THE CHEMOURS COMPANY

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

02/14/2020 | 05:32pm


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 years ended December 31, 2019 and 2018 and the changes
therein. For the year ended December 31, 2017, and changes from the year ended
December 31, 2017 to the year ended December 31, 2018, 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, 2018.



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.




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.






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 plastics and coatings, refrigeration and air conditioning,
general industrial, electronics, mining, and oil refining. Our principal
products include refrigerants, industrial fluoropolymer resins, sodium cyanide,
performance chemicals and intermediates, and TiO2 pigment. We manage and report
our operating results through three reportable segments: Fluoroproducts,
Chemical Solutions, and Titanium Technologies. Our Fluoroproducts segment is a
leading, global provider of fluoroproducts, including refrigerants and
industrial fluoropolymer resins. Our Chemical Solutions segment is a leading,
North American provider of industrial chemicals used in gold production,
industrial, and consumer applications. 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.



Recent Developments




Fayetteville Works, Fayetteville, North Carolina



In February 2019, we entered into a final Consent Order with the North Carolina
Department of Environmental Quality
("NC DEQ") and Cape Fear River Watch, a
non-profit organization. The final Consent Order comprehensively addressed
certain legal and environmental matters at our Fayetteville Works site in
Fayetteville, North Carolina ("Fayetteville") and was accepted by the North
Carolina Superior Court for Bladen County
.






In connection with the Consent Order, a thermal oxidizer ("TO") became fully
operational at the site in December 2019, and we switched to the permitted
operating scenario for the TO on December 31, 2019 as required by the Consent
Order. The TO is designed to reduce aerial PFAS emissions from Fayetteville,
and, within 90 days of installation, we, along with the North Carolina Division
of Air Quality
, will conduct testing to confirm whether the TO is destroying
99.99% of all PFAS air emissions routed to it, utilizing a 2017 baseline.



In the fourth quarter of 2019, we completed and submitted our Cape Fear River
PFAS Loading Reduction Plan - Supplemental Information Report and Corrective
Action Plan ("CAP") to NC DEQ. The Supplemental Information Report provides
information to support the evaluation of potential remedial options to reduce
PFAS loadings to surface waters, including interim alternatives. The CAP
describes potential remediation activities to address PFAS in on-site
groundwater and surface waters at the site, in accordance with the requirements
of the Consent Order and the North Carolina groundwater standards, and builds on
the previous submissions to NC DEQ. In the fourth quarter of 2019, based on the
Consent Order, CAP, and our plans, we accrued an additional $132 million related
to the estimated cost of on-site remediation.




See "Note 22 - Commitments and Contingent Liabilities" to the Consolidated
Financial Statements for further information about environmental remediation at
Fayetteville.







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Netherlands Pension Plan



In the fourth quarter of 2019, we completed a settlement transaction related to
a significant portion of our Netherlands pension plan. The future risk,
responsibility, and administration associated with the $932 million of inactive
participants' vested pension benefits was transferred to a third-party asset
management company via an irrevocable transaction in December 2019, thereby
eliminating our exposure to the pension liabilities and formally effecting the
settlement. The cumulative loss associated with the inactive participants'
vested pension benefits was recognized in earnings, resulting in a charge of
$380 million recognized in other expense, net in the consolidated statements of
operations. At December 31, 2019, the projected benefit obligations associated
with the plan's active employees remained on our consolidated balance sheet.



2019 Restructuring Program



In an effort to better align our cost structure with market opportunities, we
recorded net severance charges of $22 million during the year ended December 31,
2019
. Impacted employees are subject to our customary involuntary termination
benefits. The majority of the employees separated from the Company during the
fourth quarter of 2019, and the majority of the associated severance payments
will be made by the end of 2020.



Also, in the third quarter of 2019, we announced plans to exit the Methylamines
and Methylamides business at our Belle, West Virginia manufacturing plant, which
culminated in our completed exit and sale of the business to Belle Chemical
Company
, a subsidiary of Cornerstone Chemical Company, in the fourth quarter of
2019. As a result, for the year ended December 31, 2019, we recorded accelerated
depreciation of $34 million, which is reflected as a component of restructuring,
asset-related, and other charges in the consolidated statement of operations.
Upon completion of the sale, we also recorded an additional pre-tax loss on sale
of $2 million, net of a benefit from working capital adjustments, in other
expense, net in the consolidated statements of operations. Both of the
aforementioned charges relate to Chemical Solutions, and we do not expect to
incur additional charges related to our exit of the Methylamines and
Methylamides business.




Accounts Receivable Securitization Facility






In July 2019, we, through a wholly-owned special purpose entity, entered into an
accounts receivable securitization facility ("Securitization Facility") to
enhance our liquidity. The original borrowings amounted to $125 million, which,
along with available cash, was used to pay down our then outstanding revolving
loan. At December 31, 2019, our net borrowings under the Securitization
Facility were $110 million.



Capital Allocation



For the year ended December 31, 2019, we returned $486 million in cash to our
shareholders by purchasing $322 million in our issued and outstanding common
stock under our 2018 Share Repurchase Program, and through the payment of $164
million
in cash dividends, thereby fulfilling our goal of returning the majority
of our free cash flows to shareholders.




At December 31, 2019, the aggregate amount of our common stock that remained
available for purchase under the 2018 Share Repurchase Program was $428 million.









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Results of Operations and Business Highlights






Results of Operations




The following table sets forth our results of operations for the years ended
December 31, 2019 and 2018.






Year Ended December 31,
(Dollars in millions, except per share amounts) 2019 2018
Net sales $ 5,526 $ 6,638
Cost of goods sold 4,463 4,667
Gross profit 1,063 1,971
Selling, general, and administrative expense 548


657



Research and development expense 80 82
Restructuring, asset-related, and other charges 87 49
Total other operating expenses 715


788



Equity in earnings of affiliates 29 43
Interest expense, net (208 ) (195 )
Loss on extinguishment of debt - (38 )
Other (expense) income, net (293 )


162



(Loss) income before income taxes (124 )


1,155



(Benefit from) provision for income taxes (72 )


159



Net (loss) income (52 )


996



Less: Net income attributable to
non-controlling interests - 1
Net (loss) income attributable to Chemours $ (52 ) $


995



Per share data
Basic (loss) earnings per share of common stock $ (0.32 ) $


5.62



Diluted (loss) earnings per share of common
stock (0.32 ) 5.45




Net Sales




The following table sets forth the impacts of price, volume, and currency on our
net sales for the year ended December 31, 2019.






Year Ended December 31,
Change in net sales from prior period 2019
Price (2 )%
Volume (14 )%
Currency (1 )%
Total change in net sales (17 )%




Our net sales decreased by $1.1 billion (or 17%) to $5.5 billion for the year
ended December 31, 2019, compared with net sales of $6.6 billion for the same
period in 2018. The components of the decrease in our net sales by segment for
the year ended December 31, 2019 were as follows: in our Fluoroproducts segment,
price declined 2% and volume was down 4%; in our Chemical Solutions segment,
price declined 4% and volume was down 7%; and, in our Titanium Technologies
segment, price declined 1% and volume was down 24%. Unfavorable currency
movements also added a 1% headwind to net sales in our Fluoroproducts and
Titanium Technologies segments.




