Note  1 -- Summary of Significant Accounting Policies Note  2 -- Accounting Changes Note  3 -- Special Charges Note  4 -- Segment Information Note  5 -- Leases Note  6 -- Supplementary Income Statement Information Note  7 -- Provision for Income Taxes Note  8 -- Earnings Per Share Note  9 -- Supplementary Balance Sheet Information Note 10 -- Property, Plant and Equipment - Net Note 11 -- Deferred Income Taxes Note 12 -- Goodwill Note 13 -- Other Intangible Assets Note 14 -- Debt Note 15 -- Financial Instruments Note 16 -- Shareholder's Equity Note 17 -- Preferred Stock Note 18 -- Incentive Plans and Stock Options Note 19 -- Retirement Programs Note 20 -- Commitments and Contingencies Note 21 -- Quarterly Data (Unaudited)
 

NOTE 14. DEBT
The following is a summary of Praxair’s outstanding debt at December 31, 2003 and 2002:

(Millions of dollars)	2003	2002
SHORT-TERM
Canadian borrowings	$75	$65
U.S. borrowings	4	7
South American borrowings	44	64
Asian borrowings	5	74
Other international borrowings	5	5
Total short-term debt	133	215
LONG-TERM
U.S.:
Commercial paper and U.S. borrowings	218	86
6.625% Notes due 2003	—	75
6.75% Notes due 2003	—	300
6.15% Notes due 2003	—	250
6.85% Notes due 2005	150	150
6.90% Notes due 2006	250	250
4.75% Notes due 2007 (a)	249	249
6.625% Notes due 2007	250	250
6.50% Notes due 2008	250	250
2.75% Notes due 2008 (a)	299	—
6.375% Notes due 2012 (a, b)	539	543
3.95% Notes due 2013 (a)	349	—
Other borrowings	42	40
South American borrowings	33	28
Asian borrowings	41	52
Other international borrowings	6	3
Obligations under capital lease	7	7
	2,683	2,533
Less: current portion of long-term debt	(22)	(23)
Total long-term debt	2,661	2,510
Total debt	$2,816	$2,748
(a) Amounts are net of unamortized discounts.
(b) December 31, 2003 and 2002 include a $40 million and $45 million fair value increase, respectively, related to SFAS 133 hedge accounting (see Note 15).

During 2003, Praxair repaid $300 million of 6.75% notes and $75 million of 6.625% notes that were due on March 1, 2003 and March 15, 2003 respectively. On April 15, 2003, Praxair repaid $250 million of 6.15% notes that were due. The repayments were funded through the issuance of commercial paper. On May 27, 2003 and June 2, 2003, respectively, Praxair issued $350 million of 3.95% due 2013 and $300 mil-lion of 2.75% notes due 2008. The proceeds of these debt issuances were used to refinance commercial paper and purchase $339 million of previously leased assets.

On March 19, 2002 and June 19, 2002, respectively, Praxair issued $500 million of 6.375% notes due 2012 and $250 million of 4.75% notes due 2007. The proceeds were used to repay outstanding commercial paper. On July 15, 2002, Praxair redeemed the 8.7% debentures due 2022 resulting in an additional $15 million charge recorded within interest expense for the year ended December 31, 2002.

During 2003, $9 million of long-term debt was assumed through the consolidation of an equity investment in China. During 2001, $65 million of long-term debt was assumed through the consolidation of an equity investment in India.

Praxair maintains a $1 billion credit agreement that expires in 2005. In July 2003, Praxair terminated its $500 million 364-day revolving credit facility. At December 31, 2003, $234 million of commercial paper and notes due in 2004 and ($711 million notes due in 2003 and commercial paper at December 31, 2002) has been classified as long-term because of the company’s intent to refinance this debt on a long-term basis and the availability of such financing under the terms of its credit agreement. No borrowings were outstanding under the credit agreements at December 31, 2003 or 2002 and associated fees were not significant in each of the past three years.

At December 31, 2003 and 2002, the weighted-average interest rate on commercial paper and U.S. bank borrowings was 1.2% and 2.0%, respectively.

Praxair’s major bank credit and long-term debt agreements contain various covenants which may, among other things, restrict the ability of Praxair to merge with another entity, incur or guarantee debt, sell or transfer certain assets, create liens against assets, enter into sale and leaseback agreements, or pay dividends and make other distributions beyond certain limits. These agreements also require Praxair to meet leverage and net worth ratios as defined in the agreements.

Excluding commercial paper and U.S. bank borrowings, scheduled maturities on long-term debt are: 2004, $38 million; 2005, $172 million; 2006, $282 million; 2007, $516 million; 2008, $556 million and $901 million thereafter. At December 31, 2003, $126 million of Praxair’s assets (principally international fixed assets) were pledged as collateral for long-term debt including the current portion of long-term debt.

At December 31, 2003, the estimated fair value of Praxair’s long-term debt portfolio was $2,957 million versus a carrying value of $2,683 million. At December 31, 2002, the estimated fair value of Praxair’s long-term debt portfolio was $2,636 million versus a carrying value of $2,533 million. These differences are attributable to interest rate changes subsequent to when the debt was issued.