TRANSFERS OF FINANCIAL ASSETS

9 Months Ended

Sep. 30, 2012

Transfers and Servicing [Abstract]

TRANSFERS OF FINANCIAL ASSETS

TRANSFERS OF FINANCIAL ASSETS

Sale of Trade Accounts Receivable in North America and Europe

The Company sells trade accounts receivable of select North America entities and qualifying trade accounts receivable of select European entities on a revolving basis to certain multi-seller commercial paper conduit entities ("conduits"). The Company maintains servicing responsibilities and the related costs are insignificant. The proceeds received are comprised of cash and interests in specified assets of the conduits (the receivables sold by the Company) that entitle the Company to the residual cash flows of such specified assets in the conduits after the commercial paper has been repaid. Neither the conduits nor the investors in those entities have recourse to other assets of the Company in the event of nonpayment by the debtors.

During the three months ended September 30, 2012, the Company recognized a loss of $5 million on the sale of these receivables ($12 million during the three months ended September 30, 2011), which is included in “Interest expense and amortization of debt discount” in the consolidated statements of income. During the nine months ended September 30, 2012, the Company recognized a loss of $14 million on the sale of receivables ($18 million during the nine months ended September 30, 2011).

The Company's interests in the conduits are carried at fair value and included in “Accounts and notes receivable – Other” in the consolidated balance sheets. Fair value of the interests is determined by calculating the expected amount of cash to be received and is based on unobservable inputs (a Level 3 measurement). The key input in the valuation is the percentage of anticipated credit losses in the portfolio of receivables sold that have not yet been collected. Given the short-term nature of the underlying receivables, discount rates and prepayments are not factors in determining the fair value of the interests.

The following table summarizes the carrying value of interests held, which represents the Company's maximum exposure to loss related to the receivables sold, and the percentage of anticipated credit losses related to the trade accounts receivable sold. Also provided is the sensitivity of the fair value of the interests held to hypothetical adverse changes in the anticipated credit losses; amounts shown below are the corresponding hypothetical decreases in the carrying value of interests.

Interests Held	Sep 30, 2012			Dec 31, 2011
In millions
Carrying value of interests held	$	1,343		$	1,141
Percentage of anticipated credit losses	1.10		%	1.22		%
Impact to carrying value - 10% adverse change	$	2		$	2
Impact to carrying value - 20% adverse change	$	5		$	4

Credit losses, net of any recoveries, on receivables sold during the three and nine months ended September 30, 2012 and September 30, 2011 were insignificant.

Following is an analysis of certain cash flows between the Company and the conduits:

Cash Proceeds	Three Months Ended				Nine Months Ended
In millions	Sep 30, 2012		Sep 30, 2011		Sep 30, 2012		Sep 30, 2011
Sale of receivables	$	—	$	13	$	57	$	16
Collections reinvested in revolving receivables	$	6,432	$	7,724	$	19,489	$	21,501
Interests in conduits (1)	$	218	$	220	$	2,190	$	1,444

(1) Presented in "Operating Activities" in the consolidated statements of cash flows.

Following is additional information related to the sale of receivables under these facilities:

Trade Accounts Receivable Sold	Sep 30, 2012		Dec 31, 2011
In millions
Delinquencies on sold receivables still outstanding	$	154	$	155
Trade accounts receivable outstanding and derecognized	$	2,621	$	2,385

Sale of Trade Accounts Receivable in Asia Pacific

The Company sells participating interests in trade accounts receivable of select Asia Pacific entities. The Company maintains servicing responsibilities and the related costs are insignificant. The third-party holders of the participating interests do not have recourse to the Company’s assets in the event of nonpayment by the debtors.

During the three and nine-month periods ended September 30, 2012 and 2011, the Company recognized insignificant losses on the sale of the participating interests in the receivables, which is included in “Interest expense and amortization of debt discount” in the consolidated statements of income. The Company receives cash upon the sale of the participating interests in the receivables.

Following is an analysis of certain cash flows between the Company and the third-party holders of the participating interests:

Cash Proceeds	Three Months Ended				Nine Months Ended
In millions	Sep 30, 2012		Sep 30, 2011		Sep 30, 2012		Sep 30, 2011
Sale of participating interests	$	16	$	42	$	48	$	129
Collections reinvested in revolving receivables	$	13	$	27	$	42	$	106

Following is additional information related to the sale of participating interests in the receivables under this facility:

Trade Accounts Receivable In millions	Sep 30, 2012		Dec 31, 2011
Derecognized from the consolidated balance sheets	$	15	$	13
Outstanding in the consolidated balance sheets	293		303
Total accounts receivable in select Asia Pacific entities	$	308	$	316

There were no credit losses on receivables relating to the participating interests sold during the three and nine-month periods ended September 30, 2012 and 2011. There were no delinquencies on the outstanding receivables related to the participating interests sold at September 30, 2012 or December 31, 2011.