DOW INC.DOW
DOW INC. Fair Value Disclosure
FAIR VALUE MEASUREMENTS
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, 2025 | Dec 31, 2024 | |||||||||||||||||||||||||||
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 | $ | 624 | $ | — | $ | — | $ | 624 | $ | 96 | $ | — | $ | — | $ | 96 | ||||||||||||
| Money market funds | Level 2 | 923 | — | — | 923 | 1,164 | — | — | 1,164 | ||||||||||||||||||||
Marketable securities 2 | Level 2 | 446 | — | (61) | 385 | 453 | — | (70) | 383 | ||||||||||||||||||||
| Other investments: | |||||||||||||||||||||||||||||
Debt securities: 3 | |||||||||||||||||||||||||||||
Government debt 4 | Level 2 | 1,221 | 24 | (83) | 1,162 | 1,103 | 13 | (123) | 993 | ||||||||||||||||||||
| Corporate bonds | Level 1 | 14 | — | (1) | 13 | 18 | — | (1) | 17 | ||||||||||||||||||||
| Corporate bonds | Level 2 | 910 | 10 | (57) | 863 | 954 | 6 | (88) | 872 | ||||||||||||||||||||
| Corporate bonds | Level 3 | 200 | — | (35) | 165 | 200 | — | (49) | 151 | ||||||||||||||||||||
Equity securities 3, 5 | Level 1 | 4 | 5 | — | 9 | 4 | 10 | — | 14 | ||||||||||||||||||||
Derivatives relating to: 6 | |||||||||||||||||||||||||||||
| Interest rates | Level 2 | — | 18 | — | 18 | — | 20 | — | 20 | ||||||||||||||||||||
| Foreign currency | Level 2 | — | 98 | — | 98 | — | 107 | — | 107 | ||||||||||||||||||||
| Commodities | Level 1 | — | 2 | — | 2 | — | 4 | — | 4 | ||||||||||||||||||||
| Commodities | Level 2 | — | 246 | — | 246 | — | 87 | — | 87 | ||||||||||||||||||||
| Total assets at fair value | $ | 4,508 | $ | 3,908 | |||||||||||||||||||||||||
| Liabilities at fair value: | |||||||||||||||||||||||||||||
Long-term debt including debt due within one year 7 | Level 2 | $ | (18,071) | $ | 1,746 | $ | (342) | $ | (16,667) | $ | (16,208) | $ | 1,487 | $ | (484) | $ | (15,205) | ||||||||||||
Guarantee liability 8 | Level 3 | (212) | (155) | ||||||||||||||||||||||||||
Derivatives relating to: 6 | |||||||||||||||||||||||||||||
| Interest rates | Level 2 | — | — | (21) | (21) | — | — | (47) | (47) | ||||||||||||||||||||
| Foreign currency | Level 2 | — | — | (155) | (155) | — | — | (142) | (142) | ||||||||||||||||||||
| Commodities | Level 1 | — | — | (15) | (15) | — | — | (1) | (1) | ||||||||||||||||||||
| Commodities | Level 2 | — | — | (243) | (243) | — | — | (64) | (64) | ||||||||||||||||||||
| Total liabilities at fair value | $ | (17,313) | $ | (15,614) | |||||||||||||||||||||||||
1.The Company's held-to-maturity securities primarily relate to treasury bills and time deposits and are included in "Cash and cash equivalents" in the consolidated balance sheets. At December 31, 2025, $555 million is included in "Cash and cash equivalents" ($96 million at December 31, 2024) and $69 million is included in "Other current assets" (zero at December 31, 2024) in the consolidated balance sheets.
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.U.S. Treasury obligations, U.S. agency obligations, U.S. agency mortgage-backed securities and other municipalities' obligations.
5.Equity securities with a readily determinable fair value.
6.See Note 21 for the classification of derivatives in the consolidated balance sheets.
7.Cost includes fair value hedge adjustment gains of $27 million at December 31, 2025 and $9 million at December 31, 2024 on $5,538 million of debt at December 31, 2025 and $5,129 million of debt at December 31, 2024.
8.Estimated liability for TDCC's guarantee of Sadara's debt, of which $132 million is included in "Other noncurrent obligations" and $80 million is included in "Accrued and other current liabilities" in the consolidated balance sheets. See Note 15 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 21 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, 2025 and 2024.
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.
