AVIENT CORP

Index to Financial Statements

27 AVIENT CORPORATION

MANAGEMENT’S REPORT

The management of Avient Corporation is responsible for preparing the consolidated financial statements and disclosures included in this Annual Report on Form 10-K. The consolidated financial statements and disclosures included in this Annual Report fairly present in all material respects the consolidated financial position, results of operations, shareholders’ equity and cash flows of Avient Corporation as of and for the year ended December 31, 2025.

Management is responsible for establishing and maintaining disclosure controls and procedures designed to ensure that the information required to be disclosed by the Company is captured and reported in a timely manner. Management has evaluated the design and operation of the Company’s disclosure controls and procedures at December 31, 2025 and found them to be effective.

Management is also responsible for establishing and maintaining a system of internal control over financial reporting that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that provide reasonable assurance that: Avient Corporation’s accounting records accurately and fairly reflect the transactions and dispositions of the assets of the Company; unauthorized or improper acquisition, use or disposal of Company assets will be prevented or timely detected; the Company’s transactions are properly recorded and reported to permit the preparation of the Company’s consolidated financial statements in conformity with generally accepted accounting principles; and the Company’s receipts and expenditures are made only in accordance with authorizations of management and the Board of Directors of the Company.

Management has assessed the effectiveness of Avient’s internal control over financial reporting as of December 31, 2025 and has prepared Management’s Annual Report On Internal Control Over Financial Reporting contained on page 63 of this Annual Report, which concludes that as of December 31, 2025, Avient’s internal control over financial reporting was effective and that no material weaknesses were identified.

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To the Shareholders and the Board of Directors of Avient Corporation

Opinion on Internal Control over Financial Reporting

We have audited Avient Corporation’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Avient Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, cash flows and shareholders' equity for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 17, 2026, expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report On Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Cleveland, Ohio

29 AVIENT CORPORATION

To the Shareholders and the Board of Directors of Avient Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Avient Corporation (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, cash flows and shareholders' equity for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 17, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

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/s/Ernst & Young LLP

We have served as the Company's auditor since 1993.

Cleveland, Ohio

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Consolidated Statements of Shareholders' Equity

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

We are an innovator of materials solutions to help our customers succeed, while enabling a sustainable world. Our products include specialty engineered materials, performance fibers, advanced composites, and color and additive solutions. We are also a highly specialized developer and manufacturer of performance enhancing additives, liquid colorants, and fluoropolymer and silicone colorants. Headquartered in Avon Lake, Ohio, we have employees at sales and manufacturing sites across North America, South America, Europe, the Middle East, Asia, and Africa. We provide value to our customers through our ability to link our knowledge of polymers and materials science with our manufacturing and supply chain to provide value added solutions to designers, assemblers and processors of materials. When used in these notes to the consolidated financial statements, the terms “we,” “us,” “our,” “Avient” and the “Company” mean Avient Corporation and its consolidated subsidiaries.

Our operations are reported intwo reportable segments: Color, Additives and Inks, and Specialty Engineered Materials. See Note 13, Segment Information, for more information.

Accounting Standards Adopted

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated income tax disclosures on an annual basis, including information on the Company's effective tax rate reconciliation and income taxes paid. The Company adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025. The adoption of ASU 2023-09 impacted income tax disclosures within Note 11, Income Taxes.

Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). This accounting standard requires disaggregated income statement expense disclosures on an annual and interim basis, including inventory purchases, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains these expenses. The standard also requires disclosure of total selling expenses on an annual and interim basis, and the definition of those expenses disclosed annually. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, and may be applied prospectively or retrospectively. The Company is evaluating the impact of ASU 2024-03. As the standard will only impact its disclosures, there will be no material impact to the consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05). This accounting standard provides a practical expedient allowing entities to assume that current conditions as of the balance sheet date remain unchanged over the remaining life of the asset when estimating expected credit losses. ASU 2025-05 is effective for annual reporting periods, including interim reporting periods within those annual periods, beginning after December 15, 2025, with early adoption permitted and should be applied prospectively. The Company is evaluating the impact of ASU 2025-05 and expects the standard will not have a material impact on the consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06). This accounting standard changes when software project costs should be capitalized by removing all references to development stages and requiring costs to be capitalized when (1) the Company authorizes and commits to funding the software project and (2) it is probable the software project will be completed. The standard also requires additional annual and interim disclosures, including the capitalized software balance and accumulated amortization. ASU 2025-06 is effective for annual reporting periods, including interim reporting periods within those annual periods, beginning after December 15, 2027, with early adoption permitted and may be applied prospectively, retrospectively, or using a modified prospective transition approach. The Company is evaluating the impact of ASU 2025-06 to the consolidated financial statements and related disclosures.

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Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of Avient and its subsidiaries. All majority-owned affiliates over which we have control are consolidated. Transactions with related parties, including joint ventures, are in the ordinary course of business. Certain prior year amounts have been adjusted to conform to current year presentation.

Use of Estimates

Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and notes. Actual results could differ from these estimates.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with a maturity of less than three months to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value.

Allowance for Doubtful Accounts

We evaluate the collectability of receivables based on a combination of factors, each of which are adjusted if specific circumstances change. We reserve for amounts determined to be uncollectible based on a specific customer’s inability to meet its financial obligation to us, resulting from an assessment of current conditions and forecasted information, the credit risk of specific customers, economic conditions and historical experience. We also record a general reserve based on the age of receivables past due. In estimating the allowance, we take into consideration the existence of credit insurance.

