CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS

~~(Unaudited)~~

September 30,

December 31,
(In millions, except par value)

2017

2016
ASSETS
Current assets:




Cash and cash equivalents(a)

$
186

$
29
Accounts receivable (net of allowance for doubtful accounts of $4 each)(a)

411

247
Accounts receivable from affiliates

9

243
Inventories(a)

431

426
Prepaid expenses

11

11
Other current assets

73

59
Current assets of discontinued operations

—

84
Total current assets

1,121

1,099
Property, plant and equipment, net(a)

1,264

1,178
Intangible assets, net(a)

21

23
Investment in unconsolidated affiliates

77

85
Deferred income taxes

200

142
Notes receivable from affiliates

—

57
Other noncurrent assets

41

35
Noncurrent assets of discontinued operations

—

42
Total assets

$
2,724

$
2,661
LIABILITIES AND EQUITY
Current liabilities:




Accounts payable(a)

$
319

$
297
Accounts payable to affiliates

15

695
Accrued liabilities(a)

213

146
Current portion of debt(a)

4

10
Current liabilities of discontinued operations

—

27
Total current liabilities

551

1,175
Long-term debt

747

13
Long-term debt to affiliates

—

882
Deferred income taxes

9

12
Other noncurrent liabilities

328

324
Noncurrent payable to affiliates

73

—
Noncurrent liabilities of discontinued operations

—

78
Total liabilities

1,708

2,484
Commitments and contingencies (Notes 11 and 12)




Equity




Parent’s net investment and advances

—

588
Ordinary shares $0.001 par value, 200 shares authorized, 106 and nil issued and 106 and nil outstanding, respectively

—

—
Additional paid-in capital

1,318

—
Accumulated deficit

(1)

—
Accumulated other comprehensive loss

(312)

(423)
Total Venator Materials PLC shareholders' equity

1,005

165
Noncontrolling interest in subsidiaries

11

12
Total equity

1,016

177
Total liabilities and equity

$
2,724

$
2,661

(Unaudited)



(Dollars in millions, except par value)	June 30, 2018			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents^(a)	$	354		$	238
Accounts receivable (net of allowance for doubtful accounts of $4 and $5, respectively)^(a)	435			380
Accounts receivable from affiliates	4			12
Inventories^(a)	491			454
Prepaid expenses	10			19
Other current assets	77			66
Total current assets	1,371			1,169
Property, plant and equipment, net^(a)	1,316			1,367
Intangible assets, net^(a)	18			20
Investment in unconsolidated affiliates	82			86
Deferred income taxes	137			167
Other noncurrent assets	37			38
Total assets	$	2,961		$	2,847
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable^(a)	$	378		$	385
Accounts payable to affiliates	14			16
Accrued liabilities^(a)	191			244
Current portion of debt^(a)	7			14
Total current liabilities	590			659
Long-term debt	741			743
Deferred income taxes	2			—
Other noncurrent liabilities	260			306
Noncurrent payable to affiliates	34			34
Total liabilities	1,627			1,742
Commitments and contingencies (Notes 11 and 12)
Equity
Ordinary shares $0.001 par value, 200 shares authorized, 106 issued and outstanding, each	—			—
Additional paid-in capital	1,313			1,311
Retained earnings	341			67
Accumulated other comprehensive loss	(329		)	(283		)
Total Venator Materials PLC shareholders' equity	1,325			1,095
Noncontrolling interest in subsidiaries	9			10
Total equity	1,334			1,105
Total liabilities and equity	$	2,961		$	2,847


	~~(a)~~

^(a)

At ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, $6 and $4$5 of cash and cash ~~equivalents,~~equivalents; $7 ~~and $6~~each of accounts receivable, ~~(net),~~net; $1 ~~each~~and $2 of ~~inventories, $4~~inventories; $5 each of property, plant and equipment, ~~(net), $18~~net; $16 and ~~$20~~$17 of intangible assets, ~~(net),~~net; $1 each of accounts ~~payable,~~payable; $3 and $4 of accrued ~~liabilities,~~liabilities; and $2 each of current portion of debt, respectively, from consolidated variable interest entities are included in the respective balance sheet captions above. See "Note 5. Variable Interest Entities."

See notes to unaudited condensed consolidated and combined financial statements.

Table of Contents

VENATOR MATERIALS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(Unaudited)

Three months ended

Nine months ended

September 30,

September 30,
(Dollars in millions, except per share amounts)

2017

2016

2017

2016
Trade sales, services and fees, net

$
582

$
532

$
1,681

$
1,648
Cost of goods sold

446

491

1,351

1,547
Operating expenses:

Selling, general and administrative (includes corporate allocations from Huntsman Corporation of $9, $27, $62 and $76, respectively)

51

55

159

168
Restructuring, impairment and plant closing costs

16

7

49

31
Other income, net

(6)

(22)

1

(33)
Total expenses

61

40

209

166
Operating income (loss)

75

1

121

(65)
Interest expense

(30)

(14)

(54)

(44)
Interest income

22

2

25

13
Other income

—

—

—

1
Income (loss) from continuing operations before income taxes

67

(11)

92

(95)
Income tax (expense) benefit

(14)

7

(26)

14
Income (loss) from continuing operations

53

(4)

66

(81)
Income from discontinued operations, net of tax

—

2

8

8
Net income (loss)

53

(2)

74

(73)
Net income attributable to noncontrolling interests

(2)

(3)

(8)

(8)
Net income (loss) attributable to Venator

$
51

$
(5)

$
66

$
(81)

Basic earnings (losses) per share:

Income (loss) from continuing operations attributable to Venator Materials PLC ordinary shareholders

$
0.48

$
(0.07)

$
0.55

$
(0.84)
Income from discontinued operations attributable to Venator Materials PLC ordinary shareholders

—

0.02

0.08

0.08
Net income (loss) attributable to Venator Materials PLC ordinary shareholders

$
0.48

$
(0.05)

$
0.63

$
(0.76)

Diluted earnings (losses) per share:

Income (loss) from continuing operations attributable to Venator Materials PLC ordinary shareholders

$
0.48

$
(0.07)

$
0.54

$
(0.84)
Income from discontinued operations attributable to Venator Materials PLC ordinary shareholders

—

0.02

0.08

0.08
Net income (loss) attributable to Venator Materials PLC ordinary shareholders

$
0.48

$
(0.05)

$
0.62

$
(0.76)



	Three months ended June 30,						Six months ended June 30,
(Dollars in millions, except per share amounts)	2018			2017			2018			2017
Trade sales, services and fees, net	$	626		$	562		$	1,248		$	1,099
Cost of goods sold	193			480			647			945
Operating expenses:
Selling, general and administrative (includes corporate allocations from Huntsman Corporation of nil, $28, nil and $52, respectively)	56			57			110			107
Restructuring, impairment, and plant closing and transition costs	136			7			145			33
Other income, net	(10		)	(40		)	(13		)	(30		)
Total operating expenses	182			24			242			110
Operating income	251			58			359			44
Interest expense	(14		)	(10		)	(27		)	(24		)
Interest income	4			1			7			3
Other income	2			1			4			2
Income from continuing operations before income taxes	243			50			343			25
Income tax expense	(45		)	(16		)	(65		)	(12		)
Income from continuing operations	198			34			278			13
Income from discontinued operations, net of tax	—			—			—			8
Net income	198			34			278			21
Net income attributable to noncontrolling interests	(2		)	(3		)	(4		)	(6		)
Net income attributable to Venator	$	196		$	31		$	274		$	15

Basic earnings per share:
Income from continuing operations attributable to Venator Materials PLC ordinary shareholders	$	1.84		$	0.29		$	2.58		$	0.06
Income from discontinued operations attributable to Venator Materials PLC ordinary shareholders	—			—			—			0.08
Net income attributable to Venator Materials PLC ordinary shareholders	$	1.84		$	0.29		$	2.58		$	0.14

Diluted earnings per share:
Income from continuing operations attributable to Venator Materials PLC ordinary shareholders	$	1.84		$	0.29		$	2.57		$	0.06
Income from discontinued operations attributable to Venator Materials PLC ordinary shareholders	—			—			—			0.08
Net income attributable to Venator Materials PLC ordinary shareholders	$	1.84		$	0.29		$	2.57		$	0.14

See notes to unaudited condensed consolidated and combined financial statements.

Table of Contents

VENATOR MATERIALS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(Unaudited)

Three months ended

Nine months ended

September 30,

September 30,
(Dollars in millions)

2017

2016

2017

2016
Net income (loss)

$
53

$
(2)

$
74

$
(73)
Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment

(4)

(30)

75

(91)
Pension and other postretirement benefits adjustments

8

4

36

16
Other comprehensive income (loss), net of tax

4

(26)

111

(75)
Comprehensive income (loss)

57

(28)

185

(148)
Comprehensive income attributable to noncontrolling interest

(2)

(3)

(8)

(8)
Comprehensive income (loss) attributable to Venator

$
55

$
(31)

$
177

$
(156)



	Three months ended June 30,						Six months ended June 30,
(Dollars in millions)	2018			2017			2018			2017
Net income	$	198		$	34		$	278		$	21
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment	(115		)	74			(58		)	79
Pension and other postretirement benefits adjustments	4			24			7			28
Hedging instruments	12			—			5			—
Total other comprehensive (loss) income, net of tax	(99		)	98			(46		)	107
Comprehensive income	99			132			232			128
Comprehensive income attributable to noncontrolling interest	(2		)	(3		)	(4		)	(6		)
Comprehensive income attributable to Venator	$	97		$	129		$	228		$	122

See notes to unaudited condensed consolidated and combined financial statements.

Table of Contents

VENATOR MATERIALS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY

(Unaudited)

Total Venator Materials PLC Equity


Parent’s Net


Accumulated




Investment

Additional

Other

Noncontrolling

and

Ordinary

Paid-in

Accumulated

Comprehensive

Interest in

(Dollars in millions)

Advances

Shares

Capital

Deficit

Loss

Subsidiaries

Total
Balance, January 1, 2017

$
588

$
—

$
—

$
—

$
(423)

$
12

$
177
Net income (loss)

67

—

—

(1)

—

8

74
Net changes in other comprehensive income

—

—

—

—

111

—

111
Dividends paid to noncontrolling interests

—

—

—

—

—

(9)

(9)
Net changes in parent’s net investment and advances

663

—

—

—

—

—

663
Conversion of parent's net investment and advances to paid-in capital

(1,318)

—

1,318

—

—

—

—
Balance, September 30, 2017

$
—

$
—

$
1,318

$
(1)

$
(312)

$
11

$
1,016

Total Venator Materials PLC Equity


Parent’s Net


Accumulated




Investment

Additional

Other

Noncontrolling

and

Ordinary

Paid-in

Accumulated

Comprehensive

Interest in

(Dollars in millions)

Advances

Shares

Capital

Deficit

Loss

Subsidiaries

Total
Balance, January 1, 2016

$
1,112

$
—

$
—

$
—

$
(401)

$
17

$
728
Net (loss) income

(81)

—

—

—

—

8

(73)
Net changes in other comprehensive loss

—

—

—

—

(75)

—

(75)
Dividends paid to noncontrolling interests

—

—

—

—

—

(10)

(10)
Net changes in parent’s net investment and advances

(318)

—

—

—

—

(2)

(320)
Balance, September 30, 2016

$
713

$
—

$
—

$
—

$
(476)

$
13

$
250



	Total Venator Materials PLC Equity
(Dollars in millions)	Parent's Net Investment and Advances		Ordinary Shares		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interest in Subsidiaries			Total
Balance, January 1, 2018	$	—	$	—	$	1,311	$	67	$	(283	)	$	10		$	1,105
Net income	—		—		—		274		—			4			278
Net changes in other comprehensive loss	—		—		—		—		(46		)	—			(46		)
Dividends paid to noncontrolling interests	—		—		—		—		—			(5		)	(5		)
Activity related to stock plans	—		—		2		—		—			—			2
Balance, June 30, 2018	$	—	$	—	$	1,313	$	341	$	(329	)	$	9		$	1,334



	Total Venator Materials PLC Equity
(Dollars in millions)	Parent's Net Investment and Advances		Ordinary Shares		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interest in Subsidiaries			Total
Balance, January 1, 2017	$	588	$	—	$	—	$	—	$	(423	)	$	12		$	177
Net income	15		—		—		—		—			6			21
Net changes in other comprehensive income	—		—		—		—		107			—			107
Dividends paid to noncontrolling interests	—		—		—		—		—			(6		)	(6		)
Net changes in parent’s net investment and advances	807		—		—		—		—			(1		)	806
Balance, June 30, 2017	$	1,410	$	—	$	—	$	—	$	(316	)	$	11		$	1,105

See notes to unaudited condensed consolidated and combined financial statements.

Table of Contents

VENATOR MATERIALS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(Unaudited)

~~(Unaudited)~~

Nine months ended

September 30,
(Dollars in millions)

2017

2016
Operating Activities:




Net income (loss)

$
74

$
(73)
Income from discontinued operations, net of tax

(8)

(8)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:




Depreciation and amortization

95

84
Deferred income taxes

(2)

(17)
Noncash restructuring and impairment charges

7

9
Noncash interest

18

32
Noncash loss on foreign currency transactions

1

2
Gain on disposal of businesses/assets, net

—

(23)
Other, net

2

3
Changes in operating assets and liabilities:



Accounts receivable

(54)

(5)
Inventories

22

113
Prepaid expenses

(1)

(1)
Other current assets

(8)

2
Other noncurrent assets

6

(7)
Accounts payable

8

6
Accrued liabilities

40

(25)
Other noncurrent liabilities

(20)

(5)
Net cash provided by operating activities from continuing operations

180

87
Net cash provided by operating activities from discontinued operations

1

6
Net cash provided by operating activities

181

93
Investing Activities:




Capital expenditures

(97)

(76)
Insurance proceeds for recovery of property damage

50

—
Net repayments from (advances to) affiliates

121

(36)
Repayment of government grant

(5)

—
Cash received from unconsolidated affiliates

37

25
Investment in unconsolidated affiliates

(33)

(21)
Proceeds from sale of businesses/assets

—

9
Net cash provided by (used in) investing activities from continuing operations

73

(99)
Net cash used in investing activities from discontinued operations

(1)

(6)
Net cash provided by (used in) investing activities

72

(105)
Financing Activities:




Repayment of long-term debt

(5)

(1)
Net repayments on affiliate accounts payable

(86)

23
Final settlement of affilate balances at Separation

(732)

—
Dividends paid to noncontrolling interests

(9)

(10)
Proceeds from issuance of long-term debt

750

—
Debt issuance costs paid

(18)

—
Other financing activities

1

(2)
Net cash (used in) provided by financing activities

(99)

10
Effect of exchange rate changes on cash

2

—
Net change in cash and cash equivalents, including discontinued operations

156

(2)
Cash and cash equivalents at beginning of period, including discontinued operations

30

22
Cash and cash equivalents at end of period, including discontinued operations

$
186

$
20

Supplemental cash flow information:




Cash paid for interest

$
2

$
4
Cash paid for income taxes

11

6
Supplemental disclosure of noncash activities:

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

$
19

$
17
Received settlements of notes receivable from affiliates

57

230
Settlement of long-term notes payable/notes receivable with affiliates

792

(1)



	Six months ended June 30,
(Dollars in millions)	2018			2017
Operating Activities:
Net income	$	278		$	21
Income from discontinued operations, net of tax	—			(8		)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	69			59
Deferred income taxes	28			1
Noncash restructuring and impairment charges	133			6
Insurance proceeds for business interruption, net of gain on recovery	—			28
Noncash interest expense	1			20
Noncash (loss) gain on foreign currency transactions	(3		)	6
Other, net	4			4
Changes in operating assets and liabilities:
Accounts receivable	(56		)	(156		)
Inventories	(46		)	12
Prepaid expenses	9			2
Other current assets	(14		)	(4		)
Other noncurrent assets	(1		)	2
Accounts payable	(17		)	(7		)
Accrued liabilities	(59		)	—
Other noncurrent liabilities	(21		)	(16		)
Net cash provided by (used in) operating activities from continuing operations	305			(30		)
Net cash provided by operating activities from discontinued operations	—			1
Net cash provided by (used in) operating activities	305			(29		)
Investing Activities:
Capital expenditures	(167		)	(40		)
Insurance proceeds for recovery of property damage	—			50
Net advances to affiliates	—			91
Repayment of government grant	—			(5		)
Cash received from unconsolidated affiliates	14			27
Investment in unconsolidated affiliates	(9		)	(19		)
Net cash (used in) provided by investing activities from continuing operations	(162		)	104
Net cash used in investing activities from discontinued operations	—			(1		)
Net cash (used in) provided by investing activities	(162		)	103
Financing Activities:
Repayment of third-party debt	(9		)	(5		)
Net repayments on affiliate accounts payable	—			(60		)
Dividends paid to noncontrolling interests	(5		)	(6		)
Net cash used in financing activities	(14		)	(71		)
Effect of exchange rate changes on cash	(13		)	1
Net change in cash and cash equivalents, including discontinued operations	116			4
Cash and cash equivalents at beginning of period, including discontinued operations	238			30
Cash and cash equivalents at end of period, including discontinued operations	$	354		$	34
Supplemental cash flow information:
Cash paid for interest	25			$	2
Cash paid for income taxes	20			4
Supplemental disclosure of noncash activities:
Capital expenditures included in accounts payable as of June 30, 2018 and 2017, respectively	49			$	9
Settlement of long-term notes payable/notes receivable with affiliates	—			792

See notes to unaudited condensed consolidated and combined financial statements.

Table of Contents

VENATOR MATERIALS PLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

~~NOTE~~

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

General,

~~Except when~~ Description of Business, Recent Developments and Basis of Presentation

General

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

subsidiaries.

Description of Business

Venator operates in two segments: Titanium Dioxide and Performance Additives. The Titanium Dioxide segment manufactures and sells primarily TiO₂, and operates eight TiO₂ manufacturing facilities across the globe, predominantly in Europe. The Performance Additives segment manufactures and sells functional additives, color pigments, timber treatment and water treatment chemicals. This segment operates 1917 color pigments, functional additives, water treatment and timber treatment manufacturing and processing facilities in Europe, North America, Asia and Australia.

~~Recent Developments~~

~~Initial Public Offering and Separation~~

In conjunction with our IPO completed on August 8, 2017, we ~~completed our IPO~~entered into a separation agreement to effect the separation of ~~26,105,000 of our outstanding 106,271,712 ordinary shares, par value $0.001 per share, which includes 3,405,000 ordinary shares issued~~the Titanium Dioxide and Performance Additives businesses from Huntsman. This arrangement is referred to herein as the "separation."

Recent Developments

Potential Ashtabula Complex Acquisition

On July 16, 2018, we announced that we reached an agreement with Tronox Limited (“Tronox”) to purchase the European paper laminates business (the “8120 Grade”) from Tronox upon the ~~exercise in full by the underwriters~~closing of their ~~option to purchase additional shares, at a public offering price of $20.00 per share. All of the ordinary shares were sold by Huntsman, and we did not receive any proceeds from the offering.~~proposed merger with The ~~ordinary shares began trading August 3, 2017 on the New York Stock Exchange under the symbol “VNTR.” Following our IPO, Huntsman owns approximately 75% of Venator’s outstanding ordinary shares.~~ ~~The material terms of our IPO are described in the Prospectus.~~

National Titanium Dioxide Company Limited ("Cristal"). In connection with the acquisition, Tronox would supply the 8120 Grade to us under a Transitional Supply Agreement until the transfer of the manufacturing of the 8120 Grade to our ~~IPO and the Separation, Venator and Huntsman entered into certain agreements~~Greatham, U.K. facility has been completed.

Additionally, we announced that allocated between Venator and Huntsman the various assets, employees, liabilities and obligations that were previously part of Huntsman and that govern various interim and ongoing relationships between the parties.

~~On August 15, 2017, we registered 14,025,000 ordinary shares on Form S-8 which are reserved in connection with awards under our 2017 Stock Incentive Plan.~~

~~Table of Contents~~

~~Senior Credit Facilities and Senior Notes~~

~~On August 8, 2017, in connection with our IPO and the Separation,~~ we entered into ~~new financing arrangements~~an agreement with Tronox providing, among other things, that the parties will engage in exclusive negotiations until September 29, 2018 and ~~incurred new debt, including borrowings of $375 million under~~use our respective best efforts to achieve a ~~new senior secured term loan facility with a maturity of seven years (the “Term Loan Facility”). In addition to~~definitive agreement for the Term Loan Facility, we entered into a $300 million asset-based revolving lending facility with a maturity of five years (the “ABL Facility” and, together with the Term Loan Facility, the “Senior Credit Facilities”). On July 14, 2017, in connection with our IPO and the Separation, our subsidiaries Venator Finance S.à.r.l. and Venator Materials LLC (the “Issuers”), issued $375 million in aggregate principal amount of 5.75% of Senior Notes due 2025 (the “Senior Notes”). Promptly following consummationpurchase by us of the ~~Separation, the proceeds~~Ashtabula, Ohio complex currently owned by Cristal if a divestiture of the ~~Senior Notes were released from escrow and Venator used the net proceeds of the Senior Notes and borrowings under the Term Loan Facility~~Ashtabula complex is required for Tronox to ~~repay approximately $732 million of net intercompany debt owed to Huntsman and to pay related fees and expenses of approximately $18 million.~~

obtain approval for its proposed merger with Cristal.

Pori Fire

On January 30, 2017, our TiO₂ manufacturing facility in Pori, Finland experienced fire damage and we continue to repair the facility. Prior to the fire, 60% of the site capacity produced specialty products which, on average, contributed greater than 75% of the site EBITDA from January 1, 2015 through January 30, 2017. We are currently operating at 20% of total prior capacity but producing only specialty products, and we currently intend to restore manufacturing of the balance of these more profitable specialty productsThe loss was covered by the fourth quarter of 2018. The remaining 40% of site capacity is more commoditized and we will determine if and when to rebuild this commoditized capacity depending on market conditions, costs and projected long term returns relative to our other investment opportunities.

We have recorded a loss of $31 million for the write-off of fixed assets and lost inventory in other operating income, net in our condensed consolidated and combined statements of operations for the nine months ending September 30, 2017. In addition, we recorded a loss of $18 million of costs for cleanup of the facility in other operating income, net through September 30, 2017. The site is insuredinsurance for property damage as well as business interruption losses subject to retained deductibles of $15 million and 60 days, ~~respectively, with~~respectively.

On April 13, 2018 we received a final payment from our insurers of €191 million, or $236 million, bringing our total insurance receipts to €468 million, or $551 million, which was the limit of ~~$500 million. Due~~our insurance proceeds. We elected to ~~prevailing strong market conditions, our TiO~~₂ ~~selling prices continue~~receive the insurance proceeds in Euro in order to ~~improve and our business is benefitting from~~match the ~~resulting improved profitability and cash flows. This also has~~currency of the ~~effect of increasing our total anticipated~~related business interruption losses and capital expenditures resulting from the Pori ~~site. We currently believe~~fire. For the ~~combination~~six months ended June 30, 2018, we received €243 million, or $298 million, of ~~increased TiO~~₂ ~~profitability and recently estimated reconstruction costs will result~~insurance proceeds, while €225 million, or $253 million, was received during 2017.

During the second quarter of 2018, in ~~losses and costs~~conjunction with the receipt of the final payment from our insurers, we recorded $325 million of income in ~~excess~~cost of goods sold in our $500 million insurance limit. We currently expect to contain these over-the-limit costs within $100 million to $150 million, and to account for them as capital expenditures. However, these are preliminary estimates based on a numberconsolidated statement of ~~significant assumptions, and as a result uninsured costs could exceed current estimates. Factors that could materially impact our current estimates include our actual future TiO~~₂ ~~profitability and related impact on our business interruption losses; the accuracy of our current property damage estimates; the actual costs and timing of our reconstruction efforts; the extent to~~operations, which ~~we rebuild the 40% of site capacity that produces commoditized products; our ability to secure government subsidies~~ related to our reconstruction efforts; and a number of other significant market and facility-related assumptions. Please see “Part II. Item 1A. Risk Factors—Disruptions in production at our manufacturing facilities, including our Pori facility, may have a material adverse impact on our business, results of operations and/or financial condition.”

