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(Exact name of registrant as specified in its charter)

Ohio									34-1730488
(State or other jurisdiction									(I.R.S. Employer Identification No.)
of incorporation or organization)
33587 Walker Road,
Avon Lake, Ohio									44012
(Address of principal executive offices)									(Zip Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol			Name of each exchange on which registered
Common Shares, par value $.01 per share			AVNT			New York Stock Exchange

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☒			Accelerated filer			☐
Non-accelerated filer			☐			Smaller reporting company			☐
						Emerging growth company			☐

•disruptions, uncertainty or volatility in the credit markets that could adversely impact the availability of credit already arranged and the availability and cost of credit in the future;

•the effect on foreign operations of currency fluctuations, tariffs and other political, economic and regulatory risks;

•the current and potential future impact of the COVID-19 pandemic on our business, results of operations, financial position or cash flows, including without any limitation, any supply chain and logistics issues;

•changes in polymer consumption growth rates and laws and regulations regarding plastics in jurisdictions where we conduct business;

•fluctuations in raw material prices, quality and supply, and in energy prices and supply;

•production outages or material costs associated with scheduled or unscheduled maintenance programs;

•unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters;

•our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends;

•information systems failures and cyberattacks;

•amounts for cash and non-cash charges related to restructuring plans that may differ from original estimates, including because of timing changes associated with the underlying actions; and

•other factors described in this Annual Report on Form 10-K under Item 1A, “Risk Factors.”

We operate in three reportable segments: (1) Color, Additives and Inks; (2) Specialty Engineered Materials; and (3) Distribution. Previously, Avient had four reportable segments. However, as a result of the divestiture of the Performance Products and Solutions segment (PP&S) on October 25, 2019, we have removed PP&S as a separate operating segment and its results are presented as discontinued operations. Please see Note 3, Discontinued Operations, to the accompanying consolidated financial statements for additional information.

Our segments are further detailed in Note 15, Segment Information, to the accompanying consolidated financial statements.

The top priority at Avient is the safety and health of our associates, and our ultimate goal is to operate injury free. Progress toward this goal is measured at the business unit and regional levels, communicated globally, and linked to a number of recognition mechanisms. In 2021, we maintained world-class performance for our industry, with a recordable incident rate of 0.55 per 100 full-time workers per year as compared to industry average of 3.50 in 2020. We continue to be recognized as an American Chemistry Counsel Responsible Care® company and set high standards for our operations as we strive to achieve our goal of zero recordable injuries.

•provide all levels of associates with a compensation package that aligns Avient’s and the associates’ interests through the use of base and annual incentive pay programs;

•maintain a competitive pay program that serves to attract, retain, motivate and reward associates; and

•award individual pay commensurate with experience, level of responsibility, and marketability.

We are strongly committed to safety as evidenced by our low injury incidence rate of 0.55 per 100 full-time workers per year in 2021 and 0.5 in 2020. The 2020 average injury incidence rate for our NAICS Code (326 Plastics and Rubber Products Manufacturing) was 3.50. We hold the American Chemistry Council's certification as a Responsible Care Management System® (RCMS) company. Certification was granted based on Avient's conformance to the RCMS's comprehensive environmental health, safety and security requirements. The RCMS certification affirms the importance Avient places on having world-class environmental, health, safety and security performance.

Refer to Note 12, Commitments and Contingencies, to the accompanying consolidated financial statements for discussion of environmental investigation and remediation matters and Item 1A. Risk Factors for discussion of matters pertaining to other regulation.

Our international operations are subject to a variety of risks, including currency fluctuations and devaluations, exchange controls, currency restrictions and changes in local economic conditions. While the impact of these risks is difficult to predict, any one or more of them could adversely affect our future operations. For more information about the noted risks, see Item 1A. "Risk Factors." For more information about our international operations, see Note 15, Segment Information, to the accompanying consolidated financial statements.

Our internet address is www.avient.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available, free of charge, on our website (select Investors and then SEC Filings) or upon written request, as soon as reasonably practicable after we electronically file or furnish them to the SEC. The contents of our website are not part of this Annual Report on Form 10-K, and the reference to our website does not constitute incorporation by reference into this Form 10-K of the information contained at that site.

ITEM 1A. RISK FACTORS

We conduct a substantial portion of our business outside the U.S., with approximately 53% of our sales in foreign countries. We currently have many facilities located outside the U.S., as detailed in Item 2. “Properties.” Accordingly, our business is subject to risks related to the differing legal, political, social and regulatory requirements, and economic conditions of many jurisdictions. Risks inherent in international operations include, but are not limited to, the following:

•changes in local government regulations and policies including, but not limited to, duty or tariff restrictions, foreign currency exchange controls or monetary policy, repatriation of earnings, expropriation of property, investment limitations and tax policies;

•political and economic instability and disruptions, including labor unrest, withdrawal or renegotiation of trade agreements, natural disasters, major public health issues, pandemics, civil strife, acts of war, insurrection and terrorism;

•legislation that regulates the use of chemicals;

•disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act;

•compliance with international trade laws and regulations, including export control and economic sanctions;

•difficulties in staffing and managing multi-national operations;

•limitations on our ability to enforce legal rights and remedies;

•reduced protection of intellectual property rights;

•other risks arising out of foreign sovereignty over the areas where our operations are conducted; and

•increasingly complex laws and regulations concerning privacy and data security, including, but not limited to, the European Union's General Data Protection Regulation.

