The Corporation sells its products to TDCC to simplify the customer interface process. Products are sold to and purchased from TDCC at prices determined in accordance with the terms of an agreement between UCC and TDCC. After each quarter, the Corporation and TDCC analyze the pricing used for the sales in that quarter and reach agreement on any necessary adjustments, at which point the prices are final. The Corporation also procures certain commodities and raw materials through a TDCC subsidiary and pays a commission to that TDCC subsidiary based on the volume and type of commodities and raw materials purchased.

The Corporation also has a master services agreement with TDCC, whereby TDCC provides services including, but not limited to: accounting; legal; treasury (investments, cash management, risk management, insurance); procurement; human resources; environmental; health and safety; and business management for UCC. Under the master services agreement with TDCC, general administrative and overhead type services that TDCC routinely

allocates to various businesses are charged to UCC. The master services agreement cost allocation basis is headcount and includes a 10 percent service fee.

The following table summarizes UCC’s transactions with TDCC and a TDCC subsidiary related to product and services agreements for the years ended December 31, 2022, 2021 and 2020:


Product and Services Agreements Transactions	2022		2021		2020		Income Statement
In millions							Classification
TDCC Subsidiary:
Commodity and raw materials purchases 1	$	1,909	$	1,915	$	1,021	Cost of sales
Commission expense	$	19	$	21	$	22	Sundry income (expense) - net
TDCC:
General administrative and overhead type services and service fee 2	$	65	$	63	$	31	Sundry income (expense) - net
Activity-based costs	$	89	$	74	$	87	Cost of sales

1.Period-end balances on hand are included in inventory. The increase in purchase costs from 2020 was primarily due to higher feedstock and energy costs.

2.The increase in services and fees from 2020 resulted from TDCC's periodic review of the actual cost of services provided to UCC in accordance with related agreements.

Management believes the method used for determining expenses charged by TDCC is reasonable. TDCC provides these services by leveraging its centralized functional service centers to provide services at a cost that management believes provides an advantage to the Corporation.

The monitoring and execution of risk management policies related to interest rate and foreign currency risks, which are based on TDCC’s risk management philosophy, are provided as a service to UCC.

The Corporation incurred asset losses and other costs and experienced lost sales and margins due to severe weather events that impacted the U.S. Gulf Coast in 2021. These costs and losses are covered, in part, by an insurance program purchased by TDCC from its insurance affiliate. In December 2021, the Corporation recorded an insurance recovery of $114 million from TDCC for the Corporation’s share of covered losses and incurred costs, included in "Cost of sales" in the consolidated statements of income and included in “Accounts receivable - Related companies” in the consolidated balance sheets at December 31, 2021. Proceeds from this insurance recovery were received in 2022.

In accordance with the Tax Sharing Agreement between the Corporation and TDCC, the Corporation makes payments to TDCC to cover the Corporation's estimated federal tax liability; payments were $155 million in 2022, $42 million in 2021 and $100 million in 2020.

As part of TDCC’s cash management process, UCC is a party to revolving loans with TDCC that mature December 30, 2023 and have interest rates based on alternative reference rates, effective January 1, 2022, and based on LIBOR (London Interbank Offered Rate) in prior periods. At December 31, 2022, the Corporation had a note receivable of $958 million ($988 million at December 31, 2021) from TDCC under a revolving loan agreement. The Corporation may draw from this note receivable in support of its daily working capital requirements and, as such, the net effect of cash inflows and outflows under this revolving loan agreement is presented in the consolidated statements of cash flows as an operating activity.

The Corporation also has a separate revolving credit agreement with TDCC that allows the Corporation to borrow or obtain credit enhancements up to an aggregate of $1 billion. TDCC may demand repayment with a 30-day written notice to the Corporation, subject to certain restrictions. A related collateral agreement provides for the replacement of certain existing pledged assets, primarily equity interests in various subsidiaries and joint ventures, with cash collateral. At December 31, 2022, $942 million was available under the revolving credit agreement ($935 million at December 31, 2021). The cash collateral was reported as "Noncurrent receivables from related companies" in the consolidated balance sheets.

On a quarterly basis, the Corporation's Board reviews and determines if there will be a dividend distribution to its parent company and sole shareholder, TDCC. The Board takes into consideration the level of earnings and cash flows, among other factors, in determining the amount of the dividend distribution.