~~The fire at our Pori facility did not have a material impact on our 2017 third quarter operating results as~~the losses incurred ~~were offset by insurance proceeds.~~to date and yet to be incurred. We received $141 million of non-refundable partial progress payments from our insurer through September 30, 2017 and we received an additional $112 million payment on October 9, 2017. During the first nine months of 2017, we recorded ~~$128~~$371 million of income related to property damage and business interruption insurance recoveries for the six months ended June 30, 2018 while $84 million was recognized for the six months ended June 30, 2017. Nil and $68 million was reported in accrued liabilities as of June 30, 2018 and December 31, 2017, respectively.

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We recorded a loss of $5 million and $17 million for cleanup and other ~~operating income, net~~non-capital reconstruction costs in cost of goods sold for the six months ended June 30, 2018 and 2017, respectively. We recorded a loss of $31 million for the write-off of fixed assets and lost inventory in cost of goods sold in our ~~condensed~~ consolidated and combined statements of operations ~~to offset property damage and business interruption losses recorded during~~for the ~~period. We recorded $17 million as deferred income in accrued liabilities as of September~~six months ended June 30, 2017 for insurance proceeds received for costs not yet incurred. The difference between payments received from our insurers of $141 million and the sum of income of $128 million and deferred income of $17 million is related to the foreign exchange movements of the U.S. Dollar against the Euro during the first nine months of the year.

2017.

Basis of Presentation

Venator’s unaudited condensed consolidated and combined financial statements have been prepared in accordance with generally accepted accounting principles in the United States ~~("GAAP"~~(“GAAP” or ~~"U.S. GAAP"~~“U.S. GAAP”) ~~and in~~

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management’s opinion reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results of operations, comprehensive income (loss), financial position and cash flows for the periods presented. Results of interim periods are not necessarily indicative of those to be expected for the full year. These unaudited condensed consolidated and combined financial statements should be read in conjunction with the audited combined financial statements and notes to combined financial statements included in the Prospectus.

. Prior to the ~~Separation,~~separation, Venator’s operations were included in Huntsman’s financial results in different legal forms, including but not limited to: (1) wholly-owned subsidiaries for which the Titanium Dioxide and Performance Additives businesses were the sole businesses; (2) legal entities which are comprised of other businesses and include the Titanium Dioxide ~~and/or~~and Performance Additives businesses; and (3) variable interest entities in which the Titanium Dioxide and Performance Additives and other businesses are the primary beneficiaries. The unaudited condensed consolidated and combined financial statements include all revenues, costs, assets, liabilities and cash flows directly attributable to ~~Venator. The unaudited condensed consolidated and combined financial statements also include~~Venator, as well as allocations of direct and indirect corporate expenses, ~~through the date of the Separation,~~ which are based upon an allocation method that in the opinion of management is reasonable. Such corporate cost allocation transactions between Venator and Huntsman have been considered to be effectively settled for cash in the unaudited condensed consolidated and combined financial statements at the time the transaction is recorded and the net effect of the settlement of these intercompany transactions is reflected in the unaudited condensed consolidated and combined statements of cash flows as a financing activity. Because the historical unaudited condensed consolidated and combined financial information for the periods indicated reflect the combination of these legal entities under common control, the historical unaudited condensed consolidated and combined financial information includes the results of operations of other Huntsman businesses that are not a part of our operations after the ~~Separation.~~separation. We report the results of those other businesses as discontinued operations. ~~See “Note 3.~~Please see “Note 15. Discontinued ~~Operations” for further discussion of discontinued operations.~~

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

Operations.”

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

Prior to the ~~Separation, Huntsman’s~~separation, Huntsman's executive, information technology, EHS and certain other corporate departments performed certain administrative and other services for Venator. Additionally, Huntsman performed certain site services for Venator. Expenses incurred by Huntsman and allocated to Venator were determined based on specific services provided or ~~were~~are allocated based on Venator’s total revenues, total assets, and total employees in proportion to those of Huntsman. Management believes that such expense allocations are reasonable. Corporate allocations include allocated selling, general, and administrative expenses of ~~$9 million~~nil and ~~$27~~$28 million for the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, respectively, and ~~$62 million~~nil and ~~$76~~$52 million for the ~~nine~~six months ended ~~September~~June 30, 2018 and 2017, respectively.

In the notes to unaudited condensed consolidated and ~~2016, respectively.~~

combined financial statements, all dollar and share amounts in tabulations are in millions unless otherwise indicated.

~~NOTE~~

Note 2. ~~RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~

Recently Issued Accounting Pronouncements

Accounting Pronouncements ~~Pending Adoption in Future Periods~~

Adopted During the Period

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. ~~2014‑09,~~2014-09, Revenue from Contracts with Customers (Topic 606)~~, outlining~~. This ASU along with subsequently issued amendments, outline a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers and supersedes most ~~current~~previously issued revenue recognition guidance. ~~In August 2015,~~Under this guidance, revenue is recognized at the ~~FASB issued ASU No. 2015‑14,~~ ~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferring the effective date of ASU No. 2014‑09 for all entities by one year. Further, in March 2016, the FASB issued ASU No. 2016‑08,~~ ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), clarifying the implementation guidance on principal versus agent considerations, in April 2016, the FASB issued ASU No. 2016‑10,~~ ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, clarifying the implementation guidance on identifying performance obligations in~~time a ~~contract and determining whether an entity’s promise~~good or service is transferred to ~~grant a license provides~~ a customer ~~with either a right to use~~for the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time), in May 2016, the FASB issued ASU No. 2016‑12, ~~Revenue from Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients~~,

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~~providing clarifications and practical expedients for certain narrow aspects in Topic 606, and in December 2016, the FASB issued ASU 2016‑20,~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The amendments in these~~consideration received. These ASUs are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. ~~The amendments in ASU No. 2014‑09, ASU No. 2016‑08, ASU No. 2016‑10, ASU No. 2016‑12 and ASU No. 2016‑20 should be applied retrospectively, and early application is permitted.~~ We are substantially complete with our analysis to identify areas that will be impacted by the adoption of the amendments in ASU No. 2014‑09, ASU No. 2016‑08, ASU No. 2016‑10, ASU No. 2016‑12 and ASU No. 2016‑20 on our financial statements. At this time, other than additional required disclosures, we do not expect the adoption of the amendments inadopted these ASUs ~~to have a significant impact on our financial statements. The standard will be adopted in our fiscal year~~effective January 1, 2018 and we have elected the modified retrospective approach as the transition method.

~~In February 2016, the FASB issued ASU No. 2016‑02,~~ ~~Leases (Topic 842)~~. The amendments in this ASU will increase transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this ASU will require lessees to recognize in the statement of financial position As a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application of the amendments in this ASU is permitted for all entities. Reporting entities are required to recognize and measure leases under these amendments at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impactresult of the adoption of these amendments, we revised our accounting policy for revenue recognition as detailed in “Note 3. Revenue,” and, except for the ~~amendments~~changes noted in ~~this ASU~~"Note 3. Revenue" no

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material changes have been made to our significant policies disclosed in "Note 1. Description of Business, Recent Developments, Basis of Presentation and Summary of Significant Accounting Policies" of our Annual Report on Form 10-K, filed on February 23, 2018, for the year ended December 31, 2017. The adoption of these ASUs did not have a significant impact on our unaudited condensed consolidated and combined financial ~~statements and believe, based on our preliminary assessment, that we will record significant additional right-of-use assets and lease obligations.~~

statements.

In August 2016, the FASB issued ASU No. ~~2016‑15,~~2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU clarify and include specific guidance to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. We ~~do not expect~~adopted the amendments of this ASU effective January 1, 2018, and the initial adoption of the ~~amendments~~amendment in this ASU ~~to have a significant~~did not impact on our unaudited condensed consolidated and combined financial statements.

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

In March 2017, the FASB issued ASU No. ~~2017‑07,~~2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments in this ASU require that an employer report the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the same line items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of income from operations. The amendments in this ASU also allow only the service cost component to be eligible for capitalization when applicable (for example, as a cost of internally manufactured inventory or a self-constructed asset). The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit cost in assets. ~~The~~We adopted the amendments inof this ASU ~~will impact~~effective January 1, 2018, which impacted the presentation of our financial statements. Our ~~current~~historical presentation of service cost components iswas consistent with the amendments in this ASU. ~~Upon~~

~~Table~~The other components of ~~Contents~~

~~adoption of the amendments in this ASU, we expect to present the other components~~net periodic pension and postretirement benefit costs are presented within other nonoperating income, whereas we ~~currently present~~historically presented these within cost of goods sold and selling, general and administrative expenses.

As a result of the retrospective adoption of this ASU, for the three and six months ending June 30, 2017, cost of goods sold increased by $1 million and $3 million, respectively, selling, general and administrative expenses decreased by nil and $1 million, respectively, and other income increased by $1 million and $2 million, respectively, within our unaudited condensed consolidated and combined statements of operations.

In August 2017, the FASB issued ASU No. ~~2017‑12,~~2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in this ASU better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships as well as the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements to increase the understandability of the results of an entity’s intended hedging strategies. The amendments in this ASU also include certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted in any interim period after the issuance of this ASU. Transition requirements and elections should be applied to hedging relationships existing on the date of adoption. For cash flow and net investment hedges, an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness, and the amended presentation and disclosure guidance is required only prospectively. We adopted the amendments of this ASU effective January 1, 2018, and the initial adoption of the amendment in this ASU did not impact on our unaudited condensed consolidated and combined financial statements.

Accounting Pronouncements Pending Adoption in Future Periods

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments in this ASU will increase transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this ASU will require lessees to

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recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application of the amendments in this ASU is permitted for all entities. Reporting entities are required to recognize and measure leases under these amendments at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact of the adoption of the amendments in this ASU on our financial ~~statements.~~statements and believe, based on our preliminary assessment, that we will record significant additional right-of-use assets and lease obligations.

In February 2018, the FASB issued ASU No. 2018-02,

Income Statement—Reporting Comprehensive Income (Topic 220). This standard provides an option to reclassify stranded tax effects within accumulated other comprehensive income (loss) to retained earnings due to the U.S. federal corporate income tax rate change in the Tax Cuts and Jobs Act of 2017 (the "Tax Act"). This standard is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. We have not completed our assessment, but we do not anticipate this will have a material impact on our unaudited consolidated and combined statement of comprehensive income.

Note 3. Revenue

We account for revenues from contracts with customers under ASC 606, Revenue from Contracts with Customers, which became effective January 1, 2018. As part of the adoption of ASC 606, we applied the new standard on a modified retrospective basis analyzing open contracts as of January 1, 2018. However, no cumulative effect adjustment to retained earnings was necessary as no revenue recognition differences were identified when comparing the revenue recognition criteria under ASC 606 to previous requirements.

We generate substantially all of our revenues through sales of inventory in the open market and via long-term supply agreements. Revenue is recognized when the performance obligations under the terms of our contracts are satisfied. Generally, this occurs at the time of shipping at which point the control of the goods transfers to the customer. Further, in determining whether control has transferred, we consider if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferred goods. Sales, value-added, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. We have elected to account for all shipping and handling activities as fulfillment costs. We recognize these costs for shipping and handling when control over products have transferred to the customer as an expense in cost of goods sold. We have also elected to expense commissions when incurred as the amortization period of the commission asset that we would have otherwise recognized is less than one year.

The following table disaggregates our revenue by major geographical region for the three and six months ended June 30, 2018:



	For the Three Months Ended June 30, 2018						For the Six Months Ended June 30, 2018
	Titanium Dioxide		Performance Additives		Total		Titanium Dioxide		Performance Additives		Total
North America	$	80	$	78	$	158	$	151	$	155	$	306
Europe	229		59		288		470		117		587
Asia	96		30		126		192		57		249
Other	50		4		54		98		8		106
Total Revenues	$	455	$	171	$	626	$	911	$	337	$	1,248

The following table disaggregates our revenue by major product line for the three and six months ended June 30, 2018:

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	For the Three Months Ended June 30, 2018						For the Six Months Ended June 30, 2018
	Titanium Dioxide		Performance Additives		Total		Titanium Dioxide		Performance Additives		Total
TiO₂	$	455	$	—	$	455	$	911	$	—	$	911
Color Pigments	—		84		84		—		166		166
Functional Additives	—		39		39		—		80		80
Timber Treatment	—		41		41		—		78		78
Water Treatment	—		7		7		—		13		13
Total Revenues	$	455	$	171	$	626	$	911	$	337	$	1,248

Substantially all of our revenue is generated through inventory sales in which revenue is recognized at a point in time. At contract inception, we assess the goods promised in our contracts and identify a performance obligation for each promise to transfer to the customer a good that is distinct. In substantially all cases, a contract has a single performance obligation to deliver a promised good to the customer.

The amount of consideration we receive and revenue we recognize is based upon the terms stated in the sales contract, which may contain variable consideration such as discounts or rebates. We also give our customers a limited right to return products that have been damaged, do not satisfy their specifications, or other specific reasons. Payment terms on product sales to our customers typically range from 30 days to 90 days, although certain exceptions exist where standard payment terms are exceeded, these instances are infrequent and do not exceed one year. Discounts are allowed for some customers for early payment or if a certain volume is met. As our standard payment terms are less than one year, we have elected to not assess whether a contract has a significant financing component. In order to estimate the applicable variable consideration at the time of revenue recognition, we use historical and current trend information to estimate the amount of discounts, rebates, or returns to which customers are likely to be entitled. Historically, actual discount or rebate adjustments relative to those estimated and accrued at the point of which revenue is recognized have not materially differed.

Note 4. Inventories

Inventories are stated at the lower of cost or market, with cost determined using first-in, first-out and average cost methods for different components of inventory. Inventories at June 30, 2018 and December 31, 2017 consisted of the following:



	June 30, 2018		December 31, 2017
Raw materials and supplies	$	159	$	149
Work in process	58		46
Finished goods	274		259
Total	$	491	$	454

~~NOTE 3. DISCONTINUED OPERATIONS~~

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

~~NOTE 4. INVENTORIES~~

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

September 30,

December 31,
(Dollars in millions)

2017

2016
Raw materials and supplies

$
164

$
134
Work in process

42

46
Finished goods

225

246
Total

$
431

$
426

~~NOTE~~

Note 5. ~~VARIABLE INTEREST ENTITIES~~

Variable Interest Entities

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

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

Viance, LLC ("Viance") is our 50%-owned joint venture with Dow Chemical Company. Viance markets timber treatment products for Venator. We have determined that the activity that most significantly impacts Viance’s economic performance is manufacturing. The joint venture sources all of its products through a contract manufacturing arrangement at our Harrisburg, North Carolina facility and we bear a disproportionate amount of working capital risk of loss due to the supply arrangement whereby we control manufacturing on Viance’s behalf.Pacific Iron Products Sdn Bhd is our 50%-owned joint venture with Coogee Chemicals that manufactures products for Venator. It was determined that the activities that most significantly impact its economic performance are raw material supply, manufacturing and sales. In this joint venture we supply all the raw materials through a fixed cost supply contract, operate the manufacturing facility and market the products of the joint venture to customers. Through a fixed price raw materials supply contract with the joint venture we are exposed to the risk related to the fluctuation of raw material pricing. As a result, we concluded that we are the primary beneficiary.

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Creditors of these entities have no recourse to Venator’s general credit. As the primary beneficiary of these variable interest entities at ~~September~~June 30, ~~2017,~~2018, the joint ventures’ assets, liabilities and results of operations are included in Venator’s condensed consolidated and combined financial statements.

The revenues, income from continuing operations before income taxes and net cash provided by operating activities for our variable interest entities for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017 are as follows:

Three months ended

Nine months ended

September 30,

September 30,
(Dollars in millions)

2017

2016

2017

2016
Revenues

$
31

$
30

$
97

$
89
Income from continuing operations before income taxes

4

5

16

15
Net cash provided by operating activities

6

7

20

19



	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Revenues	$	35	$	32	$	66	$	66
Income from continuing operations before income taxes	5		5		9		12
Net cash provided by operating activities	3		7		12		14

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~~NOTE~~

Note 6. ~~RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS~~

Restructuring, Impairment, and Plant Closing and Transition Costs

Venator has initiated various restructuring programs in an effort to reduce operating costs and maximize operating efficiency. As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, accrued restructuring and plant closing and transition costs by type of cost and initiative consisted of the following:

Other


Workforce

restructuring

(Dollars in millions)

reductions(1)

costs

Total(2)
Accrued liabilities as of December 31, 2016

$
21

$
—

$
21
2017 charges

34

8

42
2017 payments

(15)

(8)

(23)
Foreign currency effect on liability balance

1

—

1
Accrued liabilities as of September 30, 2017

$
41

$
—

$
41



	Workforce reductions⁽¹⁾			Other restructuring costs			Total⁽²⁾
Accrued liabilities as of December 31, 2017	$	34		$	—		$	34
2018 charges for 2017 and prior initiatives	3			8			11
2018 charges for 2018 initiatives	1			—			1
2018 payments for 2017 and prior initiatives	(10		)	(8		)	(18		)
2018 payments for 2018 initiatives	—			—			—
Foreign currency effect on liability balance	(1		)	—			(1		)
Accrued liabilities as of June 30, 2018	$	27		$	—		$	27


	~~(1)~~


⁽¹⁾	The total workforce reduction reserves of ~~$41~~$27 million relate to the termination of ~~338~~174 positions, of which zero positions had been terminated as of ~~September~~June 30, ~~2017.~~ 2018.


⁽²⁾		Accrued liabilities remaining ~~for continuing operations,~~ at ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017 by year of initiatives were as follows:

September 30,

December 31,
(Dollars in millions)

2017

2016
2015 initiatives and prior

$
12

$
21
2016 initiatives

—

—
2017 initiatives

29

—
Total

$
41

$
21



	June 30, 2018		December 31, 2017
2016 initiatives and prior	$	7	$	9
2017 initiatives	19		25
2018 initiatives	1		—
Total	$	27	$	34

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

Titanium

Performance


(Dollars in millions)

Dioxide

Additives

Total
Accrued liabilities as of December 31, 2016

$
12

$
9

$
21
2017 charges

33

9

42
2017 payments

(14)

(9)

(23)
Foreign currency effect on liability balance

1

—

1
Accrued liabilities as of September 30, 2017

$
32

$
9

$
41

Current portion of restructuring reserves

$
28

$
9

$
37
Long-term portion of restructuring reserve

4

—

4



	Titanium Dioxide			Performance Additives			Total
Accrued liabilities as of December 31, 2017	$	30		$	4		$	34
2018 charges for 2017 and prior initiatives	11			—			11
2018 charges for 2018 initiatives	—			1			1
2018 payments for 2017 and prior initiatives	(15		)	(3		)	(18		)
2018 payments for 2018 initiatives	—			—			—
Foreign currency effect on liability balance	(1		)	—			(1		)
Accrued liabilities as of June 30, 2018	$	25		$	2		$	27
Current portion of restructuring reserves	17			2			19
Long-term portion of restructuring reserve	8			—			8

Details with respect to cash and noncash restructuring charges and impairment of assets for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017 by initiative are provided below:

Three months ended

Nine months ended
(Dollars in millions)

September 30, 2017

September 30, 2017
Cash charges

$
16

$
42
Impairment of assets

—

3
Other noncash charges

—

4
Total 2017 Restructuring, Impairment and Plant Closing Costs

$
16

$
49

Three months ended

Nine months ended
(Dollars in millions)

September 30, 2016

September 30, 2016
Cash charges

$
6

$
22
Accelerated depreciation

1

8
Other noncash charges

—

1
Total 2016 Restructuring, Impairment and Plant Closing Costs

$
7

$
31



	Three months ended		Six months ended
	June 30, 2018		June 30, 2018
Cash charges	$	6	$	12
Accelerated depreciation	129		132
Other noncash charges	1		1
Total 2018 Restructuring, Impairment and Plant Closing and Transition Costs	$	136	$	145

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Three months ended Six months ended
June 30, 2017 June 30, 2017
Cash charges $ 4
$ 27
Impairment of assets 3
3
Other noncash charges —
3
Total 2017 Restructuring, Impairment and Plant Closing and Transition Costs $ 7
$ 33

Restructuring Activities

In December 2014, we implemented a comprehensive restructuring program to improve the global competitiveness of our Titanium Dioxide and Performance Additives segments. As part of the program, we are reducing our workforce by approximately 900 positions. In connection with this restructuring program, we recorded restructuring expense of nil ~~and $4 million~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, respectively.~~

~~In February 2015, we announced a plan to close the black end manufacturing operations and ancillary activities at our Calais, France site, which will reduce our TiO~~₂ ~~capacity by approximately 100 kilotons, or 11% of our European TiO~~₂ capacity. In connection with this closure, we recorded restructuring expense of nil and $1 million in the three and nine months ended September 30, 2016, respectively. All expected charges have been incurred as of the end of 2016.

2018, each.

In July 2016, we announced plans to close our Umbogintwini, South Africa TiO₂ manufacturing facility. As part of the program, we recorded restructuring expense of approximately $1 million and $3$2 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, respectively. We expect to incur additional charges of approximately $3$12 million through the end of ~~the third quarter of 2018.~~2022.

In March 2017, we announced a plan to close the white end finishing and packaging operation of our TiO₂ manufacturing facility at our Calais, France site. The announced plan follows the 2015 closure of the black end manufacturing operations and would result in the closure of the entire facility. In connection with this closure, we recorded restructuring expense of ~~$12~~$4 million and ~~$34~~$9 million infor the three and ~~nine~~six months ended ~~September~~June 30, 2017, respectively. We recorded $1 million and $8 million of accelerated depreciation on the remaining long-lived assets associated with this manufacturing facility during the three and nine months ended September 30, 2016,2018, respectively. We expect to incur additional charges of approximately ~~$45~~$44 million through the end of ~~2021.~~2022.

In September 2017, we announced a plan to close our St. Louis and Easton manufacturing facilities. As part of the program, we recorded restructuring expense of approximately $3$5 million and $8 million related to accelerated

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depreciation for the three and six months ended ~~September~~June 30, ~~2017.~~2018, respectively. We expect to incur ~~$17~~$7 million of accelerated depreciation through the end of 2018.

~~NOTE~~

In May 2018, we implemented a plan to close portions of our Color Pigments manufacturing facility in Augusta, Georgia. As part of the program, we recorded restructuring expense of $127 million for the three and six months ended June 30, 2018, each, of which $125 million related to accelerated depreciation, $1 million related to other noncash charges and $1 million related to cash charges. We expect to incur additional charges of approximately $2 million through the end of 2019.

Note 7. ~~DEBT~~

Debt

Outstanding debt, net of debt issuance costs of $12 million, consisted of the following:

September 30,

December 31,
(Dollars in millions)

2017

2016
Term loan facility

$
368

$
—
Senior notes

370

—
Amounts outstanding under A/R programs

—

106
Variable interest entities

2

2
Other

11

21
Total debt—excluding debt to affiliates

$
751

$
129
Less: short-term debt and current portion of long-term debt

4

10
Total long-term debt—excluding debt to affiliates

$
747

$
119
Notes payable to affiliates

—

882
Total debt

$
747

$
1,001

~~The~~ ~~estimated fair values of the Term Loan Facility and the ABL Facility approximate their carrying value. The fair value of the Senior Notes at September 30, 2017 was approximately $390 million.~~



	June 30, 2018		December 31, 2017
Senior Notes	$	370	$	370
Term Loan Facility	366		367
Other	12		20
Total debt	748		757
Less: short-term debt and current portion of long-term debt	7		14
Total long-term debt	$	741	$	743

The estimated fair value of the Senior Notes iswas $359 million and $396 million as of June 30, 2018 and December 31, 2017, respectively. The estimated fair value of the Term Loan Facility was $375 million and $378 million as of June 30, 2018 and December 31, 2017, respectively. The estimated fair values of the Senior Notes and the Term Loan Facility are based onupon quoted market prices ~~for the identical liability when traded as an asset in an active market~~ (Level 1).

The weighted average interest rate on our outstanding balances under the Senior Notes

and Term Loan Facility as of June 30, 2018 and December 31, 2017 was approximately 5% each.

Senior Notes

On July 14, 2017, ~~the Issuers~~our subsidiaries Venator Finance S.à.r.l. and Venator Materials LLC (the “Issuers”) entered into an indenture in connection with the issuance of the Senior Notes.

The Senior Notes are general unsecured senior obligations of the Issuers and are guaranteed on a general unsecured senior basis by Venator and certain of Venator’s subsidiaries.

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The indenture related to the Senior Notes imposes certain limitations on the ability of Venator and certain of its subsidiaries to, among other things, incur additional indebtedness secured by any principal properties, incur indebtedness of non-guarantor subsidiaries, enter into sale and leaseback transactions with respect to any principal properties and consolidate or merge with or into any other person or lease, sell or transfer all or substantially all of its properties and assets.