•economic downturns or other volatility in the significant end markets that we serve;

•product obsolescence or technological changes that unfavorably alter the value/cost proposition of our products and services;

•competition from existing and unforeseen polymer and non-polymer based products;

•declines in general economic conditions or reductions in industrial production growth rates, both domestically and globally, which could impact our customers’ ability to pay amounts owed to us;

•changes in environmental regulations that limit our ability to sell our products and services in specific markets;

•changes in laws and regulations regarding plastic materials; and

•inability to obtain raw materials or supply products to customers due to factors such as supplier work stoppages, supply shortages, plant outages or regulatory changes that may limit or prohibit overland transportation of certain hazardous materials and exogenous factors, like severe weather.

We are exposed to fluctuations in foreign currency exchange rates. Any significant change in the value of the currencies of the countries in which we do business against the U.S. dollar, whether precipitated by governmental monetary policy or otherwise, could affect our ability to sell products competitively and control our cost structure, which could have a material adverse effect on our business, financial condition and results of operations. For additional detail related to this risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk."

As of December 31, 2021, we had goodwill of $1,286.4 million. The future occurrence of a potential indicator of impairment, such as a significant adverse change in business climate, an adverse action or assessment by a regulator, unanticipated competition, a material negative change in relationships with customers, strategic decisions made in response to economic or competitive conditions could result in goodwill impairment charges, which could adversely impact our results of operations. Based on our 2021 goodwill impairment test, performed as of October 1, 2021, no reporting units were identified as being at risk of future impairment. For additional information, see Note 4, Goodwill and Intangible Assets, to the accompanying consolidated financial statements and “Critical Accounting Policies and Estimates” included in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

•shutdowns or slowdowns of our production facilities;

•disruptions in our supply chain and our ability to obtain raw materials, packaging and other sourced materials due to labor shortages, governmental restrictions or the failure of our suppliers, distributors or manufacturers to meet their obligations to us;

•increases in raw material and commodity costs;

•the inability of a significant portion of our workforce, including our management team, to work as a result of illness or government restrictions; and

•reduced liquidity of customers, which could negatively impact the collectability of outstanding receivables and our cash flows.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Specialty Engineered Materials

Color, Additives and Inks

Distribution

1. Birmingham, Alabama

1. Glendale, Arizona

30. Toronto, Canada

59. Santa Clara, Mexico

1. Rancho Cucamonga, California

2. Englewood, Colorado

2. & 3. Phoenix, Arizona (c)

31. Maipu, Chile

60. Toluca, Mexico

2. Chicago, Illinois

3. Montrose, Colorado

4. Bethel, Connecticut

32. Chuzhou, China

61. Auckland, New Zealand

3. Eagan, Minnesota

4. North Haven, Connecticut

5. Dalton, Georgia

33. Guangzhou, China

62. Karachi, Pakistan

4. Edison, New Jersey

5. McHenry, Illinois

6. Kennesaw, Georgia

34. Pudong, China

63. Lahore, Pakistan

5. Statesville, North Carolina

6. Winona, Minnesota

7. Elk Grove Village, Illinois

35. & 36. Shanghai, China (d)

64. Lima, Peru

6. Elyria, Ohio

7. Hickory, North Carolina

8. West Chicago, Illinois

37. Suzhou, China

65. Konstantynow, Poland

7. La Porte, Texas

8. Avon Lake, Ohio

9. La Porte, Indiana

38. Tianjin, China

66. Kutno, Poland

8. Brampton, Ontario, Canada

9. Hatfield, Pennsylvania

10. Lewiston, Maine

39. Cota, Colombia

67. Jeddah, Saudi Arabia

(8 Distribution Facilities)

10. Changzhou, China

11. Holden, Massachusetts

40. Aland, Finland

68. Riyadh, Saudi Arabia

11. Shenzhen, China

12. Albion, Michigan

41. Cergy, France

69. Yanbu, Saudi Arabia

12. Suzhou, China

13. Minneapolis, Minnesota

42. Tossiat, France

70. Jurong, Singapore

13. Gaggenau, Germany

14. St. Louis, Missouri

43. Ahrensburg, Germany

71. Randburg, South Africa

14. Melle, Germany

15. Lockport, New York

44. Diez, Germany

72. Alicante, Spain

15. Leeuwarden, Netherlands

16. Mooresville, North Carolina

45. Lahnstein, Germany

73. Barcelona, Spain

16. Barbastro, Spain

17. Berea, Ohio

46. Guatemala City, Guatemala

74. Pamplona, Spain

17. Istanbul, Turkey

18. Massillon, Ohio

47. Gyor, Hungary

75. Sant Andreu, Spain

18. Leek, United Kingdom

19. North Baltimore, Ohio

48. Kalol, India

76. Malmoe, Sweden

Shanghai, China (b)

20. Norwalk, Ohio

49. Pune, India

77. Taoyuan, Taiwan

Pune, India (a)

21. Lehigh Valley, Pennsylvania

50. Rania, India

78. Bangkok, Thailand

Pamplona, Spain (a)

22. Mountain Top, Pennsylvania

51. Vashere, India

79. Phan Thong, Thailand

(18 Manufacturing Plants)

23. Vonore, Tennessee

52. Tangerang, Indonesia

80. Gazientep, Turkey

24. Winchester, Virginia

53. Naas, Ireland

81. Gebze, Turkey

25. Lomas de Zamora, Argentina

54. Lomagna, Italy

82. Barnsley, United Kingdom

26. Assesse, Belgium

55. Merate, Italy

83. Knowsley, United Kingdom

27. Louvain-La-Nueve, Belgium

56. Milan, Italy

84. Thuan An, Vietnam

28. Itupeva, Brazil

57. Pogliano, Italy

(84 Manufacturing Plants)

29. Suzano, Brazil

58. Butterworth, Malaysia

(a)Facility is not included in manufacturing plants total as it is also included as part of another segment.

