FAIR VALUE MEASUREMENTS (Notes)

12 Months Ended

Dec. 31, 2023

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:


Fair Value Measurements on a Recurring Basis		Dec 31, 2023								Dec 31, 2022
In millions	Fair Value Level	Cost		Gain		Loss		Fair Value		Cost		Gain		Loss		Fair Value
Assets at fair value:
Cash equivalents:
Held-to-maturity securities 1	Level 2	$	485	$	—	$	—	$	485	$	872	$	—	$	—	$	872
Money market funds	Level 2	663		—		—		663		355		—		—		355
Marketable securities 2	Level 2	1,361		—		(61)		1,300		927		12		—		939
Nonconsolidated affiliates 3	Level 3							7								7
Other investments:
Debt securities: 4
Government debt 5	Level 2	766		3		(107)		662		754		1		(133)		622
Corporate bonds	Level 1	24		—		(3)		21		38		—		(3)		35
Corporate bonds	Level 2	1,148		17		(99)		1,066		1,236		10		(156)		1,090
Corporate bonds	Level 3	200		—		(89)		111		—		—		—		—
Equity securities 4, 6	Level 1	5		12		—		17		5		5		—		10
Derivatives relating to: 7
Interest rates	Level 2	—		136		—		136		—		351		—		351
Foreign currency	Level 2	—		59		—		59		—		204		—		204
Commodities	Level 1	—		2		—		2		—		63		—		63
Commodities	Level 2	—		60		—		60		—		158		—		158
Total assets at fair value								$	4,589							$	4,706
Liabilities at fair value:
Long-term debt including debt due within one year 8	Level 2	$	(15,024)	$	1,089	$	(747)	$	(14,682)	$	(15,060)	$	1,683	$	(498)	$	(13,875)
Guarantee liability 9	Level 3							(178)								(199)
Derivatives relating to: 7
Interest rates	Level 2	—		—		(154)		(154)		—		—		(246)		(246)
Foreign currency	Level 2	—		—		(46)		(46)		—		—		(119)		(119)
Commodities	Level 1	—		—		(2)		(2)		—		—		(103)		(103)
Commodities	Level 2	—		—		(68)		(68)		—		—		(167)		(167)
Total liabilities at fair value								$	(15,130)							$	(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.Estimated asset for an investment in a limited liability company included in "Investment in nonconsolidated affiliates" in the consolidated balance sheets.

4.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.

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

6.Equity securities with a readily determinable fair value.

7.See Note 20 for the classification of derivatives in the consolidated balance sheets.

8.Cost includes fair value hedge adjustment gains of $49 million at December 31, 2023 and $46 million at December 31, 2022 on $4,479 million of debt at December 31, 2023 and $2,279 million of debt at December 31, 2022. See Note 20 for information on fair value measurements of long-term debt.

9.Estimated liability for TDCC's guarantee of Sadara's debt which is included in "Other noncurrent obligations" in the consolidated balance sheets. See Note 14 for additional information.

Cost approximates fair value for all other financial instruments.

For assets and liabilities classified as Level 1 measurements (measured using quoted prices in active markets), total fair value is either the price of the most recent trade at the time of the market close or the official close price, as defined by the exchange on which the asset is most actively traded on the last trading day of the period, multiplied by the number of units held without consideration of transaction costs.

For assets and liabilities classified as Level 2 measurements, where the security is frequently traded in less active markets, fair value is based on the closing price at the end of the period; where the security is less frequently traded, fair value is based on the price a dealer would pay for the security or similar securities, adjusted for any terms specific to that asset or liability, or by using observable market data points of similar, more liquid securities to imply the price. Market inputs are obtained from well-established and recognized vendors of market data and subjected to tolerance and quality checks.

For derivative assets and liabilities, standard industry models are used to calculate the fair value of the various financial instruments based on significant observable market inputs, such as foreign exchange rates, commodity prices, swap rates, interest rates and implied volatilities obtained from various market sources. Market inputs are obtained from well-established and recognized vendors of market data and subjected to tolerance/quality checks.

For all other assets and liabilities for which observable inputs are used, fair value is derived through the use of fair value models, such as a discounted cash flow model or other standard pricing models. See Note 20 for further information on the types of instruments used by the Company for risk management.

There were no transfers between Levels 1 and 2 in the years ended December 31, 2023 and 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 corporate bond, accounted for as a debt security and an investment in a limited liability company, accounted for as an investment in nonconsolidated affiliates. There was no unfunded commitment on the investment in a limited liability company at December 31, 2023 and 2022.

The following table summarizes the changes in fair value measurements of the investment in a corporate bond using Level 3 inputs for the year ended December 31, 2023:


Fair Value Measurements Using Level 3 Inputs for Investment in Corporate Bond at Dec 31,	2023
In millions
Balance at Jan 1	$	—
Recognition of asset 1	200
Loss included in AOCL 2	(89)
Balance at Dec 31	$	111

1.Included in "Other investments" in the consolidated balance sheets.

2.Included in "Accumulated other comprehensive loss" in the consolidated balance sheets.

For liabilities classified as Level 3 measurements, the 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. See Note 14 for further information on guarantees classified as Level 3 measurements. The following table summarizes the changes in fair value measurements using Level 3 inputs for the years ended December 31, 2023 and 2022:


Fair Value Measurements Using Level 3 Inputs for Accrued Liability of Sadara Guarantee at Dec 31,	2023		2022
In millions
Balance at Jan 1	$	(199)	$	(220)

Gain included in earnings 1	21		21
Balance at Dec 31	$	(178)	$	(199)

1.Included in "Equity in earnings (losses) of nonconsolidated affiliates" in the consolidated income statements.

For equity securities calculated at net asset value per share (or its equivalent), the Company had $86 million in private equity and $18 million in real estate at December 31, 2023 ($92 million in private equity and $20 million in real estate at December 31, 2022). There are no redemption restrictions and the unfunded commitments on these investments were $75 million at December 31, 2023 ($54 million at December 31, 2022).

Fair Value Measurements on a Nonrecurring Basis

The following table summarizes the bases used to measure certain assets at fair value on a nonrecurring basis in the consolidated balance sheets:


Basis of Fair Value Measurements on a Nonrecurring Basis at Dec 31	(Level 3)		Total Losses
In millions
2023
Assets at fair value:
Long-lived assets and other assets	$	9	$	191

2023 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. The assets associated with this plan were written down to zero. 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 $191 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 ($50 million), Performance Materials & Coatings ($49 million) and Corporate ($91 million).

See Note 4 for additional information on the Company's restructuring activities.

The Company's fair value measurements on a nonrecurring basis were insignificant in 2022 and 2021.

- 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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