Inventories

Raw materials and finished goods are carried at lower of cost or net realizable value using either the weighted average cost or the first-in, first-out (FIFO) method. We record reserves for inventory that is damaged, obsolete, excess and slow-moving to Cost of sales.

Long-lived Assets

Property, plant and equipment is carried at historical cost, net of depreciation and amortization that is computed using the straight-line method over the estimated useful lives of the assets, which generally ranges from 3 to 15 years for machinery and equipment and up to 40 years for buildings. We depreciate certain assets associated with closing manufacturing locations over a shortened life (through the cease-use date). We expense repair and maintenance costs as incurred. We capitalize replacements and improvements that increase the estimated useful life of an asset. We retain fully depreciated assets in property and accumulated depreciation accounts until we remove them from service.

We account for operating and finance leases under the provisions of FASB Accounting Standards Codification (ASC) Topic 842.

Finite-lived intangible assets, which consist primarily of customer relationships, patents and technology are amortized over their estimated useful lives. The useful lives range up to 25 years.

We assess the recoverability of long-lived assets when events or changes in circumstances indicate that we may not be able to recover the assets’ carrying amount. We measure the recoverability of assets to be held and used by a comparison of the carrying amount of the asset to the expected future undiscounted cash flows associated with the asset. We measure the amount of impairment of long-lived assets as the amount by which the carrying value of the asset exceeds the fair value of the asset, which is generally determined based on projected discounted future cash flows or appraised values.

Internal-Use Software and Cloud Computing Arrangements

We capitalize costs related to computer software obtained or developed for internal use. Software obtained for internal use has generally been enterprise-level business software that the Company customizes to meet its specific operational needs. Costs incurred in the application development phase are capitalized as Property, Net in the Company’s Consolidated Balance Sheets and are depreciated using the straight-line method over their estimated useful lives.

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We also enter into certain cloud-based software hosting arrangements. Capitalizable cloud computing arrangement costs are generally consistent with those incurred during the application development stage for internal-use software, however, these costs are capitalized as Other assets in the Company's Consolidated Balance Sheets. As of December 31, 2025 and 2024, there was $5.8 million and $76.4 million capitalized within Other non-current assets, respectively. In the first quarter of 2025, the Company completed a review of its cloud-based enterprise resource planning system, S/4HANA, including updated project timelines, cost incurred to date, required internal resources and expected costs to complete the initial site implementations, and the evolution of options that could provide better returns for shareholders. As a result of this review, the Company determined it would cease the ongoing development of S/4HANA. As a result of this decision, in the first quarter of 2025, the Company recognized a non-cash, pre-tax impairment charge of $71.6 million associated with capitalized implementation costs. Refer to Note 3, Employee Separation and Restructuring Costs, for more information.

Goodwill and Indefinite Lived Intangible Assets

Goodwill is the excess of the purchase price paid over the fair value of the net assets of the acquired business. We assess goodwill for impairment on an annual basis or more frequently when events or changes in circumstance indicate that the asset may be impaired. Goodwill is tested for impairment at the reporting unit level. The Company's reporting units are at a level below the Company's reportable operating segments. Goodwill is allocated to the reporting units based on the estimated fair value at the date of acquisition. Our annual measurement date for testing impairment of goodwill assets is October 1.

The Company may perform a qualitative test to determine whether it is more likely than not the fair value of a reporting unit is less than its carrying amount in order to determine whether it is necessary to perform a quantitative goodwill impairment test. For our quantitative test, we use an income approach to estimate the fair value of our reporting units. The income approach uses a reporting unit’s projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital that is determined based on current market conditions. The projection uses management’s best estimates of economic and market conditions over the projected period, including sales growth rates, operating margins, capital expenditures, working capital, discount rates and terminal value growth rates. We validate our estimates of fair value under the income approach by considering the implied control premium and conclude whether the implied control premium is reasonable based on other recent market transactions.

In 2025, the annual goodwill impairment test was performed using a qualitative analysis with the exception of certain reporting units where management elected to bypass the qualitative analysis and perform a quantitative analysis. Based on the analyses performed in 2025, the fair value of the Company's reporting units continue to exceed their respective carrying amounts, and accordingly, no impairment charges were recognized.

Indefinite-lived intangible assets primarily consist of certain trade names. Indefinite-lived intangible assets are tested qualitatively or quantitatively for impairment at least annually as of October 1 to determine whether their fair values exceed their respective carrying amounts, unless events or changes in circumstance indicate that the asset may be impaired prior to the annual test. For our quantitative test, the implied fair value of indefinite-lived intangible assets is determined based on significant unobservable inputs. The fair value of the trade names is calculated using a “relief from royalty” methodology. This approach involves two steps: (1) estimating reasonable royalty rates for the trade name and (2) applying this royalty rate to a net sales stream and discounting the resulting cash flows to determine fair value using a weighted-average cost of capital that is determined based on current market conditions. This fair value is then compared with the carrying value of the trade name.

The Company performed its annual impairment testing of indefinite-lived intangible assets using a qualitative approach. Management assessed relevant trends and factors, including projected market outlook and growth rates, forecasted and actual sales performance, discount rates, and other qualitative considerations. Based on these assessments, management concluded that no quantitative analysis is required and the fair values of the Company's indefinite-lived intangible assets exceeded their carrying values, and accordingly, no impairment charges were recognized.

