SHERWIN WILLIAMS COSHW

SHERWIN WILLIAMS CO Fair Value Disclosure

10-KFiled Feb 19, 20263 min read
FAIR VALUE MEASUREMENTS
The Fair Value Measurements and Disclosures Topic of the ASC applies to the Company’s financial and non-financial assets and liabilities. The guidance applies when other standards require or permit the fair value measurement of assets and liabilities. Under the guidance, assets and liabilities measured at fair value are categorized as follows:
Level 1: Quoted prices in active markets for identical assets
Level 2: Significant other observable inputs
Level 3: Significant unobservable inputs
There were no assets and liabilities measured at fair value on a recurring basis classified as Level 3 at December 31, 2025, 2024 and 2023. Except for the acquisition-related fair value measurements, assets held for sale prior to the 2023 divestiture of the China architectural business described in Note 3 and the goodwill and trademark quantitative impairment tests described in Note 6, there were no assets or liabilities measured at fair value on a nonrecurring basis. The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis, categorized using the fair value hierarchy.
December 31, 2025December 31, 2024December 31, 2023
TotalLevel 1Level 2TotalLevel 1Level 2TotalLevel 1Level 2
Assets:
Deferred compensation plan$101.0 $101.0 $— $98.6 $98.6 $— $84.7 $84.7 $— 
Net investment hedges— — — 48.9 — 48.9 — — — 
$101.0 $101.0 $— $147.5 $98.6 $48.9 $84.7 $84.7 $— 
Liabilities:
Net investment hedges$122.6 $— $122.6 $— $— $— $24.4 $— $24.4 
The deferred compensation plan assets consist of the investment funds maintained for future payments under the Company’s executive deferred compensation plans, which are structured as rabbi trusts. The investments are marketable securities accounted for under the Debt and Equity Securities Topics of the ASC. The Level 1 investments are valued using quoted market prices multiplied by the number of shares. There was $7.7 million, $7.0 million and $6.4 million of deferred compensation plan assets held in partnership funds measured using NAV (or its equivalent) as a practical expedient as of December 31, 2025, December 31, 2024 and December 31, 2023, respectively. These investments are not classified in the fair value hierarchy. The cost basis of all investments within the deferred compensation plan was $80.7 million, $82.7 million and $76.3 million at December 31, 2025, 2024 and 2023, respectively.
The net investment hedges represent the fair value of the cross currency swaps. See Note 16 for further information. The fair value is based on a valuation model that uses observable inputs, including interest rate curves and the euro foreign currency rate.
The carrying amounts reported for Cash and cash equivalents and Short-term borrowings approximate fair value.
The fair value of the Company’s publicly traded debt is based on quoted market prices. The fair value of the Company’s non-publicly traded debt is estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The Company’s publicly traded debt and non-publicly traded debt are classified as Level 1 and Level 2, respectively, in the fair value hierarchy. The following table summarizes the carrying amounts and fair values of the Company’s publicly traded debt and non-publicly traded debt.
 December 31,
 202520242023
Carrying
Amount		Fair
Value		Carrying AmountFair
Value		Carrying AmountFair
Value
Publicly traded debt$9,670.7 $8,813.7 $9,225.8 $8,172.8 $9,475.8 $8,615.1 
Non-publicly traded debt0.1 0.1 0.2 0.2 0.9 0.8 

Historical Timeline

Fiscal YearFiled
2025Feb 19, 2026Showing above
2024Feb 20, 2025
2023Feb 20, 2024
2022Feb 22, 2023
2021Feb 17, 2022
2020Feb 19, 2021
2019Feb 21, 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.

Other Available Disclosures

Income TaxesRevenueEarnings Per SharePP&EGoodwill & IntangiblesLeasesSegmentsDebtStock CompensationNew StandardsPay vs Performance