and,
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
/s/ Mark E. Newman
Mark E. Newman
President and Chief Executive Officer
February 11, 2022
Certification of CFO Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2
In connection with the Annual Report of The Chemours Company (the “Company”) on Form 10-K for the year ended December 31, 2021 as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), Sameer Ralhan, as Chief Financial Officer of the Company,
hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and,
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
/s/ Sameer Ralhan
Sameer Ralhan
Senior Vice President, Chief Financial Officer
February 11, 2022
MINE SAFETY DISCLOSURES
Exhibit 95
The Company owns and operates a mineral sands mining and separation facility in Starke, Florida, mineral sands mining facilities in
Jesup, Georgia and Nahunta, Georgia, and a mineral sands separation facility in Offerman, Georgia. The following table provides
information about citations, orders and notices issued from the Mine Safety and Health Administration (“MSHA”) under the Federal
Mine Safety and Health Act of 1977 (“Mine Act”) for the year ended December 31, 2021.
Mine
(MSHA
Identification
Number)
Section
104
S&S1
Citations
(#)
Section
104(b)
Orders
(#)
Section
104(d)
Citations
and
Orders
(#)
Section
110(b)(2)
Violations
(#)
Section
107(a)
Orders
(#)
Total
Dollar
Value of
MSHA
Assessments
Proposed
($)
Total
Number
of
Mining
Related
Fatalities
(#)
Received
Notice of
Pattern of
Violations
Under
Section
104(e)
(yes/no)
Received
Notice of
Potential
to Have
Pattern
Under
Section
104(e)
(yes/no)
Legal
Actions
Pending
as of
Last Day
of Period
(#)
Legal
Actions
Initiated
During
Period
(#)
Legal
Actions
Resolved
During
Period
(#)
Starke, FL
(0800225)
Jesup, GA
(0901256)
Mission Mine
(0901230)
Offerman MSP
(0901236)
1
2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
1,781
—
—
—
$
—
$
—
$
690
—
250
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
S&S refers to significant and substantial violations of mandatory health or safety standards under section 104 of the Mine Act.