Information regarding certain legal proceedings can be found in Note 12, Commitments and Contingencies, to the accompanying consolidated financial statements and is incorporated by reference herein.

Name

Age

Position

Robert M. Patterson

49

Chairman, President and Chief Executive Officer

Jamie A. Beggs

45

Senior Vice President, Chief Financial Officer

Cathy K. Dodd

56

Senior Vice President, President of Distribution

Michael A. Garratt

58

Senior Vice President, President Color, Additives and Inks, EMEA

Lisa K. Kunkle

53

Senior Vice President, General Counsel and Secretary

M. John Midea, Jr.

57

Senior Vice President, Global Operations and Process Improvement

Woon Keat Moh

48

Senior Vice President, President of Color, Additives and Inks, Americas and Asia

Chris L. Pederson

55

Senior Vice President, President of Specialty Engineered Materials

Vinod Purayath, PhD

43

Senior Vice President, Chief Technology Officer

Joel R. Rathbun

49

Senior Vice President, Mergers & Acquisitions

João José San Martin Neto

61

Senior Vice President, Chief Human Resources Officer

Woon Keat Moh: Senior Vice President, President Color, Additives and Inks, Americas and Asia, April 2020 to date. Senior Vice President, President of Color, Additives and Inks, 2020 to 2020. Vice President of Asia, 2019 to 2019. General Manager of Specialty Engineered Materials Asia, 2014 to 2018. Sales Director of Color and Additives Asia, 2011 to 2014. Business Development Manager, Color and Additives Asia, 2010 to 2011. From 1999 to 2010, Mr. Moh worked for Clariant AG (a global manufacturer of color and additives masterbatch) in various roles of increasing responsibility, culminating in a commercial leadership role in Southeast Asia. He also served as a technical sales executive for Bayer AG (a manufacturer of pigments, dyestuffs, additives, chemical auxiliaries for textile, leather, paper and plastic industry) with its Specialty Products division from 1997 to 1999.

Period			Total Number of Shares Purchased						Weighted Average Price Paid Per Share						Total Number of Shares Purchased as Part of Publicly Announced Program						Maximum Number of Shares that May Yet be Purchased Under the Program(1)
October 1 to October 31			—						$	—					—						5,757,472
November 1 to November 30			—						$	—					—						5,757,472
December 1 to December 31			—						$	—					—						5,757,472
Total			—						$	—					—

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions)						2021						2020						2019
Sales						$	4,818.8					$	3,242.1					$	2,862.7
Operating income						381.2						189.3						156.8
Net income from continuing operations, net of income taxes						230.6						133.8						75.7
Net income from continuing operations attributable to Avient common shareholders						230.8						132.0						75.5

Results of Operations																								Variances — Favorable (Unfavorable)
																								2021 versus 2020
(Dollars in millions, except per share data)						2021						2020						2019						Change						% Change
Sales						$	4,818.8					$	3,242.1					$	2,862.7					$	1,576.7					48.6		%
Cost of sales						3,719.2						2,457.8						2,205.5						(1,261.4)						(51.3)		%
Gross margin						1,099.6						784.3						657.2						315.3						40.2		%
Selling and administrative expense						718.4						595.0						500.4						(123.4)						(20.7)		%
Operating income						381.2						189.3						156.8						191.9						101.4		%
Interest expense, net						(75.3)						(74.6)						(59.5)						(0.7)						(0.9)		%
Other (expense) income, net						(1.3)						24.3						12.1						(25.6)						nm
Income from continuing operations before income taxes						304.6						139.0						109.4						165.6						119.1		%
Income tax expense						(74.0)						(5.2)						(33.7)						(68.8)						nm
Net income from continuing operations						$	230.6					$	133.8					$	75.7					$	96.8					72.3		%
(Loss) income from discontinued operations, net of income taxes						—						(0.4)						513.1						0.4						nm
Net income						230.6						133.4						588.8						97.2						72.9		%
Net loss (income) attributable to noncontrolling interests						0.2						(1.8)						(0.2)						2.0						nm
Net income attributable to Avient common shareholders						$	230.8					$	131.6					$	588.6					$	99.2					75.4		%
Earnings per share attributable to Avient common shareholders - basic:
Continuing operations						$	2.53					$	1.47					$	0.98
Discontinued operations						—						(0.01)						6.64
Total						$	2.53					$	1.46					$	7.62
Earnings per share attributable to Avient common shareholders - diluted:
Continuing operations						$	2.51					$	1.46					$	0.97
Discontinued operations						—						(0.01)						6.61
Total						$	2.51					$	1.45					$	7.58

Other income, net decreased $25.6 million in 2021 as compared to 2020 due to a mark-to-market adjustment and curtailments on our pension and other post-employment benefit obligations that resulted in a loss of $9.4 million in 2021, while it resulted in a gain of $17.2 million in 2020 (see Note 11, Employee Benefit Plans to the accompanying condensed consolidated financial statements). All components of net periodic benefit cost, except for service costs, are presented herein.

