Quarterly report pursuant to Section 13 or 15(d)

INVENTORIES

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INVENTORIES
 9 Months Ended
Sep. 30, 2012
INVENTORIES  
INVENTORIES

4. INVENTORIES

        Inventories are stated at the lower of cost or market, with cost determined using last-in first-out ("LIFO"), first-in first-out, and average costs methods for different components of inventory. Inventories consisted of the following (dollars in millions):

 
   September 30,
2012 		  December 31,
2011 		 

Raw materials and supplies

   $ 471   $ 374  

Work in progress

     96     92  

Finished goods

     1,314     1,162  
           

Total

     1,881     1,628  

LIFO reserves

     (74 )   (89 )
           

Net

   $ 1,807   $ 1,539  
           

        For September 30, 2012 and December 31, 2011, approximately 10% and 12%, respectively, of inventories were recorded using the LIFO cost method.

        In the normal course of operations we, at times, exchange raw materials and finished goods with other companies for the purpose of reducing transportation costs. The net nonmonetary open exchange positions are valued at cost. The amounts included in inventory under nonmonetary open exchange agreements receivable by us as of September 30, 2012 and December 31, 2011 were $12 million and $3 million, respectively. Other open exchanges are settled in cash and result in a net deferred profit margin. The amount payable under these open exchange agreements as of September 30, 2012 and December 31, 2011 was $2 million and nil, respectively.