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BORROWINGS | 9 Months Ended
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Sep. 30, 2020
Debt Disclosure [Abstract] |
BORROWINGS | BORROWINGS
| September 30, |  | December 31,
(Dollars in millions) | 2020 |  | 2019
Borrowings consisted of: |  |  |
4.5% notes due January 2021 (1) | $ | 185 |  |  | $ | 185 |
3.5% notes due December 2021 | 298 |  |  | 298 |
3.6% notes due August 2022 | 743 |  |  | 741 |
1.50% notes due May 2023 (2) | 876 |  |  | 840 |
7 1/4% debentures due January 2024 | 198 |  |  | 198 |
7 5/8% debentures due June 2024 | 43 |  |  | 43 |
3.8% notes due March 2025 | 701 |  |  | 695 |
1.875% notes due November 2026 (2) | 581 |  |  | 556 |
7.60% debentures due February 2027 | 195 |  |  | 195 |
4.5% notes due December 2028 | 493 |  |  | 493 |
4.8% notes due September 2042 | 493 |  |  | 493 |
4.65% notes due October 2044 | 874 |  |  | 874 |
Commercial paper and short-term borrowings | 185 |  |  | 171 |
Total borrowings | 5,865 |  |  | 5,782 |
Borrowings due within one year | 370 |  |  | 171 |
Long-term borrowings | $ | 5,495 |  |  | $ | 5,611 |
(1)In October 2020, the Company repaid the 4.5% notes due January 2021 ($185 million principal) using available cash. (2)The carrying value of the euro-denominated 1.50% notes due May 2023 and 1.875% notes due November 2026 will fluctuate with changes in the euro exchange rate. The carrying value of these euro-denominated borrowings have been designated as non-derivative net investment hedges of a portion of the Company's net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations. Loan Agreement, Credit Facility, and Commercial Paper Borrowings In second quarter 2020, the Company borrowed $250 million under a new 364-Day Term Loan Credit Agreement (the "Term Loan") as a precautionary measure due to increased financial market volatility, particularly in the availability and terms of commercial paper, resulting from the COVID-19 coronavirus global pandemic ("COVID-19"). In third quarter 2020, the Term Loan was repaid using available cash. The early repayment resulted in a charge of $1 million for early debt extinguishment costs which was primarily attributable to related unamortized issuance costs. The Company has access to a $1.50 billion revolving credit agreement (the "Credit Facility") expiring October 2023. 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 available liquidity for general corporate purposes and supports commercial paper borrowings. Commercial paper borrowings are classified as short-term. In first quarter 2020, the Company borrowed a total of $400 million under the Credit Facility. In second quarter 2020, the Company repaid a total of $400 million using available cash. At September 30, 2020 and December 31, 2019, the Company had no outstanding borrowings under the Credit Facility. At September 30, 2020, the Company's commercial paper borrowings were $185 million with a weighted average interest rate of 0.35 percent. At December 31, 2019, the Company's commercial paper borrowings were $170 million with a weighted average interest rate of 2.03 percent. The Credit Facility contains customary covenants, including requirements to maintain certain financial ratios, that determine the events of default, amounts available, and terms of borrowings. In second quarter 2020, the Company amended the Credit Facility and the Term Loan maximum debt covenants to reflect the higher cash balance to enhance liquidity due to, and the expected negative impact on operating results of, COVID-19 and added a new restrictive covenant prohibiting stock repurchases until June 30, 2021 in the event certain financial ratios are exceeded. The Company was in compliance with all applicable covenants at both September 30, 2020 and December 31, 2019. The Company did not renew the $250 million accounts receivable securitization agreement (the "A/R Facility") which expired April 2020. Eastman Chemical Financial Corporation ("ECFC"), a subsidiary of the Company, had an agreement to sell interests in trade receivables under the A/R Facility to a third party purchaser. Third party creditors of ECFC had 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 were subject to interest rates based on a spread over the lender's borrowing costs and ECFC paid a fee to maintain availability of the A/R Facility. In first quarter 2020, the Company borrowed a total of $350 million, in two tranches, under the A/R Facility and repaid a total of $350 million using available cash. At December 31, 2019, the Company had no borrowings outstanding under the A/R Facility. Fair Value of Borrowings Eastman has classified its total borrowings at September 30, 2020 and December 31, 2019 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 2019 Annual Report on Form 10-K. The fair value for fixed-rate debt securities is based on quoted market prices for the same or similar debt instruments and is classified as Level 2. The fair value for the Company's other borrowings, primarily under the Credit Facility and commercial paper, equals the carrying value and is classified as Level 2. At September 30, 2020 and December 31, 2019, the fair value of total borrowings was $6.529 billion and $6.275 billion, respectively. The Company had no borrowings classified as Level 3 as of September 30, 2020 and December 31, 2019.

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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