						Twelve Months Ended December 31,
(In millions)						2021						2020
Federal statutory income tax rate						21.0		%				21.0		%
Tax (benefit) expense on GILTI and FDII						(1.7)						3.1
International tax on certain current and prior year earnings						1.4						2.0
Net impact of non-deductible acquisition earnouts and transaction cost						0.1						1.8
Research and development credit						(0.8)						(2.1)
Carryback of capital losses						(0.4)						(13.1)
State and local tax, net						1.4						(3.4)
International tax rate differential						(0.2)						(2.7)
International permanent items						0.2						(5.2)
Net impact of uncertain tax positions						0.7						1.0
Changes in valuation allowances						1.7						0.5
Other						0.9						0.8
Effective income tax rate						24.3		%				3.7		%

Operating income is the primary measure that is reported to our chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. Operating income at the segment level does not include: corporate general and administrative costs that are not allocated to segments; intersegment sales and profit eliminations; charges related to specific strategic initiatives, such as the consolidation of operations; restructuring activities, including employee separation costs resulting from personnel reduction programs, plant closure and phase-in costs; costs incurred directly in relation to acquisitions or divestitures; integration costs; executive separation agreements; share-based compensation costs; environmental remediation costs and other liabilities for facilities no longer owned or closed in prior years; actuarial gains and losses associated with our pension and post-retirement benefit plans; and certain other items that are not included in the measure of segment profit or loss that is reported to and reviewed by our chief operating decision maker. These costs are included in Corporate and eliminations.

Avient has three reportable segments: (1) Color, Additives and Inks; (2) Specialty Engineered Materials; and (3) Distribution. Our segments are further discussed in Note 15, Segment Information, to the accompanying consolidated financial statements.

Sales and Operating Income

																								2021 versus 2020
(Dollars in millions)						2021						2020												Change						% Change
Sales:
Color, Additives and Inks						$	2,401.6					$	1,502.9											$	898.7					59.8		%
Specialty Engineered Materials						918.9						708.8												210.1						29.6		%
Distribution						1,630.9						1,110.3												520.6						46.9		%
Corporate and eliminations						(132.6)						(79.9)												(52.7)						(66.0)		%
Sales						$	4,818.8					$	3,242.1											$	1,576.7					48.6		%
Operating income:
Color, Additives and Inks						$	303.1					$	180.8											$	122.3					67.6		%
Specialty Engineered Materials						132.0						94.4												37.6						39.8		%
Distribution						93.2						69.5												23.7						34.1		%
Corporate and eliminations						(147.1)						(155.4)												8.3						5.3		%
Operating income						$	381.2					$	189.3											$	191.9					101.4		%
Operating income as a percentage of sales:
Color, Additives and Inks						12.6		%				12.0		%										0.6		%				points
Specialty Engineered Materials						14.4		%				13.3		%										1.1		%				points
Distribution						5.7		%				6.3		%										(0.6)		%				points
Total						7.9		%				5.8		%										2.1		%				points

(In millions)
Cash and cash equivalents			$	601.2
Revolving credit availability			485.5
Liquidity			$	1,086.7

The following table summarizes our cash flows from operating, investing and financing activities:

(In millions)						2021						2020						2019
Cash provided by (used by):
Operating Activities						$	233.8					$	221.6					$	300.8
Investing Activities						(150.2)						(1,431.6)						611.9
Financing Activities						(114.6)						982.0						(218.3)
Effect of exchange rate on cash						(17.3)						12.8						(0.6)
Net (decrease) increase in cash and cash equivalents						$	(48.3)					$	(215.2)					$	693.8

Operating activities

(In millions)			2021						2020
Senior secured revolving credit facility due 2026			$	—					$	—
5.25% senior notes due 2023			598.6						597.5
5.75% senior notes due 2025			643.2						641.2
Senior secured term loan due 2026			605.3						610.0
Other debt			11.8						23.9
Total debt			$	1,858.9					$	1,872.6
Less short-term and current portion of long-term debt			8.6						18.6
Total long-term debt, net of current portion			$	1,850.3					$	1,854.0

For additional information regarding our debt, please see Note 6, Financing Arrangements to the accompanying condensed consolidated financial statements.

We have future obligations under various contracts relating to debt and interest payments, operating leases, pension and post-retirement benefit plans and purchase obligations. The following table summarizes our obligations as of December 31, 2021 that are expected to impact liquidity and cash flow in future periods. See Liquidity and Capital Resources for additional discussion of our ability to generate and access cash to meet requirements as well as plans for use of cash in both the short-term and long-term.

						Payment Due by Period
(In millions)						Total						2022						2023						2024						2025						2026						Thereafter
Total debt (1)						$	1,873.3					$	8.6					$	608.6					$	8.6					$	658.7					$	6.9					$	581.9
Operating leases						81.3						26.3						19.8						12.6						7.7						4.6						10.3
Interest on long-term debt obligations (2)						241.8						84.4						68.5						52.6						33.7						1.6						1.0
Pension and post-retirement obligations (3)						89.4						9.5						8.9						8.7						9.0						9.0						44.3
Purchase obligations (4)						40.5						27.5						8.1						3.0						1.5						0.4						—
Total						$	2,326.3					$	156.3					$	713.9					$	85.5					$	710.6					$	22.5					$	637.5

(1)Total debt includes both the current and long-term portions of debt and capital lease obligations.

(2)Represents estimated contractual interest payments for all outstanding debt.

(4)Purchase obligations are primarily comprised of service agreements related to telecommunication, information technology, utilities and other manufacturing plant services and certain capital commitments.

Significant accounting policies are described more fully in Note 1, Description of Business and Summary of Significant Accounting Policies, to the accompanying consolidated financial statements. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires us to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates on historical experience and assumptions that we believe are reasonable considering the related facts and circumstances. The application of these critical accounting policies involves the exercise of judgment and use of assumptions for future uncertainties. Accordingly, actual results could differ significantly from these estimates. We believe that the following discussion addresses our most critical accounting policies, which are those that are the most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective and complex judgments.