The Senior Notes bear interest of 5.75% per year payable semi-annually and will mature on July 15, 2025. The Issuers may redeem the Senior Notes in whole or in part at any time prior to July 15, 2020 at a price equal to 100% of the principal amount t~~hereof~~thereof plus accrued and unpaid interest, if any, and an early redemption premium, calculated on an agreed percentage of the outstanding principal amount, providing compensation on a portion of foregone future interest payables. The Senior Notes will be redeemable in whole or in part at any time on or after July 15, 2020 at the redemption prices set forth in the indenture, plus accrued and unpaid interest, if any, up to, but not including, the redemption date. In addition, at any time prior to July 15, 2020, the Issuers may redeem up to 40% of the aggregate principal amount of the Senior Notes with an amount not greater than the net cash proceeds of certain equity offerings or contributions to Venator’s equity at 105.75% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption date. Upon the occurrence of certain change of control events (other than the ~~Separation)~~separation), holders of the Venator Notes will have the right to require that the Issuers purchase all or a portion of such holder’s Senior Notes in cash at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase.

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Senior Credit Facilities

On August 8, 2017, we entered into the Senior Credit Facilities that provide for first lien senior secured financing of up to $675 million, consisting of:

~~the Term Loan Facility in an aggregate principal amount of $375 million, with a maturity of seven years; and~~

~~the ABL Facility in an aggregate principal amount of up to $300 million, with a maturity of five years.~~

the Term Loan Facility in an aggregate principal amount of $375 million, with a maturity of seven years; and

the ABL Facility in an aggregate principal amount of up to $300 million, with a maturity of five years.

The Term Loan Facility will amortize in aggregate annual amounts equal to 1% of the original principal amount of the Term Loan Facility, payable quarterly commencing in the fourth quarter of 2017.

Availability to borrow under the $300 million of commitments under the ABL Facility is subject to a borrowing base calculation comprised of accounts receivable and inventory in ~~United States,~~U.S., Canada, the ~~United Kingdom,~~U.K., Germany and accounts receivable in France and Spain, that fluctuate from time to time and may be further impacted by the lenders’ discretionary ability to impose reserves and availability blocks that might otherwise incrementally increase borrowing availability. As a result, the aggregate amount available for extensions of credit under the ABL Facility at any time is the lesser of $300 million and the borrowing base calculated according to the formula described above minus the aggregate amount of extensions of credit outstanding under the ABL Facility at such time.

Borrowings under the Term Loan Facility bear interest at a rate equal to, at Venator’s option, either (a) a London Interbank Offering Rate (“LIBOR”) based rate determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs subject to an interest rate floor to be agreed or (b) a base rate determined by reference to the highest of (i) the rate of interest per annum determined from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City, (ii) the federal funds rate plus 0.50% per annum and (iii) the one-month adjusted LIBOR plus 1.00% per annum, in each case plus an applicable margin to be agreed upon. Borrowings under the ABL Facility bear interest at a variable rate equal to an applicable margin based on the applicable quarterly average excess availability under the ABL Facility plus either a LIBOR or a base rate. The applicable margin percentage is calculated and established once every three calendar months and varies from 150 to 200 basis points for LIBOR loans depending on the quarterly average excess availability under the ABL Facility for the immediately preceding three month period.

Guarantees

All obligations under the Senior Credit Facilities are guaranteed by Venator and substantially all of ~~its~~our subsidiaries (the “Guarantors”), and are secured by substantially all of the assets of Venator and the Guarantors, in each case subject to certain exceptions. Lien priority as between the Term Loan Facility and the ABL Facility with respect to the collateral will be governed by an intercreditor agreement.

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Substantially all of our U.S. operations and certain of their foreign subsidiary holdings fully and unconditionally guaranteed Huntsman International’s outstanding notes. Upon the Separation, such operations and entities no longer guarantee Huntsman International’s outstanding notes. As of December 31, 2016, Huntsman International and its guarantors had third-party debt outstanding of $3,793 million. As of December 31, 2016, our U.S. operations and certain of our foreign subsidiaries had total assets, excluding intercompany amounts, of $502 million.

Cash Pooling Program

Prior to the ~~Separation,~~separation, Venator addressed cash flow needs by participating in a cash pooling program with Huntsman. Cash pooling transactions were recorded as either amounts receivable from affiliates or amounts payable to affiliates and are presented as ~~"Net~~“Net advances to ~~affiliates"~~affiliates” and ~~"Net~~“Net borrowings on affiliate accounts ~~payable"~~payable” in the investing and financing sections, respectively, in the unaudited condensed consolidated and combined statements of cash flows. Interest income was earned if an affiliate was a net lender to the cash pool and paid if an affiliate was a net borrower from the cash pool based on a variable interest rate determined historically by Huntsman. Venator exited the cash pooling program prior to the ~~Separation~~separation and all receivables and payables generated through the cash pooling program were settled in connection with the ~~Separation.~~

separation.

Notes Receivable and Payable of Venator to Huntsman

As of September 30, 2017 and December 31, 2016, Venator had notes receivable outstanding from affiliates of nil and $57 million, respectively, and notes payable outstanding to affiliates totaling nil and $882 million, respectively. The borrowers and lenders were subsidiaries of Huntsman International and the notes were unsecured.

Substantially all Huntsman receivables or payables were eliminated in connection with the ~~Separation,~~separation, other than a payable to Huntsman for a liability pursuant to the Tax Matters Agreement dated August 7, 2017, by and among Venator Materials PLC and Huntsman ~~Corporation~~ (the “Tax Matters Agreement”) entered into at the time of the ~~Separation~~separation which

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has been presented as “Noncurrent payable to affiliates” on our unaudited condensed consolidated and combined balance sheet. See ~~“Note~~“Note 9. Income ~~Taxes”~~Taxes” for further discussion.

A/R Programs

Certain of our entities participated in the accounts receivable securitization programs ("A/R Programs") sponsored by Huntsman International. Under the A/R Programs, such entities sold certain of their trade receivables to Huntsman International. Huntsman International granted an undivided interest in these receivables to a special purpose entity, which served as security for the issuance of debt of Huntsman International. On April 21, 2017, Huntsman International amended its accounts receivable securitization facilities, which, among other things, removed existing receivables sold into the program by Venator and at which time we discontinued our participation in the A/R Programs.

~~As of December 31, 2016, Huntsman International had $106 million of net receivables in their A/R Programs and reflected on their balance sheet associated with Venator.~~

The entities’ allocated losses on the A/R Programs for the three and six months ended ~~September 30, 2016 was $1 million, and for the nine months ended September~~June 30, 2017 was nil and ~~2016 were~~ $1 ~~million and $4~~ million, respectively. The allocation of losses on sale of accounts receivable is based upon the pro-rata portion of total receivables sold into the securitization program as well as other program and interest expenses associated with the A/R Programs.

~~Compliance with Covenants~~

We believe that we are in compliance with the covenants contained in the agreements governing our material financing arrangements, including our Senior Credit Facilities and our Senior Notes. Our material financing agreements are subject to affirmative and negative covenants which are customary for secured financings of this type and include financial covenants for interest coverage and total leverage ratios.

A failure to comply with a covenant could result in a default under a material financing arrangement unless we obtained an appropriate waiver or forbearance (as to which we can provide no assurance). A default under these material financing arrangements generally allows debt holders the option to declare the underlying debt obligations immediately due and payable. Furthermore, certain of our material financing arrangements contain cross-default and cross-acceleration provisions under which a failure to comply with the covenants in one material financing arrangement may result in an event of default under another material financing ~~arrangement. If in the future we fail to comply with the~~

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~~financial covenants of our material financing arrangements, we may not have access to the liquidity provided by these financing arrangements.~~

~~NOTE~~

Note 8. ~~DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES~~

~~Venator~~Derivative Instruments and Hedging Activities

To reduce cash flow volatility from foreign currency fluctuations, we enter into forward and swap contracts to hedge portions of cash flows of certain foreign currency transactions. We do not use derivative financial instruments for trading or speculative purposes.

In December 2017, we entered into three cross-currency swap agreements to convert a portion of our intercompany fixed-rate, U.S. dollar denominated notes, including the semi-annual interest payments and the payment of remaining principal at maturity, to a fixed-rate, Euro denominated debt. The economic effect of the swap agreement was to eliminate the uncertainty of the cash flows in U.S. Dollars associated with the notes by fixing the principle amount at €169 million with a fixed annual rate of 3.43%. These hedges have been designated as cash flow hedges and the critical terms of the cross-currency swap agreements correspond to the underlying hedged item. These swaps mature in July 2022, which is our best estimate of the repayment date of these intercompany loans. The amount and timing of the semi-annual principle payments under the cross-currency swap also correspond with the terms of the intercompany loans. Gains and losses from these hedges offset the changes in the value of interest and principal payments as a result of changes in foreign exchange rates.

We formally assessed the hedging relationship at the inception of the hedge in order to determine whether the derivatives that are used in the hedging transactions are highly effective in offsetting cash flows of the hedged item and we will continue to assess the relationship on an ongoing basis. We use the hypothetical derivative method in conjunction with regression analysis to measure effectiveness of our cross-currency swap agreement. The portion of the hedge that is ineffective will be recorded in earnings in other income. We did not record any ineffectiveness during 2018.

The effective portion of the changes in the fair value of the swaps are deferred in other comprehensive loss and subsequently recognized in other income, net in the unaudited condensed consolidated and combined statements of operations when the hedged item impacts earnings. Cash flows related to our cross currency swap that relate to our periodic interest settlement will be classified as operating activities and the cash flows that relates to principal balances will be designated as financing activities. The fair value of these hedges was nil and $5 million at June 30, 2018 and December 31, 2017, respectively, and was recorded as other long-term liabilities on our unaudited condensed consolidated and combined balance sheets. We estimate the fair values of our cross currency swaps by taking into consideration valuations obtained from a third-party valuation service that utilizes an income-based industry standard valuation model for which all significant inputs are observable either directly or indirectly. These inputs include foreign currency exchange rates, credit default swap rates and cross-currency basis swap spreads. The cross currency swap has been classified as Level 2 because the fair value is based upon observable market-based inputs or unobservable inputs that are corroborated by market data.

For the six months ended June 30, 2018, the change in accumulated other comprehensive loss associated with these cash flow hedging activities was a gain of approximately $5 million. As of June 30, 2018, accumulated

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comprehensive loss of nil is expected to be reclassified to earnings during the next twelve months. The actual amount that will be reclassified to earnings over the next twelve months may vary from this amount due to changing market conditions.

We would be exposed to ~~market risks associated with foreign exchange risk. Venator’s cash flows~~credit losses in the event of nonperformance by a counterparty to our derivative financial instruments. We continually monitor our position and ~~earnings are subject to fluctuations due to exchange rate variation. Venator’s revenues~~the credit rating of our counterparties, and ~~expenses are denominated~~we do not anticipate nonperformance by the counterparties.

Forward Currency Contracts Not Designated as Hedges

We transact business in various foreign ~~currencies. Venator enters~~currencies and we enter into currency forward contracts to offset the risk associated with the risks of foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, Venator generally nets multicurrency cash balances among its subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of three months or less). Venator does not hedge its foreign currency exposures in a manner that would eliminate the effect of changes in exchange rates on its cash flowsexposure. At June 30, 2018 and ~~earnings. At September 30,~~December 31, 2017 ~~Venator~~we had approximately ~~$84~~$93 million inand $109 million, respectively, notional amount (in U.S. dollar equivalents) outstanding ~~with maturities of approximately one month.~~

Prior to the Separation, Huntsman International, or its subsidiaries, entered into foreign currency derivatives on Venator’s behalf. As of December 31, 2016, Huntsman International or its subsidiaries, on behalf of Venator, had approximately $88 million in ~~notional amount (in U.S. dollar equivalents) outstanding, respectively, in forward~~ foreign currency contracts with a term of approximately one month.

~~NOTE~~ The contracts are valued using observable market rates (Level 2).

Note 9. ~~INCOME TAXES~~

Income Taxes

Venator uses the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed on a tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets for each jurisdiction. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider the cyclicality of Venator and cumulative income or losses during the applicable period. Cumulative losses incurred over the period limits our ability to consider other subjective evidence such as our projections for the future. Changes in expected future income in applicable tax jurisdictions could affect the realization of deferred tax assets in those jurisdictions.

We recorded income tax expense of ~~$14~~$45 million and ~~income tax benefit of $7~~$16 million for the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, respectively, and income tax expense of ~~$26~~$65 million and ~~income tax benefit of $14~~$12 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, respectively. Our tax expense is significantly affected by the mix of income and losses in tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions.

For U.S. federal income tax purposes Huntsman will recognize a gain as a result of the internal restructuring and IPO to the extent the fair market value of the assets associated with our U.S. businesses exceeded the basis of such assets for U.S. federal income tax purposes at the time of the ~~Separation.~~separation. As a result of such gain recognized, the basis of the assets associated with our U.S. businesses has increased. This basis step up ~~gives~~gave rise to a deferred tax asset of ~~$77~~$36 million that we ~~have~~ recognized ~~during~~for the ~~quarter.~~

year ended December 31, 2017.

Pursuant to the Tax Matters Agreement entered into at the time of the ~~Separation,~~separation, we are required to make a future payment to Huntsman for any actual U.S. federal income tax savings we recognize as a result of any such basis increase for tax years through December 31, 2028. It is currently estimated (based on a value of our U.S. businesses derived from the IPO price of our ordinary shares and current tax rates) that the aggregate future payments required by this provision are expected to be approximately ~~$73~~$34 million. We ~~have~~ recognized a noncurrent liability for this amount ~~as of September 30,~~at December 31, 2017. Moreover, any subsequent adjustment asserted by U.S. taxing authorities could increase the amount of gain recognized and the corresponding basis increase, and could result in a higher liability for us under the Tax Matters Agreement.

On December 22, 2017, the U.S. government enacted the Tax Act into law. The Tax Act made broad and complex changes to the U.S. tax code that will impact the Company, including but not limited to (1) a reduction of the U.S. federal corporate income tax rate from 35% to 21%, (2) immediate expensing of certain qualified property, (3) limitations on the deductibility of interest expense and (4) the creation of the base erosion anti-abuse tax, a new minimum tax.

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~~NOTE~~

The Securities and Exchange Commission (the "SEC") staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

For the year ended December 31, 2017 we recorded a provisional decrease to our net deferred tax assets of $3 million, with a corresponding net deferred tax expense of $3 million. While we were able to make a reasonable estimate of the impact of the reduction in corporate rate, it may be affected by other analyses related to the Tax Act, including, but not limited to, return to accrual adjustments including completion of computations and analysis of 2017 expenditures that qualify for immediate expensing.

For the period ended June 30, 2018 we have not made any additional measurement-period adjustments related to deferred taxes during the quarter as we have not yet completed our accounting for the income tax effects of certain elements of the Tax Act. As we complete our analysis of the Tax Act, collect and prepare necessary data, and interpret any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, we may adjust the provisional amounts. Those adjustments may materially impact our provision for income taxes in the period in which the adjustments are made. We expect to complete our accounting within the prescribed measurement period.

Note 10. ~~EARNINGS (LOSSES) PER SHARE~~

Earnings Per Share

Basic earnings ~~(losses)~~ per share excludes dilution and is computed by dividing net income ~~(loss)~~ attributable to Venator ordinary shareholders by the weighted average number of shares outstanding during the period. Diluted earnings ~~(losses)~~ per share reflects all potential dilutive ordinary shares outstanding during the period and is computed by dividing net income ~~(loss)~~ available to Venator ordinary shareholders by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities. For the periods prior to our IPO, the average number of ordinary shares outstanding used to calculate basic and diluted earnings ~~(losses)~~ per share was based on the ordinary shares that were outstanding at the time of our IPO.

Basic and diluted earnings ~~(losses)~~ per share isare determined using the following information:

Three months ended

Nine months ended

September 30,

September 30,
(In millions)

2017

2016

2017

2016
Numerator:

Basic and diluted income (loss) from continuing operations:

Income (loss) from continuing operations attributable to Venator

$
51

$
(7)

$
58

$
(89)
Basic and diluted net income (loss):

Net income (loss) attributable to Venator

$
51

$
(5)

$
66

$
(81)
Denominator:

Weighted average shares outstanding

106.3

106.3

106.3

106.3
Dilutive share-based awards

0.3

—

0.3

—
Total weighted average shares outstanding, including dilutive shares

106.6

106.3

106.6

106.3



	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Numerator:
Basic and diluted income from continuing operations:
Income from continuing operations attributable to Venator Materials PLC ordinary shareholders	$	196	$	31	$	274	$	7
Basic and diluted income from discontinued operations:
Income from discontinued operations attributable to Venator Materials PLC ordinary shareholders	$	—	$	—	$	—	$	8
Basic and diluted net income:
Net income attributable to Venator Materials PLC ordinary shareholders	$	196	$	31	$	274	$	15
Denominator:
Weighted average shares outstanding	106.4		106.3		106.4		106.3
Dilutive share-based awards	0.3		—		0.4		—
Total weighted average shares outstanding, including dilutive shares	106.7		106.3		106.8		106.3

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For each of the three and six months ended June 30, 2018 and 2017, the number of anti-dilutive employee share-based awards excluded from the computation of diluted EPS was not significant.

~~NOTE~~

Note 11. ~~COMMITMENTS AND CONTINGENCIES~~

Commitments and Contingencies

Legal Proceedings

Antitrust Matters

WeIn the past, we were named as a defendant in ~~consolidated class action~~multiple civil antitrust suits ~~filed on February 9 and 12, 2010 in the U.S. District Court for the District of Maryland~~ alleging that we, our co-defendants and other alleged co-conspirators conspired to fix prices of TiO₂ sold in the U.S. ~~The other defendants named in this matter were E. I. du Pont de Nemours~~We settled litigation involving both direct purchasers of TiO₂ and ~~Company ("DuPont"), Kronos and National Titanium Dioxide Company, Ltd. ("Cristal") (formerly Millennium). On August 28, 2012,~~purchasers who opted out of the ~~court certified a class consisting of all U.S. customers who purchased TiO~~₂ ~~directly from the defendants (the "Direct Purchasers") since February 1, 2003. On December 13, 2013, we and all other defendants settled the Direct Purchasers~~direct purchaser litigation ~~and the court approved the settlement. We paid the settlement in an amount~~for amounts immaterial to our unaudited condensed consolidated and combined financial statements.

On November 22, 2013, we were named as a defendant in a civil antitrust suit filed in the U.S. District Court for the District of Minnesota brought by a Direct Purchaser who opted out of the Direct Purchasers class litigation (the "Opt-Out Litigation"). On April 21, 2014, the court severed the claims against us from the other defendants sued and ordered our case transferred to the U.S. District Court for the Southern District of Texas. Subsequently, Kronos, another defendant, was also severed from the Minnesota case and claims against it were transferred and consolidated for trial with our case in the Southern District of Texas. On February 26, 2016, we reached an agreement to settle the Opt-Out Litigation and subsequently paid the settlement in an amount immaterial to our condensed consolidated and combined financial statements.

We were also named as a defendant in a class action civil antitrust suit filed on March 15, 2013 in the U.S. District Court for the Northern District of California by ~~the~~ purchasers of products made from TiO₂ (the ~~"Indirect Purchasers"~~“Indirect Purchasers”) making essentially the same allegations as did the ~~Direct Purchasers.~~direct purchasers. On October 14, 2014, plaintiffs filed their Second Amended Class Action Complaint narrowing the class of plaintiffs to those merchants and consumers of architectural coatings containing TiO₂. On August 11, 2015, the court granted our motion to dismiss the Indirect Purchasers litigation with leave to amend the complaint. A Third Amended Class Action Complaint was filed on September 29, 2015 further limiting the class to consumers of architectural paints. Plaintiffs have raised state antitrust claims under the laws of 15 states, consumer protection claims under the laws of nine states, and unjust enrichment

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claims under the laws of 16 states. On November 4, 2015, we and our co-defendants filed another motion to dismiss. On June 13, 2016, the court substantially denied the motion to dismiss except as to consumer protection claims in one state. ~~The parties~~We have ~~entered into a settlement, subject~~agreed to ~~court approval, for an amount immaterial to our condensed consolidated and combined financial statements.~~

On August 23, 2016, we were named as a defendant in a fourth civil antitrust suit filed in the U.S. District Court for the Northern District of California by an Indirect Purchaser, Home Depot. Home Depot is an Indirect Purchaser primarily through paints it purchases from various manufacturers. We settledsettle this matter for an amount immaterial to our unaudited condensed consolidated and combined financial ~~statements~~statements. The court preliminarily approved the settlement on December 13, 2017 and the ~~court dismissed~~final approval hearing is expected to occur in the ~~case on May 31, 2017.~~

~~These~~fourth quarter of 2018.

The Indirect Purchasers ~~seek~~sought to recover injunctive relief, treble damages or the maximum damages allowed by state law, costs of suit and ~~attorneys'~~attorneys’ fees. We are not aware of any illegal conduct by us or any of our employees.

Other Proceedings

We are a party to various other proceedings instituted by private plaintiffs, governmental authorities and others arising under provisions of applicable laws, including various environmental, products liability and other laws. Except as otherwise disclosed in these ~~condensed~~ consolidated and combined financial statements, we do not believe that the outcome of any of these matters will have a material effect on our financial condition, results of operations or liquidity.

~~NOTE~~

Note 12. ~~ENVIRONMENTAL, HEALTH AND SAFETY MATTERS~~

Environmental, Health and Safety Matters

Environmental, Health and Safety Capital Expenditures

We may incur future costs for capital improvements and general compliance under EHS laws, including costs to acquire, maintain and repair pollution control equipment. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, our capital expenditures for EHS matters totaled $5$3 million, ~~and $7 million, respectively.~~each. Because capital expenditures for these matters are subject to evolving regulatory requirements and depend, in part, on the timing, promulgation and enforcement of specific requirements, our capital expenditures for EHS matters have varied significantly from year to year and we cannot provide assurance that our recent expenditures are indicative of future amounts we may spend related to EHS and other applicable laws.

~~Environmental Reserves~~

We accrue liabilities relating to anticipated environmental cleanup obligations, site reclamation and closure costs, and known penalties. Liabilities are recorded when potential liabilities are either known or considered probable and can be reasonably estimated. Our liability estimates are calculated using present value techniques as appropriate and are based upon requirements placed upon us by regulators, available facts, existing technology, and past experience. The environmental liabilities do not include amounts recorded as asset retirement obligations. As of September 30, 2017 and December 31, 2016, we had environmental reserves of $12 million, each. We may incur losses for environmental remediation.

Environmental Matters

We have incurred and we may in the future incur, liability to investigate and clean up waste or contamination at our current or former facilities or facilities operated by third parties at which we may have disposed of waste or other

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materials. Similarly, we may incur costs for the cleanup of waste that was disposed of prior to the purchase of our businesses. Under some circumstances, the scope of our liability may extend to damages to natural resources.

Under the Comprehensive Environmental Response, Compensation, and Liability Act ~~("CERCLA"~~(“CERCLA”) and similar state laws, a current or former owner or operator of real property in the U.S. may be liable for remediation costs regardless of whether the release or disposal of hazardous substances was in compliance with law at the time it occurred, and a current owner or operator may be liable regardless of whether it owned or operated the facility at the time of the release. Outside the U.S., analogous contaminated property laws, such as those in effect in France, can hold past owners and/or operators liable for remediation at former facilities. We have not been notified by third parties of claims against us for cleanup liabilities at former facilities or third-party sites, including, but not limited to, sites listed under CERCLA.

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Under the Resource Conservation and Recovery Act in the U.S. and similar state laws, we may be required to remediate contamination originating from our properties as a condition to our hazardous waste permit. Some of our manufacturing sites have an extended history of industrial chemical manufacturing and use, including on-site waste ~~disposal.~~disposal and we have made accruals for related remediation activity. We are aware of soil, groundwater or surface contamination from past operations at some of our sites and have made accruals for related remediation activity, and we may find contamination at other sites in the future. Similar laws exist in a number of locations in which we currently operate, or previously operated, manufacturing facilities, such as France and Italy.

