NOTES PAYABLE, LONG-TERM DEBT AND AVAILABLE CREDIT FACILITIES



Notes Payable In millions	Jun 30, 2012			Dec 31, 2011
Notes payable to banks	$	375		$	421
Notes payable to related companies	88			92
Notes payable trade	10			28
Total notes payable	$	473		$	541
Period-end average interest rates	2.97		%	3.06		%



Long-Term Debt In millions	2012 Average Rate		Jun 30, 2012			2011 Average Rate		Dec 31, 2011
Promissory notes and debentures:
Final maturity 2012	6.01	%	$	904		5.35	%	$	2,158
Final maturity 2013	6.03	%	402			6.10	%	395
Final maturity 2014	7.23	%	2,128			7.28	%	2,103
Final maturity 2015	5.85	%	1,281			5.92	%	1,257
Final maturity 2016	2.55	%	780			2.57	%	757
Final maturity 2017	5.92	%	881			6.03	%	857
Final maturity 2018 and thereafter	6.53	%	10,386			6.55	%	10,305
Other facilities:
U.S. dollar loans, various rates and maturities	2.52	%	314			2.37	%	232
Foreign currency loans, various rates and maturities	3.61	%	1,635			3.52	%	1,609
Medium-term notes, varying maturities through 2022	4.44	%	1,112			4.76	%	902
Pollution control/industrial revenue bonds, varying maturities through 2038	5.67	%	717			5.70	%	860
Capital lease obligations	—		16			—		17
Unamortized debt discount	—		(372		)	—		(393		)
Long-term debt due within one year	—		(1,880		)	—		(2,749		)
Long-term debt	—		$	18,304		—		$	18,310



Annual Installments on Long-Term Debt For Next Five Years at June 30, 2012 In millions
2012	$	1,439
2013	$	714
2014	$	2,418
2015	$	1,512
2016	$	1,028
2017	$	1,172

On March 8, 2012, the Company redeemed $1.25 billion aggregate principal amount of 4.85 percent notes due August 15, 2012, at a price of 101.8 percent of the principal amount of the notes, plus accrued and unpaid interest. As a result of this redemption, the Company realized a $24 million pretax loss on the early extinguishment of debt, included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Corporate.

In the first six months of 2012, the Company issued $210 million aggregate principal amount of InterNotes and approximately $224 million of long-term debt was entered into by consolidated variable interest entities.

In the first quarter of 2012, the Company redeemed $37 million of pollution control/industrial revenue bonds that matured on January 1, 2012. During the second quarter of 2012, the Company repurchased $105 million of pollution control/industrial revenue tax-exempt bonds that were subject to re-marketing.

On March 22, 2011, the Company concluded cash tender offers for $1.5 billion aggregate principal amount of certain notes issued by the Company. As a result of the tender offers, the Company redeemed $1.5 billion of the notes and recognized a $472 million pretax loss on early extinguishment of debt, included in “Sundry income (expense) – net” in the consolidated statements of income and reflected in Corporate.

During the first six months of 2011, the Company redeemed $800 million of notes that matured on February 1, 2011 and Euro 500 million of notes that matured on May 27, 2011 ($707 million equivalent at March 31, 2011). The Company also redeemed $1,208 million of InterNotes and recognized a $10 million pretax loss on early extinguishment of debt, included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Corporate. In the second quarter of 2011, the Company issued $175 million of InterNotes.

The Company’s outstanding debt of $20.2 billion has been issued under indentures which contain, among other provisions, covenants with which the Company must comply while the underlying notes are outstanding. Such covenants include obligations to not allow liens on principal U.S. manufacturing facilities, enter into sale and lease-back transactions with respect to principal U.S. manufacturing facilities, or merge or consolidate with any other corporation, or sell or convey all or substantially all of the Company’s assets. The outstanding debt also contains customary default provisions. Failure of the Company to comply with any of these covenants could result in a default under the applicable indenture, which would allow the note holders to accelerate the due date of the outstanding principal and accrued interest on the subject notes.

The Company’s primary credit agreements contain covenant and default provisions in addition to the covenants set forth above with respect to the Company’s debt. Significant other covenants and default provisions related to these agreements include:


(a)	the obligation to maintain the ratio of the Company’s consolidated indebtedness to consolidated capitalization at no greater than 0.65 to 1.00 at any time the aggregate outstanding amount of loans under the Five Year Competitive Advance and Revolving Credit Facility Agreement dated October 18, 2011 equals or exceeds $500 million,


(b)	a default if the Company or an applicable subsidiary fails to make any payment on indebtedness of $50 million or more when due, or any other default under the applicable agreement permits or results in the acceleration of $200 million or more of principal, and


(c)	a default if the Company or any applicable subsidiary fails to discharge or stay within 30 days after the entry of a final judgment of more than $200 million.

Failure of the Company to comply with any of the covenants or default provisions could result in a default under the applicable credit agreement which would allow the lenders to not fund future loan requests and to accelerate the due date of the outstanding principal and accrued interest on any outstanding loans.