Description

Judgments and Uncertainties

Effect if Actual Results Differ from Assumptions

Environmental Liabilities

•    Based upon our estimates, we had an undiscounted accrual of $124.5 million at December 31, 2021 for probable future environmental expenditures. Any such provision is recognized using the Company's best estimate of the amount of loss incurred, or at the lower end of an estimated range, when a single best estimate is not determinable. •    With respect to the former Goodrich Corporation Calvert City site, the United States Environmental Protection Agency (USEPA) issued its Record of Decision (ROD) in September 2018, selecting a remedy consistent with our accrual assumptions. In April 2019, the respondents signed an Administrative Settlement Agreement and Order on Consent with the USEPA to conduct the remedial design. In October 2019, the USEPA sent a Special Notice Letter to Avient, Westlake Vinyls, and Goodrich Corporation, inviting negotiation of a Consent Decree to perform the remedial actions at the site. In 2020, the three companies, USEPA, and the US Department of Justice signed the agreed Consent Decree, which received Federal Court approval in January 2021. •    In some cases, the Company recovers a portion of the costs relating to these obligations from insurers or other third parties; however, the Company records such amounts only when they are collected.

•     This accrual represents our best estimate of the remaining probable costs based upon information and technology currently available. Depending upon the results of future testing, the ultimate remediation alternatives undertaken, changes in regulations, new information, newly discovered conditions and other factors, it is reasonably possible that we could incur additional costs in excess of the amount accrued. However, such additional costs, if any, cannot currently be estimated. Our estimate of this liability may be revised as new regulations or technologies are developed or additional information is obtained.

•    If further developments or resolution of these matters are not consistent with our assumptions and judgments, we may need to recognize a significant adjustment in a future period. •    As we progress through certain benchmarks such as completion of the remedial design and remedial action, additional information will become available that may require an adjustment to our existing reserves.

Description

Judgments and Uncertainties

Effect if Actual Results Differ from Assumptions

Pension and Other Post-retirement Plans

•    We account for our defined benefit pension plans and other post-retirement plans in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Update (ASC) Topic 715, Compensation — Retirement Benefits. We immediately recognize actuarial gains and losses in our operating results in the year in which the gains or losses occur. In 2021, we recognized a $9.4 million loss that was primarily the result of actual asset returns that were lower than our assumed returns. Partially offsetting the lower asset returns was an increase in our year end discount rate from 2.47% to 2.69%.

•     Asset returns and interest rates significantly affect the value of future assets and liabilities of our pension and post-retirement plans and therefore the funded status of our plans. It is difficult to predict these factors due to the volatility of market conditions. •      To develop our discount rate, we consider the yields of high-quality corporate bonds with maturities that correspond to the timing of our benefit obligations, referred to as the bond matching approach. •     To develop our expected long-term return on plan assets, we consider historical and forward looking long-term asset returns and the expected investment portfolio mix of plan assets. The weighted-average expected long-term rate of return on plan assets was 4.86% for 2021, 5.05% for 2020 and 5.68% for 2019. •     Life expectancy is a significant assumption that impacts our pension and other post-retirement benefits obligation. During 2020, we adopted the MP-2020 mortality improvement scale which was issued by the Society of Actuaries in October 2020.

•    The expected long-term return on plan assets utilized as of January 1, 2021 and 2020 was 4.86% and 5.05%, respectively. An increase/decrease in our expected long-term return on plan assets of 50 basis points as of December 31, 2021 would result in a change of approximately $2.5 million to 2022 net periodic benefit cost.

Income Taxes

• We account for income taxes using the asset and liability method under FASB ASC Topic 740. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, deferred tax assets are also recorded with respect to net operating losses and other tax attribute carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when realization of the benefit of deferred tax assets is not deemed to be more likely than not. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. • We recognize net tax benefits under the recognition and measurement criteria of FASB ASC Topic 740, Income Taxes, which prescribes requirements and other guidance for financial statement recognition and measurement of positions taken or expected to be taken on tax returns. We record interest and penalties related to uncertain tax positions as a component of income tax expense.

• The utilization of certain deferred tax assets is dependent on the amount and timing of taxable income that we will ultimately generate in the future and other factors, such as changes in tax laws. We have provided valuation allowances as of December 31, 2021, aggregating to $19.6 million against certain international, state and local net operating loss carryforwards and other deferred tax assets. As of December 31, 2021, the gross liability for unrecognized income tax benefits, including interest and penalties, totaled $21.3 million. • Undistributed and indefinitely reinvested earnings for certain consolidated non-U.S. subsidiaries were approximately $489 million as of December 31, 2021. No tax provision was made on these earnings as APB 23 provides guidance that U.S. companies do not need to recognize tax effects on international earnings that are indefinitely reinvested. Additionally, no deferred income taxes were recorded on taxable outside basis differences as it was not practicable to determine the tax provision impact.

•  Although management believes that the estimates and judgments discussed herein are reasonable, actual results could differ, which could result in income tax expense or benefits that could be material.

Description

Judgments and Uncertainties

Effect if Actual Results Differ from Assumptions

Goodwill

•     Goodwill represents the excess of the purchase price over the fair value of the net assets of acquired companies. We follow the guidance in ASC 350, Intangibles — Goodwill and Other, including subsequent updates, and test goodwill for impairment at least annually, absent a triggering event that would warrant an impairment assessment. On an ongoing basis, absent any impairment indicators, we perform our goodwill impairment testing as of the first day of October of each year.

•    We have identified our reporting units at the operating segment level, or in most cases, one level below the operating segment level. Goodwill is allocated to the reporting units based on the estimated fair value at the date of acquisition. •      We estimated fair value using the best information available to us, including market information and discounted cash flow projections using the income approach. •  The income approach requires us to make assumptions and estimates regarding projected economic and market conditions, growth rates, operating margins and cash expenditures. Sensitivity analyses were performed around these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values.