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, 2025:
| Fair Value Measurements Using Level 3 Inputs for Investment in Corporate Bond at Dec 31, | 2025 | 2024 | ||||||
In millions | ||||||||
| Balance at Jan 1 | $ | 151 | $ | 111 | ||||
Gain included in AOCL 1 | 14 | 40 | ||||||
| Balance at Dec 31 | $ | 165 | $ | 151 | ||||
1.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 project financing debt is in proportion to the Company's 35 percent ownership interest in Sadara. The estimated fair value of the project financing debt 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. The Company has also guaranteed Sadara’s obligation related to its $500 million revolving credit facility. In the fourth quarter of 2025, Sadara drew $80 million from this facility. The estimated fair value of the revolving credit facility guarantee was calculated based on a discounted cash flow analysis of the Company’s expected obligation to make future payments on behalf of Sadara in the second quarter of 2026. See Note 15 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, 2025 and 2024:
| Fair Value Measurements Using Level 3 Inputs for Accrued Liabilities of Sadara Guarantees at Dec 31, | 2025 | 2024 | ||||||
In millions | ||||||||
| Balance at Jan 1 | $ | (155) | $ | (178) | ||||
Gain included in earnings 1 | 23 | 23 | ||||||
| Recognition of revolving credit facility liability | (80) | — | ||||||
| Balance at Dec 31 | $ | (212) | $ | (155) | ||||
1.Included in "Equity in 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 $109 million in private equity and $13 million in real estate at December 31, 2025 ($90 million in private equity and $15 million in real estate at December 31, 2024). There are no redemption restrictions and the unfunded commitments on these investments were $65 million at December 31, 2025 ($81 million at December 31, 2024).
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 | Fair Value Level | Fair Value | Total Losses | ||||||||
| In millions | |||||||||||
| 2025 | |||||||||||
| Assets at fair value: | |||||||||||
| Long-lived assets and other assets | Level 3 | $ | 115 | $ | 657 | ||||||
Equity securities with no readily determinable fair value 1 | Level 2 | 55 | — | ||||||||
| Goodwill | Level 3 | — | 690 | ||||||||
| 2024 | |||||||||||
| Assets at fair value: | |||||||||||
| Long-lived assets and other assets | Level 3 | $ | 60 | $ | 53 | ||||||
1.See Note 21 for additional information related to the fair value determination.
2025 Fair Value Measurements on a Nonrecurring Basis
The Company recorded a charge for asset write-downs and write-offs, including the write-down of certain manufacturing facilities, corporate assets, leased, non-manufacturing facilities and other miscellaneous assets. The manufacturing facilities, corporate assets and certain leased, non-manufacturing facilities and other miscellaneous assets associated with this plan were written down to zero. In addition, impairments of certain leased, non-manufacturing facilities and other miscellaneous assets, which were classified as Level 3 measurements, resulted in a write-down of right-of-use assets to a fair value of $110 million using unobservable inputs. The Company recorded impairment charges of $349 million for asset write-downs and write-offs, included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income and related to Packaging & Specialty Plastics ($88 million), Industrial Intermediates & Infrastructure ($64 million), Performance Materials & Coatings ($150 million) and Corporate ($47 million).
As part of the 2023 Restructuring Program, the Company recorded impairment charges of $5 million for asset write-downs and write-offs, included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income and related to Industrial Intermediates & Infrastructure.
In the fourth quarter of 2025, the Company recognized a $303 million pretax impairment charge related to assets used for chlor-alkali, propylene oxide and brine production in Latin America. The assets were written down to $5 million using a discounted cash flow method. The impairment charge is included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income and related to Industrial Intermediates & Infrastructure ($232 million) and Packaging & Specialty Plastics ($71 million). See Note 6 for additional information.
In the fourth quarter of 2025, the Company performed its annual goodwill impairment testing and determined the Polyurethanes & Construction Chemicals reporting unit was impaired. The fair value of the reporting unit was estimated using a discounted cash flow and did not support the carrying value of the reporting unit. As a result, the Company recorded an impairment charge of $690 million related to Industrial Intermediates & Infrastructure. See Note 12 for additional information.
2024 Fair Value Measurements on a Nonrecurring Basis
As part of the 2023 Restructuring Program, the Company recorded impairment charges for asset write-downs and write-offs of $8 million related to the shutdown of certain polyurethanes assets (Industrial Intermediates & Infrastructure), $7 million related to the shutdown of certain silicones assets (Performance Materials & Coatings) and $1 million related to Corporate, included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income.
The Company recorded impairment charges of $37 million related primarily to write-downs of certain manufacturing assets in the United States and Italy. The assets, classified as Level 3 measurements, were valued at $60 million using unobservable inputs. The impairment charges were included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income and related to Packaging & Specialty Plastics.
See Note 5 for additional information on the Company's restructuring activities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 3, 2026 | Showing above |
| 2024 | Feb 4, 2025 | |
| 2023 | Jan 31, 2024 | |
| 2022 | Feb 1, 2023 | |
| 2021 | Feb 4, 2022 | |
| 2019 | Feb 7, 2020 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.