The drivers of these changes for each of our segments are discussed further
under the heading "Segment Reviews" within this MD&A.






Cost of Goods Sold



Our cost of goods sold ("COGS") decreased by $204 million (or 4%) to $4.5
billion
for the year ended December 31, 2019, compared with COGS of $4.7 billion
for the same period in 2018. The decrease in our COGS for the year ended
December 31, 2019 was primarily attributable to lower net sales volumes, as well
as lower distribution, freight, and logistics expenses. These decreases were
partially offset by operational headwinds in our Fluoroproducts segment, and
higher raw materials costs and lower fixed cost absorption in our Titanium
Technologies segment. Additionally, during the year ended December 31, 2019, we
incurred $150 million for environmental remediation activities related to
Fayetteville.




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Selling, General, and Administrative Expense






Our selling, general, and administrative ("SG&A") expense decreased by $109
million
(or 17%) to $548 million for the year ended December 31, 2019, compared
with SG&A expense of $657 million for the same period in 2018. The decrease in
our SG&A expense for the year ended December 31, 2019 was primarily attributable
to lower performance-related compensation costs, as well as costs incurred for
our 2018 debt transactions, which did not recur in 2019. The year ended December
31, 2018
also included the accrual of $63 million for estimated liabilities
associated with ongoing environmental matters at Fayetteville. These comparative
decreases for the year ended December 31, 2019 are partially offset by $18
million
incurred during the first quarter of 2019, in connection with the
approved final Consent Order to settle certain legal and environmental matters
at Fayetteville.




Research and Development Expense



Our R&D expense was largely unchanged at $80 million for the year ended December
31, 2019
and $82 million for the year ended December 31, 2018.



Restructuring, Asset-related, and Other Charges



Our restructuring, asset-related, and other charges amounted to $87 million and
$49 million for the years ended December 31, 2019 and 2018, respectively.






For the year ended December 31, 2019, our restructuring, asset-related, and
other charges were primarily attributable to $22 million of employee separation
charges incurred in connection with our 2019 Restructuring Program, as well as
$34 million of accelerated depreciation recorded in conjunction with our exit of
the Methylamines and Methylamides business at our Belle, West Virginia
manufacturing plant. We also recognized $20 million in decommissioning and
dismantling-related charges, primarily attributable to the demolition and
removal of certain unused buildings at our Chambers Works site in Deepwater, New
Jersey
, as well as $9 million of accelerated depreciation associated with the
discontinuation of the titanium tetrachloride product line at our New
Johnsonville, Tennessee
site.



For the year ended December 31, 2018, our restructuring, asset-related, and
other charges were primarily attributable to employee separation and other
charges incurred in connection with our 2017 restructuring program of $27
million
, and employee separation charges of $5 million for our 2018
restructuring program. In addition, we recognized $13 million in decommissioning
and dismantling-related charges, primarily attributable to the demolition and
removal of certain unused buildings at our Chambers Works site in Deepwater, New
Jersey
, and an asset-related charge of $4 million for a goodwill impairment in
our Chemical Solutions segment.




Equity in Earnings of Affiliates






Our equity in earnings of affiliates decreased by $14 million (or 33%) to $29
million
for the year ended December 31, 2019, compared with equity in earnings
of affiliates of $43 million for the same period in 2018. The decrease in our
equity in earnings of affiliates for the year ended December 31, 2019 was
primarily attributable to global semiconductor and automotive market softness
for our equity method investees in the Fluoroproducts segment.



Interest Expense, Net



Our interest expense, net increased by $13 million (or 7%) to $208 million for
the year ended December 31, 2019, compared with interest expense, net of $195
million
for the same period in 2018. The increase in our interest expense, net
for the year ended December 31, 2019 was primarily attributable to a reduction
in interest income earned on lower cash and cash equivalents balances, as well
as less interest capitalized following the completion or stoppage of certain of
our large-scale construction projects. These increases were partially offset by
lower interest expense following our 2018 debt transactions.




Loss on Extinguishment of Debt



For the year ended December 31, 2019, we did not extinguish any of our
outstanding debt.






For the year ended December 31, 2018, we recognized a combined loss on
extinguishment of debt of $38 million in connection with the amendment and
restatement of our credit agreement, and our tender offers to purchase any and
all of our outstanding euro-denominated 6.125% senior unsecured notes due May
2023
and a portion of our outstanding U.S. dollar-denominated 6.625% senior
unsecured notes due May 2023.




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Other Income (Expense), Net



Our other income, net decreased by $455 million to other expense, net of $293
million
for the year ended December 31, 2019, compared with other income, net of
$162 million for the same period in 2018. The decrease in our other income, net
for the year ended December 31, 2019 was primarily attributable to $368 million
in non-operating pension and other post-retirement employee benefit loss, which
is inclusive of a $380 million expense recognized upon settlement of the portion
of our Netherlands pension plan pertaining to inactive participants' vested
pension benefits. We also experienced a decrease in miscellaneous income, which
is primarily attributable to $26 million lower EU fluorinated greenhouse gas
("F-Gas") quota authorization sales. The comparative decrease in our other
income, net is also reflective of a $42 million gain on the sale of our Linden,
New Jersey
site during the year ended December 31, 2018. These decreases were
partially offset by recognition of a previously deferred non-cash gain of $9
million
during the year ended December 31, 2019. The gain, which was associated
with the sale of our Repauno site in Gibbstown, New Jersey, had been deferred
until certain environmental obligations were fulfilled.




Provision for (Benefit from) Income Taxes



Our benefit from income taxes amounted to $72 million for the year ended
December 31, 2019, representing an effective tax rate of 58%. Our provision for
income taxes amounted to $159 million for the year ended December 31, 2018,
representing an effective tax rate of 14%.






The $231 million decrease in our provision for income taxes for the year ended
December 31, 2019, when compared with the same period in 2018, was primarily
attributable to reduced profitability and the geographic mix of our earnings. In
addition, our benefit from income taxes for the year ended December 31, 2019
included $14 million in windfall benefit from our share-based payments, which
was partially offset by an $8 million valuation allowance on certain foreign
subsidiary earnings and certain foreign tax credits. Our provision for income
taxes for the year ended December 31, 2018 included $14 million in windfall
benefit from our share-based payments, a $15 million benefit from the release of
a valuation allowance against our foreign tax credits, and a net $10 million
benefit from certain other provisions of U.S. tax reform.



Segment Reviews



Adjusted earnings before interest, taxes, depreciation, and amortization
("Adjusted EBITDA") is the primary measure of segment performance 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;


• asset impairments;


• (gains) losses on sales of assets and businesses; and,



• other items not considered indicative of our ongoing operational performance



and expected to occur infrequently.





A reconciliation of Adjusted EBITDA to net income (loss) attributable to
Chemours for the years ended December 31, 2019 and 2018 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, 2019 and 2018.