•  If actual results are not consistent with our assumptions and estimates, we may be exposed to goodwill impairment charges. • The fair value of the reporting unit is based on a number of subjective factors including: (a) appropriate consideration of valuation approaches, (b) the consideration of our business outlook and (c) weighted average cost of capital (discount rate), growth rates and market multiples for our estimated cash flows. •      Based on our 2021 annual impairment test performed on October 1st where both quantitative and qualitative tests were performed, we determined there were no reporting units considered to be at risk of impairment. We believe that the current assumptions and estimates are reasonable, supportable and appropriate. The business could be impacted by unforeseen changes in market factors or opportunities, which could impact our existing assumptions used in our impairment test. As such, there can be no assurance that these estimates and assumptions made for the purposes of the goodwill impairment test will prove to be accurate predictions of future performance.

Indefinite-lived Intangible Assets

•   Indefinite-lived intangible assets represent trade names associated with acquired companies.

•    We estimate the fair value of trade names using a “relief from royalty payments” approach. This approach involves two steps: (1) estimating reasonable royalty rate for the trade name and (2) applying this royalty rate to a net sales stream and discounting the resulting cash flows to determine fair value. Fair value is then compared with the carrying value of the trade name.

•     If actual results are not consistent with our assumptions and estimates, we may be exposed to impairment charges related to our indefinite lived trade name •     Based on our 2021 annual impairment test, no trade names were considered at risk.

Information regarding recent and future adoption of accounting standards can be found in Note 1, Description of Business and Summary of Significant Accounting Policies, to the accompanying consolidated financial statements and is incorporated by reference herein.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We face translation risks related to the changes in foreign currency exchange rates. Amounts invested in our foreign operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting translation adjustments are recorded as a component of Accumulated other comprehensive (loss) income in the Shareholders’ equity section of the accompanying Consolidated Balance Sheets. Net sales and expenses in our foreign operations’ foreign currencies are translated into varying amounts of U.S. dollars depending upon whether the U.S. dollar weakens or strengthens against other currencies. Therefore, changes in exchange rates may either positively or negatively affect our net sales and expenses from foreign operations as expressed in U.S. dollars.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

			Page
Management’s Report			30
Reports of Independent Registered Public Accounting Firm (PCAOB ID:42)			31
Consolidated Financial Statements:
Consolidated Statements of Income			35
Consolidated Statements of Comprehensive Income			36
Consolidated Balance Sheets			37
Consolidated Statements of Cash Flows			38
Consolidated Statements of Shareholders’ Equity			39
Notes to Consolidated Financial Statements			40

/s/ ROBERT M. PATTERSON						/s/ JAMIE A. BEGGS
Robert M. Patterson						Jamie A. Beggs
Chairman, President and Chief Executive Officer						Senior Vice President and Chief Financial Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Avient Corporation

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Avient Corporation

						Environmental Accrued Liabilities
Description of the Matter						As described in Note 12 to the consolidated financial statements, the environmental accrued liability as of December 31, 2021 is approximately $124.5 million and is comprised primarily of the cost estimate for the Calvert City location of $113.2 million. The Company records an accrual for probable future environmental remediation projects on an undiscounted basis which represents management’s best estimate of probable future costs based upon currently available information and technology and management’s view of the most likely remedy.
						Auditing the determination of the accrual involved a high degree of subjectivity as estimates underlying the determination of the accrual were based on assumptions unique to the affected site and subject to various laws and regulations governing the protection of the applicable environment. Actual costs incurred in future periods could differ from amounts estimated and future changes to environmental laws and regulations could increase the extent of remediation work required, therefore the calculation is complicated due to uncertainty in determining the probable future costs and the extent of the remediation efforts.

How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to establish the environmental accrued liability, including management’s review and evaluation of the information included in the Calvert City Record of Decision and the Administrative Settlement Agreement and Order on Consent issued by the United States Environmental Protection Agency (USEPA). For example, we tested controls over management’s review of the estimation and the significant assumptions used to develop future cost estimates. We also tested management’s controls to validate that the data used in the accrual estimate was complete and accurate.
						With the assistance of our specialist, we tested the balance of the environmental accrued liability and the disclosure of the expected cost to remediate. Our audit procedures included, among others, making inquiries of internal general counsel, obtaining internal general counsel’s representation and external communications used in determining the environmental accrued liability. This included an evaluation of externally available information and a comparison of management’s cost estimates to the estimates published in the Record of Decision by the USEPA. We tested the significant assumptions used by management by comparing those assumptions to accepted industry practice and information included in the Record of Decision issued by the USEPA. We examined historical costs for recurring items and compared those amounts to future projections for similar costs.
						Accounting for the Clariant Color Business Combination
Description of the Matter						As discussed in Note 2 to the consolidated financial statements, on July 1, 2020, the Company completed its acquisition of the equity interests in the global color business of Clariant AG and certain assets of Clariant Chemicals (India) Limited. The business and assets are collectively referred to as the Clariant Color Acquisition. Total consideration paid by the Company to complete the Clariant Color Acquisition was approximately $1.4 billion, net of cash and debt. The acquisition is being accounted for under the acquisition method of accounting. As of June 30, 2021, the purchase accounting for the Clariant Color Acquisition was finalized.