Litigation Reserves

We accrue for loss contingencies associated with outstanding litigation, claims and assessments for which management has determined it is probable that a loss contingency exists and the amount of loss can be reasonably estimated. We recognize expense associated with professional fees related to litigation claims and assessments as incurred. Refer to Note 10, Commitments and Contingencies, for further information.

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Derivative Financial Instruments

All derivative financial instruments, such as foreign exchange contracts, are recognized in the financial statements and measured at fair value, regardless of the purpose or intent in holding them.

In the normal course of business, we are exposed to fluctuations in foreign currency exchange rates as well as variability in cash flows resulting from changes in contractually specified interest rates (e.g., SOFR). We have established policies and procedures that manage this exposure through the use of financial instruments. By policy, we do not enter into these instruments for trading purposes or speculation. We formally assess, designate and document, as a hedge of an underlying exposure, the qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, we assess at inception whether the financial instruments used in the hedging transaction are highly effective at offsetting changes in either the fair values or cash flows of the underlying exposures. If highly effective, any subsequent test may be done qualitatively.

We have cross-currency swaps which are documented and designated as net investment hedges of our Euro denominated investment in foreign entities. We pay fixed-rate interest in Euros and receive fixed-rate interest in U.S. dollars related to our future obligations to exchange Euros for U.S. dollars. The interest receivable on the swaps is accrued each month for effective instruments designated as a hedge and is reflected within Interest expense, netwithin the Consolidated Statements of Income and the remaining change in the fair value of the derivatives is recorded as a component of Accumulated Other Comprehensive Income (Loss) (AOCI). From time to time, we may enter into certain foreign currency exchange forward contracts, which are not designated as hedges and are adjusted to fair value at each period end, with the resulting gains and losses recognized in the accompanying Consolidated Statements of Income immediately.

Refer to Note 14, Derivatives and Hedging, for more information.

Pension and Other Post-retirement Plans

We immediately recognize actuarial gains and losses in our operating results in the year in which the gains or losses occur. Refer to Note 9, Employee Benefit Plans, for more information.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) in 2025, 2024 and 2023 were as follows:

Fair Value of Financial Instruments

The estimated fair values of financial instruments were principally based on market prices where such prices were available and, where unavailable, fair values were estimated based on market prices of similar instruments.

Foreign Currency Translation

Revenues and expenses are translated at average currency exchange rates during the related period. Assets and liabilities of foreign subsidiaries are translated using the exchange rate at the end of the reporting period. The resulting translation adjustments are recorded as accumulated other comprehensive income or loss. Gains and losses resulting from foreign currency transactions, including intercompany transactions that are not considered long-term investments, are included in Other income, net.

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Revenue Recognition

We recognize revenue once control of the product is transferred to the customer, which typically occurs when products are shipped from our facilities.

Shipping and Handling Costs

Shipping and handling costs are included in Cost of sales.

Research and Development Expense

Research and development costs of $96.7 million in 2025, $98.7 million in 2024 and $90.3 million in 2023 are charged to expense as incurred.

Environmental Remediation Costs

We expense costs that are associated with managing hazardous substances and pollution in ongoing operations on a current basis. Costs associated with environmental contamination are accrued when it becomes probable that a liability has been incurred and our proportionate share of the cost can be reasonably estimated. Any such provision is recognized using the Company's best estimate of the amount of loss incurred, or at the lower end of an estimated range, when a single best estimate is not determinable. In some cases, the Company recovers a portion of the costs relating to these obligations from insurers or other third parties, and the recovery is recognized when realization of the proceeds is deemed as probable.

Share-Based Compensation

In accounting for share-based compensation, we estimate the fair value of share-based awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the accompanying Consolidated Statements of Income. As of December 31, 2025, we hadone active share-based employee compensation plan, which is described more fully in Note 12, Share-Based Compensation.

Income Taxes

Deferred income tax liabilities and assets are determined based upon the differences between the financial reporting and tax basis of assets and liabilities and are measured using the tax rate and laws currently in effect. We evaluate our deferred income taxes to determine whether a valuation allowance should be established against the deferred tax assets or whether the valuation allowance should be reduced based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard. See Note 11, Income Taxes, for additional detail.

Note 2 — GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill by segment were as follows:

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Indefinite and finite-lived intangible assets consisted of the following:

Amortization of finite-lived intangible assets for the years ended December 31, 2025, 2024 and 2023 was $80.4 million, $77.8 million and $79.8 million, respectively.

We expect finite-lived intangibles amortization expense for the next five years as follows:

Note 3 — EMPLOYEE SEPARATION AND RESTRUCTURING COSTS

Cloud-based Enterprise Resource Planning System Impairment and Other Related Charges

In the first quarter of 2025, the Company completed a review of its cloud-based enterprise resource planning system, S/4HANA, including updated project timelines, cost incurred to date, required internal resources and expected costs to complete the initial site implementations, and the evolution of options that could provide better returns for shareholders. As a result of this review, the Company determined it would cease the ongoing development of S/4HANA.

As a result of this decision, in the first quarter of 2025, the Company recognized a non-cash, pre-tax impairment charge of $71.6 million associated with capitalized implementation costs. The Company also recognized pre-tax charges of $14.7 million associated with unpaid contractual obligations for hosting fees. Further, the Company recognized charges of $2.8 million associated to severance actions resulting from the decision to cease development of S/4HANA. These charges are included in Selling and administrative expense within the Consolidated Statements of Income.