Year Ended December 31,
(Dollars in millions) 2019 2018
Fluoroproducts $ 578 $ 783
Chemical Solutions 80 64
Titanium Technologies 505 1,055
Segment Adjusted EBITDA 1,163 1,902
Corporate and Other (143 ) (162 )
Total Adjusted EBITDA $ 1,020 $ 1,740





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Fluoroproducts



The following table sets forth the net sales, Adjusted EBITDA, and Adjusted
EBITDA margin amounts for our Fluoroproducts segment for the years ended
December 31, 2019 and 2018.



Year Ended December 31,
(Dollars in millions) 2019 2018
Segment net sales $ 2,648 $ 2,862
Adjusted EBITDA 578 783
Adjusted EBITDA margin 22 % 27 %





The following table sets forth the impacts of price, volume, and currency on our
Fluoroproducts segment's net sales for the year ended December 31, 2019.






Year Ended December 31,
Change in segment net sales from prior period 2019
Price (2 )%
Volume (4 )%
Currency (1 )%
Total change in segment net sales (7 )%




Segment Net Sales



Our Fluoroproducts segment's net sales decreased by $214 million (or 7%) to $2.6
billion
for the year ended December 31, 2019, compared with segment net sales of
$2.9 billion for the same period in 2018. The decrease in segment net sales for
the year ended December 31, 2019 was primarily attributable to decreases in
volume and price of 4% and 2%, respectively. Illegal imports of legacy HFC
refrigerants into the EU, in violation of the EU's F-gas regulations, impacted
both volume and price during the year ended December 31, 2019. Volumes also
declined due to lower demand for our legacy base refrigerants and polymers,
which was driven by softness in global markets, primarily the automotive and
electronics markets. These decreases were partially offset by volume increases
from the continued adoption of OpteonTM products in mobile applications and
growth in high-grade Fluoropolymers sales. Unfavorable currency movements added
a 1% headwind to the segment's net sales during the year ended December 31,
2019
.




Segment Adjusted EBITDA and Adjusted EBITDA Margin






Segment Adjusted EBITDA decreased by $205 million (or 26%) to $578 million and
segment Adjusted EBITDA margin decreased by approximately 500 basis points to
22% for the year ended December 31, 2019, compared with segment Adjusted EBITDA
of $783 million and segment Adjusted EBITDA margin of 27% for the same period in
2018. The decreases in segment Adjusted EBITDA and segment Adjusted EBITDA
margin for the year ended December 31, 2019 were primarily attributable to the
aforementioned decreases in the price and volume and unfavorable currency
movements in the segment's net sales. We also experienced increased costs during
the year ended December 31, 2019 due to the start-up of our new OpteonTM
refrigerants facility in Corpus Christi, Texas, and unplanned outages at certain
facilities. Additionally, our F-gas quota authorization sales decreased by $26
million
when compared to the year ended December 31, 2018.



The segment's operating results for the years ended December 31, 2019 and 2018
included $22 million and $34 million, respectively, of additional costs for
process waste water treatment at Fayetteville. We expect to continue to incur
these costs as we actively work with the NC DEQ to resolve the suspension of our
National Pollutant Discharge Elimination System permit.


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Chemical Solutions




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, 2019 and 2018.






Year Ended December 31,
(Dollars in millions) 2019 2018
Segment net sales $ 533 $ 602
Adjusted EBITDA 80 64
Adjusted EBITDA margin 15 % 11 %





The following table sets forth the impacts of price, volume, and currency on our
Chemical Solutions segment's net sales for the year ended December 31, 2019.






Year Ended December 31,
Change in segment net sales from prior period 2019
Price (4 )%
Volume (7 )%
Currency - %
Total change in segment net sales (11 )%




Segment Net Sales



Our Chemical Solutions segment's net sales decreased by $69 million (or 11%) to
$533 million for the year ended December 31, 2019, compared with segment net
sales of $602 million for the same period in 2018. The decrease in segment net
sales for the year ended December 31, 2019 was primarily attributable to
decreases in volume and price of 7% and 4%, respectively, which were driven by
operational issues at a key customer mine in Mining Solutions and lower prices
for certain Performance Chemicals and Intermediates products, mainly driven by
mix and raw material cost pass-throughs as stipulated in certain contracts.




Segment Adjusted EBITDA and Adjusted EBITDA Margin






Segment Adjusted EBITDA increased by $16 million (or 25%) to $80 million and
segment Adjusted EBITDA margin increased by approximately 400 basis points to
15% for the year ended December 31, 2019, compared with segment Adjusted EBITDA
of $64 million and segment Adjusted EBITDA margin of 11% for the same period in
2018. The increases in segment Adjusted EBITDA and segment Adjusted EBITDA
margin for the year ended December 31, 2019 were primarily attributable to
increased license income and lower cost of goods sold, partially offset by the
aforementioned decreases in net sales.




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Titanium Technologies



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, 2019 and 2018.



Year Ended December 31,
(Dollars in millions) 2019 2018
Segment net sales $ 2,345 $ 3,174
Adjusted EBITDA 505 1,055
Adjusted EBITDA margin 22 % 33 %





The following table sets forth the impacts of price, volume, and currency on our
Titanium Technologies segment's net sales for the year ended December 31, 2019.






Year Ended December 31,
Change in segment net sales from prior period 2019
Price (1 )%
Volume (24 )%
Currency (1 )%
Total change in segment net sales (26 )%




Segment Net Sales



Our Titanium Technologies segment's net sales decreased by $829 million (or 26%)
to $2.3 billion for the year ended December 31, 2019, compared with segment net
sales of $3.2 billion for the same period in 2018. The decrease in segment net
sales for the year ended December 31, 2019 was primarily attributable to a 24%
decrease in volume, driven by lower TiPureTM TiO2 net sales volumes due to
market destocking and share loss. Price declined modestly by 1%, primarily due
to customer, regional, and channel mix, but remained largely stable as a result
of our TVS strategy. We also experienced a 1% headwind from unfavorable currency
movements.




Segment Adjusted EBITDA and Adjusted EBITDA Margin






Segment Adjusted EBITDA decreased by $550 million (or 52%) to $505 million and
segment Adjusted EBITDA margin decreased by approximately 1,100 basis points to
22% for the year ended December 31, 2019, compared with segment Adjusted EBITDA
of $1.1 billion and segment Adjusted EBITDA margin of 33% for the same period in
2018. The decreases in segment Adjusted EBITDA and segment Adjusted EBITDA
margin for the year ended December 31, 2019 were primarily attributable to the
aforementioned decreases in segment net sales volume associated with market
destocking and share loss, as well as margin compression due to higher costs for
certain raw materials and lower fixed cost absorption as we reduced production
rates to match reduced customer demand.



Corporate and Other



Corporate costs and certain legacy legal and environmental expenses, stock-based
compensation costs, 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 decreased by $19 million (or 12%) to $143 million for
the year ended December 31, 2019, compared with Corporate and Other costs of
$162 million for the same period in 2018. The decrease in Corporate and Other
costs for the year ended December 31, 2019 was primarily attributable to lower
performance-related compensation and lower costs for certain legacy legal
matters.