						Accounting for the Clariant Color Business Combination (continued)
						Auditing the Company’s accounting for the allocation of the purchase price to the identifiable assets and liabilities for the Clariant Color Acquisition was complex due to the significant estimation in determining the fair value of identifiable intangible assets, which principally consisted of customer relationships and developed technology. The Company used the relief from royalty and multi-period excess earnings method to determine the fair value of developed technology and customer relationships, respectively. The high degree of subjectivity was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired business. The significant assumptions used to estimate the value of the intangible assets included discount rates and certain assumptions that form the basis of the forecasted results including revenue growth rates, profitability, and royalty rates.
How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risks of material misstatement relating to the determination of the fair value of the identifiable intangible assets. For example, we tested controls over management’s review of the fair value methodologies and significant assumptions described above.
						To test the estimated fair values of the acquired intangible assets, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. We compared the significant assumptions used by management to current industry and economic trends. We performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the intangible assets that would result from changes in the assumptions. We utilized our specialist in assessing the methodologies applied and evaluating significant assumptions. Furthermore, we assessed the appropriateness of the disclosures in the consolidated financial statements regarding the acquisition.

Consolidated Statements of Income

						Year Ended December 31,
(In millions, except per share data)						2021						2020						2019
Sales						$	4,818.8					$	3,242.1					$	2,862.7
Cost of sales						3,719.2						2,457.8						2,205.5
Gross margin						1,099.6						784.3						657.2
Selling and administrative expense						718.4						595.0						500.4
Operating income						381.2						189.3						156.8
Interest expense, net						(75.3)						(74.6)						(59.5)
Other (expense) income, net						(1.3)						24.3						12.1
Income from continuing operations before income taxes						304.6						139.0						109.4
Income tax expense						(74.0)						(5.2)						(33.7)
Net income from continuing operations						230.6						133.8						75.7
(Loss) income from discontinued operations, net of income taxes						—						(0.4)						513.1
Net income						230.6						133.4						588.8
Net loss (income) attributable to noncontrolling interests						0.2						(1.8)						(0.2)
Net income attributable to Avient common shareholders						$	230.8					$	131.6					$	588.6
Earnings per share attributable to Avient common shareholders - Basic:
Continuing operations						$	2.53					$	1.47					$	0.98
Discontinued operations						—						(0.01)						6.64
Total						$	2.53					$	1.46					$	7.62
Earnings per share attributable to Avient common shareholders - Diluted:
Continuing operations						$	2.51					$	1.46					$	0.97
Discontinued operations						—						(0.01)						6.61
Total						$	2.51					$	1.45					$	7.58
Weighted-average shares used to compute earnings per common share:
Basic						91.4						90.1						77.2
Plus dilutive impact of share-based compensation						0.7						0.5						0.5
Diluted						92.1						90.6						77.7
Anti-dilutive shares not included in diluted common shares outstanding						—						0.8						0.6
Cash dividends declared per share of common stock						$	0.875					$	0.820					$	0.788

Consolidated Statements of Comprehensive Income

			Year Ended December 31,
(In millions)			2021						2020						2019
Net income			$	230.6					$	133.4					$	588.8
Other comprehensive (loss) income, net of tax:
Translation adjustments and related hedging instruments			(75.2)						110.6						2.2
Cash flow hedges			3.2						(1.6)						(2.5)
Total other comprehensive (loss) income			(72.0)						109.0						(0.3)
Total comprehensive income			158.6						242.4						588.5
Comprehensive loss (income) attributable to noncontrolling interests			0.2						(1.8)						(0.2)
Comprehensive income attributable to Avient common shareholders			$	158.8					$	240.6					$	588.3

Consolidated Balance Sheets

			Year Ended December 31,
(In millions, except par value per share)			2021						2020
ASSETS
Current assets:
Cash and cash equivalents			$	601.2					$	649.5
Accounts receivable, net			642.3						516.6
Inventories, net			461.1						327.5
Other current assets			122.4						108.5
Total current assets			1,827.0						1,602.1
Property, net			676.1						694.9
Goodwill			1,286.4						1,308.1
Intangible assets, net			925.2						1,008.5
Operating lease assets, net			74.1						80.9
Other non-current assets			208.4						176.0
Total assets			$	4,997.2					$	4,870.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term and current portion of long-term debt			$	8.6					$	18.6
Accounts payable			553.9						471.7
Current operating lease obligations			24.2						25.1
Accrued expenses and other current liabilities			353.9						285.6
Total current liabilities			940.6						801.0
Non-current liabilities:
Long-term debt			1,850.3						1,854.0
Pension and other post-retirement benefits			100.0						115.0
Deferred income taxes			100.6						140.0
Non-current operating lease obligations			50.1						56.0
Other non-current liabilities			165.1						192.8
Total non-current liabilities			2,266.1						2,357.8
SHAREHOLDERS' EQUITY
Common Shares, $0.01 par, 400.0 shares authorized, 122.2 shares issued			1.2						1.2
Additional paid-in capital			1,511.8						1,513.3
Retained earnings			1,208.0						1,057.4
Common shares held in treasury, at cost, 30.6 shares in 2021 and 30.9 shares in 2020			(900.7)						(901.2)
Accumulated other comprehensive (loss) income			(45.6)						26.4
Avient shareholders’ equity			1,774.7						1,697.1
Noncontrolling interest			15.8						14.6
Total equity			1,790.5						1,711.7
Total liabilities and equity			$	4,997.2					$	4,870.5