~~NOTE~~

Environmental Reserves

We accrue liabilities relating to anticipated environmental cleanup obligations, site reclamation and closure costs, and known penalties. Liabilities are recorded when potential liabilities are either known or considered probable and can be reasonably estimated. Our liability estimates are calculated using present value techniques as appropriate and are based upon requirements placed upon us by regulators, available facts, existing technology, and past experience. The environmental liabilities do not include amounts recorded as asset retirement obligations. As of June 30, 2018 and December 31, 2017, we had environmental reserves of $11 million and $12 million, respectively. We may incur losses for environmental remediation.

Note 13. ~~OTHER COMPREHENSIVE INCOME (LOSS)~~

Other Comprehensive Income (Loss)

Other comprehensive income (loss) consisted of the following:

Pension and other

Other






Foreign

postretirement

comprehensive

Amounts

currency

benefits

income of

attributable to

Amounts

translation

adjustments,

unconsolidated

noncontrolling

attributable to
(Dollars in millions)

adjustment(a)

net of tax(b)

affiliates

Total

interests

Venator
Beginning balance, January 1, 2017

$
(112)

$
(306)

$
(5)

$
(423)

$
—

$
(423)
Adjustments related to other entities under common control

5

24

—

29

—

29
Tax expense

—

(3)

—

(3)

—

(3)
Other comprehensive income before reclassifications

68

3

—

71

—

71
Tax benefit

2

1

—

3

—

3
Amounts reclassified from accumulated other comprehensive loss, gross(c)

—

11

—

11

—

11
Tax expense

—

—

—

—

—

—
Net current-period other comprehensive income

75

36

—

111

—

111
Ending balance, September 30, 2017

$
(37)

$
(270)

$
(5)

$
(312)

$
—

$
(312)

Pension and other

Other






Foreign

postretirement

comprehensive

Amounts

currency

benefits

income of

attributable to

Amounts

translation

adjustments,

unconsolidated

noncontrolling

attributable to
(Dollars in millions)

adjustment(d)

net of tax(e)

affiliates

Total

interests

Venator
Beginning balance, January 1, 2016

$
(144)

$
(252)

$
(5)

$
(401)

$
—

$
(401)
Adjustments related to other entities under common control

2

1

—

3

—

3
Tax expense

—

—

—

—

—

—
Other comprehensive (loss) income before reclassifications

(92)

7

—

(85)

—

(85)
Tax expense

(1)

(1)

—

(2)

—

(2)
Amounts reclassified from accumulated other comprehensive loss, gross(c)

—

8

—

8

—

8
Tax benefit

—

1

—

1

—

1
Net current-period other comprehensive (loss) income

(91)

16

—

(75)

—

(75)
Ending balance, September 30, 2016

$
(235)

$
(236)

$
(5)

$
(476)

$
—

$
(476)



	Foreign currency translation adjustment^(a)			Pension and other postretirement benefits adjustments net of tax^(b)			Other comprehensive loss of unconsolidated affiliates			Hedging Instruments			Total			Amounts attributable to noncontrolling interests		Amounts attributable to Venator
Beginning balance, January 1, 2018	$	(6	)	$	(267	)	$	(5	)	$	(5	)	$	(283	)	$	—	$	(283	)
Other comprehensive loss before reclassifications	(58		)	—			—			5			(53		)	—		(53		)
Tax benefit	—			—			—			—			—			—		—
Amounts reclassified from accumulated other comprehensive loss, gross^(c)	—			7			—			—			7			—		7
Tax expense	—			—			—			—			—			—		—
Net current-period other comprehensive (loss) income	(58		)	7			—			5			(46		)	—		(46		)
Ending balance, June 30, 2018	$	(64	)	$	(260	)	$	(5	)	$	—		$	(329	)	$	—	$	(329	)

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	Foreign currency translation adjustment^(d)			Pension and other postretirement benefits adjustments net of tax^(e)			Other comprehensive loss of unconsolidated affiliates			Total			Amounts attributable to noncontrolling interests		Amounts attributable to Venator
Beginning balance, January 1, 2017	$	(112	)	$	(306	)	$	(5	)	$	(423	)	$	—	$	(423	)
Adjustments due to discontinued operations	5			24			—			29			—		29
Tax expense	—			(3		)	—			(3		)	—		(3		)
Other comprehensive income before reclassifications	72			—			—			72			—		72
Tax expense	2			—			—			2			—		2
Amounts reclassified from accumulated other comprehensive loss, gross^(c)	—			7			—			7			—		7
Tax benefit	—			—			—			—			—		—
Net current-period other comprehensive income	79			28			—			107			—		107
Ending balance, June 30, 2017	$	(33	)	$	(278	)	$	(5	)	$	(316	)	$	—	$	(316	)


	~~(a)~~


^(a)	Amounts are net of tax of ~~$2 million and~~ nil as of ~~September~~June 30, ~~2017~~2018 and January 1, ~~2017, respectively.~~ 2018, each.


^(b)		Amounts are net of tax of ~~$54 million and $56~~$52 million as of ~~September~~June 30, ~~2017~~2018 and January 1, ~~2017, respectively.~~ 2018, each.


^(c)		See table below for details about the amounts reclassified from accumulated other comprehensive loss.


^(d)		~~Amounts include a tax benefit of $1 million and nil as of September 30, 2016 and January 1, 2016, respectively.~~

~~(e)~~

Amounts are net of tax of ~~$60~~$2 million ~~at September~~and nil as of June 30, ~~2016~~2017 and January 1, ~~2016, each.~~

2017, respectively.

^(e)

Amounts are net of tax of $53 million and $56 million as of June 30, 2017 and January 1, 2017, respectively.



	Three months ended June 30,					Six months ended June 30,					Affected line item in the statement
	2018		2017			2018		2017			where net income is presented
Details about Accumulated Other Comprehensive Loss Components^(a):
Amortization of pension and other postretirement benefits:
Actuarial loss	$	4	$	4		$	7	$	8		^(b)
Prior service credit	—		(1		)	—		(1		)	^(b)
Total amortization	4		3			7		7			Total before tax
Income tax expense	—		—			—		—			Income tax expense
Total reclassifications for the period	$	4	$	3		$	7	$	7		Net of tax

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Three months ended

Nine months ended


September 30,

September 30,

Affected line item in the statement
(Dollars in millions)

2017

2016

2017

2016

where net income is presented
Details about Accumulated Other Comprehensive Loss Components(a):

Amortization of pension and other postretirement benefits:










Actuarial loss

$
5

$
3

$
13

$
8

(b)
Prior service credit

(1)

—

(2)

—

(b)
Total amortization

4

3

11

8

Total before tax
Income tax benefit

—

—

—

1

Income tax (expense) benefit
Total reclassifications for the period

$
4

$
3

$
11

$
9

Net of tax


	~~(a)~~


^(a)	Pension and other postretirement benefit amounts in parentheses indicate credits on our consolidated statements of operations.


^(b)		These accumulated other comprehensive loss components are included in the computation of net periodic pension costs.

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~~NOTE~~

Note 14. ~~OPERATING SEGMENT INFORMATION~~

Operating Segment Information

We derive our revenues, earnings and cash flows from the manufacture and sale of a wide variety of commodity chemical products. We have reported our operations through our two segments, Titanium Dioxide and Performance Additives, and organized our business and derived our operating segments around differences in product lines. We have historically conducted other business within components of legal entities we operated in conjunction with Huntsman businesses, and such businesses are included within the corporate and other line item below.

The major product groups of each reportable operating segment are as follows:


~~Segment~~		~~Product Group~~
~~Titanium Dioxide~~ Segment		~~titanium dioxide~~ Product Group
Titanium Dioxide		titanium dioxide
Performance Additives		functional additives, color pigments, timber treatment and water treatment chemicals

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Sales between segments are generally recognized at external market prices and are eliminated in consolidation. Adjusted EBITDA is presented as a measure of the financial performance of our global business units and for reporting the results of our operating segments. The revenues and adjusted EBITDA for each of the two reportable operating segments are as follows:

Three months ended

Nine months ended

September 30,

September 30,
(Dollars in millions)

2017

2016

2017

2016
Revenues:








Titanium Dioxide

$
431

$
392

$
1,217

$
1,197
Performance Additives

151

140

464

451
Total

$
582

$
532

$
1,681

$
1,648
Segment adjusted EBITDA(1)








Titanium Dioxide

$
127

$
22

$
268

$
28
Performance Additives

15

16

57

56

142

38

325

84
Corporate and other

(8)

(17)

(48)

(46)
Total

$
134

$
21

$
277

$
38
Reconciliation of adjusted EBITDA to net income (loss):








Interest expense

(30)

(14)

(54)

(44)
Interest income

22

2

25

13
Income tax (expense) benefit - continuing operations

(14)

7

(26)

14
Depreciation and amortization

(35)

(30)

(95)

(84)
Net income attributable to noncontrolling interests

2

3

8

8
Other adjustments:








Business acquisition and integration expenses

(4)

(3)

(2)

(11)
Gain on disposition of businesses/assets

—

23

—

23
Net income of discontinued operations, net of tax

—

2

8

8
Certain legal settlements and related expenses

—

—

(1)

(1)
Amortization of pension and postretirement actuarial losses

(5)

(3)

(13)

(8)
Net plant incident (costs) credits

(1)

(3)

(4)

2
Restructuring, impairment and plant closing costs

(16)

(7)

(49)

(31)
Net income (loss)

$
53

$
(2)

$
74

$
(73)



	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
Revenues:
Titanium Dioxide	$	455		$	401		$	911		$	786
Performance Additives	171			161			337			313
Total	$	626		$	562		$	1,248		$	1,099
Segment adjusted EBITDA⁽¹⁾
Titanium Dioxide	$	147		$	93		$	290		$	141
Performance Additives	23			21			47			42
	170			114			337			183
Corporate and other	(13		)	(20		)	(23		)	(40		)
Total	157			94			314			143
Reconciliation of adjusted EBITDA to net income:
Interest expense	(14		)	(10		)	(27		)	(24		)
Interest income	4			1			7			3
Income tax expense - continuing operations	(45		)	(16		)	(65		)	(12		)
Depreciation and amortization	(35		)	(29		)	(69		)	(59		)
Net income attributable to noncontrolling interests	2			3			4			6
Other adjustments:
Business acquisition and integration expenses	(2		)	—			(4		)	—
Separation expense, net	—			—			(1		)	—
Net income of discontinued operations, net of tax	—			—			—			8
Loss on disposition of business/assets	(2		)	—			(2		)	—
Amortization of pension and postretirement actuarial losses	(4		)	(4		)	(7		)	(8		)
Net plant incident credits (costs)	273			2			273			(3		)
Restructuring, impairment and plant closing and transition costs	(136		)	(7		)	(145		)	(33		)
Net income	$	198		$	34		$	278		$	21


	~~(1)~~

⁽¹⁾

Adjusted EBITDA is defined as net income ~~(loss)~~ of Venator before interest, income tax from continuing operations, depreciation and amortization and net income attributable to noncontrolling interests, as well as eliminating the following adjustments from net ~~income (loss):~~income: (a) business acquisition and integration expenses; (b) gain on disposition of businesses/assets (c) net income of discontinued operations, net of income tax; (d) certain legal settlements and related expenses; (e) amortization of pension and postretirement actuarial losses; (f) net plant incident credits (costs); and (g) restructuring, impairment and plant closing costs.

separation expense,

~~NOTE 15. RELATED PARTY TRANSACTIONS~~

~~Venator is party to a variety of transactions and agreements with Huntsman, their former parent and controlling shareholder.~~

~~Corporate Cost Allocations~~

Prior to the Separation, Huntsman’s executive, information technology, EHS and certain other corporate departments performed certain administrative and other services for Venator. Additionally, Huntsman performed certain site services for Venator. Expenses incurred by Huntsman and allocated to Venator were determined based on specific services provided or were allocated based on Venator’s total revenues, total assets, and total employees in proportion to those of Huntsman. Management believes that such expense allocations are reasonable. Corporate allocations include allocated selling, general, and administrative expenses of $9 million and $27 million for the three months ended

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~~September 30, 2017~~

net; (c) net income of discontinued operations, net of tax; (d) loss on disposition of business/assets; (e) amortization of pension and ~~2016, respectively,~~postretirement actuarial losses; (f) net plant incident credits (costs); and ~~$62 million~~(g) restructuring, impairment, and ~~$76 million for the nine months ended September 30, 2017~~plant closing and ~~2016, respectively.~~

~~Material Agreements between Venator and Huntsman~~

On August 11, 2017, Venator entered into a separation agreement with Huntsman to effect the Separation and to provide a framework for the relationship with Huntsman. This agreement governs the relationship between Venator and Huntsman subsequent to the completion of the Separation and provides for the allocation between Venator and Huntsman of assets, liabilities and obligations attributable to periods prior to the Separation. Because these agreements were entered into in the context of a related party transaction, the terms may not be comparable to terms that would be obtained in a transaction between unaffiliated parties.

~~Other Transactions~~

See descriptions of our financing arrangements with Huntsman before and after the Separation in “Note 7. Debt” and “Note 8. Derivative Instruments and Hedging Activities.” See description of our arrangement with Huntsman as part of the separation in “Note 9. Income Taxes.”

transition costs.

~~Table of Contents~~

Note 15. Discontinued Operations

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

The following table summarizes the operations data for discontinued operations:



	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Revenues:
Trade sales, services and fees, net	$	—	$	—	$	—	$	15
Related party sales	—		—		—		17
Total revenues	—		—		—		32
Cost of goods sold	—		—		—		26
Operating expenses:
Selling, general and administrative (includes corporate allocations of nil, nil, nil and $2, respectively)	—		—		—		(7		)
Restructuring, impairment and plant closing costs	—		—		—		1
Other income, net	—		—		—		1
Total operating expenses	—		—		—		(5		)
Income from discontinued operations before tax	—		—		—		11
Income tax expense	—		—		—		(3		)
Net income from discontinued operations	$	—	$	—	$	—	$	8

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our unaudited condensed consolidated and combined financial statements and the related notes included in Item 1 hereto as well as the risk factors contained in “Part ~~II.~~I. Item 1A. Risk ~~Factors.”~~

Factors” of our 2017 Form 10-K.

Except when the context otherwise requires or where otherwise indicated, (1) all references to ~~"Venator,"~~“Venator,” the ~~"Company," "we," "us"~~“Company,” “we,” “us” and ~~"our"~~“our” refer to Venator Materials PLC and its subsidiaries, or, as the context requires, the historical Pigments and Additives business of Huntsman, (2) all references to ~~"Huntsman"~~“Huntsman” refer to Huntsman Corporation, our controlling shareholder, and its subsidiaries, ~~other than us,~~ (3) all references to the ~~"Titanium Dioxide"~~“Titanium Dioxide” segment or business refer to the TiO₂ business of Venator, or, as the context requires, the historical Pigments and Additives segment of Huntsman and the related operations and assets, liabilities and obligations, (4) all references to the ~~"Performance Additives"~~“Performance Additives” segment or business refer to the functional additives, color pigments, timber treatment and water treatment businesses of Venator, or, as the context requires, the Pigments and Additives segment of Huntsman and the related operations and assets, liabilities and obligations, (5) all references to ~~"other businesses"~~“other businesses” refer to certain businesses that Huntsman retained in connection with the ~~Separation~~separation and that are reported as discontinued operations in our ~~condensed~~ consolidated and combined financial statements, (6) all references to ~~"Huntsman International"~~“Huntsman International” refer to Huntsman International LLC, a wholly-owned subsidiary of Huntsman and the entity through which Huntsman operates all of its businesses, ~~and~~ (7) we refer to the internal reorganization prior to our initial public offering ~~(our “IPO”~~("IPO"), the separation transactions initiated to separate the Venator business from Huntsman’s other businesses, including the entry into and effectiveness of the separation agreement and ancillary agreements, and the ~~Senior~~financing arrangements and debt, comprising the senior secured term loan facility (the "Term Loan Facility"), the asset-based revolving facility (the "ABL Facility" and, together with the Term Loan Facility, the "Senior Credit ~~Facilities (defined below)~~Facilities") and ~~Senior Notes (defined below)~~the 5.75% senior notes due 2025 (the "Senior Notes"), including the use of the net proceeds of the Senior Credit Facilities and the Senior Notes, which were used to repay intercompany debt we owed to Huntsman and to pay related fees and expenses, as the ~~"Separation"~~ “separation” and (8) the “Rockwood acquisition” refers to Huntsman’s acquisition of the performance and additives and TiO₂ businesses of Rockwood Holdings, Inc. (“Rockwood”) completed on October 1, 2014.

This MD&A contains forward-looking statements concerning trends or events potentially affecting our business or future performance, including, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions. The words "aim," "anticipate," "believe," "budget," "continue," "could," "effort," "estimate," "expect," "forecast," "goal," "guidance," "intend," "likely," "may," "might," "objective," "outlook," "plan," "potential," "predict," "project," "seek," "should," "target, "will"“aim,” “anticipate,” “believe,” “budget,” “continue,” “could,” “effort,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “likely,” “may,” “might,” “objective,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target, “will” or ~~"would"~~“would” and similar expressions identify forward-looking statements. We do not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements contained in this ~~Quarterly Report.~~report. See ~~"Note~~“Note Regarding Forward-Looking ~~Statements"~~Statements” and ~~"Risk~~“Part II. Item 1A. Risk Factors."

~~BASIS OF PRESENTATION~~

”

Basis of Presentation

Prior to the ~~Separation, Venator’s~~separation, our operations were included in Huntsman’s financial results in different legal forms, including but not limited to: (1) wholly-owned subsidiaries for which the Titanium Dioxide and Performance Additives businesses were the sole businesses; (2) legal entities which are comprised of other businesses and include the Titanium Dioxide and/or Performance Additives businesses; and (3) variable interest entities in which the Titanium Dioxide and Performance Additives businesses are the primary beneficiaries. The unaudited condensed consolidated and combined financial statements include all revenues, costs, assets, liabilities and cash flows directly attributable to ~~Venator.~~us. The unaudited condensed consolidated and combined financial statements also include allocations of direct and indirect corporate expenses through the date of the ~~Separation,~~separation, which are based upon an allocation method that in the opinion of management is reasonable. Because the historical unaudited condensed consolidated and combined financial information for the periods indicated reflect the combination of these legal entities under common control, the historical unaudited condensed consolidated and ~~consolidated~~combined financial information includes the results of operations of other Huntsman businesses that are not a part of our operations after the ~~Separation.~~separation. We report the results of those other businesses as discontinued ~~operations in “Note 3.~~operations. Please see “Part I. Item 1. Note 15. Discontinued ~~Operations.~~Operations”

of this report.

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In addition, the unaudited condensed consolidated and combined financial statements have been prepared from Huntsman’s historical accounting records through the ~~Separation~~separation and are presented on a stand-alone basis as if ~~Venator’s~~our operations had been conducted separately from Huntsman; however, prior to the ~~Separation, Venator~~separation, we did not operate as a separate, stand-alone entity for the periods presented and, as such, the unaudited condensed consolidated and combined financial

~~Table of Contents~~

statements reflecting balances and activity prior to the ~~Separation,~~separation, may not be indicative of the financial position, results of operations and cash flows had ~~Venator~~we been a stand-alone company.

~~EXECUTIVE SUMMARY~~

Executive Summary

We are a leading global manufacturer and marketer of chemical products that improve the quality of life for downstream consumers and promote a sustainable future. Our products comprise a broad range of innovative chemicals and formulations that bring color and vibrancy to buildings, protect and extend product life, and reduce energy consumption. We market our products globally to a diversified group of industrial customers through two segments: Titanium Dioxide, which consists of our TiO₂ business, and Performance Additives, which consists of our functional additives, color pigments, timber treatment and water treatment businesses. We are a leading global producer in many of our key product lines, including TiO₂, color pigments and functional additives, a leading North American producer of timber treatment products and a leading European producer of water treatment products.

~~RECENT DEVELOPMENTS~~

~~Initial Public Offering and Separation~~

Recent Developments

Potential Ashtabula Complex Acquisition

On ~~August 8, 2017,~~July 16, 2018, we ~~completed our IPO of 26,105,000 of our outstanding 106,271,712 ordinary shares, par value $0.001 per share~~announced that we reached an agreement with Tronox to purchase the European paper laminates business (the ~~“ordinary shares”~~“8120 Grade”) ~~which includes 3,405,000 ordinary shares issued~~from Tronox upon the ~~exercise in full by the underwriters~~closing of their option to purchase additional shares, at a public offering price of $20.00 per share. All of the ordinary shares were sold by Huntsman, and we did not receive any proceeds from the offering. The ordinary shares began trading August 3, 2017 on the New York Stock Exchange under the symbol “VNTR.” Following our IPO, Huntsman owns approximately 75% of Venator’s outstanding ordinary shares. ~~The material terms of our IPO are described in the Prospectus.~~

proposed merger with Cristal. In connection with the acquisition, Tronox would supply the 8120 Grade to us under a Transitional Supply Agreement until the transfer of the manufacturing of the 8120 Grade to our ~~IPO and the Separation, Venator and Huntsman entered into certain agreements~~Greatham, U.K. facility has been completed.

~~On August 15, 2017, we registered 14,025,000 ordinary shares on Form S-8 which are reserved in connection with awards under our 2017 Stock Incentive Plan.~~

~~Senior Credit Facilities and Senior Notes~~

~~On August 8, 2017, in connection with the IPO and the Separation,~~ we entered into ~~new financing arrangements~~an agreement with Tronox providing, among other things, that the parties will engage in exclusive negotiations until September 29, 2018 and ~~incurred new debt, including borrowings of $375 million under~~use our respective best efforts to achieve a ~~new senior secured term loan facility with a maturity of seven years (the “Term Loan Facility”). In addition to~~definitive agreement for the Term Loan Facility, we entered into a $300 million asset-based revolving lending facility with a maturity of five years (the “ABL Facility” and, together with the Term Loan Facility, the “Senior Credit Facilities”). On July 14, 2017, in connection with the IPO and the Separation, our subsidiaries Venator Finance S.à.r.l. and Venator Materials LLC (the “Issuers”), issued $375 million in aggregate principal amount of 5.75% of Senior Notes due 2025 (the “Senior Notes”). Promptly following consummationpurchase by us of the ~~Separation, the proceeds~~Ashtabula, Ohio complex currently owned by Cristal if a divestiture of the ~~Senior Notes were released from escrow and Venator used the net proceeds of the Senior Notes and borrowings under the Term Loan Facility~~Ashtabula complex is required for Tronox to ~~repay approximately $732 million of net intercompany debt owed to Huntsman and to pay related fees and expenses of approximately $18 million.~~

obtain approval for its proposed merger with Cristal.

Pori Fire

On January 30, 2017, our TiO₂ manufacturing facility in Pori, Finland experienced fire damage and we continue to repair the facility. The loss was covered by insurance for property damage as well as business interruption losses subject to retained deductibles of $15 million and 60 days, respectively. The Pori facility had a nameplate capacity of 130,000 metric tons per year, which represented approximately 17% of our total TiO₂ nameplate capacity and approximately 2% of total global TiO₂ demand. Prior to the fire, 60% of the site capacity produced specialty products which, on average, contributed greater than 75% of the site EBITDA from January 1, 2015 through January 30, 2017. ~~The Pori facility had~~We have restored 20% of the total prior capacity, which is dedicated to production of specialty products.

On April 13, 2018, we received a ~~nameplate capacity~~final payment from our insurers of up€191 million, or $236 million, bringing our total insurance receipts to ~~130,000 metric tons per year,~~€468 million, or $551 million, which ~~represented approximately 17%~~was the limit of our ~~total TiO~~₂ ~~capacity~~insurance proceeds. We elected to receive the insurance proceeds in Euro in order to match the currency of the related business interruption losses and ~~approximately 2%~~capital expenditures resulting from the Pori fire. For the six months ended June 30, 2018, we received €243 million, or $298 million, of ~~total global TiO~~₂ ~~demand. We are currently operating at 20% of total prior capacity~~

insurance proceeds, while €225 million, or $253 million, was received during 2017.

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~~but producing only specialty products, and we currently intend to restore manufacturing~~

During the second quarter of 2018, in conjunction with the receipt of the ~~balance~~final payment from our insurers, we recorded $325 million of ~~these more profitable specialty products by~~income in cost of goods sold in our consolidated statement of operations, which related to the ~~fourth quarter~~losses incurred to date and yet to be incurred. We recorded $371 million of ~~2018. The remaining 40%~~income related to property damage and business interruption insurance recoveries for the six months ended June 30, 2018 while $84 million was recognized for the six months ended June 30, 2017. Nil and $68 million was reported in accrued liabilities as of ~~site capacity is more commoditized~~June 30, 2018 and ~~we will determine if~~December 31, 2017, respectively.

