FAIR VALUE MEASUREMENTS (Notes)

3 Months Ended

Mar. 31, 2023

FAIR VALUE MEASUREMENTS

A summary of the Company's recurring and nonrecurring fair value measurements can be found in Note 22 to the Consolidated Financial Statements included in the 2022 10-K.

Fair Value Measurements on a Recurring Basis

The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis:


Basis of Fair Value Measurements on a Recurring Basis	Mar 31, 2023								Dec 31, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
In millions
Assets at fair value:
Cash equivalents:
Held-to-maturity securities 1	$	—	$	714	$	—	$	714	$	—	$	872	$	—	$	872
Money market funds	—		1,273		—		1,273		—		355		—		355
Marketable securities 2	—		619		—		619		—		939		—		939
Equity securities 3	18		—		—		18		10		—		—		10
Nonconsolidated affiliates 4	—		—		7		7		—		—		7		7
Debt securities: 3
Government debt 5	—		641		—		641		—		622		—		622
Corporate bonds	31		1,116		—		1,147		35		1,090		—		1,125
Derivatives relating to: 6
Interest rates	—		39		—		39		—		351		—		351
Foreign currency	—		122		—		122		—		204		—		204
Commodities	18		71		—		89		63		158		—		221
Total assets at fair value	$	67	$	4,595	$	7	$	4,669	$	108	$	4,591	$	7	$	4,706
Liabilities at fair value:
Long-term debt including debt due within one year 7	$	—	$	14,239	$	—	$	14,239	$	—	$	13,875	$	—	$	13,875
Guarantee liability 8	—		—		194		194		—		—		199		199
Derivatives relating to: 6
Interest rates	—		37		—		37		—		246		—		246
Foreign currency	—		73		—		73		—		119		—		119
Commodities	68		81		—		149		103		167		—		270
Total liabilities at fair value	$	68	$	14,430	$	194	$	14,692	$	103	$	14,407	$	199	$	14,709

1.The Company's held-to-maturity securities primarily included treasury bills and time deposits.

2.The Company’s investments in marketable securities are included in “Other current assets” in the consolidated balance sheets.

3.The Company’s investments in debt securities, which are primarily available-for-sale, and equity securities are included in “Other investments” in the consolidated balance sheets.

4.Estimated asset for an investment in a limited liability company included in "Investment in nonconsolidated affiliates" in the consolidated balance sheets.

5.U.S. Treasury obligations, U.S. agency obligations, U.S. agency mortgage-backed securities and other municipalities’ obligations.

6.See Note 14 for the classification of derivatives in the consolidated balance sheets.

7.See Note 14 for information on fair value measurements of long-term debt.

8.Estimated liability for TDCC's guarantee of Sadara's debt which is included in "Other noncurrent obligations" in the consolidated balance sheets.

For equity securities calculated at net asset value per share (or its equivalent), the Company had $84 million in private market securities and $20 million in real estate at March 31, 2023 ($92 million in private market securities and $20 million in real estate at December 31, 2022). There are no redemption restrictions and the unfunded commitments on these investments were $54 million at March 31, 2023 and December 31, 2022.

For assets classified as Level 3 measurements, fair value is based on significant unobservable inputs including assumptions where there is little, if any, market activity. The level 3 asset value represents the fair value of an investment in a limited liability company, accounted for as an investment in nonconsolidated affiliates. There was no unfunded commitment on the investment at March 31, 2023 or December 31, 2022.

For liabilities classified as Level 3 measurements, fair value is based on significant unobservable inputs including assumptions where there is little, if any, market activity. The fair value of the Company’s accrued liability related to the guarantee of Sadara’s debt is in proportion to the Company’s 35 percent ownership interest in Sadara. The estimated fair value of the guarantee was calculated using a "with" and "without" method. The fair value of the debt was calculated "with" the guarantee less the fair value of the debt "without" the guarantee. The "with" and "without" values were calculated using a discounted cash flow method based on contractual cash flows as well as projected prepayments made on the debt by Sadara.

Fair Value Measurements on a Nonrecurring Basis

As part of the 2023 Restructuring Program, the Company has or will shut down a number of manufacturing facilities, corporate facilities and miscellaneous assets around the world. In the first quarter of 2023, the assets associated with this plan were written down to zero, except for one corporate facility. The remaining corporate facility, which was classified as a level 3 measurement, was written down to a fair value of $16 million using unobservable inputs. In addition, impairments of leased, non-manufacturing facilities, which were classified as Level 3 measurements, resulted in a write-down of right-of-use assets to a fair value of $9 million using unobservable inputs. The impairment charges related to the 2023 Restructuring Program, totaling $197 million, were included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to Packaging & Specialty Plastics ($1 million), Industrial Intermediates & Infrastructure ($40 million), Performance Materials & Coatings ($49 million) and Corporate ($107 million).

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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