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2020 Outlook



Our 2020 results will be driven by the following expectations: (i) 2020 volume
for our Titanium Technologies segment will continue to recover as we further
execute our TVS strategy; (ii) there will be continued transition to OpteonTM
refrigerants in our Fluoroproducts segment, which will be offset by the impacts
of illegal imports of legacy HFC refrigerants into the EU in violation of the
region's F-gas regulations; and, (iii) there will be continued demand for Mining
Solutions products in our Chemical Solutions segment. We expect that our capital
expenditures will be approximately $400 million.



Our outlook for 2020 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, such as the recent spread of the novel coronavirus. 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, available
cash, receivables securitization, and borrowings under our debt financing
arrangements, which are described in further detail in "Note 20 - Debt" to the
Consolidated Financial Statements. We believe these sources are sufficient to
fund our planned operations and to meet our interest, dividend, and contractual
obligations. Our financial policy seeks to: (i) selectively invest in organic
and inorganic growth to enhance our portfolio, including certain strategic
capital investments; (ii) return cash to shareholders through dividends and
share repurchases; and, (iii) maintain appropriate leverage by using free cash
flows to repay outstanding borrowings. 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.



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 industry and economic cycles, evidencing
the operating strength of our businesses.



In May 2018, we completed our $500 million 2017 Share Repurchase Program. On
August 1, 2018, our board of directors increased our quarterly cash dividend to
$0.25 per share. Additionally, on August 1, 2018, our board of directors
approved the 2018 Share Repurchase Program, which authorizes us to purchase
shares of our issued and outstanding common stock in an aggregate amount not to
exceed $750 million, plus any fees or costs in connection with our share
repurchase activity. On February 13, 2019, our board of directors increased the
authorization amount of the 2018 Share Repurchase Program to $1.0 billion. The
2018 Share Repurchase Program became effective on August 1, 2018 and will
continue through the earlier of its expiration on December 31, 2020, or the
completion of repurchases up to the approved amount. To date, we have
repurchased $572 million of our common stock under the 2018 Share Repurchase
Program.



We anticipate making significant payments for interest, capital expenditures,
environmental remediation costs and investments, dividends, and other actions
over the next 12 months, which we expect to fund through cash generated from
operations, available cash, receivables securitization, and borrowings. We
further anticipate that our operations and existing debt financing arrangements
will provide us with sufficient liquidity over the next 12 months. The
availability under our revolving credit facility is subject to the last 12
months of consolidated EBITDA, as defined in the amended and restated credit
agreement, which is discussed further in "Note 20 - Debt" to the Consolidated
Financial Statements.



At December 31, 2019, we had total cash and cash equivalents of $943 million, of
which, $839 million was held by our foreign subsidiaries. All of the cash and
cash equivalents held by our foreign subsidiaries is readily convertible into
currencies used in our operations, including the U.S. dollar. The cash and
earnings of our foreign subsidiaries are generally used to finance their
operations and capital expenditures. At December 31, 2019, management believed
that sufficient liquidity was available in the U.S., which includes borrowing
capacity under our revolving credit facility, and it is our intention to
indefinitely reinvest the historical pre-2018 earnings of our foreign
subsidiaries. Beginning in 2018, management asserts that only certain foreign
subsidiaries are indefinitely reinvested. See "Note 9 - Income Taxes" to the
Consolidated Financial Statements for further information related to our income
tax positions.




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Cash Flows



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, 2019
and 2018.



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



Cash provided by operating activities $ 650 $ 1,140
Cash used for investing activities


(483 ) (487 )
Cash used for financing activities (419 ) (993 )




Operating Activities



We received $650 million and $1.1 billion in cash flows from our operating
activities for the years ended December 31, 2019 and 2018, respectively. The
decrease in our operating cash inflows for the year ended December 31, 2019 was
primarily attributable to a decrease in our net income, despite reduction in our
finished products inventories to align with decreased sales volumes during the
year ended December 31, 2019 when compared to the prior year. We also made cash
payments for certain raw materials purchases that occurred during the fourth
quarter of 2018.



Investing Activities



We used $483 million in cash flows for our investing activities during the year
ended December 31, 2019. Our investing cash outflows for the year ended December
31, 2019
were primarily attributable to purchases of property, plant, and
equipment amounting to $481 million, as well as $10 million in total cash
consideration payments for the acquisition of Southern Ionics Minerals, LLC.
These investing cash outflows were partially offset by proceeds from the sales
of assets and businesses of $9 million, which were primarily attributable to $4
million
received from the sale of our Oakley, California site and $2 million
received from the sale of our Methylamines and Methylamides business.



We used $487 million in cash flows for our investing activities during the year
ended December 31, 2018. Our investing cash outflows for the year ended December
31, 2018
were primarily attributable to purchases of property, plant, and
equipment amounting to $498 million, and $37 million in total cash consideration
payments for the acquisition of ICOR International, Inc. These investing cash
outflows were partially offset by proceeds from the sales of assets and
businesses of $46 million, which were primarily attributable to the sale of our
Linden, New Jersey site for $39 million.



Financing Activities



We used $419 million in cash flows for our financing activities during the year
ended December 31, 2019. Our financing cash outflows for the year ended December
31, 2019
were primarily attributable to our capital allocation activities,
resulting in $486 million of cash returned to shareholders through our 2018
Share Repurchase Program and through cash dividends paid. In addition, we made
$30 million in payments for withholding taxes on certain of our vested
stock-based compensation awards. We also drew $150 million on our revolving
credit facility for general corporate purposes. We subsequently repaid the
revolver borrowing in full, primarily using the $125 million proceeds originally
received from the Securitization Facility, as well as available cash. During the
year ended December 31, 2019, we also repaid a net $15 million of the borrowings
from the Securitization Facility. The Securitization Facility is further
described in "Note 20 - Debt" to the Consolidated Financial Statements.



We used $993 million in cash flows for our financing activities during the year
ended December 31, 2018. Our financing cash outflows for the year ended December
31, 2018
were primarily attributable to the following: $679 million in debt
repayments and $29 million in "make-whole" premium payments in connection with
our debt refinancing activities, as well as scheduled principal repayments; $644
million
for purchases of our issued and outstanding common stock under our share
repurchase programs; and, $148 million for payments of cash dividends. These
financing cash outflows were partially offset by $520 million in net proceeds
from the issuance of our euro-denominated 4.000% senior unsecured notes due May
2026
.



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The Chemours Company



Current Assets



The following table sets forth the components of our current assets at December
31, 2019
and 2018.



December 31,
(Dollars in millions) 2019 2018
Cash and cash equivalents $ 943 $ 1,201
Accounts and notes receivable, net 674 861
Inventories 1,079 1,147
Prepaid expenses and other 81 84
Total current assets $ 2,777 $ 3,293




Our accounts and notes receivable, net decreased by $187 million (or 22%) to
$674 million at December 31, 2019, compared with accounts and notes receivable,
net of $861 million at December 31, 2018. The decrease in our accounts and notes
receivable, net at December 31, 2019 was primarily attributable to lower net
sales in the fourth quarter of 2019 versus the same period in 2018, as well as
the timing of payments from our customers.