We recorded a loss of $5 million and ~~when to rebuild this commoditized capacity depending on market conditions,~~$17 million for cleanup and other non-capital reconstruction costs in cost of goods sold for the six months ended June 30, 2018 and ~~projected long term returns relative to our other investment opportunities.~~

2017, respectively. We ~~have~~ recorded a loss of $31 million for the write-off of fixed assets and lost inventory in ~~other operating income, net~~cost of goods sold in our ~~condensed~~ consolidated and combined statements of operations for the ~~nine~~six months ~~ending September~~ended June 30, 2017. ~~In addition,~~

During the second quarter of 2018, we ~~recorded a loss~~engaged additional outside experts and hired and re-allocated additional internal resources for the Pori rebuild, with an objective of ~~$18 million of costs for cleanup~~improving both the execution and cost management of the project, and to update our view on the total cost of rebuilding the site. This process identified additional damage outside the immediate fire zone leading to increased costs.

Also during the quarter, our contractor on the site experienced a recent and significant safety incident, which paused construction for several weeks while the incident was under investigation, and has extended the reconstruction timeline. These recent changes have led us to believe now that a full rebuild and commissioning of our Pori facility ~~in other operating income, net through September 30, 2017. The site is insured for property damage as well as business interruption losses subject~~may require more self-funding than our previous estimate of $325 to ~~retained deductibles of $15~~$375 million, and ~~60 days, respectively, with a limit of $500 million. Due to prevailing strong market conditions, our TiO~~₂ selling prices continue to improve and our business is benefitting from the resulting improved profitability and cash flows. This also has the effect of increasing our total anticipated business interruption losses from the Pori site. We currently believe the combination of increased TiO₂ ~~profitability and recently estimated reconstruction costs will~~may result in ~~losses~~a longer period of time for project completion.

As a result of these recent developments and ~~costs~~ in ~~excess~~light of our ~~$500 million insurance limit.~~potential acquisition of the Ashtabula complex, we are reviewing options within our manufacturing network, including the option of transferring the production of Pori's specialty and differentiated products to elsewhere in our network, and are pacing our on-going construction activities at Pori accordingly during this period of review. We ~~currently~~ expect ~~to contain these over-the-limit costs within $100 million to $150 million, and~~ to account for ~~them~~our costs as capital ~~expenditures. However, these~~expenditures and fund them from cash from operations, which will decrease our liquidity in the periods those costs are preliminary estimates based on a number of significant assumptions, and as a result uninsured costs could exceed current estimates. Factors that could materially impact our current estimates include our actual future TiO₂ profitability and related impact on our business interruption losses; the accuracy of our current property damage estimates; the actual costs and timing of our reconstruction efforts; the extent to which we rebuild the 40% of site capacity that produces commoditized products; our ability to secure government subsidies related to our reconstruction efforts; and a number of other significant market and facility-related assumptions.incurred. Please see “Part ~~II.~~II, Item 1A. Risk Factors—Risks Relating to our Business—Disruptions in production at our manufacturing facilities, including at our TiO₂ manufacturing facility in Pori, ~~facility,~~Finland, may have a material adverse impact on our business, results of operations and/or financial condition.”

The fire at our Pori facility did not have a material impact on our 2017 third quarter operating results as losses incurred were offset by insurance proceeds. We received $141 million of non-refundable partial progress payments from our insurer through September 30, 2017

Recent Trends and we received an additional $112 million payment on October 9, 2017. During the first nine months of 2017, we recorded $128 million of income related to property damage and business interruption insurance recoveries in other operating income, net and cost of goods sold in our condensed consolidated and combined statements of operations to offset property damage and business interruption losses recorded during the period. We recorded $17 million as deferred income in accrued liabilities as of September 30, 2017 for insurance proceeds received for costs not yet incurred. The difference between payments received from our insurers of $141 million and the sum of income of $128 million and deferred income of $17 million is related to the foreign exchange movements of the U.S. Dollar against the Euro during the first nine months of the year.

~~RECENT TRENDS AND OUTLOOK~~

Outlook

We expect the following factors to impact our operating results in the near term:

TiO2 pricing environment to reflect regional dynamics and historical seasonal patters in the second half of 2018.

Increasing raw materials and energy costs.

Delivery on our $90 million Business Improvement Program continues.

	·
•		~~Favorable environment for TiO~~₂ ~~price increases in the fourth quarter of 2017~~

~~Seasonally lower sales volumes in the fourth quarter of 2017~~

~~We have established a process to receive timely advance insurance payments for the continued reconstruction~~Potential acquisition of the ~~Pori facility as well as for business interruption losses, subject to policy limits~~

Ashtabula, Ohio TiO₂ complex.

The Pori reconstruction and commissioning process is currently under review.

	·
•		~~Modest increases in raw material costs in the near term~~ Industry fundamentals support an elongated TiO₂ profitability profile.

We expect that our corporate and other costs will be approximately $50 million per year, consisting of $40 million of recurring selling, general and administrative costs to operate our business as a standalone public company, which is lower than expenses historically allocated to us from Huntsman, and approximately $10 million of costs that were previously embedded in the Huntsman Pigments and Additives division.

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We continue to implement ~~business improvements in~~ our ~~Titanium Dioxide and Performance Additives businesses,~~Business Improvement Program which we expect to be completed by the ~~end~~first quarter of ~~2018~~2019 and continue to provide contributions to ~~Adjusted~~adjusted EBITDA. Of the $60 million we previously estimated for annualized savings, we have already realized approximately ~~$15~~$37 million of savings through the ~~third~~second quarter of ~~2017~~2018 as a result of these ~~programs.~~programs, including over $6 million of savings realized in the second quarter of 2018. In addition to these savings, we achieved approximately $1 million of EBITDA from increased volumes as part of the Business Improvement Program. If successfully implemented, we

~~Table of Contents~~

expect the general cost reductions and optimization of our manufacturing network to result in additional ~~increases~~contributions to our adjusted EBITDA of approximately ~~$45~~$23 million per year by the first quarter of 2019, with additional projected ~~increases~~contributions to adjusted EBITDA from volume ~~growth (primarily via the launch of new products).~~

growth.

In ~~2017,~~2018, we expect to spend approximately ~~$90~~$120 million on capital expenditures, ~~net of reimbursements and~~ excluding reconstruction of our Pori, Finland facility.

Our tax expense is significantly affected by the mix of income and losses in tax jurisdictions in which we operate. We expect our adjusted long-term effective tax rate will be approximately 15% to 20%.

~~RESULTS OF OPERATIONS~~

We believe the impact of the Tax Act on our adjusted long-term effective tax rate will not be material, given the low percentage of our global pre-tax income earned in the United States. We expect our near-term cash tax rate will be between 10% to 15%. In addition, based on the recent years’ profitability in our Titanium Dioxide segment in the U.K. and Spain, we anticipate sufficient positive evidence to support the partial release of valuation allowances on certain net deferred tax assets in late 2018. Due to application of the local tax rules in the U.K. and Spain, which limit the amount of net operating loss carryforward that may be utilized on an annual basis, we currently estimate a partial valuation allowance release of approximately $30 million to $40 million for these jurisdictions during the quarter ended December 31, 2018.

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Results of Operations

The following table sets forth our consolidated results of operations for the three months ended ~~September~~June 30, 2018 and 2017 and ~~2016 and the nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016.~~

2017:

Three Months Ended

Nine Months Ended

September 30,

September 30,

(Dollars in millions)

2017

2016

% Change

2017

2016

% Change

Revenues

$
582

$
532

9
%
$
1,681

$
1,648

2
%
Cost of goods sold

446

491

(9)
%

1,351

1,547

(13)
%
Operating expenses

45

33

36
%

160

135

19
%
Restructuring, impairment and plant closing costs

16

7

129
%

49

31

58
%
Operating income (loss)

75

1

7,400
%

121

(65)

NM

Interest expense, net

(8)

(12)

(33)
%

(29)

(31)

(6)
%
Other income

—

—

NM

—

1

(100)
%
Income (loss) from continuing operations before income taxes

67

(11)

NM

92

(95)

NM

Income tax (expense) benefit

(14)

7

NM

(26)

14

NM

Income (loss) from continuing operations

53

(4)

NM

66

(81)

NM

Income from discontinued operations

—

2

(100)
%

8

8

-
%
Net income (loss)

53

(2)

NM

74

(73)

NM

Reconciliation of net income (loss) to adjusted EBITDA:













Interest expense, net

8

12

(33)
%

29

31

(6)
%
Income tax expense (benefit) - continuing operations

14

(7)

NM

26

(14)

NM

Depreciation and amortization

35

30

17
%

95

84

13
%
Net income attributable to noncontrolling interests

(2)

(3)

(33)
%

(8)

(8)

—
%
Other adjustments:





Business acquisition and integration expenses

4

3



2

11



Gain on disposition of businesses/assets

—

(23)

—

(23)

Net income of discontinued operations, net of tax

—

(2)

(8)

(8)

Certain legal settlements and related expenses

—

—

1

1



Amortization of pension and postretirement actuarial losses

5

3



13

8



Net plant incident (credits) costs

1

3



4

(2)



Restructuring, impairment and plant closing costs

16

7



49

31



Adjusted EBITDA(1)

$
134

$
21

538
%
$
277

$
38

629
%

Net cash (used in) provided by operating activities



$
181

$
93

95
%
Net cash provided by investing activities



72

(105)

NM

Net cash used in financing activities







(99)

10

NM

Capital expenditures







(97)

(76)

28
%



	Three Months Ended								Six Months Ended
	June 30,								June 30,
(Dollars in millions)	2018			2017			% Change		2018			2017			% Change
Revenues	$	626		$	562		11	%	$	1,248		$	1,099		14	%
Cost of goods sold	193			480			(60	)%	647			945			(32	)%
Operating expenses	46			17			171	%	97			77			26	%
Restructuring, impairment and plant closing and transition costs	136			7			1,843	%	145			33			339	%
Operating income	251			58			333	%	359			44			716	%
Interest expense, net	(10		)	(9		)	(11	)%	(20		)	(21		)	5	%
Other income	2			1			100	%	4			2			100	%
Income from continuing operations before income taxes	243			50			386	%	343			25			1,272	%
Income tax expense	(45		)	(16		)	181	%	(65		)	(12		)	442	%
Income from continuing operations	198			34			482	%	278			13			2,038	%
Income from discontinued operations	—			—			NM		—			8			(100	)%
Net income	198			34			482	%	278			21			1,224	%
Reconciliation of net income to adjusted EBITDA:
Interest expense, net	10			9			11	%	20			21			(5	)%
Income tax expense - continuing operations	45			16			181	%	65			12			442	%
Depreciation and amortization	35			29			21	%	69			59			17	%
Net income attributable to noncontrolling interests	(2		)	(3		)	33	%	(4		)	(6		)	33	%
Other adjustments:
Business acquisition and integration expenses	2			—					4			—
Separation expense, net	—			—					1			—
Net income of discontinued operations, net of tax	—			—					—			(8		)
Loss on disposition of business/assets	2			—					2			—
Amortization of pension and postretirement actuarial losses	4			4					7			8
Net plant incident (credits) costs	(273		)	(2		)			(273		)	3
Restructuring, impairment and plant closing and transition costs	136			7					145			33
Adjusted EBITDA⁽¹⁾	$	157		$	94				$	314		$	143

Net cash provided by (used in) operating activities from continuing operations									$	305		$	(30	)	NM
Net cash (used in) provided by investing activities from continuing operations									(162		)	104			NM
Net cash used in financing activities									(14		)	(71		)	(80	)%
Capital expenditures									(167		)	(40		)	318	%

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Three Months Ended

Three Months Ended

September 30, 2017

September 30, 2016
(Dollars in millions)

Gross

Tax(3)

Net

Gross

Tax(3)

Net
Reconciliation of net income (loss) to adjusted net income (loss):

Net income (loss)

$
53

$
(2)
Net income attributable to noncontrolling interests

(2)

(3)
Other adjustments:

Business acquisition and integration expenses

$
4

$
(1)

3

$
3

$
—

3
Gain on disposition of businesses/assets

—

—

—

(23)

6

(17)
Net income of discontinued operations

—

—

—

(2)

—

(2)
Amortization of pension and postretirement actuarial losses

5

—

5

3

—

3
Net plant incident (credits) costs

1

—

1

3

(1)

2
Restructuring, impairment and plant closing costs

16

(1)

15

7

(1)

6
Adjusted net income (loss)(2)

$
26

$
(2)

$
75

$
(9)

$
4

$
(10)

Weighted-average shares-basic

106.3

106.3
Weighted-average shares-diluted

106.6

106.3

Net income (loss) attributable to Venator Materials PLC ordinary shareholders:

Basic

0.48

(0.05)
Diluted

0.48

(0.05)

Other non-GAAP measures:

Adjusted net income (loss) per share:(2)

Basic

$
0.71

$
(0.09)
Diluted

0.70

(0.09)



	Three Months Ended							Three Months Ended
	June 30, 2018							June 30, 2017
(Dollars in millions)	Gross		Tax⁽³⁾		Net			Gross		Tax⁽³⁾		Net
Reconciliation of net income to adjusted net income:
Net income					$	198						$	34
Net income attributable to noncontrolling interests					(2		)					(3		)
Other adjustments:
Business acquisition and integration expenses	2		(1	)	1			—		—		—
Loss on disposition of business/assets	2		—		2			—		—		—
Amortization of pension and postretirement actuarial losses	4		(1	)	3			4		—		4
Net plant incident credits	(273	)	53		(220		)	(2	)	1		(1		)
Restructuring, impairment and plant closing and transition costs	136		(27	)	109			7		(1	)	6
Adjusted net income⁽²⁾					$	91						$	40

Weighted-average shares-basic					106.4							106.3
Weighted-average shares-diluted					106.7							106.3

Net income attributable to Venator Materials PLC ordinary shareholders:
Basic					$	1.84						$	0.29
Diluted					$	1.84						$	0.29

Other non-GAAP measures:
Adjusted net income per share⁽²⁾:
Basic					$	0.86						$	0.38
Diluted					$	0.85						$	0.38

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Nine Months Ended

Nine Months Ended

September 30, 2017

September 30, 2016
(Dollars in millions)

Gross

Tax(3)

Net

Gross

Tax(3)

Net
Reconciliation of net income (loss) to adjusted net income (loss):

Net income (loss)

$
74

$
(73)
Net income attributable to noncontrolling interests

(8)

(8)
Other adjustments:

Business acquisition and integration expenses

$
2

$
(1)

1

$
11

$
(5)

6
Gain on disposition of businesses/assets

—

—

—

(23)

6

(17)
Net income of discontinued operations

(11)

3

(8)

(10)

2

(8)
Certain legal settlements and related expenses

1

—

1

1

—

1
Amortization of pension and postretirement actuarial losses

13

—

13

8

1

9
Net plant incident (credits) costs

4

(1)

3

(2)

—

(2)
Restructuring, impairment and plant closing costs

49

(4)

45

31

(6)

25
Adjusted net income (loss)(2)

$
58

$
(3)

$
121

$
16

$
(2)

$
(67)

Weighted-average shares-basic

106.3

106.3
Weighted-average shares-diluted

106.6

106.3

Net income (loss) attributable to Venator Materials PLC ordinary shareholders:

Basic

$
0.63

$
(0.76)
Diluted

0.62

(0.76)

Other non-GAAP measures:

Adjusted net income (loss) per share:

Basic

$
1.14

$
(0.63)
Diluted

1.14

(0.63)



	Six Months Ended							Six Months Ended
	June 30, 2018							June 30, 2017
(Dollars in millions)	Gross		Tax⁽³⁾		Net			Gross		Tax⁽³⁾		Net
Reconciliation of net income to adjusted net income:
Net income					$	278						$	21
Net income attributable to noncontrolling interests					(4		)					(6		)
Other adjustments:
Business acquisition and integration expenses	4		(1	)	3			—		—		—
Separation expense, net	1		—		1			—		—		—
Net income of discontinued operations	—		—		—			(8	)	—		(8		)
Loss on disposition of business/assets	2		—		2			—		—		—
Amortization of pension and postretirement actuarial losses	7		(1	)	6			8		—		8
Net plant incident (credits) costs	(273	)	53		(220		)	3		(1	)	2
Restructuring, impairment and plant closing and transition costs	145		(28	)	117			33		(3	)	30
Adjusted net income⁽²⁾					$	183						$	47

Weighted-average shares-basic					106.4							106.3
Weighted-average shares-diluted					106.8							106.3

Net income attributable to Venator Materials PLC ordinary shareholders:
Basic					$	2.58						$	0.14
Diluted					$	2.57						$	0.14

Other non-GAAP measures:
Adjusted net income per share⁽²⁾:
Basic					$	1.72						$	0.44
Diluted					$	1.71						$	0.44

NM—Not meaningful


⁽¹⁾		Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net income ~~(loss)~~ before interest, income tax from continuing operations, depreciation and amortization, and net income attributable to noncontrolling interests, as well as eliminating the ~~following adjustments:~~following: (a) business acquisition and integration expenses; (b) ~~gain on disposition of businesses/assets~~separation expense, net; (c) net income of discontinued operations, net of ~~income~~ tax; (d) ~~certain legal settlements and related expenses;~~loss on disposition of business/assets; (e) amortization of pension and postretirement actuarial losses; (f) net plant incident (credits) costs; and (g) restructuring, impairment and plant closing and transition costs. We believe that net income ~~(loss)~~ is the performance measure calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP” or “GAAP”) that is most directly comparable to adjusted ~~EBITDA~~. EBITDA.

We believe adjusted EBITDA is useful to investors in assessing our ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of our operational profitability and that may obscure underlying business results and trends. However, this measure should not be considered in isolation or viewed as a substitute for net income or other measures of performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. Our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions. Adjusted EBITDA is also used by securities analysts, lenders and others in their evaluation of different companies because it excludes certain items

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that can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies. Finally, companies employ productive assets of different ages and utilize different

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methods of acquiring and depreciating such assets. This can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.

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

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


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


⁽³⁾		The income tax impacts, if any, of each adjusting item represent a ratable allocation of the total difference between the unadjusted tax expense and the total adjusted tax expense, computed without consideration of any adjusting items using a with and without approach. We do not adjust for changes in tax valuation allowances because we do not believe it provides more meaningful information than is provided under GAAP.

Three Months Ended ~~September~~June 30, ~~2017~~2018 Compared to the Three Months Ended ~~September~~June 30, ~~2016~~

2017

For the three months ended ~~September~~June 30, ~~2017,~~2018, net income was ~~$53~~$198 million on revenues of ~~$582~~$626 million, compared with a net ~~loss~~income of $2$34 million on revenues of ~~$532~~$562 million for the same period in ~~2016.~~2017. The increase of ~~$55~~$164 million in net income was the result of the following items:

Revenues for the three months ended September 30, 2017 increased by $50 million, or 9%, as compared with the same period in 2016. The increase was due to a $39 million increase in revenue in our Titanium Dioxide segment primarily related to increases in average selling prices, and an $11 million increase in revenue in our Performance Additives segment due to increases in selling price and volumes. See “—Segment Analysis” below.

Our operating expenses for the three months ended September 30, 2017 increased by $12 million, or 36%, as compared with the same period in 2016, primarily related to a $23 million increase due to a 2016 gain from disposal of businesses/assets and a $6 million increase due to an insurance recovery gain in 2016 relating to losses incurred at our Uerdingen, Germany plant partially offset by a $9 million reduction in costs at our Corporate segment as our Corporate costs to operate as a stand-alone business are lower than those typically allocated to us from Huntsman and $2 million of savings from our business improvement program.

Restructuring, impairment and plant closing costs for the three months ended September 30, 2017 increased to $16 million from $7 million for the same period of 2016. For more information concerning restructuring activities, see "Note 6. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated and combined financial statements.

Revenues for the three months ended June 30, 2018 increased by $64 million, or 11%, as compared with the same period in 2017. The increase was due to a $54 million increase in revenue in our Titanium Dioxide segment primarily related to increases in average selling prices, and a $10 million increase in revenue in our Performance Additives segment due to increases in selling prices. See “—Segment Analysis” below.

Our operating expenses for the three months ended June 30, 2018 increased by $29 million, or 171%, as compared with the same period in 2017, primarily related to a change in the classification of insurance within operating income beginning in the third quarter of 2017. $37 million of insurance proceeds related to the fire at our Pori plant were classified in other income, net in the second quarter of 2017. In 2018, insurance proceeds were classified as cost of goods sold.

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Our income tax expense for the three months ended September 30, 2017 increased to $14 million from a $7 million income tax benefit for the same period in 2016. Our income tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. For further information concerning taxes, see "Note 9. Income Taxes" to our condensed consolidated and combined financial statements.

Restructuring, impairment and plant closing and transition costs for the three months ended June 30, 2018 increased to $136 million from $7 million for the same period in 2017 primarily as a result of the closure of a portion of our Augusta, Georgia plant in the second quarter of 2018. For more information concerning restructuring activities, see "Note 6. Restructuring, Impairment, and Plant Closing and Transition Costs" of the notes to unaudited condensed consolidated and combined financial statements.

Our income tax expense for the three months ended June 30, 2018 increased to $45 million from $16 million for the same period in 2017. Our income taxes are significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. For further information concerning taxes, see "Note 9. Income Taxes" of the notes to unaudited condensed consolidated and combined financial statements.

Segment Analysis

~~Three Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2016~~

Percent

Three Months Ended

Change

September 30,

Favorable

(Dollars in millions)

2017

2016

(Unfavorable)

Revenues







Titanium Dioxide

$
431

$
392

10
%
Performance Additives

151

140

8
%
Total

$
582

$
532

9
%
Segment adjusted EBITDA







Titanium Dioxide

$
127

$
22

477
%
Performance Additives

15

16

(6)
%

142

38

274
%
Corporate and other

(8)

(17)

53
%
Total

$
134

$
21

538
%

Three Months Ended September 30, 2017 vs. 2016

Average Selling

Price(1)

Foreign

Currency

Local

Translation

Mix &

Sales


Currency

Impact

Other

Volumes(2)

Period-Over-Period Increase (Decrease)









Titanium Dioxide

22
%
2
%
(2)
%
(12)
%
Performance Additives

2
%
1
%
(1)
%
5
%



	Three Months Ended						Percent Change Favorable (Unfavorable)
	June 30,
(Dollars in millions)	2018			2017
Revenues
Titanium Dioxide	$	455		$	401		13	%
Performance Additives	171			161			6	%
Total	$	626		$	562		11	%
Segment adjusted EBITDA
Titanium Dioxide	$	147		$	93		58	%
Performance Additives	23			21			10	%
	170			114			49	%
Corporate and other	(13		)	(20		)	35	%
Total	$	157		$	94		67	%



	Three Months Ended June 30, 2018 vs. 2017
	Average Selling Price⁽¹⁾
	Local Currency		Foreign Currency Translation Impact		Mix & Other		Sales Volumes⁽²⁾
Period-Over-Period Increase (Decrease)
Titanium Dioxide	18	%	6	%	1	%	(12	)%
Performance Additives	3	%	4	%	(3	)%	2	%


	~~(1)~~


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


⁽²⁾		Excludes sales volumes of by-products and raw materials.

Titanium Dioxide

The ~~$39~~$54 million, or ~~10%~~13%, increase in revenues in our Titanium Dioxide segment for the three months ended ~~September~~June 30, ~~2017~~2018 compared to the same period ~~of 2016~~in 2017 was primarily due to ~~a 24%~~an 18% increase in average selling prices, a 6% improvement driven by the favorable impact of foreign exchange rates, primarily against the Euro, partially offset by a 12% decrease in sales ~~volumes and a 2% decrease due to product mix.~~volumes. The ~~improvements~~increase in selling ~~price consisted primarily of a 22% increase as a result of~~prices reflects continued ~~improvements~~improvement in business conditions for TiO₂, allowing for ~~increased~~an increase in prices ~~and a 2% improvement primarily from favorable exchange rates against the Euro.~~globally. Sales volumes decreased ~~primarily as~~due to lower than expected customer orders, and lower product availability relating to a ~~result~~manufacturing shortfall in the current year period and higher inventory levels in the prior year period.

