RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2024

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS DISCLOSURE

RELATED PARTY TRANSACTIONS

A summary of the Corporation's related party transactions can be found in Note 17 to the Consolidated Financial Statements included in the 2023 10-K.

Product and Services Agreements

The following table summarizes UCC’s transactions with TDCC and a TDCC subsidiary related to product and services agreements for the three months ended March 31, 2024 and 2023:

Product and Services Agreements Transactions	Three Months Ended
	Mar 31, 2024		Mar 31, 2023		Income Statement Classification
In millions
Commodity and raw material purchases 1	$	260	$	319	Cost of sales
Commission expense	$	5	$	5	Sundry income (expense) - net
General administrative and overhead type services and service fee 2	$	15	$	17	Sundry income (expense) - net
Activity-based costs 3	$	148	$	26	Cost of sales

1.Period-end balances on hand are included in inventory. The decrease in purchase costs was primarily due to lower feedstock costs and the changes in cost flows resulting from UCC's divestiture of certain non-product producing infrastructure assets to another TDCC subsidiary in the fourth quarter of 2023 ("Infrastructure Divestment").

2.The decrease in services and fees resulted from TDCC's periodic review of its cost allocation for global services, partially offset by increases due to changes in cost flows and cost of site infrastructure services resulting from the Infrastructure Divestment.

3.The increase in activity-based costs was primarily due to the impact of the Infrastructure Divestment, as certain site infrastructure-related costs previously administered independently by the Corporation are now performed by another TDCC subsidiary and billed to the Corporation, and certain changes in other cost flows, also resulting from the Infrastructure Divestment. These costs include short-term lease cost of $3 million related to pipeline and site services for the three months ended March 31, 2024, included in Lease Cost in Note 8.

Additionally, the Corporation experienced an unplanned shutdown of its manufacturing site in Seadrift, Texas, in October 2023, resulting in lost sales and margins in the fourth quarter of 2023. These losses are covered, in part, by an insurance program purchased by TDCC from its insurance affiliate. In the first quarter of 2024, the Corporation recorded insurance recoveries of $22 million from TDCC for covered losses, included in "Cost of sales" in the consolidated statements of income for the three months ended March 31, 2024 and included in “Accounts receivable - Related companies” in the consolidated balance sheets at March 31, 2024.

Tax Sharing Agreement

The Corporation is included in TDCC's consolidated federal income tax group. Current and deferred tax expenses are calculated for the Corporation as a stand-alone group and are allocated to the group from the consolidated totals, consistent with the TDCC-UCC Tax Sharing Agreement. The amounts reported as income taxes payable or receivable represent the Corporation's payment obligation (or refundable amount) to TDCC based on a theoretical tax liability calculated on a separate return method.

The Corporation recorded a decrease of approximately $220 million of its income tax and related interest receivable due to a tax audit closure in the first quarter of 2024. These amounts were reclassified from "Income taxes receivable" to "Accounts receivable - Related companies" in the consolidated balance sheets at March 31, 2024 and reflected in "Related company receivables" and "Other assets and liabilities" in the consolidated statements of cash flows for the three months ended March 31, 2024.

Dividends

The following table summarizes cash dividends declared and paid to TDCC for the three months ended March 31, 2024 and 2023:

Cash Dividends Declared and Paid	Three Months Ended
	Mar 31, 2024		Mar 31, 2023
In millions
Cash dividends declared and paid	$	43	$	135