Our inventories decreased by $68 million (or 6%) to $1.1 billion at December 31,
2019
, compared with inventories of $1.1 billion at December 31, 2018. The
decrease in our inventories at December 31, 2019 was primarily attributable to a
decrease in our finished products inventories, in order to align with decreased
sales volumes across all segments, and changes to our last-in, first-out
inventory reserve balances. These decreases were partially offset by an increase
in our raw materials inventories, driven by the strategic acquisition of ore in
our Titanium Technologies segment.




Our prepaid expenses and other assets were largely unchanged at $81 million and
$84 million at December 31, 2019 and 2018, respectively.






Current Liabilities



The following table sets forth the components of our current liabilities at
December 31, 2019 and 2018.



December 31,
(Dollars in millions) 2019 2018
Accounts payable $ 923 $ 1,137
Short-term and current maturities of long-term debt 134 13
Other accrued liabilities 484 559
Total current liabilities $ 1,541 $ 1,709




Our accounts payable decreased by $214 million (or 19%) to $923 million at
December 31, 2019, compared with accounts payable of $1.1 billion at December
31, 2018
. The decrease in our accounts payable at December 31, 2019 was
primarily attributable to our decline in net sales volumes during the year ended
December 31, 2019, as well as the timing of our inventory purchases in the
fourth quarter of 2018.



Our short-term and current maturities of long-term debt increased by $121
million
(or greater than 100%) to $134 million at December 31, 2019, compared
with short-term and current maturities of long-term debt of $13 million at
December 31, 2018. The increase in our short-term and current maturities of
long-term debt at December 31, 2019 was primarily attributable to $110 million
net borrowings under the Securitization Facility, $6 million for financed
insurance premiums, and $5 million for the current portion of finance lease
liabilities and financing obligations.



Our other accrued liabilities decreased by $75 million (or 13%) to $484 million
at December 31, 2019, compared with other accrued liabilities of $559 million at
December 31, 2018. The decrease in our other accrued liabilities at December 31,
2019
was primarily attributable to lower accrued compensation and
employee-related costs, payments of certain accrued expenses, and changes in the
expected timing of payments related to accrued environmental costs. These
decreases were partially offset by balance sheet recognition of our operating
lease liabilities upon the adoption of the new leasing standard on January 1,
2019
. As of December 31, 2019, the current portion of our operating lease
liabilities amounted to $66 million.



Credit Facilities and Notes




See "Note 20 - Debt" to the Consolidated Financial Statements for a summary of
our debt arrangements.







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The Chemours Company



Supplier Financing



We maintain global paying services agreements with several financial
institutions. Under these agreements, the financial institutions act as our
paying agents with respect to accounts payable due to our suppliers who elect to
participate in the program. The agreements 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, 2019 and
2018, the total payment instructions from us amounted to $106 million and $210
million
, respectively. Pursuant to their agreement with one of the financial
institutions, 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.



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, the integrity and safety of our manufacturing sites, and to
comply with environmental regulations;



• 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 environmental capital expenditures, for the years ended December 31,
2019
and 2018.



Year Ended December 31,
(Dollars in millions) 2019 2018
Fluoroproducts $ 201 $ 274
Chemical Solutions 40 75
Titanium Technologies 121 91
Corporate and Other (1) 119 58



Total purchases of property, plant, and equipment $ 481 $



498



(1) Includes $83 million and $41 million during the years ended December 31,



2019 and 2018, respectively, 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 decreased by $17 million (or 3%) to $481 million for
the year ended December 31, 2019, compared with capital expenditures of $498
million
for the same period in 2018. Our capital expenditures for the year ended
December 31, 2019 included the continued construction and completion of our new
R&D facility on the Science, Technology, and Advanced Research campus of the
University of Delaware in Newark, Delaware, as well as preparation of a new
minerals sands mine site in Jesup, Georgia. We also invested in a thermal
oxidizer to reduce aerial PFAS emissions from Fayetteville, which is further
discussed in "Note 22 - Commitments and Contingent Liabilities" to the
Consolidated Financial Statements. These increases are more than offset by
capital expenditures for the year ended December 31, 2018 that did not recur,
whether to the same magnitude or at all, in 2019. Such expenditures included the
completion of our OpteonTM refrigerants plant in Corpus Christi, Texas, as well
as progress on our planned Mining Solutions plant in Mexico prior to its
construction suspension, which is further discussed in "Note 22 - Commitments
and Contingent Liabilities" to the Consolidated Financial Statements.




45



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The Chemours Company



Contractual Obligations




The following table sets forth information related to our significant
contractual obligations at December 31, 2019.






Payments Due In
2025 and
(Dollars in millions) Total 2020 2021 - 2022 2023 - 2024 Beyond
Long-term debt obligations
(1) $ 4,036 $ 122 $ 26 $ 934 $ 2,954
Interest on long-term debt
obligations (1) 1,046 203 401 309 133
Operating leases 379 82 115 64 118
Financing leases 76 9 16 16 35
Purchase obligations (2):
Raw materials 1,290 160 303 257 570
Utilities 1,055 113 162 153 627
Other 107 64 30 13 -
Total purchase obligations 2,452 337 495 423 1,197
Other liabilities:
Workers' compensation (3) 24 3 5 4 12
Asset retirement obligations
(3) 61 7 21 11 22
Environmental remediation (3) 406 74 111 86 135
Legal settlements (3) 20 4 6 5 5
Employee separation charges 15 15 - - -
Other (3) 170 27 18 21 104
Total other liabilities 696 130 161 127 278


Total contractual obligations $ 8,685 $ 883 $ 1,214



$ 1,873 $ 4,715



(1) To calculate payments due for principal and interest, we assumed that



interest rates, foreign currency exchange rates, and outstanding borrowings



under our credit facilities were unchanged from December 31, 2019 through



their dates of maturity.



(2) Represents 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.



(3) Represents reasonable estimates of future cash payments for our contractual



obligations.





Off Balance Sheet Arrangements



Historically, we have not made significant payments to satisfy guarantee
obligations; however, we believe we have the financial resources to satisfy
these guarantees in the event required.







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The Chemours Company



Recent Accounting Pronouncements



See "Note 3 - Summary of Significant Accounting Policies" to the Consolidated
Financial Statements for a summary of our recent accounting pronouncements.



Critical Accounting Policies and Estimates






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 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 tax benefits in other income (expense),
net and income tax-related penalties in the provision for (benefit from) income
taxes.



With respect to U.S. tax reform, while we have completed our analysis within the
applicable measurement period, pursuant to Staff Accounting Bulletin No. 118 as
issued by the SEC, 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.




See "Note 9 - Income Taxes" to the Consolidated Financial Statements for further
information related to our income tax positions.







