OLIN CorpOLN

OLIN Corp Fair Value Disclosure

10-KFiled Feb 23, 20233 min read
NOTE 24. FAIR VALUE MEASUREMENTS

Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value.  Hierarchical levels are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities.  We are required to separately disclose assets and liabilities measured at fair value on a recurring basis, from those measured at fair value on a nonrecurring basis.  Nonfinancial assets measured at fair value on a nonrecurring basis are intangible assets and goodwill, which are reviewed for impairment annually in the fourth quarter and/or when circumstances or other events indicate that impairment may have occurred.  Determining which hierarchical level an asset or liability falls within requires significant judgment.  The following table summarizes the assets and liabilities measured at fair value in the consolidated balance sheets:
Balance at December 31, 2022Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Total
Assets($ in millions)
Commodity contracts$— $5.5 $— $5.5 
Foreign exchange contracts— 0.3 — 0.3 
Total Assets$— $5.8 $— $5.8 
Liabilities    
Commodity contracts$— $49.0 $— $49.0 
Foreign exchange contracts— 0.9 — 0.9 
Total Liabilities$— $49.9 $— $49.9 
Balance at December 31, 2021
Assets
Commodity contracts$— $33.5 $— $33.5 
Foreign exchange contracts— 1.2 — 1.2 
Total Assets$— $34.7 $— $34.7 
Liabilities
Commodity contracts$— $3.2 $— $3.2 
Foreign exchange contracts— 0.6 — 0.6 
Total Liabilities$— $3.8 $— $3.8 

Commodity Contracts

Commodity contract financial instruments were valued primarily based on prices and other relevant information observable in market transactions involving identical or comparable assets or liabilities including both forward and spot prices for commodities.  We use commodity derivative contracts for certain raw materials and energy costs such as copper, zinc, lead, ethane, electricity and natural gas to provide a measure of stability in managing our exposure to price fluctuations.

Foreign Currency Contracts

Foreign currency contract financial instruments were valued primarily based on relevant information observable in market transactions involving identical or comparable assets or liabilities including both forward and spot prices for currencies.  We enter into forward sales and purchase contracts to manage currency risk resulting from purchase and sale commitments denominated in foreign currencies.

Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximated fair values due to the short-term maturities of these instruments. Since our long-term debt instruments may not be actively traded, the inputs used to measure the fair value of our long-term debt are based on current market rates for debt of similar risk and maturities and is classified as Level 2 in the fair value measurement hierarchy.  As of December 31, 2022 and 2021, the fair value measurements of debt were $2,517.7 million and $2,921.0 million, respectively.
Nonrecurring Fair Value MeasurementsIn addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis as required by ASC 820.  There were no assets measured at fair value on a nonrecurring basis as of December 31, 2022 and 2021.

Historical Timeline

Fiscal YearFiled
2022Feb 23, 2023Showing above
2021Feb 24, 2022
2020Feb 22, 2021
2019Feb 25, 2020
2018Feb 25, 2019
2017Feb 26, 2018
2016Feb 28, 2017
2015Mar 1, 2016

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.

Other Available Disclosures

Income TaxesRevenueEarnings Per SharePP&EGoodwill & IntangiblesSegmentsDebtCommitmentsStock CompensationNew Standards