Clariant Color Integration Restructuring Program

We completed a restructuring program associated with our integration of Clariant Color, which is expected to enable us to better serve customers, improve efficiency and deliver cost savings. This program resulted in total charges of $64.0 million.

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A summary of the Clariant Color integration restructuring is shown below:

Other Restructuring Actions

During the years ended December 31, 2025, 2024 and 2023, additional charges were recognized associated with workforce reductions and plant closures. These actions have been taken as a result of productivity initiatives and organizational changes. A summary of this activity is shown below:

Total restructuring costs included in the Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023 are shown in the table below.

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Note 4 — FINANCING ARRANGEMENTS

For each of the periods presented, total debt consisted of the following:

On March 12, 2025, the Company refinanced its senior secured term loan by amending the credit agreement governing such term loan (the Term Loan Amendment). The Term Loan Amendment reduced the interest rate per annum by 25 basis points, which now is either (i) Adjusted Term SOFR (as defined in the Term Loan Amendment) plus 1.75%, or (ii) a Base Rate (as defined in the Term Loan Amendment) plus 0.75%. The maturity date and other terms and conditions are substantially the same as the terms and conditions under the credit agreement immediately prior to the Term Loan Amendment.

During 2025, the Company made voluntary prepayments of $150.0 million on its senior secured term loan, which were applied to the principal installments in direct order of maturity. These prepayments were made without penalty or premium.

On June 12, 2025, the Company entered into a revolving credit agreement (the Revolving Credit Agreement) with various financial institutions as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, which replaced our previous credit agreement set to mature in 2026. The Revolving Credit Agreement provides for a senior secured revolving credit facility of up to $500.0 million, which may be increased by up to $250.0 million, subject to certain conditions. Loans under the Revolving Credit Agreement will mature on June 12, 2030. The Revolving Credit Agreement contains representations and warranties, affirmative covenants, negative covenants and events of default that are substantially similar to those contained in the Company's existing term loan credit agreement.

As of December 31, 2025 and 2024, we hadno borrowings outstanding under our Revolving Credit Facility. As of December 31, 2025, remaining availability under our Revolving Credit Facility was $490.3 million.

The agreements governing our Revolving Credit Facility and our senior secured term loan, and the indentures and credit agreements governing other debt contain a number of customary financial and restrictive covenants that, among other things, limit our ability to: sell or otherwise transfer assets, including in a spin-off, incur additional debt or liens, consolidate or merge with any entity or transfer or sell all or substantially all of our assets, pay dividends or make certain other restricted payments, make investments, enter into transactions with affiliates, create dividend or other payment restrictions with respect to subsidiaries, make capital investments and alter the business we conduct. As of December 31, 2025, we were in compliance with all covenants.

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The estimated fair value of Avient’s debt instruments at December 31, 2025 and 2024 was $1,967.1 million and $2,083.3 million, respectively, compared to carrying values of $1,923.1 million and $2,067.0 million as of December 31, 2025 and 2024, respectively. The fair value of Avient’s debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and represent Level 2 measurements within the fair value hierarchy.

Aggregate maturities of the principal amount of debt for the next five years and thereafter are as follows:

Included in Interest expense, net for the years ended December 31, 2025, 2024 and 2023 was interest income of $46.3 million, $50.1 million, and $49.8 million, respectively. Interest income includes the impact of cross-currency swaps, as described in Note 14, Derivatives and Hedging. Total interest paid on debt, net of the impact of hedging, was $97.6 million in 2025, $85.2 million in 2024 and $106.3 million in 2023.

Note 5 — LEASING ARRANGEMENTS

We lease certain manufacturing facilities, warehouse space, machinery and equipment, vehicles and information technology equipment under operating leases. The majority of our leases are operating leases. Finance leases are immaterial to our consolidated financial statements. Operating lease assets and obligations are reflected within Operating lease assets, net, Accrued expenses and other current liabilities, and Other non-current liabilities, respectively.

Lease expense for these leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred. The components of lease cost recognized within our Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023 were as follows:

We often have options to renew lease terms for buildings and other assets. The exercise of lease renewal options are generally at our sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at our discretion. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease term for our operating leases as of December 31, 2025 and 2024 was 5.1 years and 5.6 years, respectively. The non-cash net increase in operating lease liabilities was $10.0 million, $37.3 million and $18.1 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The discount rate implicit within our leases is generally not determinable and, therefore, the Company determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate for our leases is determined based on lease term and currency in which lease payments are made, adjusted for impacts of collateral.

The weighted average discount rate used to measure our operating lease liabilities as of December 31, 2025 and 2024 were 5.7% and 6.0%, respectively.

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Maturities of lease liabilities at December 31, 2025 are as follows:

Note 6 — INVENTORIES, NET

Components of Inventories, net as of December 31, 2025 and 2024 are as follows:

Inventory reserves totaled $33.2 million and $36.3 million at December 31, 2025 and 2024, respectively, and are included within the table above.

Note 7 — PROPERTY, NET

Components of Property, net as of December 31, 2025 and 2024 are as follows:

Depreciation expense, including accelerated depreciation associated with restructuring actions, was $105.5 million in 2025, $101.9 million in 2024 and $109.0 million in 2023.