Consolidated Statements of Cash Flows

			Year Ended December 31,
(In millions)			2021						2020						2019
Operating activities
Net income			$	230.6					$	133.4					$	588.8
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of business, net of tax			—						—						(457.7)
Depreciation and amortization			144.2						111.8						87.5
Accelerated depreciation			1.7						3.2						—
Deferred income tax benefit			(27.3)						(1.7)						(3.2)
Share-based compensation expense			11.2						11.3						11.6
Changes in assets and liabilities, net of the effect of acquisitions:
(Increase) decrease in accounts receivable			(143.1)						(4.6)						29.7
(Increase) decrease in inventories			(139.5)						40.2						40.2
Increase (decrease) in accounts payable			95.3						78.4						(22.7)
(Decrease) increase in pension and other post-retirement benefits			(10.9)						30.7						(19.7)
Increase in post-acquisition earnout liabilities			—						1.0						36.4
Increase (decrease) in accrued expenses and other assets and liabilities - net			71.6						(2.0)						9.9
Taxes paid on gain on divestiture			—						(142.0)						—
Payment of post-acquisition date earnout liability			—						(38.1)						—
Net cash provided by operating activities			233.8						221.6						300.8
Investing activities
Capital expenditures			(100.6)						(63.7)						(81.7)
Business acquisitions, net of cash acquired			(47.6)						(1,380.2)						(119.6)
Net proceeds from divestiture			—						7.1						761.8
Other investing activities			(2.0)						5.2						51.4
Net cash (used) provided by investing activities			(150.2)						(1,431.6)						611.9
Financing activities
Debt offering proceeds			—						650.0						—
Borrowings under credit facilities			—						—						963.4
Repayments under credit facilities			—						—						(1,083.9)
Purchase of common shares for treasury			(4.2)						(22.4)						(26.9)
Cash dividends paid			(77.7)						(71.3)						(60.3)
Repayment of other debt			—						—						(1.8)
Repayment of long-term debt			(18.5)						(7.8)						(6.5)
Payments on withholding tax on share awards			(10.7)						(2.3)						(2.1)
Debt financing costs			—						(9.5)						(0.2)
Equity offering proceeds, net of underwriting discount and issuance costs			—						496.1						—
Payment of acquisition date earnout liability			—						(50.8)						—
Other financing activities			(3.5)						—						—
Net cash (used) provided by financing activities			(114.6)						982.0						(218.3)
Effect of exchange rate changes on cash			(17.3)						12.8						(0.6)
(Decrease) increase in cash and cash equivalents			(48.3)						(215.2)						693.8
Cash and cash equivalents at beginning of year			649.5						864.7						170.9
Cash and cash equivalents at end of year			$	601.2					$	649.5					$	864.7

Consolidated Statements of Shareholders' Equity

						Common Shares												Shareholders’ Equity
(In millions)						Common Shares						Common Shares  Held in Treasury						Common Shares						Additional Paid-in Capital						Retained Earnings						Common Shares  Held in Treasury						Accumulated Other Comprehensive Income (Loss)						Total Avient shareholders' equity						Non-controlling Interests						Total equity
Balance at January 1, 2019						122.2						(44.5)						$	1.2					$	1,166.9					$	472.9					$	(1,018.7)					$	(82.3)					$	540.0					$	0.6					$	540.6
Net income						—						—						—						—						588.6						—						—						588.6						0.2						588.8
Other comprehensive loss						—						—						—						—						—						—						(0.3)						(0.3)						—						(0.3)
Noncontrolling interest activity						—						—						—						—						—						—						—						—						—						—
Cash dividends declared (1)						—						—						—						—						(60.3)						—						—						(60.3)						—						(60.3)
Repurchase of common shares						—						(1.0)						—						—						—						(26.9)						—						(26.9)						—						(26.9)
Share-based compensation and exercise of awards						—						0.2						—						8.3						—						2.5						—						10.8						—						10.8
Balance at December 31, 2019						122.2						(45.3)						$	1.2					$	1,175.2					$	1,001.2					$	(1,043.1)					$	(82.6)					$	1,051.9					$	0.8					$	1,052.7
Net income						—						—						—						—						131.6						—						—						131.6						1.8						133.4
Other comprehensive income						—						—						—						—						—						—						109.0						109.0						—						109.0
Noncontrolling interest activity						—						—						—						—						—						—						—						—						(0.8)						(0.8)
Cash dividends declared (1)						—						—						—						—						(75.1)						—						—						(75.1)						—						(75.1)
Repurchase of common shares						—						(1.0)						—						—						—						(22.4)						—						(22.4)						—						(22.4)
Common shares equity offering						—						15.3						—						334.8						—						161.3						—						496.1						—						496.1
Share-based compensation and exercise of awards						—						0.1						—						3.3						—						3.0						—						6.3						—						6.3
Acquisitions/other						—						—						$	—					$	—					$	(0.3)					$	—					$	—					$	(0.3)					$	12.8					$	12.5
Balance at December 31, 2020						122.2						(30.9)						1.2						1,513.3						1,057.4						(901.2)						26.4						1,697.1						14.6						1,711.7
Net income						—						—						—						—						230.8						—						—						230.8						(0.2)						230.6
Other comprehensive income						—						—						—						—						—						—						(72.0)						(72.0)						—						(72.0)
Noncontrolling interest activity						—						—						—						—						—						—						—						—						1.4						1.4
Cash dividends declared (1)						—						—						—						—						(80.2)						—						—						(80.2)						—						(80.2)
Repurchase of common shares						—						(0.1)						—						—						—						(4.2)						—						(4.2)						—						(4.2)
Share-based compensation and exercise of awards						—						0.4						$	—					$	0.9					$	—					$	4.7					$	—					$	5.6					$	—					$	5.6
Acquisitions/other						—						—						$	—					$	(2.4)											$	—					$	—					$	(2.4)											$	(2.4)
Balance at December 31, 2021						122.2						(30.6)						$	1.2					$	1,511.8					$	1,208.0					$	(900.7)					$	(45.6)					$	1,774.7					$	15.8					$	1,790.5