Table of ~~the fire at our Pori, Finland manufacturing facility, however, sales volumes, excluding the impact of the Pori fire, increased by 4% compared to the same period in 2016.~~

Contents

Segment adjusted EBITDA of our Titanium Dioxide segment increased by ~~$105~~$54 million, or 58%, for the three months ended ~~September~~June 30, ~~2017~~2018 compared to the same period in ~~2016~~2017. This improvement was primarily as a result of ~~an increase in revenue largely due to an increase in average selling price and increase in volumes (excluding~~higher revenues, $6 million from the ~~impact~~sale of ~~the Pori fire),~~carbon credits and a ~~$13~~$4 million ~~reduction~~benefit from our Business Improvement Program, partially offset by increases in ~~costs primarily due to our business improvement program.~~

raw material and other direct costs.

Performance Additives

The increase in revenues in our Performance Additives segment of ~~$11~~$10 million, or 8%6%, for the three months ended ~~September~~June 30, ~~2017~~2018 compared to the same period ~~of 2016~~in 2017 was primarily due to a 3% increase in average selling ~~price~~prices, a 4% improvement driven by the favorable impact of foreign exchange rates, and a

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5% 2% increase in ~~volume,~~volumes, partially offset by a 1%3% decrease due to ~~changes in product mix.~~sales mix and other. The improvement in selling prices was primarily in ~~our Functional Additives~~certain timber treatment and functional additives product ~~line.~~

lines, where we raised prices to offset increases in raw material costs.

Segment adjusted EBITDA in our Performance Additives segment ~~was $15~~increased by $2 million, or 10%, for the three ~~month period~~months ended ~~September~~June 30, ~~2017~~2018 compared to ~~$16 million for~~ the same period in ~~2016. The $1~~2017, due to the increase in revenues and a $3 million ~~decrease is a result of higher sales volumes and higher selling prices~~benefit from our Business Improvement Program, partially offset by ~~a $2 million decrease as a result of the release of an environmental reserve at our Heinhausen, Germany plant~~increases in ~~the third quarter of 2016 and other cost increases.~~

raw material costs.

Corporate and ~~other~~

Other

Corporate and other ~~primarily consists of corporate selling, general and administrative~~represents expenses which are not allocated to our segments. Losses from Corporate and other ~~are $9~~were $13 million, or ~~53%,~~$7 million lower for the three months ended June 30, 2018 than the same period in ~~the prior year~~2017 as our costs to operate as a standalone company are lower than those costs historically allocated to us from Huntsman.

~~Nine~~

Six Months Ended ~~September~~June 30, ~~2017~~2018 Compared to the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~

2017

For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, net income was ~~$74~~$278 million on revenues of ~~$1,681~~$1,248 million, compared with a net ~~loss~~income of ~~$73~~$21 million on revenues of ~~$1,648~~$1,099 million for the same period in ~~2016.~~2017. The increase of ~~$147~~$257 million in net income was the result of the following items:

Revenues for the nine months ended September 30, 2017 increased by $33 million, or 2%, as compared with the same period in 2016. The increase was due to a $20 million, or 2%, increase in revenue in our Titanium Dioxide segment primarily due to increases in selling price, and a $13 million, or 3%, increase in revenue in our Performance Additives segment due to increases in selling price and volumes. See "—Segment Analysis" below.

Our operating expenses for the nine months ended September 30, 2017 increased by $25 million, or 19%, as compared to the same period in 2016, primarily related to a $23 million increase due to a 2016 gain from disposal of businesses/assets and a $6 million decrease due to an insurance recovery gain in 2016 relating to losses incurred at our Uerdingen plant partially offset by $6 million of savings from our restructuring programs.

Restructuring, impairment and plant closing costs for the nine months ended September 30, 2017 increased to $49 million from $31 million for the same period in 2016. For more information concerning restructuring activities, see "Note 6. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated and combined financial statements.

Our income tax expense for the nine months ended September 30, 2017 increased to $26 million from a $14 million income tax benefit for the same period in 2016. Our income tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. For further information concerning taxes, see "Note 9. Income Taxes" to our condensed consolidated and combined financial statements.

Revenues for the six months ended June 30, 2018 increased by $149 million, or 14%, as compared with the same period in 2017. The increase was due to a $125 million increase in revenue in our Titanium Dioxide segment primarily related to increases in average selling prices, and a $24 million increase in revenue in our Performance Additives segment due to increases in selling prices. See “—Segment Analysis” below.

Our operating expenses for the six months ended June 30, 2018 increased by $20 million, or 26%, as compared with the same period in 2017, primarily related to a change in the classification of insurance within operating income beginning in the third quarter of 2017. $37 million of insurance proceeds related to the fire at our Pori plant were classified in other income, net in the second quarter of 2017. In 2018, insurance proceeds were classified as cost of goods sold.

Restructuring, impairment and plant closing and transition costs for the six months ended June 30, 2018 increased to $145 million from $33 million for the same period in 2017 primarily as a result of the closure of a portion of our Augusta, Georgia plant in the second quarter of 2018. For more information concerning restructuring activities, see "Note 6. Restructuring, Impairment, and Plant Closing and Transition Costs" of the notes to unaudited condensed consolidated and combined financial statements.

Our income tax expense for the six months ended June 30, 2018 increased to $65 million from $12 million for the same period in 2017. Our income tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operated, as impacted by the presence of valuation allowances in certain tax jurisdictions. For further information concerning taxes, see "Note 9. Income Taxes" of the notes to unaudited condensed consolidated and combined financial statements.

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Segment Analysis

~~Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016~~

Percent

Nine Months Ended

Change

September 30,

Favorable

(Dollars in millions)

2017

2016

(Unfavorable)

Revenues







Titanium Dioxide

$
1,217

$
1,197

2
%
Performance Additives

464

451

3
%
Total

$
1,681

$
1,648

2
%
Segment adjusted EBITDA







Titanium Dioxide

$
268

$
28

857
%
Performance Additives

57

56

2
%

325

84

287
%
Corporate and other

(48)

(46)

(4)
%
Total

$
277

$
38

629
%

Nine Months Ended September 30, 2017 vs. 2016

Average Selling

Price(1)

Foreign

Currency

Local

Translation

Mix &

Sales


Currency

Impact

Other

Volumes(2)

Period-Over-Period Increase (Decrease)









Titanium Dioxide

17
%
(1)
%
(1)
%
(13)
%
Performance Additives

1
%
(1)
%
—
%
2
%



	Six Months Ended						Percent Change Favorable (Unfavorable)
	June 30,
(Dollars in millions)	2018			2017
Revenues
Titanium Dioxide	$	911		$	786		16	%
Performance Additives	337			313			8	%
Total	$	1,248		$	1,099		14	%
Segment adjusted EBITDA
Titanium Dioxide	$	290		$	141		106	%
Performance Additives	47			42			12	%
	337			183			84	%
Corporate and other	(23		)	(40		)	43	%
Total	$	314		$	143		120	%



	Six Months Ended June 30, 2018 vs. 2017
	Average Selling Price⁽¹⁾
	Local Currency		Foreign Currency Translation Impact		Mix & Other		Sales Volumes⁽²⁾
Period-Over-Period Increase (Decrease)
Titanium Dioxide	21	%	8	%	1	%	(14	)%
Performance Additives	5	%	5	%	(3	)%	1	%


	~~(1)~~


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


⁽²⁾		Excludes sales volumes of by-products and raw materials.

Titanium Dioxide

The ~~$20~~$125 million, or 2%16%, increase in revenues in our Titanium Dioxide segment for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to the same period ~~of 2016~~in 2017 was primarily due to a ~~16%~~21% increase in average selling prices, an 8% improvement driven by the favorable impact of foreign exchange rates, primarily against the Euro, partially offset by a ~~13%~~14% decrease in sales ~~volumes and a 1% decrease due to product mix.~~volumes. The ~~improvements~~increase in selling prices ~~were primarily as a result of~~reflects continued improvement in business conditions for TiO₂, allowing for an increase in ~~prices.~~prices globally. Sales volumes decreased primarily as a result of the fire at our Pori, Finland manufacturing ~~facility.~~facility and as a result of plant closures as part of our restructuring programs. Excluding the impact of the fire at our Pori plant and the impact of plants closed as part of our restructuring programs, sales volumes decreased by 5% which is attributable to lower than expected customer orders, and lower product availability relating to a manufacturing shortfall in the current year period and higher inventory levels in the prior year period.

Segment adjusted EBITDA of our Titanium Dioxide segment increased by ~~$240~~$149 million, or 106%, for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to the same period in ~~2016~~2017. This improvement was primarily as a result of ~~an increase~~higher revenues, $13 million from the sale of carbon credits and $12 million of EBITDA benefit from our Business Improvement Program, partially offset by increases in ~~revenue largely due to an increase in average selling price~~raw material and ~~increase in volumes (excluding the impact of the fire at a Pori plant), and a $31 million reduction in costs, primarily due to our business improvement program.~~

other direct costs.

Performance Additives

The increase in revenues in our Performance Additives segment of ~~$13~~$24 million, or 3%8%, for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to the same period in ~~2016~~2017 was primarily due to a ~~$2 million~~5% increase in average selling ~~price~~prices, a 5% improvement driven by the favorable impact of foreign exchange rates, and a 2%1% increase in ~~volume.~~volumes, partially offset by

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a 3% decrease due to less favorable sales mix and other. The improvement in selling prices was primarily in ~~our Functional Additives~~certain color pigment, timber treatment and and functional additives product ~~line.~~

lines, where we raised prices to offset increases in raw material costs.

Segment adjusted EBITDA in our Performance Additives segment increased by $1$5 million, or 2%12%, for the six months ended June 30, 2018 compared to the same period in 2017, due to the increase in revenue and a $5 million increase due to savings from our Business Improvement Program, partially offset by increases in revenues from higher volumes and selling pricing. The increases in revenue was offset by a decrease in EBITDA as a result of increased costs and the release of an environmental reserve relating to our former Heinhausen, Germany plant in the third quarter of 2016.

raw material costs.

Corporate and ~~other~~

~~Segment adjusted EBITDA for~~ Other

Corporate and other ~~was materially consistent year over year.~~

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~~LIQUIDITY AND CAPITAL RESOURCES~~

On August 8, 2017, in connection with the IPO and the Separation, we entered into new financing arrangements and incurred new debt, including $375 million of Senior Notes issued by our subsidiaries, Venator Finance S.à.r.l. and Venator Materials LLC, and borrowings of $375 million the Term Loan Facility. We used the net proceeds of the Senior Notes and the Term Loan Facility to repay intercompany debt owed to Huntsman and to pay related fees and expenses. Substantially all Huntsman receivables or payables were eliminated in connection with the Separation, other than a payable to Huntsman for a liability pursuant to the Tax Matters Agreement entered into at the time of the Separation which has been presented as “Noncurrent payable to affiliate” on our condensed consolidated and combined balance sheet. See “Note 9. Income Taxes” for further discussion.

In addition to the Senior Notes and the Term Loan Facility, we entered into a $300 million asset-based revolving lending facility with a maturity of five years, referred to herein as the ABL Facility and, together with the Term Loan Facility, the Senior Credit Facilities. Availability to borrow under the ABL Facility is subject to a borrowing base calculation comprising both accounts receivable and inventory in the United States, Canada, the United Kingdom and Germany and only accounts receivable in France and Spain. Thus, the base calculation may fluctuate from time to time and may be further impacted by the lenders' discretionary ability to impose reserves and availability blocks that might otherwise incrementally increase borrowing availability. Assuming all proposed borrowers currently participate in the facility, the borrowing base calculation is in excess of $268 million. To participate in the facility, each borrower is required to deliver certain documentation and security agreements to the satisfaction of the administrative agent, some ofrepresents expenses which are not ~~fully satisfied, reducing~~allocated to our segments. Losses from Corporate and other were $23 million, or $17 million lower for the ~~borrowing base calculation~~six months ended June 30, 2018 than the same period in 2017 as our costs to ~~$234 million.~~

operate as a standalone company are lower than those costs historically allocated to us from Huntsman.

Liquidity and Capital Resources

Prior to the separation, our primary source of liquidity and capital resources had been cash flows from operations, our participation in a cash pooling program with Huntsman and debt incurred by Huntsman. Following the separation, we have not received any funding through the Huntsman cash pooling program. We had cash and cash equivalents of $354 million and $238 million as of June 30, 2018 and December 31, 2017, respectively. We expect to have adequate liquidity to meet our obligations over the next 12 months. Additionally, we believe our future obligations, including needs for capital expenditures will be met by available cash generated from operations and borrowings under the ABL Facility.

On August 8, 2017, in connection with our IPO and the separation, we entered into new financing arrangements and incurred new debt, including $375 million of Senior Notes issued by our subsidiaries Venator Finance S.à.r.l. and Venator Materials LLC (the "Issuers"), and borrowings of $375 million under the term loan facility. We used the net proceeds of the Senior Notes and the Term Loan Facility to repay approximately $732 million of net intercompany debt owed to Huntsman and to pay related fees and expenses of approximately $18 million. Substantially all Huntsman receivables or payables were eliminated in connection with the separation, other than a payable to Huntsman for a liability pursuant to the Tax Matters Agreement entered into at the time of the separation which has been presented as noncurrent payable to affiliate within the unaudited condensed consolidated and combined balance sheet.

In addition to the Senior Notes and the Term Loan Facility, we entered into the ABL Facility. Availability to borrow under the ABL Facility is subject to a borrowing base calculation comprising both accounts receivable and inventory in the U.S., Canada, the U.K. and Germany and only accounts receivable in France and Spain. Thus, the base calculation may fluctuate from time to time and may be further impacted by the lenders’ discretionary ability to impose reserves and availability blocks that might otherwise incrementally increase borrowing availability. Assuming all proposed borrowers currently participate in the facility, the borrowing base calculation as of June 30, 2018 is in excess of $281 million, of which $271 million was available to borrowers. To participate in the facility, each borrower is required to deliver certain documentation and security agreements to the satisfaction of the administrative agent, which was achieved in January 2018.

Items Impacting Short-Term and Long-Term Liquidity

Our liquidity can be significantly impacted by various factors. The following matters had, or are expected to have, a significant impact on our liquidity:

Cash invested in our accounts receivable and inventory, net of accounts payable, decreased by approximately $138 million for the nine months ended September 30, 2017 as reflected in our condensed consolidated and combined statements of cash flows. We expect volatility in our working capital components to continue after the Separation due to seasonal changes in working capital throughout the year.

During 2017, we expect to spend approximately $90 million on capital expenditures, net of reimbursements, approximately $49 million of which has been spent as of September 30, 2017. Our future expenditures include certain EHS maintenance and upgrades; repair of our Pori manufacturing facility that was damaged by fire on January 30, 2017; periodic maintenance and repairs applicable to major units of manufacturing facilities; expansions of our existing facilities or construction of new facilities; and certain cost reduction projects. We expect to fund this spending with cash provided by operations.

During the nine months ended September 30, 2017, we made contributions to our pension and postretirement benefit plans of $19 million. During the remainder of 2017, we expect to contribute an additional amount of approximately $7 million to these plans.

We are involved in a number of cost reduction programs for which we have established restructuring accruals. As of September 30, 2017, we had $41 million of accrued restructuring costs of which $37 million is classified as current. We expect to incur additional restructuring and plant closing costs of approximately $6 million, including $3 million for non-cash charges, and pay approximately $5 million through the remainder of 2017. For further discussion of these plans and the costs involved, see "Note 6. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated and combined financial statements.

Cash invested in our accounts receivable and inventory, net of accounts payable, decreased by approximately $32 million for the six months ended June 30, 2018 as reflected in our unaudited condensed consolidated and combined statements of cash flows. We expect volatility in our working capital components to continue due to seasonal changes in working capital throughout the year.

During 2018, we expect to spend approximately $120 million on capital expenditures, excluding spending on the restoration of our Pori facility, approximately $42 million of which has been spent as of June 30, 2018.

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Our future expenditures include certain EHS maintenance and upgrades; periodic maintenance and repairs applicable to major units of manufacturing facilities; expansions of our existing facilities or construction of new facilities; and certain cost reduction projects. We expect to fund this spending with cash provided by operations.

During the six months ended June 30, 2018, we made contributions to our pension and postretirement benefit plans of $12 million. During the remainder of 2018, we expect to contribute an additional amount of approximately $16 million to these plans.

We are involved in a number of cost reduction programs for which we have established restructuring accruals. As of June 30, 2018, we had $27 million of accrued restructuring costs of which $19 million is classified as current. We expect to incur additional restructuring and plant closing costs of approximately $25 million, including $8 million for non-cash charges, and pay approximately $24 million, through the remainder of 2018. For further discussion of these plans and the costs involved, see "Note 6. Restructuring, Impairment, and Plant Closing and Transition Costs" of the notes to unaudited condensed consolidated and combined financial statements.

Further, although the ~~business improvement program~~Business Improvement Program is expected to be completed by the end of 2018, we expect to incur additional restructuring charges well beyond the end of 2018. We expect the ~~business improvement program~~Business Improvement Program to provide additional contributions to adjusted EBITDA ~~beginning~~ in ~~2017.~~

2018.

	·
•		On January 30, 2017, our TiO₂ manufacturing facility in Pori, Finland experienced fire damage and we continue to repair the facility. ~~Prior~~The loss was covered by insurance for property damage as well as business interruption losses subject to ~~the fire, 60%~~retained deductibles of ~~the site capacity produced specialty products which, on average, contributed greater than 75% of the site EBITDA from January 1, 2015 through January 30, 2017.~~ $15 million and 60 days, respectively. The Pori facility had a nameplate capacity of 130,000 metric tons per year, which represented approximately 17% of our total TiO₂ nameplate capacity and approximately 2% of total global TiO₂ demand. We are currently operating at 20% of total prior capacity but producing only specialty products, and we currently intend to restore manufacturing of the balance of these more profitable specialty products by the fourth quarter of 2018. The remaining 40% of site capacity is more commoditized and we will determine if and when to rebuild this commoditized capacity depending on market conditions, costs and projected long term returns relative to our other investment opportunities. The site is insured for property damage as well as business interruption losses. According to our insurance policies, the respective retention levels (deductibles) for physical damage and business interruption are $15 million and 60 days, respectively, with a limit of $500 million, which we expect our claims associated with the fire to exceed, in light of increased business interruption claims arising from increased TiO₂ profitability and recently estimated reconstruction costs. We expect to account for these overages as capital expenditures and currently expect to fund this additional capital spending with cash provided by operations. As of September 30, 2017, we have received $141 million from our insurer as partial progress payments towards the overall pending claim. On October 9, 2017 we received another partial progress payment in the amount of $112 million from our insurer.

Prior to the fire, 60% of the site capacity produced specialty products which, on average, contributed greater than 75% of the site EBITDA from January 1, 2015 through January 30, 2017. We have ~~established a process with our insurer to receive timely advance payments~~restored 20% of the total prior capacity.

During the second quarter of 2018, we engaged additional outside experts and hired and re-allocated additional internal resources for the ~~reconstruction~~Pori rebuild, with an objective of improving both the execution and cost management of the project, and to update our view on the total cost of rebuilding the site. This process identified additional damage outside the immediate fire zone leading to increased costs.

As a result of these recent developments and in light of our potential acquisition of the Ashtabula complex, we are reviewing options within our manufacturing network, including the option of transferring the production of Pori's specialty and differentiated products to elsewhere in our network, and are pacing our on-going construction activities at Pori accordingly during this period of review. We expect to account for our costs as ~~well as~~capital expenditures and fund them from cash from operations, which will decrease our liquidity in the periods those costs are incurred. Please see “Part II, Item 1A. Risk Factors-Risks Relating to our Business-Disruptions in production at our manufacturing facilities, including at our TiO₂ manufacturing facility in Pori, Finland, may have a material adverse impact on our business, ~~interruption losses, subject to policy limits.~~ results of operations and/or financial condition.”

We have ~~agreed~~$747 million in aggregate principal outstanding under $375 million, 5.75% of Senior Notes due 2025, and a $372 million Term Loan Facility. See further discussion under "Financing Arrangements."

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Following the separation and our IPO, we no longer rely on Huntsman’s earnings, assets, cash flow or credit and we are responsible for obtaining and maintaining sufficient working capital and servicing our debt. See “Part I. Item 1A. Risk Factors—Risks Related to Our Relationship with Huntsman—If we are unable to generate sufficient cash flow from our ~~insurer to have periodic meetings to review relevant site activities~~operations, our business, financial condition and ~~interim claims as well as regular progress payments.~~

results of operations may be materially and adversely affected” in our Annual Report on form 10-K for the year ended December 31, 2017 filed with the SEC on February 23, 2018 (our "Form 10-K").

In connection with the IPO and the Separation, we entered into new financing arrangements and incurred new debt, including the issuance of $375 million in aggregate principal amount of 5.75% of Senior Notes due 2025 and borrowings of $375 million under the Term Loan Facility. In addition to the Term Loan Facility, we entered into a $300 million ABL Facility. We used the net proceeds of the Senior Notes and the Term Loan Facility to repay approximately $732 million of intercompany debt owed to Huntsman and to pay related fees and expenses of approximately $18 million.

As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, we had $4$7 million and ~~$10~~$14 million, respectively, classified as current portion of debt.

As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, we had approximately ~~$141~~$29 million and ~~$26~~$31 million, respectively, of cash and cash equivalents held ~~by our non-U.S. subsidiaries,~~outside of the U.S. and Europe, including our variable interest entities. ~~We intend~~As of June 30, 2018, our non-U.K. subsidiaries have no plan to ~~use cash held~~distribute earnings in ~~our non-U.S. subsidiaries~~a manner that would cause them to fund our local operations. Nevertheless, we could repatriate this cash or future operating cash from earnings as dividends to our parent company. If non-U.S. cash were repatriated as dividends, under current tax law, we have the ability to repatriate the cash without incurring incremental income tax. Cash held by certain foreign subsidiaries, including our variable interest entities, may also be subject to ~~legal restrictions, including those arising from the interests of our partners, which could limit the amounts available for repatriation.~~

U.K., U.S., or other local country taxation.

Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018 Compared to the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~

2017

Net cash provided by operating activities from continuing operations was ~~$180~~$305 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 while net cash ~~provided by~~used in operating activities from continuing operations was ~~$87~~$30 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The increase in net cash provided by operating activities from continuing operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared with the same period ~~of 2016~~in 2017 was primarily attributable to noncash restructuring charges of $133 million in 2018 compared to $6 million in 2017, the ~~$147~~ $257 million increase in net income as described in “—Results of Operations” above, offset by ~~an $85~~a $38 million unfavorable variance in operating assets and liabilities for ~~2017~~2018 as compared with ~~2016.~~

2017.

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Net cash used in investing activities from continuing operations was $162 million for the six months ended June 30, 2018, compared to net cash provided by investing activities from continuing operations ~~was $73~~of $104 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017, compared to~~2017. The increase in net cash used in investing activities from continuing operations ~~of $99 million~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2016. The increase in net cash provided by investing activities from continuing operations for the nine months ended September 30, 2017~~2018 compared with the same period ~~of 2016~~in 2017 was primarily attributable to a decrease in insurance proceeds received for recovery of property damage of $50 million and an increase in capital expenditures of $127 million compared to the prior year period, a decrease in net repayments from to affiliates of ~~$157~~$91 million ~~year over year.~~

and a decrease in net cash received from unconsolidated affiliates.

Net cash used in financing activities from continuing operations was ~~$99~~$14 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, compared to net cash ~~provided by~~used in financing activities from continuing operations of ~~$10~~$71 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The ~~increase~~decrease in net cash used in financing activities from continuing operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared with the same period ~~of 2016~~in 2017 was primarily attributable to ~~$732 million final settlement of affiliate balances at Separation and an increase~~a decrease in ~~net~~ repayments on ~~affiliates~~affiliate accounts payable of ~~$109~~$60 million from ~~2016~~2017 to ~~2017 offset by proceeds from the issuance~~2018.