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Note 8 — OTHER BALANCE SHEET LIABILITIES

Other current and non-current liabilities as of December 31, 2025 and 2024 consist of the following:

Note 9 — EMPLOYEE BENEFIT PLANS

All U.S. qualified defined benefit pension plans are frozen, no longer accrue benefits and are closed to new participants. We have foreign pension plans that accrue benefits. The plans generally provide benefit payments using a formula that is based upon employee compensation and length of service.

The following tables present the change in benefit obligation, change in plan assets and components of funded status for defined benefit pension plans.

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Amounts included in the accompanying Consolidated Balance Sheets as of December 31 are as follows:

As of December 31, 2025 and 2024, we had plans with total projected and accumulated benefit obligations in excess of the related plan assets as follows:

Weighted-average assumptions used to determine benefit obligations at December 31:

The following table summarizes the components of net periodic benefit cost (income) that was recognized during each of the years in the three-year period ended December 31, 2025.

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:

*The mark-to-market component of net periodic costs is determined based on discount rates as of year-end and actual asset returns during the year.

The expected long-term rate of return on pension assets was determined after considering the forward looking long-term asset returns by asset category and the expected investment portfolio mix.

Our pension investment strategy is to diversify the portfolio among asset categories to enhance the portfolio’s risk-adjusted return as well as insulate it from exposure to changes in interest rates. Our asset mix considers the duration of plan liabilities, historical and expected returns of the investments, and the funded status of the plan. The pension asset allocation is reviewed and actively managed based on the funded status of the plan. Based on the current funded status of the plan, our pension asset investment allocation guidelines are weighted heavily to fixed income securities. The plan keeps a minimal amount of cash available to fund benefit payments. See the following table for the plans' asset allocation.

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The fair values of pension plan assets at December 31, 2025 and 2024, by asset category, are as follows:

Pension Plan Assets

Other assets are primarily insurance contracts for international plans. The U.S. equity common collective funds are predominately invested in equity securities actively traded in public markets. The international and global equity common collective funds have broadly diversified investments across economic sectors and focus on low volatility, long-term investments. The fixed income common collective funds consist primarily of publicly traded United States fixed interest obligations (principally investment grade bonds and government securities).

Level 1 assets are valued based on quoted market prices. Level 2 investments are valued based on quoted market prices and/or other market data for the same or comparable instruments and transactions of the underlying fixed income investments. The insurance contracts included in the other asset category are valued at the transacted price. Common collective funds are valued at the net asset value of units held by the fund at year-end. The unit value is determined by the total value of fund assets divided by the total number of units of the fund owned.

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The estimated future benefit payments for our pension plans are as follows:

We currently estimate that employer contributions will be $7.5 million to all qualified and non-qualified pension plans in 2026.

The Company sponsors various voluntary retirement savings plans (RSP). Under the provisions of the plans, eligible employees receive defined Company contributions and are eligible for Company matching contributions based on their eligible earnings contributed to the plan. In addition, we may make discretionary contributions to the plans for eligible employees based on a specific percentage of each employee’s compensation.

Following are our contributions to the RSP:

Note 10 — COMMITMENTS AND CONTINGENCIES

We have been notified by federal and state environmental agencies and by private parties that we may be a potentially responsible party (PRP) in connection with the environmental investigation and remediation of certain sites. While government agencies frequently assert that PRPs are jointly and severally liable at these sites, in our experience, the interim and final allocations of liability costs are generally made based on the relative contribution of waste. We may also initiate corrective and preventive environmental projects of our own to support safe and lawful activities at our operations. We believe that compliance with current governmental regulations at all levels will not have a material adverse effect on our financial position, results of operations or cash flows.

In September 2007, the United States District Court for the Western District of Kentucky (Court) in the case of Westlake Vinyls, Inc. v. Goodrich Corporation, et al., held that Avient must pay the remediation costs at the former Goodrich Corporation Calvert City facility (now largely owned and operated by Westlake Vinyls, Inc. (Westlake Vinyls)), together with certain defense costs of Goodrich Corporation. The rulings also provided that Avient can seek indemnification for contamination attributable to Westlake Vinyls. Following the rulings, the parties to the litigation agreed to settle all claims regarding past environmental costs incurred at the site. The settlement agreement provides a mechanism to pursue allocation of future remediation costs at the Calvert City site to Westlake Vinyls.

The environmental obligation at the site arose as a result of an agreement between The B.F. Goodrich Company (n/k/a Goodrich Corporation) and our predecessor, The Geon Company, at the time of the initial public offering in 1993. Under the agreement, The Geon Company agreed to indemnify Goodrich Corporation for certain environmental costs at the site. Neither Avient nor The Geon Company ever operated the facility.

Since 2009, Avient, along with respondents Westlake Vinyls and Goodrich Corporation, has worked with the United States Environmental Protection Agency (USEPA) to address the remedial activities at the site. The USEPA issued its Record of Decision (ROD) in September 2018. In April 2019, the respondents signed an Administrative Settlement Agreement and Order on Consent with the USEPA to conduct the remedial actions at the site. In February 2020, three companies signed the agreed Consent Decree and remedial action Work Plan, which received Federal Court approval in January 2021.