47



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The Chemours Company



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.



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.




No impairment charges were recognized on our long-lived assets during the years
ended December 31, 2019 and 2018.






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, 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.



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 reporting unit cash
flows. 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, 2019, 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, 2019.



The estimated fair value of the Fluoropolymers reporting unit was determined by
utilizing a discount rate of 9.84% and a market multiple of 7.3 times Adjusted
EBITDA, resulting in an estimated fair value 30% higher than its carrying value.
Fluoropolymers has $56 million of goodwill. Changing the weighting of the market
and income approaches used for Fluoropolymers could result in a maximum
reduction of the excess of estimated fair value over carrying value to
17%. 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 17%; a 1% decrease in the long-term growth rate would decrease
the excess of estimated fair value over carrying value to 24%; and, a 15%
decrease in the market multiple assumption would decrease the excess of
estimated fair value over carrying value to 20%. Under each of these sensitivity
scenarios, the Fluoropolymers reporting unit's fair value exceeded its carrying
value.



The estimated fair value of the Mining Solutions reporting unit was determined
by utilizing a discount rate of 11.09%, resulting in an estimated fair value 17%
higher than its carrying value. Mining Solutions has $51 million of goodwill.
Assuming all other factors remain the same, it would take more than a 110-basis
point increase in the discount rate to cause the estimated fair value to fall
below the unit's carrying value; and, a 1% decrease in the long-term growth rate
would decrease the excess of estimated fair value over carrying value to 5%.




48



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The Chemours Company



Our determination of the fair value of the Mining Solutions reporting unit
considered further delays and additional costs of construction for our new
Mining Solutions facility under construction in Gomez Palacio, Durango, Mexico.
The construction-in-process for this facility represents a significant portion
of the total carrying value of Mining Solutions, and, in the event that the
facility was unable to be completed, the impairment of the related long-lived
assets would significantly decrease the carrying value of the reporting unit. As
a result, an impairment of the reporting unit's goodwill would become less
likely.



Employee Benefits



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, 2019, 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 expense for 2019 was 4.1%.



A 50 basis point increase in the discount rate would result in a decrease of $4
million
to the net periodic benefit cost for 2020, 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 2020, while a 50 basis point decrease in the expected
return on plan assets assumption would result in an increase of approximately $3
million
.



In the fourth quarter of 2019, we, through our wholly-owned subsidiary Chemours
Netherlands B.V
., completed a settlement transaction related to a significant
portion of our Netherlands pension plan. We transferred the future risk and
administration associated with the $932 million of 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 our 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
million
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 million recognized in
other expense, net in the consolidated statements of operations. At December 31,
2019
, the projected benefit obligations associated with the plan's active
employees remained on our consolidated balance sheet.



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 DuPont 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 DuPont 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.




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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 in-depth
environmental studies, sampling, testing, and other analyses. Inherent
uncertainties exist in such evaluations, primarily due to unknown environmental
conditions, changing governmental regulations and legal standards 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 DuPont and its subsidiaries, which we may be required to
indemnify pursuant to the Separation-related agreements executed prior to the
Separation. 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.



Environmental Matters



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 (further described below), if any, during the
period reported.



The charges described in this section include $201 million accrued for costs
associated with the proposed Consent Order between us and the 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 (further 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, 2019, 2018, and 2017, we spent $101 million,
$57 million, and $15 million, respectively, on environmental capital projects
that were either required by law or necessary to meet our internal environmental
objectives. The increases in our environmental capital expenditures for the
years ended December 31, 2019 and 2018 when compared with the same period in
2017 were primarily attributable to new capital projects at Fayetteville. We
expect further increases in these capital expenditures over the near-term, while
in the longer-term, our capital expenditures for environmental matters will vary
based on the success of our deployed solutions, changes in our operations,
technological advancements, developments in environmental requirements, and
stakeholder expectations.




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The Chemours Company



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 DuPont 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" 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, related 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 require certain
investigative, remediation, and restoration activities at sites where we conduct
or once conducted operations or at sites where our generated waste was disposed.
At December 31, 2019 and 2018, our consolidated balance sheets included
environmental remediation liabilities of $406 million and $291 million,
respectively, relating to these matters, which, as discussed in further detail
below, included $201 million and $75 million, respectively, for Fayetteville.




The following table sets forth the activities in our remediation accruals for
the years ended December 31, 2019 and 2018.






December 31,
(Dollars in millions) 2019 2018
Balance at January 1, $ 291 $ 253
Increase in remediation accrual 200 101
Remediation payments (85 ) (63 )
Balance at December 31, $ 406 $ 291





Our estimated liability for environmental remediation covered 211 sites at
December 31, 2019 and 2018.






The following table sets forth our estimated environmental liability by site
category.



(Dollars in millions) December 31, 2019 December 31, 2018
Site category Number of Sites Remediation



Accrual Number of Sites Remediation Accrual
Chemours-owned (1)


25 $ 327 25 $ 204
Multi-party Superfund/non-owned (2) 86 79 86 87
Closed or settled 100 - 100 -
Total sites 211 $ 406 211 $ 291


(1) Includes remediation accrual of divested or sold sites where certain
environmental obligations were retained by us in accordance with the
related sale agreements.



(2) Sites not owned by us, including sites previously owned by DuPont and sites



owned by a third party, where remediation obligations are imposed by
Superfund laws such as CERCLA or similar state laws.





As part of our legacy as a former subsidiary of DuPont, we are cleaning-up
historical impacts to soil and groundwater that have occurred in the past at the
25 sites that we own. These operating and former operating sites make up
approximately 80% of our remediation liabilities at December 31, 2019.






We were also assigned numerous clean-up obligations from DuPont, which pertain
to 86 sites previously owned by DuPont and sites that we or DuPont never owned
or operated. We are meeting our obligations to clean up those sites. The
majority of these never-owned sites are multi-party Superfund sites that we,
through DuPont, have been notified of potential liability under CERCLA 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 20% of our remediation liabilities at December 31, 2019. 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 100 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 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 remediation liabilities by site clean-up phase as of December 31,
2019
and 2018.



[[Image Removed]]



(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, 2019 and 2018.


(2) Dollars in millions.



(3) As of December 31, 2019, related to Fayetteville, Investigation included



$155 million for on-site remediation, and Active Remediation included $46



million for off-site groundwater remediation. As of December 31, 2018,
Investigation included $75 million related to 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 DuPont pursuant to the separation-related agreements, we and DuPont
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 $530 million above
the amount accrued at December 31, 2019. 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



While there are many remediation sites that contribute to our total accrued
environmental remediation liabilities at December 31, 2019 and 2018, the
following table sets forth the sites that are the most significant.






