Borrowings

12 Months Ended

Dec. 31, 2011

Borrowings

Borrowings

Note J.

Borrowings

Short-Term Debt

($ in millions)

At December 31:	2011		2010
Commercial paper	$	2,300	$	1,144
Short-term loans	1,859		1,617
Long-term debt—current maturities	4,306		4,017
Total	$	8,463	$	6,778

The weighted-average interest rates for commercial paper at December 31, 2011 and 2010 were 0.1 percent and 0.2 percent, respectively. The weighted-average interest rates for short-term loans was 1.2 percent and 1.1 percent at December 31, 2011 and 2010, respectively.

Long-Term Debt

Pre-Swap Borrowing

($ in millions)

At December 31:	Maturities	2011			2010
U.S. dollar notes and debentures (average interest rate at December 31, 2011):
3.72%	2012–2013	$	8,615	*	$	6,326
1.02%	2014–2015	2,414		*	5,019
4.94%	2016–2020	8,600			6,359
2.90%	2021	500			—
7.00%	2025	600			600
6.22%	2027	469			469
6.50%	2028	313			313
5.875%	2032	600			600
8.00%	2038	187			187
5.60%	2039	1,545			1,545
7.00%	2045	27			27
7.125%	2096	322			322
		24,192			21 ,766
Other currencies (average interest rate at December 31, 2011, in parentheses):
Euros (6.6%)	2012–2016	1,037			1,897
Japanese yen (0.8%)	2013–2014	1,123			1,162
Swiss francs (3.8%)	2012–2020	173			540
Other (5.1%)	2012–2014	177			240
		26,702			25,606
Less: net unamortized discount		533			531
Add: fair value adjustment**		994			788
		27,161			25,863
Less: current maturities		4,306			4,017
Total		$	22,857		$	21,846

*$1.6 billion in debt securities issued by IBM International Group Capital LLC, which is an indirect, 100 percent owned finance subsidiary of the company, is included in 2012-2015. Debt securities issued by IBM International Group Capital LLC are fully and unconditionally guaranteed by the company.

**The portion of the company’s fixed rate debt obligations that is hedged is reflected in the Consolidated Statement of Financial Position as an amount equal to the sum of the debt’s carrying value plus a fair value adjustment representing changes in the fair value of the hedged debt obligations attributable to movements in benchmark interest rates.

Post-Swap Borrowing (Long-Term Debt, Including Current Portion)

(in millions)

	2011				2010
For the year ended December 31:	Amount		Average Rate		Amount		Average Rate
Fixed-rate debt	$	18,547	4.38	%	$	14,446	5.29	%
Floating-rate debt*	8,614		1.54	%	11,417		1.23	%
Total	$	27,161			$	25,863

*Includes $5,898 million in 2011 and $7,078 million in 2010 of notional interest rate swaps that effectively convert the fixed-rate long-term debt into floating-rate debt. (See note D, “Financial Instruments,” on pages 96 to 100.)

Pre-swap annual contractual maturities of long-term debt outstanding at December 31, 2011, are as follows:

($ in millions)

	Total
2012	$	4,311
2013	5,495
2014	3,763
2015	197
2016	3,009
2017 and beyond	9,926
Total	$	26,702

Interest on Debt

($ in millions)

For the year ended December 31:	2011		2010		2009
Cost of financing	$	553	$	555	$	706
Interest expense	402		365		404
Net investment derivative activity	9		3		(1		)
Interest capitalized	9		5		13
Total interest paid and accrued	$	973	$	928	$	1,122

Refer to the related discussion on page 137 in note T, “Segment Information,” for total interest expense of the Global Financing segment. See note D, “Financial Instruments,” on pages 96 to 100 for a discussion of the use of currency and interest rate swaps in the company’s debt risk management program.

Lines of Credit

In 2011 the company renewed its five-year, $10 billion Credit Agreement (the “Credit Agreement”), which now expires on November 10, 2016. The total expense recorded by the company related to this facility was $5.0 million in 2011, $6.2 million in 2010 and $6.3 million in 2009. The Credit Agreement permits the company and its Subsidiary Borrowers to borrow up to $10 billion on a revolving basis. Borrowings of the Subsidiary Borrowers will be unconditionally backed by the company. The company may also, upon the agreement of either existing lenders, or of the additional banks not currently party to the Credit Agreement, increase the commitments under the Credit Agreement up to an additional $2.0 billion. Subject to certain terms of the Credit Agreement, the company and Subsidiary Borrowers may borrow, prepay and reborrow amounts under the Credit Agreement at any time during the Credit Agreement. Interest rates on borrowings under the Credit Agreement will be based on prevailing market interest rates, as further described in the Credit Agreement.

The Credit Agreement contains customary representations and warranties, covenants, events of default, and indemnification provisions. The company believes that circumstances that might give rise to breach of these covenants or an event of default, as specified in the Credit Agreement, are remote. As of December 31, 2011, there were no borrowings by the company, or its subsidiaries, under the Credit Agreement.

The company also has other committed lines of credit in some of the geographies which are not significant in the aggregate. Interest rates and other terms of borrowing under these lines of credit vary from country to country, depending on local market conditions.