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In 2023, the Company recognized charges of $20.6 million associated with the completion of certain remedial action activities at the site. Further, the Company received construction bids based on an interim design for the largest component of remedial action at Calvert City, the construction of a barrier wall around the site, which began in 2024. These construction cost updates resulted in an additional charge of $36.2 million in 2023. In 2024, the Company finalized the design and construction estimates for one phase of the barrier wall, as well as an updated remedial action timeline at the site, which resulted in charges of $19.8 million. Construction of the initial barrier wall section began in 2024 and was completed in the first quarter of 2025. In 2025, the Company recognized charges of $21.3 million associated with Calvert City, primarily driven by incremental investigation and remedial design work deemed necessary based on results of ongoing findings at the site. Further, this incremental work resulted in atwo-year extension of the planned remedial action timeline, which also contributed to the charges. The remaining wall designs and construction are now expected to be completed in phases through 2030. As the Company completes further design work and begins construction on the remaining sections of the barrier wall, the Company will update its accrual, which was $133.2 million as of December 31, 2025, for any new information as it becomes available.

Total environmental accruals of $141.2 million and $146.0 million are reflected within Accrued expenses and other current liabilities and Other non-current liabilities in our Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024, respectively. These undiscounted accruals represent our best estimate of probable future costs that we can reasonably estimate, based upon currently available information and technology and how the remedy will be implemented. It is reasonably possible that we could incur additional costs in excess of the amount accrued, which could be material to our Consolidated Statements of Income. However, such additional costs cannot currently be estimated as they are dependent upon the results of future testing and findings during the execution of remedial design and remedial action, changes in the Calvert City construction timeline, changes in regulations, technology development, new information, newly discovered conditions and other factors that are not currently known.

The following table details the changes in the environmental accrued liabilities:

The environmental expenses noted in the table above, primarily related to the ongoing remedial action at Calvert City, are included in Cost of sales within the Consolidated Statements of Income.

We recognized gains from insurance recoveries of $2.0 million,$34.7 million and $1.7 million in 2025,2024 and 2023, respectively. These gains are included in Cost of sales within the Consolidated Statements of Income. Cash received from insurance recoveries totaled $36.0 million, $0.7 million and $1.7 million in 2025,2024 and 2023, respectively. Further insurance recoveries related to remedial activities at the Calvert City site are expected to be immaterial.

Avient is subject to a broad range of claims, administrative and legal proceedings such as lawsuits that relate to contractual allegations, tax audits, product claims, personal injuries, and employment related matters. Although it is not possible to predict with certainty the outcome or cost of these matters, the Company believes our current reserves are appropriate and that these matters will not have a material adverse effect on the consolidated financial statements.

Note 11 — INCOME TAXES

Income (loss) from continuing operations, before income taxes consists of the following:

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A summary of income tax expense (benefit) from continuing operations is as follows:

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A reconciliation of the applicable U.S. federal statutory tax rate to the consolidated effective income tax rate along with a description of significant reconciling items is included below for the year ended December 31, 2025.

(a)California, Wisconsin, and Georgia make up the majority of the state & local income tax benefit.

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In 2025, Luxembourg recognized a statutory impairment that gave rise to a $28.9 million tax benefit. Further, in 2025, the Company completed an intercompany transfer of intellectual property between entities in different tax jurisdictions resulting in a net tax benefit of $12.1 million. These benefits increased deferred tax assets in Luxembourg; however, based on an evaluation of available evidence, the Company determined that it is more likely than not that a portion of these deferred tax assets will not be fully realized. As a result, the Company recorded a valuation allowance of $41.2 million in Luxembourg.

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective tax rate differs from the statutory tax rate as follows:

In 2023, the tax rate included the recognition of tax benefits of 7.5% associated with tax impairments of investments in affiliates, driven in part from European restructuring actions. Further, we recognized a 5.4% tax benefit from federal and state capital losses associated with an international affiliate's tax status change in 2022. Finally, we recognized tax benefits from the reduction of uncertain tax positions as well as the U.S. R&D tax credit, which reduced the tax rate,5.3% and 3.7%, respectively. Partially offsetting these benefits were non-deductible foreign interest,5.3%, tax associated with foreign income repatriation,3.9%, and an increase of our valuation allowance which impacted the rate 3.6%.

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Components of our deferred tax assets (liabilities) as of December 31, 2025 and 2024 were as follows:

As of December 31, 2025, we had gross state net operating loss carryforwards of $68.1 million that expire between 2026 and 2044 or that have indefinite carryforward periods. Various international subsidiaries have gross net operating loss carryforwards totaling $357.4 million that expire between 2026 and 2042 or that have indefinite carryforward periods.

As of December 31, 2025, no tax provision has been made relating to undistributed earnings of certain non-U.S. subsidiaries, as these amounts continue to be indefinitely reinvested, consistent with our policy. The cash that is permanently reinvested is typically used for operations. It is not practical to estimate the additional income taxes and applicable withholding taxes that would be payable upon the remittance of such undistributed earnings. Taxes on certain foreign earnings as of December 31, 2025 and 2024 included in the Other deferred tax liabilities line in the table above are $10.0 million and $9.7 million, respectively.

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In accordance with the updated requirements of ASU 2023-09 for the year ended December 31, 2025, cash paid for income taxes was as follows:

For the years ended December 31, 2024 and 2023, income taxes paid, net of refunds, were $65.9 million and $151.2 million, respectively.

A reconciliation of unrecognized tax benefits is as follows:

We recognize interest and penalties related to uncertain tax positions in the tax provision. We had $2.2 million and $2.5 million accrued as of December 31, 2025 and 2024, respectively.

