XML 29 R12.htm IDEA: XBRL DOCUMENT
v3.5.0.2

BORROWINGS | 9 Months Ended
--- | ---
Sep. 30, 2016
Debt Disclosure [Abstract] |
BORROWINGS | BORROWINGS
| September 30, |  | December 31,
(Dollars in millions) | 2016 |  | 2015
Borrowings consisted of: |  |  |
2.4% notes due June 2017 | $ | 499 |  |  | $ | 998 |
6.30% notes due November 2018 | 166 |  |  | 166 |
5.5% notes due November 2019 | 249 |  |  | 249 |
2.7% notes due January 2020 | 795 |  |  | 794 |
4.5% notes due January 2021 | 249 |  |  | 249 |
3.6% notes due August 2022 | 890 |  |  | 896 |
1.50% notes due May 2023 | 607 |  |  | — |
7 1/4% debentures due January 2024 | 244 |  |  | 244 |
7 5/8% debentures due June 2024 | 54 |  |  | 54 |
3.8% notes due March 2025 | 792 |  |  | 791 |
7.60% debentures due February 2027 | 222 |  |  | 222 |
4.8% notes due September 2042 | 492 |  |  | 492 |
4.65% notes due October 2044 | 870 |  |  | 869 |
Credit facilities borrowings | 300 |  |  | 550 |
Commercial paper borrowings | 175 |  |  | 430 |
Capital leases | 4 |  |  | 4 |
Total borrowings | 6,608 |  |  | 7,008 |
Borrowings due within one year | 675 |  |  | 431 |
Long-term borrowings | $ | 5,933 |  |  | $ | 6,577 |
On May 26, 2016, the Company sold euro-denominated 1.50% notes due 2023 in the principal amount of €550 million ($614 million). Proceeds from the sale of the notes, net of transaction costs, were €544 million ($607 million) and were used for the early repayment of $500 million of 2.4% notes due June 2017 and repayment of other borrowings. Total consideration for the partial redemption of 2.4% notes due June 2017 was $507 million ($500 million for the principal amount and $7 million for the early redemption premium) and are reported as financing activities on the Unaudited Consolidated Statements of Cash Flows. The early repayment resulted in a charge of $9 million for early debt extinguishment costs primarily attributable to the early redemption premium and related unamortized costs. The book value of the redeemed debt was $498 million. In conjunction with the euro-denominated public debt offering, the Company contemporaneously designated these borrowings as a non-derivative hedge of a portion of its net investment in one of its euro functional currency denominated subsidiaries. For further information, see Note 8, "Derivative and Non-Derivative Financial Instruments". Credit Facility and Commercial Paper Borrowings In connection with the 2014 acquisition of Taminco Corporation ("Taminco"), Eastman borrowed $1.0 billion under a five-year Term Loan. As of September 30, 2016, the Term Loan balance outstanding was $250 million with an interest rate of 1.77 percent. In second quarter 2016, $100 million of the Company's borrowings under the Term Loan were repaid using available cash. As of December 31, 2015, the Term Loan balance outstanding was $350 million with an interest rate of 1.67 percent. Borrowings under the Term Loan are subject to interest at varying spreads above quoted market rates. The Company has access to a $1.25 billion revolving credit agreement (the "Credit Facility") that expires October 2021. Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. The Credit Facility provides liquidity support for commercial paper borrowings and general corporate purposes. Commercial paper borrowings are classified as short-term. At September 30, 2016 and December 31, 2015, the Company had no outstanding borrowings under the Credit Facility. At September 30, 2016, the Company's commercial paper borrowings were $175 million with a weighted average interest rate of 0.76 percent. At December 31, 2015, the Company's commercial paper borrowings were $430 million with a weighted average interest rate of 0.80 percent. The Company has access to a $250 million accounts receivable securitization agreement (the "A/R Facility") that expires April 2019. Eastman Chemical Financial Corporation ("ECFC"), a subsidiary of the Company, has an agreement to sell interests in trade receivables under the A/R Facility to a third party purchaser. Third party creditors of ECFC have first priority claims on the assets of ECFC before those assets would be available to satisfy the Company's general obligations. Borrowings under the A/R Facility are subject to interest rates based on a spread over the lender's borrowing costs, and ECFC pays a fee to maintain availability of the A/R Facility. At September 30, 2016, the Company's borrowings under the A/R Facility were $50 million supported by trade receivables with an interest rate of 1.58 percent. In third quarter 2016, $150 million of the available amount under the A/R Facility was repaid. In first nine months 2016, $350 million of the available amount under the A/R Facility was repaid and $200 million borrowed. At December 31, 2015, the Company's borrowings under the A/R Facility were $200 million supported by trade receivables with an interest rate of 1.11 percent. The Credit and A/R Facilities and the Term Loan contain a number of customary covenants and events of default, including the maintenance of certain financial ratios. The Company was in compliance with all such covenants for all periods presented. Total available borrowings under the Credit and A/R Facilities were $1,275 million and $842 million as of September 30, 2016 and December 31, 2015, respectively. Changes in available borrowings were due primarily to a decrease in commercial paper borrowings and borrowings under the A/R Facility. The Company would not have violated applicable covenants for these periods if the total available amounts of the facilities had been borrowed. Fair Value of Borrowings The Company has classified its long-term borrowings at September 30, 2016 and December 31, 2015, under the fair value hierarchy as defined in the accounting policies in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2015 Annual Report on Form 10-K. The fair value for fixed-rate debt securities is based on current market prices and is classified as Level 1. The fair value for the Company's other borrowings, which relate to the Term Loan, the A/R Facility, and capital leases, equals the carrying value and is classified as Level 2.
|  |  |  | Fair Value Measurements at September 30, 2016
(Dollars in millions) |  | Recorded Amount September 30, 2016 |  | Total Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Long-term borrowings |  | $ | 5,933 |  |  | $ | 6,410 |  |  | $ | 6,107 |  |  | $ | 303 |  |  | $ | — |
|  |  |  | Fair Value Measurements at December 31, 2015
(Dollars in millions) |  | Recorded Amount December 31, 2015 |  | Total Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Long-term borrowings |  | $ | 6,577 |  |  | $ | 6,647 |  |  | $ | 6,094 |  |  | $ | 553 |  |  | $ | — |

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration