NOTES PAYABLE, LONG-TERM DEBT AND AVAILABLE CREDIT FACILITIES
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Notes Payable at December 31 In millions | 2013 |
| | 2012 |
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Notes payable to banks | $ | 300 |
| | $ | 319 |
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Notes payable to related companies | 137 |
| | 66 |
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Notes payable trade | 6 |
| | 11 |
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Total notes payable | $ | 443 |
| | $ | 396 |
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Year-end average interest rates | 3.23 | % | | 3.14 | % |
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Long-Term Debt at December 31
In millions | 2013 Average Rate |
| | 2013 |
| | 2012 Average Rate |
| | 2012 |
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Promissory notes and debentures: | | | | | | | |
Final maturity 2013 | — |
| | $ | — |
| | 6.01 | % | | $ | 404 |
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Final maturity 2014 | 5.33 | % | | 399 |
| | 6.86 | % | | 1,138 |
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Final maturity 2015 | 2.89 | % | | 56 |
| | 5.82 | % | | 1,290 |
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Final maturity 2016 | 2.53 | % | | 805 |
| | 2.54 | % | | 789 |
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Final maturity 2017 | 5.65 | % | | 491 |
| | 5.88 | % | | 890 |
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Final maturity 2018 | 5.43 | % | | 570 |
| | 5.59 | % | | 840 |
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Final maturity 2019 and thereafter | 5.94 | % | | 12,200 |
| | 5.96 | % | | 12,148 |
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Other facilities: | | | | | | | |
U.S. dollar loans, various rates and maturities | 1.44 | % | | 490 |
| | 2.30 | % | | 288 |
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Foreign currency loans, various rates and maturities | 3.18 | % | | 1,140 |
| | 3.50 | % | | 1,336 |
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Medium-term notes, varying maturities through 2023 | 3.76 | % | | 1,143 |
| | 4.26 | % | | 1,132 |
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Pollution control/industrial revenue bonds, varying maturities through 2038 | 5.59 | % | | 518 |
| | 5.67 | % | | 718 |
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Capital lease obligations | — |
| | 41 |
| | — |
| | 21 |
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Unamortized debt discount | — |
| | (336 | ) | | — |
| | (403 | ) |
Long-term debt due within one year | — |
| | (697 | ) | | — |
| | (672 | ) |
Long-term debt | — |
| | $ | 16,820 |
| | — |
| | $ | 19,919 |
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Annual Installments on Long-Term Debt for Next Five Years In millions |
2014 | $ | 697 |
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2015 | $ | 407 |
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2016 | $ | 1,366 |
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2017 | $ | 775 |
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2018 | $ | 930 |
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2013 Activity
On November 18, 2013, the Company concluded cash tender offers for $700 million aggregate principal amount of certain notes issued by the Company. As a result of the tender offers, the Company redeemed $414 million of 6.0 percent notes due 2017 and $286 million of 5.7 percent notes due 2018 and recognized a $156 million loss on the early extinguishment of debt, included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Corporate.
During the third quarter of 2013, the Company redeemed $209 million aggregate principal amount of InterNotes of various interest rates and maturities in 2017, 2018, 2020, 2021 and 2022. As a result of this redemption, the Company realized a $3 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.
On June 24, 2013, the Company redeemed $1.25 billion aggregate principal amount of 5.9 percent notes due February 15, 2015, at a price of 108.4 percent of the principal amount of the notes, plus accrued and unpaid interest. As a result of this redemption, the Company realized a $108 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.
On June 15, 2013, the Company redeemed $142 million aggregate principal amount of InterNotes of various interest rates and varying maturities in 2017, 2018, 2020, 2021 and 2022. As a result of this redemption, the Company realized a $2 million pretax loss on the early extinguishment of debt, included in "Sundry income (expense) - net" in the consoldiated statements of income and reflected in Corporate.
On March 25, 2013, the Company redeemed $750 million aggregate principal amount of 7.6 percent notes due May 15, 2014, at a price of 107.8 percent of the principal amount of the notes, plus accrued and unpaid interest. As a result of this redemption, the Company realized a $60 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.
During 2013, the Company issued $447 million aggregate principal amount of InterNotes with varying maturities in 2018, 2020 and 2023, at various interest rates averaging 3.24 percent; and approximately $80 million of long-term debt (net of $119 million of repayments) was entered into by consolidated variable interest entities. The Company also drew $300 million on a Committed Term Loan Facility on April 5, 2013.
During 2013, the Company redeemed $250 million of 5.6 percent notes that matured on March 15, 2013; redeemed $138 million of 6.85 percent notes that matured on August 15, 2013; redeemed $82 million principal amount of InterNotes at maturity; and repurchased $200 million of pollution control/industrial revenue tax-exempt bonds of which $126 million is available for re-marketing. The Company also acquired third party lenders’ interest in Dow Kokam LLC’s $75 million note, which was previously classified as “Long-Term Debt” in the consolidated balance sheets (see Note 5 for additional information).
2012 Activity
On December 17, 2012, the Company redeemed $1.0 billion aggregate principal amount of 7.6 percent notes due May 15, 2014, at a price of 109.6 percent of the principal amount of the notes, plus accrued and unpaid interest. As a result of this redemption, the Company realized a $99 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.
On November 14, 2012, the Company issued $2.5 billion of senior unsecured notes in a public offering. The offering included $1.25 billion aggregate principal amount of 3.0 percent notes due 2022 and $1.25 billion aggregate principal amount of 4.375 percent notes due 2042.
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.
During 2012, the Company issued $281 million aggregate principal amount of InterNotes with varying maturities in 2017, 2019 and 2022, at various interest rates averaging 2.95 percent; and approximately $367 million of long-term debt was entered into by consolidated variable interest entities.
During 2012, the Company redeemed $37 million of pollution control/industrial revenue bonds that matured on January 1, 2012, repurchased $105 million of pollution control/industrial revenue tax-exempt bonds that were subject to re-marketing; redeemed Euro 253 million of notes that matured on September 19, 2012 ($317 million equivalent); and redeemed $900 million of notes that matured on October 1, 2012.
2011 Activity
On November 14, 2011, the Company issued $2.0 billion of debt securities in a public offering. The offering included $1.25 billion aggregate principal amount of 4.125 percent notes due 2021 and $750 million aggregate principal amount of 5.25 percent notes due 2041.
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 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 2011, the Company redeemed $800 million of notes that matured on February 1, 2011; Euro 500 million of notes that matured on May 27, 2011 ($707 million equivalent); $250 million of floating rate notes that matured on August 8, 2011; and $1,538 million of InterNotes, which resulted in 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.
During 2011, the Company issued $436 million of InterNotes with varying maturities in 2016, 2018 and 2021, at various interest rates averaging 3.71 percent; and approximately $1.2 billion of long-term debt was entered into by consolidated variable interest entities, including the refinancing of short-term notes payable.
Available Credit Facilities
The following table summarizes the Company's credit facilities:
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Committed and Available Credit Facilities at December 31, 2013 |
In millions | | Effective Date | | Committed Credit |
| | Credit Available |
| | Maturity Date | | Interest |
Five Year Competitive Advance and Revolving Credit Facility | | October 2011 | | $ | 5,000 |
| | $ | 5,000 |
| | October 2016 | | Floating rate |
Bilateral Revolving Credit Facility | | October 2012 | | 170 |
| | 170 |
| | October 2016 | | Floating rate |
Bilateral Revolving Credit Facility | | March 2013 | | 100 |
| | 100 |
| | March 2014 | | Floating rate |
Bilateral Revolving Credit Facility | | March 2013 | | 300 |
| | 300 |
| | October 2016 | | Floating rate |
Term Loan Facility | | March 2013 | | 300 |
| | — |
| | March 2016 | | Floating rate |
Bilateral Revolving Credit Facility | | April 2013 | | 200 |
| | 200 |
| | April 2016 | | Floating rate |
Bilateral Revolving Credit Facility | | October 2013 | | 200 |
| | 200 |
| | October 2016 | | Floating rate |
Bilateral Revolving Credit Facility | | October 2013 | | 100 |
| | 100 |
| | October 2016 | | Floating rate |
Total Committed and Available Credit Facilities | | | | $ | 6,370 |
| | $ | 6,070 |
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On January 21, 2014, the Company entered into an additional $100 million Bilateral Revolving Credit Facility agreement, which has a maturity date in October 2016 and provides for interest at floating rates, as defined in the agreement.
Debt Covenants and Default Provisions
The Company’s outstanding long-term debt has been issued under indentures which contain, among other provisions, certain customary restrictive 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 underlying notes.
The Company’s primary, private credit agreements also contain certain customary restrictive covenant and default provisions in addition to the covenants set forth above with respect to the Company’s debt. Significant other restrictive covenants and default provisions related to these agreements include:
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(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, |
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(b) | a default if the Company or an applicable subsidiary fails to make any payment, including principal, premium or interest, under the applicable agreement on other indebtedness of, or guaranteed by, the Company or such applicable subsidiary in an aggregate amount of $100 million or more when due, or any other default or other event under the applicable agreement with respect to such indebtedness occurs which permits or results in the acceleration of $400 million or more in the aggregate of principal, and |
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(c) | a default if the Company or any applicable subsidiary fails to discharge or stay within 60 days after the entry of a final judgment against the Company or such applicable subsidiary of more than $400 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 indebtedness.