If all unrecognized tax benefits were recognized, the net impact on the tax provision would be a benefit of $9.8 million.

In December 2024, Avient received a Notice of Deficiency (Notice) from the U.S. Internal Revenue Service (IRS) proposing an adjustment to the 2019 tax year resulting from a disallowed capital loss. The proposed incremental tax associated with the Notice is $23.8 million plus estimated interest of $7.3 million. We contested the Notice by filing a petition in U.S. Tax Court on March 4, 2025. The IRS' answer to Avient's petition included an additional accuracy-related penalty of $4.8 million and is subject to interest. The Company believes that the proposed penalty is also without merit, and we intend to contest the penalty vigorously in U.S. Tax Court. However, there can be no assurance this dispute with the IRS will be resolved favorably. As of December 31, 2025, the Company has not recorded any income tax provision related to this matter; therefore an unfavorable ruling or settlement in U.S. Tax Court would adversely impact our effective tax rate and result in a cash tax payment.

Note 12 — SHARE-BASED COMPENSATION

Share-based compensation cost recognized in the accompanying Consolidated Statements of Income includes compensation cost for share-based payment awards based on an estimated grant date fair value. Share-based compensation expense is based on awards expected to vest and therefore has been reduced for estimated forfeitures.

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In May 2020, our shareholders approved the Avient Corporation 2020 Equity and Incentive Compensation Plan (2020 Plan). This plan reserved 2.5 million common shares for the award of a variety of share-based compensation alternatives, including non-qualified stock options, incentive stock options, restricted stock, restricted stock units (RSUs), performance shares, performance units and stock appreciation rights (SARs). It is anticipated that all share-based grants and awards that are earned and exercised will be issued from Avient common shares that are held in treasury.

In May 2023, our shareholders voted to approve an amendment and restatement of the 2020 Plan (Amended 2020 Plan). The Amended 2020 Plan increases the number of common shares available for awards under the 2020 plan by 2.5 million common shares.

Share-based compensation is included in Selling and administrative expense. A summary of compensation expense by type of award follows:

Stock Appreciation Rights

During the years ended December 31, 2024 and 2023, the total number of SARs granted was 0.5 million and 0.5 million, respectively. No SARs were granted in 2025. Awards vest in one-third increments upon the later of the attainment of time-based vesting over athree-year service period and stock price targets. Awards granted in 2024 and 2023 are subject to an appreciation cap of 200% of the base price. SARs have contractual terms often years from the date of the grant.

The SARs were valued using a Monte Carlo simulation method as the vesting is dependent on the achievement of certain stock price targets. The SARs have time and stock price target requirements, both of which must be achieved in order to vest. Forfeitures were estimated at 3% per year based on our historical experience.

A summary of SAR activity for 2025 is presented below:

The total intrinsic value of SARs exercised during 2025, 2024 and 2023 was $0.4 million, $5.6 million and $0.7 million, respectively. As of December 31, 2025, there was $0.7 million of total unrecognized compensation cost related to SARs, which is expected to be recognized over the weighted average remaining vesting period of 13 months.

Restricted Stock Units

RSUs represent contingent rights to receiveone common share at a future date provided certain vesting criteria are met. During 2025, 2024 and 2023, the total number of RSUs granted were 0.2 million,0.2 million and 0.3 million, respectively. In 2025,0.2 million RSUs vested and 0.1 million RSUs were forfeited. RSUs granted in 2024 and 2023, which generally vest on the third anniversary of the grant date, were granted to executives and other key employees. RSUs granted in 2025 vest annually over athree-year period. Compensation expense is measured on the grant date using the quoted market price of our common shares and is recognized on a straight-line basis over the requisite service period.

As of December 31, 2025,0.5 million RSUs remain unvested with a weighted-average grant date fair value of $41.09. Unrecognized compensation cost for RSUs at December 31, 2025 was $11.1 million, which is expected to be recognized over the weighted average remaining vesting period of 20 months.

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Note 13 — SEGMENT INFORMATION

Operating segments are components of the Company about which separate financial information is available and evaluated on a regular basis by the chief operating decision maker (CODM), which is the Company's chief executive officer. Operating income is the primary segment performance measure that is reported to CODM. Our CODM utilizes this measure to determine appropriate resource allocations to our segments in the annual planning process and to periodically assess segment performance, primarily by evaluating actual results in comparison to the annual operating plan and forecast. Operating income at the segment level does not include corporate general and administrative expenses that are not allocated to segments, restructuring charges, share-based compensation costs, environmental remediation costs and associated recoveries, asset impairments, acquisition-related charges, mark-to-market adjustments on pension and other post-retirement obligations, and certain other items that are not included in the measure of segment profit or loss that is reported to and reviewed by our CODM. These costs are included in Corporate.

Segment assets are primarily customer receivables, inventories, net property, plant and equipment, intangible assets and goodwill. Corporate assets and liabilities primarily include cash, debt, pension and other employee benefits, environmental liabilities, and other unallocated corporate assets and liabilities. The accounting policies of each segment are consistent with those described in Note 1, Description of Business and Summary of Significant Accounting Policies.

Avient hastwo reportable segments: (1) Color, Additives and Inks and (2) Specialty Engineered Materials. The following is a description of each reportable segment.