Table of ~~the Senior Notes and Senior Credit facilities in 2017.~~

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Changes in Financial Condition

The following information summarizes our working capital as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016:~~

2017:

September 30,

December 31,

Increase

Percent

(Dollars in millions)

2017

2016

(Decrease)

Change

Cash and cash equivalents

$
186

$
29

$
157

541
%
Accounts receivable, net

411

247

164

66
%
Accounts receivable from affiliates

9

243

(234)

(96)
%
Inventories

431

426

5

1
%
Prepaid expenses

11

11

-

-
%
Other current assets

73

59

14

24
%
    Total current assets from continuing operations

1,121

1,015

106

10
%
Accounts payable

319

297

22

7
%
Accounts payable to affiliates

15

695

(680)

(98)
%
Accrued liabilities

213

146

67

46
%
Current portion of debt

4

10

(6)

(60)
%
    Total current liabilities from continuing operations

551

1,148

(597)

(52)
%
    Working capital (deficit)

$
570

$
(133)

$
703

(529)
%



	June 30,		December 31,		Increase			Percent
(Dollars in millions)	2018		2017		(Decrease)			Change
Cash and cash equivalents	$	354	$	238	$	116		49	%
Accounts receivable, net	435		380		55			14	%
Accounts receivable from affiliates	4		12		(8		)	(67	)%
Inventories	491		454		37			8	%
Prepaid expenses	10		19		(9		)	(47	)%
Other current assets	77		66		11			17	%
Total current assets from continuing operations	1,371		1,169		202			17	%
Accounts payable	378		385		(7		)	(2	)%
Accounts payable to affiliates	14		16		(2		)	(13	)%
Accrued liabilities	191		244		(53		)	(22	)%
Current portion of debt	7		14		(7		)	(50	)%
Total current liabilities from continuing operations	590		659		(69		)	(10	)%
Working capital	$	781	$	510	$	271		53	%

Our working capital increased by ~~$703~~$271 million as a result of the net impact of the following significant changes:

Cash and cash equivalents increased by $116 million primarily due to inflows of $305 million from operating activities of continuing operations offset by cash outflows of $162 million from investing activities of continuing operations and $14 million from financing activities of continuing operations.

Accounts receivable increased by $55 million primarily due to higher revenues in the six months ended June 30, 2018 compared to the six months ended December 31, 2017.

	·
•		~~Cash and cash equivalents~~ Inventory increased ~~by $157~~approximately $37 million primarily ~~due to inflows~~as a result of ~~$180~~a $27 million ~~from operating activities~~increase in TiO₂ inventory and a $9 million increase in color pigments inventory. The increase in TiO₂ inventory is driven by an increase in raw material costs year over year while the increase in color pigments is as a result of ~~continuing operations and $73 million of cash inflows from investing activities of continuing operations offset by outflows of $99 million from financing activities of continuing operations.~~ seasonal increases in production volumes.

Accrued liabilities decreased by $53 million primarily due to the recognition of deferred income in the second quarter recorded in connection with the progress payments received from our insurer related to the fire at our Pori, Finland manufacturing facility.

~~Accounts receivable increased by $164 million primarily due to higher revenues in the three months ended September 30, 2017 compared to the three months ended December 31, 2016.~~

Accounts receivable from and accounts payable to affiliates represent financing arrangements with affiliates of Huntsman. For further information, see “Note 7. Debt—Cash Pooling Program” of the notes to unaudited condensed consolidated and combined financial statements.

Accrued liabilities increased by $67 million primarily due to deferred income recorded in connection with the partial progress payment received from our insurer related to the fire at our Pori, Finland manufacturing facility.

Accounts receivable from and accounts payable to affiliates represent financing arrangements with affiliates of Huntsman. For further information, see “Note 7. Debt—Cash Pooling Program” to our condensed consolidated and combined financial statements.

~~FINANCING ARRANGEMENTS~~

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Financing Arrangements

Senior Notes

On July 14, 2017, the Issuers entered into an indenture in connection with the issuance of the Senior Notes.

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The Senior Notes are general unsecured senior obligations of the Issuers and are guaranteed on a general unsecured senior basis by Venator and certain of Venator’s subsidiaries.

Senior Credit Facilities

On August 8, 2017, we entered into the Senior Credit Facilities that provide for first lien senior secured financing of up to $675 million, consisting of:

~~the Term Loan Facility in an aggregate principal amount of $375 million, with a maturity of seven years; and~~

~~the ABL Facility in an aggregate principal amount of up to $300 million, with a maturity of five years.~~

the Term Loan Facility in an aggregate principal amount of $375 million, with a maturity of seven years; and

the ABL Facility in an aggregate principal amount of up to $300 million, with a maturity of five years.

The Term Loan Facility will amortize in aggregate annual amounts equal to 1% of the original principal amount of the Term Loan Facility, payable quarterly ~~commencing~~commenced in the fourth quarter of 2017.

Borrowings under the Term Loan Facility ~~will~~ bear interest at a rate equal to, at Venator’s option, either (a) a London Interbank Offering Rate (“LIBOR”) based rate determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs subject to an interest rate floor to be agreed or (b) a base rate determined by reference to the highest of (i) the rate of interest per annum determined from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City, (ii) the federal funds rate plus 0.50% per annum and (iii) the one-month adjusted LIBOR plus 1.00% per annum, in each case plus an applicable margin to be agreed upon. Borrowings under the ABL Facility bear interest at a variable rate equal to an applicable margin based on the applicable quarterly average excess availability under the ABL Facility plus either a LIBOR or a base rate. The applicable margin percentage is calculated and established once every three calendar months and varies from 150 to 200 basis points for LIBOR loans depending on the quarterly average excess availability under the ABL Facility for the immediately preceding three month period.

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Guarantees

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case subject to certain exceptions. Lien priority as between the Term Loan Facility and the ABL Facility with respect to the collateral will be governed by an intercreditor agreement.

~~AUGUSTA MATTER~~

Augusta Matter

In February 2017, Huntsman filed suit against the legacy owner and certain former executives of Rockwood, primarily related to the failure of new technology that Huntsman acquired in the Rockwood acquisition that was to be implemented at the new Augusta, Georgia facility and subsequently at other facilities. Huntsman is seeking various forms of legal remedy, including compensatory damages, punitive damages, expectation damages, consequential damages and restitution. Venator is not party to the suit.

~~RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS~~

~~Since the Rockwood acquisition in 2014, we have been involved in a cost reduction program that has delivered more than $200 million of annual cost synergies~~

Restructuring, Impairment and ~~improved its global competitiveness. In addition, we implemented~~Plant Closing and Transition Costs

For a ~~capacity reduction at our TiO~~₂ manufacturing facility in Calais, France, which has generated approximately $35 million of annual savings beginning in the first half of 2016. We have since determined to close the Calais, France facility. Further, we are incurring additional restructuring charges for recently identified plans for business improvements expected to be completed by the end of 2018. We have realized approximately $9 million of savings in the third quarter of 2017 as a result of these programs.

~~For further~~ discussion of ~~these and other~~our restructuring plans and the costs involved, see ~~“Note~~“Note 6. Restructuring, Impairment, and Plant Closing ~~Costs”~~and Transition Costs” of the notes to ~~our~~unaudited condensed consolidated and combined financial statements.

~~LEGAL PROCEEDINGS~~

Legal Proceedings

For a discussion of legal proceedings, see ~~“Note~~“Note 11. Commitments and ~~Contingencies—~~Contingencies—Legal Matters” of the notes to ~~our~~unaudited condensed consolidated and combined financial statements.

~~ENVIRONMENTAL, HEALTH AND SAFETY MATTERS~~

Environmental, Health and Safety Matters

As noted in the ~~Prospectus,~~2017 Form 10-K, specifically within ~~“Business—~~“Part I. Item 1. Business—Environmental, Health and Safety Matters” and ~~“Risk~~“Part I. Item 1A. Risk Factors,” we are subject to extensive environmental regulations, which may impose significant additional costs on our operations in the future. While we do not expect any of these enactments or proposals to have a material adverse effect on us in the near term, we cannot predict the ~~longer‑term~~longer-term effect of any of these regulations or proposals on our future financial condition. For a discussion of EHS matters, see ~~“Note~~“Note 12. Environmental, Health and Safety ~~Matters”~~Matters” of the notes to ~~our~~unaudited condensed consolidated and combined financial statements.

~~RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~

Recently Issued Accounting Pronouncements

For a discussion of recently issued accounting pronouncements, see ~~“Note~~“Note 2. Recently Issued Accounting ~~Pronouncements”~~Pronouncements” of the notes to ~~our~~unaudited condensed consolidated and combined financial statements.

~~CRITICAL ACCOUNTING POLICIES~~

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in our ~~combined financial statements. Our significant accounting policies are summarized in note "1. Description of Business, Recent Developments, Basis of Presentation~~unaudited condensed consolidated and ~~Summary of Significant Accounting Policies” to our~~ combined financial statements. There have been no changes to our accounting policies or estimates other than changes to our revenue recognition policy as a result of the adoption of ASC 606, Revenue from Contracts with Customers as detailed below.

See the Company’s critical accounting policies in “Part 2. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in the ~~Prospectus. Summarized below are our critical accounting policies:~~

~~Employee Benefit Programs~~

We sponsor several contributory and non-contributory defined benefit plans, covering employees primarily in the U.S., the U.K., Germany, Spain and Finland, but also covering employees in a number of other countries. We fund the material plans through trust arrangements (or local equivalents) where the assets are held separately from us. We also sponsor unfunded postretirement plans which provide medical and, in some cases, life insurance benefits covering

2017 Form 10-K.

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~~certain employees~~

Revenue Recognition

Venator generates substantially all of its revenues through sales of inventory in the ~~U.S., Canada~~open market and ~~South Africa. Amounts recorded in~~via long-term supply agreements. Revenue is recognized when the performance obligations under the terms of our ~~combined financial statements~~contracts are ~~recorded based upon actuarial valuations performed by various third-party actuaries. Inherent in these valuations are numerous assumptions regarding expected long-term rates~~satisfied. Generally, this occurs at the time of ~~return on plan assets, discount rates, compensation increases, mortality rates and health care cost trends. These assumptions are described in note "19. Employee Benefit Plans"~~shipping at which point the control of the goods transfers to ~~our combined financial statements in~~ the ~~Prospectus.~~

~~Income Taxes~~

We use the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed on a tax jurisdiction basis to analyze whethercustomer, there is ~~sufficient positive or negative evidence~~a present right to ~~support a change in judgment about~~payment and legal title, and the ~~realizability~~risks and rewards of the related deferred tax assets for each jurisdiction. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider the cyclicality of businesses and cumulative income or losses during the applicable period. Cumulative losses incurred over the period limit our ability to consider other subjective evidence such as our projections for the future. Changes in expected future income in applicable jurisdictions could affect the realization of deferred tax assets in those jurisdictions. See note "18. Income Taxes" to our combined financial statements in the Prospectus for more information regarding our valuation allowances.

~~As of December 31, 2016, there were no unremitted earnings of subsidiaries to consider for indefinite reinvestment. Going forward,~~ownership have transferred to the ~~extent future cash flow needs require distributions from foreign subsidiaries, based on existing law, we have the ability to repatriate the cash without incurring incremental income tax.~~

Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The application of income tax lawcustomer. Revenue is inherently complex. We are required to determine if an income tax position meets the criteria of more-likely-than-not to be realized based on the merits of the position under tax law, in order to recognize an income tax benefit. This requires us to make significant judgments regarding the merits of income tax positions and the application of income tax law. Additionally, if a tax position meets the recognition criteria of more-likely-than-not we are required to make judgments and apply assumptions in order to measure the amount of the tax benefits to recognize. These judgments are based on the probability of the amount of tax benefits that would be realized if the tax position was challenged by the taxing authorities. Interpretations and guidance surrounding income tax laws and regulations change over time. As a consequence, changes in assumptions and judgments can materially affect amounts recognized in our combined financial statements.

~~Long-Lived Assets~~

The useful lives of our property, plant and equipment are estimated based upon our historical experience, engineering estimates and industry information and are reviewed when economic events indicate that we may not be able to recover the carrying value of the assets. The estimated lives of our property range from 3 to 50 years and depreciation is recorded on the straight-line method. Inherent in our estimates of useful lives is the assumption that periodic maintenance and an appropriate level of annual capital expenditures will be performed. Without on-going capital improvements and maintenance, the productivity and cost efficiency declines and the useful lives of our assets would be shorter.

We are required to evaluate the carrying value of our long-lived tangible and intangible assets whenever events indicate that such carrying value may not be recoverable in the future or when management's plans change regarding those assets, such as idling or closing a plant. We evaluate impairment by comparing undiscounted cash flows of the related asset groups that are largely independent of the cash flows of other asset groups to their carrying values. Key assumptions in determining the future cash flows include the useful life, technology, competitive pressures, raw material pricing and regulations. In connection with our asset evaluation policy, we reviewed all of our long-lived assets for indicators that the carrying value may not be recoverable. See note "11. Restructuring, Impairment and Plant Closing Costs" to our combined financial statements in the Prospectus.

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~~Restructuring and Plant Closing Costs~~

We have recorded restructuring charges in recent periods in connection with closing certain plant locations, workforce reductions and other cost savings programs in each of our business segments. These charges are recorded when management has committed to a plan and incurred a liability related to the plan. Estimates for plant closing costs include the write-off of the carrying value of the plant, any necessary environmental and/or regulatory costs, contract termination and demolition costs. Estimates for workforce reductions and other costs savings are recorded based upon estimates of the number of positions to be terminated, termination benefits to be provided and other information, as necessary. Management evaluates the estimates on a quarterly basis and will adjust the reserve when information indicates that the estimate is above or below the currently recorded estimate. For further discussion of our restructuring activities, see note "5. Restructuring, Impairment and Plant Closing Costs" to our condensed combined financial statements in the Prospectus.

~~Contingent Loss Accruals~~

Environmental remediation costs for our facilities are accrued when it is probable that a liability has been incurred and the amount can be reasonably estimated. Estimates of environmental reserves require evaluating government regulation, available technology, site-specific information and remediation alternatives. We accrue an amount equal to our best estimate of the costs to remediate based upon the available information. The extent of environmental impacts may not be fully known and the processes and costs of remediation may change as new information is obtained or technology for remediation is improved. Our process for estimating the expected cost for remediation considers the information available, technology that can be utilized and estimates of the extent of environmental damage. Adjustments to our estimates are made periodically based upon additional information received as remediation progresses. For further information, see note "22. Environmental, Health and Safety Matters" to our combined financial statements in the Prospectus.

We are subject to legal proceedings and claims arising out of our business operations. We routinely assess the likelihood of any adverse outcomes to these matters, as well as ranges of probable losses. A determination of the amount of the reserves required, if any, for these contingencies is made after analysis of each known claim. We have an active risk management program consisting of numerous insurance policies secured from many carriers. These policies often provide coverage that is intended to minimize the financial impact, if any, of the legal proceedings. The required reserves may change in the future due to new developments in each matter. For further information, see note "21. Commitments and Contingencies—Legal Proceedings" to our combined financial statements in the Prospectus.

~~Variable Interest Entities—Primary Beneficiary~~

We evaluate each of our variable interest entities on an on-going basis to determine whether we are the primary beneficiary. Management assesses, on an on-going basis, the nature of our relationship to the variable interest entity, including the amount of control that we exercise over the entity as wellmeasured as the amount of ~~risk that~~consideration we ~~bear and rewards we~~expect to receive in regards to the entity, to determine if we are the primary beneficiary of that variable interest entity. Management judgment is required to assess whether these attributes are significant. The factors management considers when determining if we have the power to direct the activities that most significantly impact each of our variable interest entity's economic performance include supply arrangements, manufacturing arrangements, marketing arrangements and sales arrangements. We consolidate all variable interest entitiesexchange for ~~which we have concluded that we are the primary beneficiary. For further information, see note "7. Variable Interest Entities" to our combined financial statements in the Prospectus.~~

transferred goods.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks, such as changes in interest rates and foreign exchange rates. We manage these risks through normal operating and financing activities and, when appropriate, through the use of derivative instruments. We do not invest in derivative instruments for speculative purposes.

Interest Rate Risk

~~In connection with our IPO and the Separation, we entered into the Senior Credit Facilities. Through our borrowing activities, we expect to be~~

We are exposed to interest rate ~~risk. Such~~ risk ~~will arise due to~~through the ~~anticipated~~ structure of our debt portfolio ~~including the~~which includes a mix of fixed and floating ~~interest~~ rates. Actions ~~we may take~~taken to reduce interest rate risk include managing the mix and rate characteristics of various interest bearing ~~liabilities, as well as entering into interest~~liabilities.

The carrying value of our floating rate ~~derivative instruments.~~

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~~From time to time, we may purchase interest rate swaps and/or other derivative instruments to reduce the impact of changes~~debt is approximately $366 million at June 30, 2018. A hypothetical 1% increase in interest rates on our ~~floating-rate long-term debt. Under~~floating rate debt as of June 30, 2018 would increase our interest ~~rate swaps, we agree with other parties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated~~expense by ~~reference to~~approximately $4 million on an ~~agreed notional principal amount.~~

annualized basis.

Foreign Exchange Rate Risk

~~Venator is~~

We are exposed to market risks associated with foreign exchange risk. ~~Venator’s~~Our cash flows and earnings are subject to fluctuations due to exchange rate variation. ~~Venator’s~~Our revenues and expenses are denominated in various foreign currencies. ~~Venator enters~~We enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, ~~Venator~~we generally ~~nets~~net multicurrency cash balances among ~~its~~our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of three months or less). ~~Venator does~~We do not hedge ~~its~~our foreign currency exposures in a manner that would eliminate the effect of changes in exchange rates on ~~its~~our cash flows and earnings. At ~~September~~June 30, 2018 and December 31, 2017 ~~Venator~~we had approximately ~~$84~~$93 million inand $109 million, respectively, notional amount (in U.S. dollar equivalents) outstanding ~~with maturities of approximately one month.~~

In December 2017, we entered into three cross-currency swap agreements to convert a portion of our intercompany fixed-rate, U.S. dollar denominated notes, including the semi-annual interest payments and the payment of remaining principle at maturity, to a fixed-rate, Euro denominated debt. The economic effect of the swap agreement was to eliminate the uncertainty of the cash flows in U.S. Dollars associated with the notes by fixing the principle amount at €169 million with a fixed annual rate of 3.43%. These hedges have been designated as cash flow hedges and the critical terms of the cross-currency swap agreements correspond to the underlying hedged item. These swaps mature in July 2022, which is our best estimate of the repayment date of these intercompany loans. The amount and timing of the semi-annual principle payments under the cross-currency swap also correspond with the terms of the intercompany loans. Gains and losses from these hedges offset the changes in the value of interest and principal payments as a result of changes in foreign exchange rates.

During 2018, the changes in accumulated other comprehensive loss associated with these cash flow hedging activities was a gain of approximately $5 million.

Commodity Price Risk

A portion of our products and raw materials are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to fluctuate with the

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changes in the business cycle. We try protect against such instability through various business strategies. These include provisions in sales contracts allowing us to pass on higher raw material costs through timely price increases and formula price contracts to transfer or share commodity price risk. We did not have any commodity derivative instruments in place as of June 30, 2018 and December 31, 2017.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As ~~of September 30, 2017, Venator carried out an evaluation~~required by rule 13-a 15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of ~~their respective~~our management, including ~~the Chief Executive Officer~~our principal executive officer and ~~Chief Financial Officer, as to~~principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined ~~Exchange Act~~in Rules 13a-15(e) and 15d-15(e)~~). Venator maintains~~ under the Exchange Act) as of the end of the period covered by this quarterly report. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of June 30, 2018, our disclosure controls and procedures ~~designed to provide reasonable assurance~~were effective, in that they ensure that information required to be disclosed by us in ~~their respective~~the reports that ~~are filed~~we file or ~~submitted~~submit under the Exchange Act ~~are~~is (1) recorded, processed, summarized and reported within the time periods specified byin the SEC’s rules and forms, ~~of the SEC,~~ and ~~that information is~~(2) accumulated and communicated to ~~their respective~~our management, including ~~the Chief Executive Officer~~our principal executive officer and ~~Chief Financial Officer,~~principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Such management, including the Chief Executive Officer and Chief Financial Officer, do not expect that the disclosure controls and procedures or the internal controls will prevent and/or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Venator’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2017.

Internal Control over Financial Reporting

We identified a material weakness over our financial reporting as of March 31, 2017. As defined in Regulation 12b‑2 under the Exchange Act, a "material weakness" is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our company’s annual or interim financial statements will not be prevented, or detected on a timely basis. Specifically, we determined that there is a deficiency in the design of our internal controls surrounding the review of the statements of cash flows for carve out financial statements. This material weakness led

There were no changes to a material misstatement in our combined statements of cash flows for the three years ended December 31, 2016 and in our condensed combined statements of cash flows for the three months periods ended March 31, 2017 and 2016.

~~As described further in footnote 25 to our combined financial statements and footnote 13 to our condensed combined financial statementsof the Prospectus,~~ ~~the misstatements related to the presentation of cash flows associated with the cash pooling programs in which we participated in with certain subsidiaries of Huntsman International. These~~

~~Table of Contents~~

~~transactions were improperly classified between cash flows from operating activities and cash flows from either investing or financing activities.~~

We have initiated various programs to mitigate this material weakness in future periods and are in the process of supplementing our existing internal controls related to carve-out cash flow reporting, including hiring of additional accounting personnel and providing training specific to cash flow reporting to our existing accounting personnel. In addition, after the Separation, we no longer participate in a cash pooling program with affiliates outside of the Venator legal entities and no related cash flow transactions exist in periods subsequent to the Separation.

Although we plan to complete the above remediation process and integrate incremental internal controls into our 2017 testing plan, the implementation of these initiatives may not fully address any material weakness or other deficiencies that we may have in our internal control over financial reporting. See "Risk Factors—Risks Related to Our Business—We have identified a material weakness in our internal control over financial reporting ~~which resulted in the restatement of our financial statements” included in~~ ~~the Prospectus.~~

~~There were no other changes in internal control over financial reporting that occurred~~ during the ~~quarter~~three months ended ~~September~~June 30, ~~2017~~2018 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial ~~reporting.~~

reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). However, we can only give reasonable assurance that our internal controls over financial reporting will prevent or detect material misstatements on a timely basis. Ineffective internal controls over financial reporting could cause investors to lose confidence in our reported financial information and could result in a lower trading price for our securities.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During the three months ended ~~September~~June 30, ~~2017,~~2018, there have been no material developments with respect to material legal proceedings referenced ~~in “Business –~~in“Part I. Item 3. Legal Proceedings” of ~~the Prospectus.~~

our 2017 Form 10-K.