December 31,
(Dollars in millions) 2019 2018
Chambers Works, Deepwater, New Jersey $ 20 $ 18
East Chicago, Indiana 17 21


Fayetteville Works, Fayetteville, North Carolina 201 75
Pompton Lakes, New Jersey


43 45
USS Lead, East Chicago, Indiana 13 15
All other sites 112 117
Total accrued environmental remediation $ 406 $ 291




The five sites listed above represent 72% and 60% of our total accrued
environmental remediation liabilities at December 31, 2019 and 2018,
respectively. For these five sites, we expect to spend, in the aggregate, $115
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






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 fluorochemicals and finished
products at Chambers Works. In addition, three tenants operate processes at
Chambers Works including steam/electricity generation, industrial gas
production, and the manufacture of intermediate chemicals. 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.



East Chicago, Indiana



East Chicago is a former manufacturing facility that we previously owned in East
Chicago
, Lake County, Indiana. The approximate 440-acre site is bounded to the
south by the east branch of the Grand Calumet River, to the east and north by
residential and commercial areas, and to the west by industrial areas, including
a former lead processing facility. The inorganic chemicals unit on site produced
various chloride, ammonia, and zinc products and inorganic agricultural
chemicals beginning in 1892 until 1986. Organic chemical manufacturing began in
1944, consisting primarily of chlorofluorocarbons production. The remaining
business was sold to W.R. Grace Company ("Grace") in early 2000. Approximately
172 acres of the site were never developed and are managed by The Nature
Conservancy
for habitat preservation.



A comprehensive evaluation of soil and groundwater conditions at the site was
performed as part of the RCRA Corrective Action process. Studies of historical
site impacts began in 1983 in response to preliminary CERCLA actions undertaken
by the U.S. Environmental Protection Agency ("EPA"). The EPA eventually issued
an Administrative Order on Consent for the site in 1997. The order specified
that remediation work be performed under RCRA Corrective Action authority. Work
has proceeded under the RCRA Corrective Action process since that time.

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Subsequent investigations included the preparation of initial environmental site
assessments and multiple phases of investigation. In 2002, as an interim
remedial measure, two 2,000-foot long permeable reactive barrier treatment walls
were installed along the northern property boundary to address migration of
chemicals in groundwater. Since that time, the investigation process has been
completed and approved by the EPA, and the final remedy for the site was issued
by the EPA in July 2018.



On June 29, 2018, we sold the East Chicago, Indiana site to a third party for $1
million
. In connection with the sale, the buyer agreed to assume all costs
associated with environmental remediation activities at the site in excess of
$21 million, which will remain our responsibility. At the time of the sale, we
had accrued the full $21 million, of which $17 million remained as of December
31, 2019
. We will reimburse the buyer through a series of progress payments to
be made at defined intervals as certain tasks are completed.




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 DuPont in 1970, and are bounded to the east by
the Cape Fear River and to the west by North Carolina Highway 87. Currently, the
site manufactures plastic sheeting, fluorochemicals, and intermediates for
plastics manufacturing. A former manufacturing area, which was sold in 1992,
produced nylon strapping and elastomeric tape. DuPont sold its Butacite® and
SentryGlas® manufacturing units to Kuraray America, Inc. in September 2014. In
July 2015, upon our separation from DuPont, 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 DuPont.



Beginning in 1996, several stages of site investigation were conducted under NC
DEQ oversight, 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 the polymerization processing aid hexafluoropropylene
oxide dimer acid ("HFPO Dimer Acid," sometimes referred to as "GenX" or "C3
Dimer Acid") in on-site groundwater wells during our investigations in 2017, the
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 Consent Order (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, as well as "Recent Developments" within this
MD&A, we and the NC DEQ have filed a final Consent Order that comprehensively
addressed various issues, NOVs, and court filings made by the NC DEQ regarding
Fayetteville and resolved litigations filed by the NC DEQ and Cape Fear River
Watch
, a non-profit organization. In connection with the Consent Order, a
thermal oxidizer became fully operational at the site in December 2019 to reduce
aerial PFAS emissions from Fayetteville.



In the fourth quarter of 2019, we completed and submitted our Cape Fear River
PFAS Loading Reduction Plan - Supplemental Information Report and CAP to NC DEQ.
The Supplemental Information Report provides information to support the
evaluation of potential remedial options to reduce PFAS loadings to surface
waters, including interim alternatives. The CAP describes potential remediation
activities to address PFAS in on-site groundwater and surface waters at the
site, in accordance with the requirements of the Consent Order and the North
Carolina
groundwater standards, and builds on the previous submissions to NC
DEQ. The NC DEQ has made the CAP available for public review and comment until
March 6, 2020.



In the fourth quarter of 2019, based on the Consent Order, CAP, and our plans,
we accrued an additional $132 million related to the estimated cost of on-site
remediation.



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 the EPA and the New Jersey Department
of Environmental Protection
("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, the 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, Chemours submitted a revised
Corrective Measures Study ("CMS") proposing actions to address on-site soils
impacted from past operations that exceed applicable clean-up criteria. That
CMS is currently under review by EPA and NJ DEP.


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U.S. Smelter and Lead Refinery, Inc., East Chicago, Indiana






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 the EPA on the safe and timely completion of this
work. DuPont's former East Chicago manufacturing facility was located adjacent
to the site, and DuPont 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, the 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 DuPont entering into an agreement in 2014 with the
EPA and the State of Indiana to reimburse the EPA's costs to implement clean-up
in Zone 1 and Zone 3. More recently, in March 2017, we and three other parties -
Atlantic Richfield, DuPont, and the U.S. Metals Refining Co. ("US Metals") -
entered into an administrative order on consent to reimburse the EPA's costs to
clean-up a portion of Zone 2. In March 2018, the EPA issued a Unilateral
Administrative Order for the remainder of the Zone 2 work to five parties,
including us, Atlantic Richfield, DuPont, 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 has been
completed, and Zone 2 is nearly complete. There is uncertainty as to whether
these parties will be able to agree on a final allocation for Zone 2 and/or the
other Zones, and whether any 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 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. However, the proposed amendment was sent
out for public comment with the EPA's statement that the remedy basis and cost
may change based on community input on future land use. The EPA's final decision
was expected in 2019, but has not yet been released. We expect that our future
costs for Zone 1 will be contingent on this remedy decision, as well as any
final allocation between PRPs.




New Jersey Department of Environmental Protection Directives and Litigation






In March 2019, the NJ DEP issued two Directives and filed four lawsuits against
Chemours and other defendants. Further discussion related to these matters is
included in "Note 22 - Commitments and Contingent Liabilities" to the
Consolidated Financial Statements.



Climate Change



In 2018, we issued our inaugural Corporate Responsibility Commitment ("CRC")
Report, which expresses our corporate responsibility commitment - an extension
of our growth strategy - as 10 ambitious goals targeted for completion by 2030.
Built on the pillars of Inspired People, Shared Planet, and an Evolved
Portfolio, our Shared Planet pillar 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 goals are comprised of the following:

• Reduce greenhouse gas ("GHG") emissions intensity by 60%;


• Advance our plan to become carbon positive by 2050;



• Reduce air and water process emissions of fluorinated organic chemicals by



99% or more; and,


• Reduce our landfill volume intensity by 70%.