Color, Additives and Inks

Color, Additives and Inks is a leading innovator of specialized custom color and additive concentrates in solid and liquid form for thermoplastics, dispersions for thermosets, as well as specialty inks. Color and additive solutions include an innovative array of colors, special effects and performance-enhancing and sustainable solutions. When combined with polymer resins, our solutions help customers achieve differentiated specialized colors and effects targeted at the demands of today’s highly design-oriented consumer and industrial end markets. Our additive concentrates encompass a wide variety of performance and process enhancing characteristics and are commonly categorized by the function that they perform, including UV light stabilization and blocking, antimicrobial, anti-static, blowing or foaming, antioxidant, lubricant, oxygen and visible light blocking and productivity enhancement. Of growing importance is our portfolio of additives that enable our customers to achieve their sustainability goals, regarding improved recyclability, reduced energy use, light weighting, and renewable energy applications. Our colorant and additives concentrates are used in a broad range of polymers, including those used in medical and pharmaceutical devices, food packaging, personal care and cosmetics, transportation, building products, wire and cable markets. We also provide custom-formulated liquid systems that meet a variety of customer needs and chemistries, including polyester, vinyl, natural rubber and latex, polyurethane and silicone. Our offerings also include proprietary inks and latexes for diversified markets such as recreational and athletic apparel, construction and filtration, outdoor furniture and healthcare. Our liquid polymer coatings and additives are largely based on vinyl and are used in a variety of markets, including consumer, packaging, healthcare, industrial, transportation, building and construction, wire and cable, textiles and appliances. Color, Additives and Inks has manufacturing, sales and service facilities located throughout North America, South America, Asia, Europe, Middle East, and Africa.

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Specialty Engineered Materials

Specialty Engineered Materials is a leading innovator of specialty polymer materials, services and solutions for designers, assemblers and processors of thermoplastic materials across a wide variety of markets and end-use applications. Our product portfolio, which we believe to be one of the most diverse in our industry, includes specialty formulated high-performance polymer materials that are manufactured using thermoplastic resins and elastomers, which are then combined with advanced polymer additives, reinforcement, filler, colorant and/or biomaterial technologies. We also have what we believe is the broadest composite platform of solutions, which include a full range of thermoset and thermoplastic composites, reinforced with glass, carbon, aramid, and ultrahigh molecular weight polyethylene fibers. These solutions meet a wide variety of unique customer requirements, in particular light weighting. Our technical and market expertise enables us to expand the performance range and structural properties of traditional engineering-grade thermoplastic resins to meet evolving customer needs in a variety of markets, including defense, consumer, industrial, transportation, energy, building and construction and healthcare. Specialty Engineered Materials has manufacturing, sales and service facilities located throughout North America, Europe, and Asia. Our product development and application reach is further enhanced by the capabilities of our Innovation Centers in the United States, Germany, The Netherlands and China, which produce and evaluate prototype and sample parts to help assess end-use performance and guide product development. Our manufacturing capabilities are targeted at meeting our customers’ demand for speed, flexibility and critical quality.

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Financial information by reportable segment is as follows:

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Our sales are primarily to customers in the United States, Canada, Mexico, Europe, South America and Asia, and the majority of our assets are located in these same geographic areas. The following is a summary of sales and property based on the geographic areas where the sales originated and where the assets are located, in addition to other relevant financial information by reportable segment:

Note 14 — DERIVATIVES AND HEDGING

We are exposed to market risks, such as changes in foreign currency exchange rates and interest rates. To manage the volatility related to these exposures we may enter into various derivative transactions. We formally assess, designate and document, as a hedge of an underlying exposure, the qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, we assess both at inception and at least quarterly thereafter, whether the financial instruments used in the hedging transaction are effective at offsetting changes in either the fair values or cash flows of the underlying exposures. In accordance with ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities(ASU 2017-12), that ongoing assessment may be done qualitatively for highly effective relationships.

Net Investment Hedge

As a means of mitigating the impact of currency fluctuations on our Euro investments in foreign entities, we have executed cross-currency swaps, in which we pay fixed-rate interest in Euros and receive fixed-rate interest in U.S. dollars related to our future obligations to exchange Euros for U.S. dollars. In November 2024, the Company completed a transaction to effectively amend and extend cross-currency swaps maturing in May 2025, which had a combined notional amount of €1,467.2 million. The liability position of the existing cross-currency swaps was blended into new cross-currency swap agreements. In November 2024, the Company also entered into an additional cross-currency swap agreement, which had a combined notional amount of €208.2 million, to further hedge its net investment in its European operations.

We designated the cross-currency swaps as net investment hedges of our net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. The changes in fair value of the derivative instruments that are designated and qualify as hedges of net investments in foreign operations are recognized within Accumulated Other Comprehensive Income (Loss)(AOCI) to offset the changes in the values of the net investment being hedged. For the years ended December 31, 2025 and 2024, a loss of $210.2 million and a gain of $77.3 million, respectively, were recognized within translation adjustments in AOCI, net of tax.

These cross-currency swaps effectively convert a portion of our U.S. dollar denominated fixed-rate debt to Euro denominated fixed-rate debt. Included in Interest expense, net within the Consolidated Statements of Income are benefits of $36.1 million, $38.4 million and $38.8 million for the years ended December 31, 2025, 2024 and 2023, respectively, related to net interest payments received from counterparties.

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All of our derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. We determine the fair value of our derivatives based on valuation methods, which project future cash flows and discount the future amounts present value using market based observable inputs, including interest rate curves and foreign currency rates. The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets as of December 31, 2025 and 2024 is as follows:

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