ITEM 1A. RISK FACTORS

~~Factors that could materially adversely affect our business, financial condition, cash flows, results~~

As of the date of this filing, the Company and its operations ~~and share price are described in the Risk Factors previously disclosed in the Prospectus. This information should~~continue to be ~~considered carefully, together with other information in this report and other reports and materials we file with the SEC.~~ ~~In addition~~subject to the risk factors ~~noted~~previously disclosed in ~~the Prospectus, the following updated risk factor is applicable to us:~~

~~The classification of TiO~~₂ ~~as a Category 2 Carcinogen or higher in the European Union could decrease demand for our products and subject us to manufacturing regulations that could significantly increase our costs.~~

~~The European Union (“EU”) adopted the Globally Harmonised System (“GHS”)~~“Part I. Item 1A. Risk Factors” of the United Nations for a uniform system for the classification, labelling and packaging of chemical substances in Regulation (EC) No 1272/2008, the Classification, Labelling and Packaging Regulation (“CLP”). Pursuant to the CLP, an EU Member State can propose a classification for a substance to the European Chemicals Agency (“ECHA”), which upon review by ECHA’s Committee for Risk Assessment (“RAC”), can be submitted to the European Commission for adoption by regulation. On May 31, 2016, the French Agency for Food, Environmental and Occupational Health and Safety (“ANSES”) submitted a proposal to ECHA that would classify TiO₂ as a Category 1B Carcinogen presumed to have carcinogenic potential for humans by inhalation. We, together with other companies, relevant trade associations and the European Chemical Industry Council (“Cefic”), submitted comments opposing any classification of TiO₂ ~~as carcinogenic, based on evidence from multiple epidemiological studies covering more than 24,000 production workers at 18 TiO~~₂ ~~manufacturing sites over several decades that found no increased incidence of lung cancer as a result of workplace exposure to TiO~~₂ and other scientific studies that concluded that the response to lung overload studies with poorly soluble particles upon which the ANSES proposed classification is based is unique to the rat and is not seen in other animal species or humans. On June 8,our 2017 ~~the RAC announced its preliminary conclusion that certain evidence meets the criteria under CLP to classify TiO~~₂ ~~as a Category 2 Carcinogen (described by the EU regulation as appropriate for “suspected human carcinogens”) for humans by inhalation. The~~ ~~RAC published their final opinion on September 14, 2017, which proposes that TiO~~₂ ~~be classified as a Category 2 carcinogen by inhalation.~~Form 10-K. In addition, the ~~RAC proposed a Note~~following risk factor included substantive changes from those disclosed in ~~their opinion~~our 2017 Form 10-K:

Risks Related to ~~the effect that coated particles must be evaluated to assess whether a higher category (Category 1B or 1A) should be applied and additional routes of exposure (oral or dermal) should be included. The~~ Our Business

~~European Commission will now evaluate the RAC opinion~~Disruptions in deciding what, if any, regulatory measures should be taken. We, Cefic and others expect to continue to advocate to the European Commission that the RAC’s report should not justify anything other than minimal regulatory measures for the reasons stated above, among others. If the European Commission were to subsequently adopt the Category 2 Carcinogen classification, or a higher categorization for coated particles, it could require that many end-use products manufactured with TiO₂ ~~be classified and labelled as containing a potential carcinogenic component, which could negatively impact public perception of products containing TiO~~₂~~. This type of regulatory response could also limit the marketability of and demand for TiO~~₂ ~~or products containing TiO~~₂ and potentially have spill-over, restrictive effects under other EU laws, e.g., those affecting medical and pharmaceutical applications, cosmetics, food packaging and food additives. Such classifications would also affectproduction at our manufacturing operations by subjecting us to new workplace safety requirements that could significantly increase costs. In addition, any classification, use restriction, or authorization requirement for use imposed by ECHA could trigger heightened regulatory scrutinyfacilities, including at our TiO₂ manufacturing facility in ~~countries outside the EU based on health or safety grounds, which could~~Pori, Finland, may have a ~~wider~~material adverse impact ~~geographically~~ on ~~market demand for and prices~~our business, results of ~~TiO~~₂operations and/or ~~other products containing TiO~~financial condition.₂ and increase our compliance obligations outside the EU. It is also possible that heightened regulatory scrutiny would lead to claims by consumers of such products alleging adverse health impacts. Finally, the classification of TiO₂ as a Category 2 Carcinogen or higher could lead the ECHA to evaluate other products with similar particle characteristics (such as iron oxides or functional additives) for human carcinogenic potential by inhalation, which may ultimately have similar negative impacts on other members of our product portfolio. In addition, under our separation agreement with Huntsman entered into in connection with our IPO and the Separation, we are required to indemnify Huntsman for any liabilities relating to our TiO₂ ~~operations.~~

~~Sales of TiO~~₂ ~~in the EU represented approximately 32% of our revenues for the twelve months ended September 30, 2017.~~

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~~Disruptions in production at our manufacturing facilities, including our Pori facility, may have a material adverse impact on our business, results of operations and/or financial condition.~~

Manufacturing facilities in our industry are subject to planned and unplanned production shutdowns, turnarounds, outages and other disruptions. Any serious disruption at any of our facilities could impair our ability to use our facilities and have a material adverse impact on our revenues and increase our costs and expenses. Alternative facilities with sufficient capacity may not be available, may cost substantially more or may ~~take~~require a significant amount of time to increase production or qualify with our customers, any of which could negatively impact our business, results of operations and/or financial condition. Long-term production disruptions may cause our customers to seek alternative supply which could further adversely affect our profitability.

Unplanned production disruptions may occur for external reasons including natural disasters, weather, disease, strikes, transportation interruption, government regulation, political unrest or terrorism, or internal reasons, such as fire, unplanned maintenance or other manufacturing problems. Any such production disruption could have a material impact on our operations, operating results and financial condition. For example, ~~a fire occurred in~~on January 30, 2017, at our TiO₂ manufacturing facility in Pori, Finland experienced fire damage and we continue to repair the facility. The Pori facility ~~is currently not fully operational.~~had a nameplate capacity of 130,000 metric tons per year, which represented approximately 17% of our total TiO₂ nameplate capacity and approximately 2% of total global TiO₂ demand.

Prior to the fire, 60% of the site capacity produced specialty products which, on average, contributed greater than 75% of the site EBITDA from January 1, 2015 through January 30, 2017. We ~~are currently operating at~~have restored 20% of the total prior capacity, ~~but producing only~~which is dedicated to production of specialty ~~products,~~products.

We are party to a number of contracts with a variety of third parties involved in the Pori rebuild, including various vendors of required equipment and ~~we currently intend to restore manufacturing of the balance of these more profitable specialty products by the fourth quarter of 2018. The remaining 40% of site capacity is more commoditized~~necessary engineering, demolition, construction and ~~we will determine if and when to rebuild this commoditized capacity depending on market conditions, costs and projected long term returns relative to our~~ other ~~investment opportunities. However, we~~services. We may experience delays in construction, equipment procurement, or in start-up or plant commissioning, and ~~even~~there is no single third party to whom we can turn for recourse in the event of delays, increased costs or other problems associated with the rebuild. Even if we are able to resume production on this schedule, we may lose customers that have in the meantime found alternative suppliers elsewhere.

The site is insured for property damage as well as business interruption losses subject to retained deductibles of $15 million and 60 days, ~~respectively, with~~respectively. On April 13, we received a final payment from our insurers of €191 million, or $236 million, bringing our total insurance receipts to €468 million, or $551 million, which was the limit of ~~$500~~our insurance proceeds. We elected to receive the insurance proceeds in Euro in order to match the currency of the related business interruption losses and capital expenditures resulting from the Pori fire. For the six months ended June 30, 2018, we received €243 million, or $298 million, of insurance proceeds, while €225 million, or $253 million, was received during 2017.

During the second quarter of 2018, we engaged additional outside experts and hired and re-allocated additional internal resources for the Pori rebuild, with an objective of improving both the execution and cost management of the project, and to update our view on the total cost of rebuilding the site. This process identified additional damage outside

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the immediate fire zone leading to increased costs. Also during the quarter, our contractor on the site experienced a recent and significant safety incident, which paused construction for several weeks while the incident was under investigation, and has extended the reconstruction timeline. These recent changes have led us to believe now that a full rebuild and commissioning of our Pori facility and require more self-funding than our previous estimate of $325 to $375 million, and ~~we currently expect our over-the-limit costs to be within $100 million to $150 million~~may result in a longer period of ~~such limit,~~time for project completion.

As a result of these recent developments and in light of ~~increased business interruption claims arising from increased TiO~~₂ ~~profitability~~our potential acquisition of the Ashtabula complex, we are reviewing options within our manufacturing network, including the option of transferring the production of Pori's specialty and ~~recently estimated reconstruction costs.~~differentiated products to elsewhere in our network, and are pacing our on-going construction activities at Pori accordingly during this period of review. We expect to account for ~~these~~our costs ~~over our insurance limits~~ as capital expenditures and fund them from cash from operations, which will decrease our liquidity ~~and adversely impact earnings~~ in the periods those costs ~~in excess of our insurance limits~~ are incurred. ~~However, these are preliminary estimates based on a number of significant assumptions,~~ ~~and the amount by which insurance proceeds does not fully cover our damages may exceed current estimates,which would further adversely impact liquidity and earnings.~~ ~~Factors that could materially impact our current estimates include our actual future TiO~~₂ profitability and related impact on our business interruption losses; the accuracy of our current property damage estimates; the actual costs and timing of our reconstruction efforts; the extent to which we rebuild the 40% of site capacity that produces commoditized products; our ability to secure government subsidies related to our reconstruction efforts; and a number of other significant market and facility-related assumptions. ~~In addition, if we experience delays in receiving the insurance proceeds, our short term liquidity and earnings may be impacted. Additionally, our~~Our premiums and deductibles may increase substantially as a result of the fire.

In addition, we rely on a number of vendors, suppliers and, in some cases, sole-source suppliers, service providers, toll manufacturers and collaborations with other industry participants to provide us with chemicals, feedstocks and other raw materials, along with energy sources and, in certain cases, facilities that we need to operate our business. If the business of these third parties is disrupted, some of these companies could be forced to reduce their output, shut down their operations or file for bankruptcy protection. If this were to occur, it could adversely affect their ability to provide us with the raw materials, energy sources or facilities that we need, which could materially disrupt our operations, including the production of certain of our products. Moreover, it could be difficult to find replacements for certain of our business partners without incurring significant delays or cost increases. All of these risks could have a material adverse effect on our business, results of operations, financial condition and liquidity.

While we maintain business recovery plans that are intended to allow us to recover from natural disasters or other events that could disrupt our business, we cannot provide assurances that our plans would fully protect us from the effects of all such disasters or from events that might increase in frequency or intensity due to climate change. In addition, insurance may not adequately compensate us for any losses incurred as a result of natural or other disasters. In areas prone to frequent natural or other disasters, insurance may become increasingly expensive or not available at all. Furthermore, some potential climate-driven losses, particularly flooding due to sea-level rises, may pose long-term risks to our physical facilities such that operations cannot be restored in their current locations.

Significant developments from the recent and potential changes in U.S. trade policies could have a material adverse effect on us.

The U.S. government has announced and, in some cases, implemented a new approach to trade policy, including renegotiating, or potentially terminating, certain existing bilateral or multi-lateral trade agreements, as well as implementing the imposition of additional tariffs on certain foreign goods, including finished products and raw materials such as steel and aluminum. These tariffs and potential tariffs have resulted or may result in increased prices for goods and materials imported into the U.S. and, in some, cases may result or have resulted in price increases for U.S. sourced goods and materials. Changes in U.S. trade policy have resulted and could result in additional reactions from U.S. trading partners, including adopting responsive trade policy making it more difficult or costly for us to export U.S. products to other countries. These measures could also result in increased costs for products imported into the U.S. or may cause us to adjust our worldwide supply chain. Either of these could require us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold.

Various countries, and regions, including, without limitation, China, Mexico, Canada and Europe, have announced plans or intentions to impose or have imposed tariffs on a wide range of U.S. products in retaliation for new U.S. tariffs. These actions could, in turn, result in additional tariffs being adopted by the U.S. These conditions and future actions could have a significant adverse effect on world trade and the world economy. To the extent that trade tariffs and other restrictions imposed by the United States increase the price of, or limit the amount of, raw materials and products imported into the United States, the costs of our raw materials may be adversely affected and the demand from our products may be diminished, which could adversely affect our revenues and profitability.

We cannot predict future trade policy or the terms of any renegotiated trade agreements and their impacts on our business. The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action

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related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the U.S. economy, which in turn could adversely impact our business, financial condition and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Upon~~

The following table provides information with respect to shares of equity-based awards granted under our ~~formation,~~share incentive plans that we ~~issued 50,000 of~~withheld upon vesting to satisfy our ~~ordinary shares, par value £1 per share (the "Subscriber Shares"), to Huntsman International (Netherlands) B.V., an indirect wholly-owned subsidiary of Huntsman. On~~tax withholding obligations during the three months ended June 30, 2017, (a) Huntsman International (Netherlands) B.V. transferred the Subscriber Shares to Huntsman International, and (b) we issued 50,000 redeemable shares, par value £1 per share, and one ordinary share, par value $1 per share, to Huntsman International, all of which (including the Subscriber Shares) were repurchased by us prior to the consummation of our IPO. Prior to the consummation of our IPO, we issued 106,271,712 ordinary shares, par value $0.001 per share, to Huntsman through its wholly-owned subsidiaries Huntsman International and Huntsman International (Netherlands) B.V. Each issuance of shares made prior to our IPO was made pursuant to the exemption from registration in Section 4(a)(2) of the Securities Act because the offer and issuance of the ordinary shares did not involve a public offering.

2018.



	Total number of shares purchased⁽¹⁾	Average price paid per share⁽¹⁾		Total number of shares purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
April	898	$	17.60	—	$	—
May	—	—		—	—
June	—	—		—	—
Total	898	$	17.60	—	$	—


⁽¹⁾	Represents shares purchased from employees to satisfy the tax withholding obligations in connection with the vesting of restricted stock units.

ITEM 6. EXHIBITS

Each exhibit identified below is filed as a part of this report. Exhibits designated with an "*" are filed as an exhibit to this Quarterly Report on Form 10-Q and Exhibits designated with an "+" indicates a management contract or compensatory plan.

Incorporated by Reference
Exhibit
Number

Description

Schedule
Form

File
Number

Exhibit

Filing Date

2.1

Separation Agreement, dated August 7, 2017, by and among Venator Materials PLC and Huntsman Corporation

8-K

001-38176

2.1

08/11/17

3.1

Amended and Restated Articles of Association

8-K

001-38176

3.1

08/07/17

4.1

Registration Rights Agreement, dated August 8, 2017, by and among Venator Materials PLC, Huntsman International LLC and Huntsman (Holdings) Netherlands B.V.

8-K

001-38176

10.4

08/11/17

4.2

Indenture, dated as of July 14, 2017, by and among Venator Finance S.à r.l., Venator Materials LLC and Wilmington Trust, National Association, as trustee

S-1/A

333-217753

4.3

07/14/17

4.3

Form of 5.75% Senior Note due 2025 (included as Exhibit A to Exhibit 4.1)

S-1/A

333-217753

4.3

07/14/17

4.4

Supplemental Indenture, dated August 8, 2017, by and among Venator Finance S.a r. l., Venator Materials LLC, the guarantors party thereto and Wilmington Trust, National Association

8-K

001-38176

10.8

08/11/17

10.1+

Venator Materials 2017 Stock Incentive Plan

8-K

001-38176

10.1

08/07/17

10.2+

Form of Non-qualified Stock Option Agreement (Employee Form) related to the Venator Materials 2017 Stock Incentive

S-8

333-219982

4.4

08/15/17

10.3+

Form of Performance Unit Agreement (Employee Form) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.5

08/15/17



		Incorporated by Reference
Exhibit Number	Description	Schedule Form	Exhibit	Filing Date
31.1*	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

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10.4+

Form of Phantom Share Agreement (Employee Form) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.6

08/15/17

10.5+

Form of Restricted Stock Unit Agreement (Employee Form, IPO Award Conversion) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.7

08/15/17

10.6+

Form of Restricted Stock Unit Agreement (Employee Form, New Grants) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.8

08/15/17

10.7+

Form of Restricted Stock Unit Agreement (Director Form) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.9

08/15/17

10.8+

Form of Share Unit Agreement (Director Form) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.10

08/15/17

10.9+

Form of Notice of Award of Ordinary Shares (Director Form) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.11

08/15/17

10.10

Employment Transfer Agreement, dated June 19, 2017 (Stolle)

S-1

333-217753

10.8

07/14/17

10.11

Employment Transfer Agreement, dated July 11, 2017 (Ogden)

S-1

333-217753

10.9

07/14/17

10.12

Employment Agreement, dated September 15, 2014 (Buberl)

S-1

333-217753

10.10

07/14/17

10.13

Transition Services Agreement, dated August 7, 2017, by and among Venator Materials PLC and Huntsman International LLC.

8-K

001-38176

10.1

08/11/17

10.14

Tax Matters Agreement, dated August 7, 2017, by and among Venator Materials PLC and Huntsman Corporation.

8-K

001-38176

10.2

08/11/17

10.15

Employee Matters Agreement, dated August 7, 2017, by and among Venator Materials PLC and Huntsman Corporation

8-K

001-38176

10.3

08/11/17

10.16

ABL Facility Agreement, dated August 8, 2017, by and among Venator Materials PLC, the borrowers party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.

8-K

001-38176

10.5

08/11/17

SIGNATURES

~~Table of Contents~~

10.17

Term Loan Agreement, dated August 8, 2017, by and among Venator Materials PLC, Venator Finance S.À.R.L. and Venator Materials LLC, as borrowers, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative and collateral agent.

8-K

001-38176

10.6

08/11/17

31.1*

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002

31.2*

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002

32.1*

Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*

Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*

XBRL Instance Document

101.SCH*

XBRL Taxonomy Extension Schema Document

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

XBRL Taxonomy Definition Linkbase Document

101.LAB*

XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document

~~Table of Contents~~

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		VENATOR MATERIALS PLC (Registrant)

Date: ~~November~~ 2~~, 2017~~	~~By:~~ July 31, 2018	By:	/s/ Kurt Ogden
		Kurt Ogden
		Senior Vice President and Chief Financial Officer

Date: ~~November~~ 2~~, 2017~~	~~By:~~ July 31, 2018	By:	/s/ Stephen Ibbotson
		Stephen Ibbotson
		Vice President and Controller



England and Wales	~~98‑1373159~~ 98-1373159
(State or other jurisdiction	(I.R.S. Employer Identification No.)
of incorporation or organization)



Large accelerated filer ☐ o	Accelerated filer ☐ o	Non-accelerated filer ☑ þ	Smaller reporting company ☐ o	Emerging growth company ☐ o
		(Do not check if a smaller reporting company)

				~~Page~~
~~NOTEREGARDINGFORWARD~~-~~LOOKINGSTATEMENTS~~		2
			Page
NOTE REGARDING FORWARD-LOOKING STATEMENTS		2

PART I	FINANCIAL INFORMATION		3 3

ITEM 1.	Condensed Consolidated and Combined Financial Statements (Unaudited)		3 3

	Condensed Consolidated and Combined Balance Sheets		3 3

	Condensed Consolidated and Combined Statements of Operations		4 4

	Condensed Consolidated and Combined Statements of Comprehensive Income ~~(Loss)~~		5 5

	Condensed Consolidated and Combined Statements of Equity		6 6

	Condensed Consolidated and Combined Statements of Cash Flows		7 7

	Notes to Unaudited Condensed Consolidated and Combined Financial Statements		8 8

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25 26

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		42 42

ITEM 4.	Controls and Procedures		43 43

PART II	OTHER INFORMATION		44 45

ITEM 1.	Legal Proceedings		44 45

ITEM 1A.	Risk Factors		44 45

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		46 47

ITEM 6.	Exhibits		46 47

	Signatures		47 50


•	increased manufacturing regulations for some of our products, including the outcome of the pending potential classification of TiO₂ as a carcinogen in the European Union (“EU”) or any increased regulatory scrutiny;


•	disruptions in production at our manufacturing facilities, including at our TiO₂ manufacturing facility in Pori, Finland;


	September 30,		December 31,
(In millions, except par value)	2017		2016
ASSETS
Current assets:
Cash and cash equivalents(a)	$	186	$	29
Accounts receivable (net of allowance for doubtful accounts of $4 each)(a)		411		247
Accounts receivable from affiliates		9		243
Inventories(a)		431		426
Prepaid expenses		11		11
Other current assets		73		59
Current assets of discontinued operations		—		84
Total current assets		1,121		1,099
Property, plant and equipment, net(a)		1,264		1,178
Intangible assets, net(a)		21		23
Investment in unconsolidated affiliates		77		85
Deferred income taxes		200		142
Notes receivable from affiliates		—		57
Other noncurrent assets		41		35
Noncurrent assets of discontinued operations		—		42
Total assets	$	2,724	$	2,661
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable(a)	$	319	$	297
Accounts payable to affiliates		15		695
Accrued liabilities(a)		213		146
Current portion of debt(a)		4		10
Current liabilities of discontinued operations		—		27
Total current liabilities		551		1,175
Long-term debt		747		13
Long-term debt to affiliates		—		882
Deferred income taxes		9		12
Other noncurrent liabilities		328		324
Noncurrent payable to affiliates		73		—
Noncurrent liabilities of discontinued operations		—		78
Total liabilities		1,708		2,484
Commitments and contingencies (Notes 11 and 12)
Equity
Parent’s net investment and advances		—		588
Ordinary shares $0.001 par value, 200 shares authorized, 106 and nil issued and 106 and nil outstanding, respectively		—		—
Additional paid-in capital		1,318		—
Accumulated deficit		(1)		—
Accumulated other comprehensive loss		(312)		(423)
Total Venator Materials PLC shareholders' equity		1,005		165
Noncontrolling interest in subsidiaries		11		12
Total equity		1,016		177
Total liabilities and equity	$	2,724	$	2,661


	Three months ended				Nine months ended
	September 30,				September 30,
(Dollars in millions, except per share amounts)	2017		2016		2017		2016
Trade sales, services and fees, net	$	582	$	532	$	1,681	$	1,648
Cost of goods sold		446		491		1,351		1,547
Operating expenses:
Selling, general and administrative (includes corporate allocations from Huntsman Corporation of $9, $27, $62 and $76, respectively)		51		55		159		168
Restructuring, impairment and plant closing costs		16		7		49		31
Other income, net		(6)		(22)		1		(33)
Total expenses		61		40		209		166
Operating income (loss)		75		1		121		(65)
Interest expense		(30)		(14)		(54)		(44)
Interest income		22		2		25		13
Other income		—		—		—		1
Income (loss) from continuing operations before income taxes		67		(11)		92		(95)
Income tax (expense) benefit		(14)		7		(26)		14
Income (loss) from continuing operations		53		(4)		66		(81)
Income from discontinued operations, net of tax		—		2		8		8
Net income (loss)		53		(2)		74		(73)
Net income attributable to noncontrolling interests		(2)		(3)		(8)		(8)
Net income (loss) attributable to Venator	$	51	$	(5)	$	66	$	(81)

Basic earnings (losses) per share:
Income (loss) from continuing operations attributable to Venator Materials PLC ordinary shareholders	$	0.48	$	(0.07)	$	0.55	$	(0.84)
Income from discontinued operations attributable to Venator Materials PLC ordinary shareholders		—		0.02		0.08		0.08
Net income (loss) attributable to Venator Materials PLC ordinary shareholders	$	0.48	$	(0.05)	$	0.63	$	(0.76)

Diluted earnings (losses) per share:
Income (loss) from continuing operations attributable to Venator Materials PLC ordinary shareholders	$	0.48	$	(0.07)	$	0.54	$	(0.84)
Income from discontinued operations attributable to Venator Materials PLC ordinary shareholders		—		0.02		0.08		0.08
Net income (loss) attributable to Venator Materials PLC ordinary shareholders	$	0.48	$	(0.05)	$	0.62	$	(0.76)


	Total Venator Materials PLC Equity
	Parent’s Net								Accumulated
	Investment				Additional				Other		Noncontrolling
	and		Ordinary		Paid-in		Accumulated		Comprehensive		Interest in
(Dollars in millions)	Advances		Shares		Capital		Deficit		Loss		Subsidiaries		Total
Balance, January 1, 2017	$	588	$	—	$	—	$	—	$	(423)	$	12	$	177
Net income (loss)		67		—		—		(1)		—		8		74
Net changes in other comprehensive income		—		—		—		—		111		—		111
Dividends paid to noncontrolling interests		—		—		—		—		—		(9)		(9)
Net changes in parent’s net investment and advances		663		—		—		—		—		—		663
Conversion of parent's net investment and advances to paid-in capital		(1,318)		—		1,318		—		—		—		—
Balance, September 30, 2017	$	—	$	—	$	1,318	$	(1)	$	(312)	$	11	$	1,016


			Other
	Workforce		restructuring
(Dollars in millions)	reductions(1)		costs		Total(2)
Accrued liabilities as of December 31, 2016	$	21	$	—	$	21
2017 charges		34		8		42
2017 payments		(15)		(8)		(23)
Foreign currency effect on liability balance		1		—		1
Accrued liabilities as of September 30, 2017	$	41	$	—	$	41


	Titanium		Performance
(Dollars in millions)	Dioxide		Additives		Total
Accrued liabilities as of December 31, 2016	$	12	$	9	$	21
2017 charges		33		9		42
2017 payments		(14)		(9)		(23)
Foreign currency effect on liability balance		1		—		1
Accrued liabilities as of September 30, 2017	$	32	$	9	$	41

Current portion of restructuring reserves	$	28	$	9	$	37
Long-term portion of restructuring reserve		4		—		4


			Pension and other		Other
	Foreign		postretirement		comprehensive				Amounts
	currency		benefits		income of				attributable to		Amounts
	translation		adjustments,		unconsolidated				noncontrolling		attributable to
(Dollars in millions)	adjustment(a)		net of tax(b)		affiliates		Total		interests		Venator
Beginning balance, January 1, 2017	$	(112)	$	(306)	$	(5)	$	(423)	$	—	$	(423)
Adjustments related to other entities under common control		5		24		—		29		—		29
Tax expense		—		(3)		—		(3)		—		(3)
Other comprehensive income before reclassifications		68		3		—		71		—		71
Tax benefit		2		1		—		3		—		3
Amounts reclassified from accumulated other comprehensive loss, gross(c)		—		11		—		11		—		11
Tax expense		—		—		—		—		—		—
Net current-period other comprehensive income		75		36		—		111		—		111
Ending balance, September 30, 2017	$	(37)	$	(270)	$	(5)	$	(312)	$	—	$	(312)