We are committed to improving our resource efficiency, to acting on
opportunities to reduce our GHG emissions, to enhancing the eco-efficiency of
our supply chain, and to encouraging our employees to reduce their own
environmental footprints. We understand that maintaining safe, sustainable
operations has an impact on us, our communities, the environment, and our
collective future. We continue to invest in R&D to develop safer, cleaner, and
more efficient products and processes that help our customers and consumers
reduce both their GHGs and their 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 for reducing GHGs.



PFOA




See our discussion under the heading "PFOA" in "Note 22 - Commitments and
Contingent Liabilities" to the Consolidated Financial Statements.









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GenX



On June 26, 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.






Delaware Chancery Court Lawsuit






In May 2019, we filed a lawsuit in Delaware Chancery Court ("Chancery Court")
against DowDuPont, Inc., Corteva, Inc., and DuPont concerning DuPont's
contention that it is entitled to unlimited indemnity from us for specified
liabilities that DuPont assigned to us in the spin-off. The lawsuit requests
that the Chancery Court enter a declaratory judgment limiting DuPont'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
billion
dividend DuPont extracted from us in connection with the spin-off. In
response, DuPont has filed a Motion to Dismiss the lawsuit seeking to have the
dispute heard in a non-public arbitration rather than the Chancery Court. Many
of the potential litigation liabilities discussed in "Note 22 - Commitments and
Contingent Liabilities" to the Consolidated Financial Statements are at issue in
the lawsuit.




56



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Non-GAAP Financial Measures



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"), and
Return on Invested Capital ("ROIC") - 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;


• asset impairments;


• (gains) losses on sales of business or assets; and,



• other items not considered indicative of our ongoing operational performance



and expected to occur infrequently.




Adjusted Net Income is defined as our net income or 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 presented on a diluted basis and is calculated by dividing
Adjusted Net Income by the weighted-average number of our common shares
outstanding, accounting for the dilutive impact of our stock-based compensation
awards. 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 net debt plus equity.



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, and
ROIC 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.

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The following table sets forth a reconciliation of Adjusted EBITDA, Adjusted Net
Income, and Adjusted EPS to our net income (loss) attributable to Chemours for
the years ended December 31, 2019 and 2018.



Year Ended December


31,



(Dollars in millions, except per share amounts) 2019


2018



Net (loss) income attributable to Chemours $ (52 ) $


995



Non-operating pension and other post-retirement
employee benefit cost (income) (1) 368 (27 )
Exchange losses (gains), net 2 (1 )
Restructuring, asset-related, and other charges
(2) 87


49



Loss on extinguishment of debt -


38



Gain on sales of assets and businesses (3) (10 ) (45 )
Transaction costs (4) 3


9



Legal and environmental charges (5) 175


82



Other charges -


1



Adjustments made to income taxes (6) - (41 )
Benefit from income taxes relating to
reconciling items (7) (154 ) (26 )
Adjusted Net Income 419


1,034



Net income attributable to non-controlling
interests - 1
Interest expense, net 208 195
Depreciation and amortization 311 284
All remaining provision for income taxes 82


226



Adjusted EBITDA $ 1,020 $


1,740




Weighted-average number of common shares
outstanding - basic 164,816,839


176,968,554



Dilutive effect of our employee compensation
plans (8) 2,428,184


5,603,467



Weighted-average number of common shares
outstanding - diluted (8) 167,245,023


182,572,021




Per share data
Basic (loss) earnings per share of common stock $ (0.32 ) $


5.62



Diluted (loss) earnings per share of common
stock (8) (0.32 )


5.45



Adjusted basic earnings per share of common
stock 2.54


5.85



Adjusted diluted earnings per share of common
stock (8) 2.51


5.67



(1) The year ended December 31, 2019 includes a $380 million settlement loss



related to a significant portion of our Netherlands pension plan, specific



to the vested pension benefits of the inactive participants. See "Note 27



- Long-term Employee Benefits" to the Consolidated Financial Statements



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" to the Consolidated Financial Statements.



(3) The year ended December 31, 2019 included a non-cash gain of $9 million



related to the sale of the Company's Repauno, New Jersey site. The year
ended December 31, 2018 included gains of $3 million and $42 million
associated with the sales of our East Chicago, Indiana and Linden, New
Jersey
sites, respectively.


(4) Includes costs associated with our debt transactions, as well as


accounting, legal, and bankers' transaction costs incurred in connection



with our strategic initiatives.



(5) Legal charges pertains to litigation settlements, PFOA drinking water



treatment accruals, and other legal charges. Environmental charges



pertains to estimated liabilities associated with on-site remediation,



off-site groundwater remediation, and toxicology studies related to
Fayetteville. The year ended December 31, 2019 included $168 million in
additional charges for the approved final Consent Order associated with



certain matters at Fayetteville. The year ended December 31, 2018 included



$63 million in additional charges for the estimated liability associated



with Fayetteville. See "Note 22 - Commitments and Contingent Liabilities"



to the Consolidated Financial Statements for further detail.





(6) Includes the removal of certain discrete income tax impacts within our
provision for income taxes, such as the benefit from windfalls on our
share-based payments, historical valuation allowance adjustments,



unrealized gains and losses on foreign exchange rate changes, and other



discrete income tax items.



(7) 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 represents both current and deferred income tax expense or
benefit based on the nature of the non-GAAP financial measure.



(8) In periods where the Company incurs a net loss, the impact of potentially



dilutive securities is excluded from the calculation of EPS under GAAP, as



its inclusion would have an anti-dilutive effect. As such, with respect to



the GAAP measure of diluted EPS, the impact of potentially dilutive



securities is excluded from our calculation for the year ended December



31, 2019. With respect to the non-GAAP measure of adjusted diluted EPS,
the impact of potentially dilutive securities is included in our
calculation for both of the periods presented above, as Adjusted Net
Income was in a net income position for the years ended December 31, 2019
and 2018.


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The following table sets forth a reconciliation of FCF to our cash flows
provided by operating activities for the years ended December 31, 2019 and 2018.



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



Cash flows provided by operating activities $ 650 $



1,140



Less: Purchases of property, plant, and equipment (481 )



(498 )
Free Cash Flows $ 169 $ 642





The following table sets forth a reconciliation of invested capital, net, a
component of ROIC, to our total debt, equity, and cash and cash equivalents
amounts for the years ended December 31, 2019 and 2018.






Year Ended December 31,
(Dollars in millions) 2019 2018
Adjusted EBITDA (1) $ 1,020 $ 1,740
Less: Depreciation and amortization (311 ) (284 )
Adjusted EBIT 709 1,456

Total debt 4,160 3,972
Total equity 695 1,020
Less: Cash and cash equivalents (943 ) (1,201 )
Invested capital, net $ 3,912 $ 3,791

Average invested capital (2) $ 4,102 $ 3,717

Return on Invested Capital 17 % 39 %


(1) See the preceding tables for a reconciliation of Adjusted EBITDA to net
income (loss) attributable to Chemours for the years ended December 31,
2019
and 2018.


(2) Average invested capital is based on a five-quarter trailing average of
invested capital, net.




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