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Derivative Financial Instruments and Risk Management (Tables)
 9 Months Ended
Sep. 30, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Location and fair value of derivative instruments reported in the Consolidated Statement of Financial Position
The location and fair value of derivative instruments reported in the Consolidated Statement of Financial Position are as follows:
 
(Millions of dollars)
 
 
 
 
 
 
Consolidated Statement of Financial
 
Asset (Liability) Fair Value
 
Position Location
 
September 30, 2012
 
December 31, 2011
Designated derivatives
 
 
 
 
 
Foreign exchange contracts
 
 
 

 
 

Machinery and Power Systems
Receivables – trade and other
 
$
48

 
$
54

Machinery and Power Systems
Long-term receivables – trade and other
 
1

 
19

Machinery and Power Systems
Accrued expenses
 
(63
)
 
(73
)
Machinery and Power Systems
Other liabilities
 
(10
)
 
(10
)
Interest rate contracts
 
 
 
 
 

Financial Products
Receivables – trade and other
 
28

 
15

Financial Products
Long-term receivables – trade and other
 
224

 
233

Financial Products
Accrued expenses
 
(11
)
 
(6
)
 
 
 
$
217

 
$
232

Undesignated derivatives
 
 
 

 
 

Foreign exchange contracts
 
 
 

 
 

Machinery and Power Systems
Receivables – trade and other
 
$
14

 
$
27

Machinery and Power Systems
Accrued expenses
 
(58
)
 
(12
)
Machinery and Power Systems
Other liabilities
 
(18
)
 
(85
)
Financial Products
Receivables – trade and other
 
9

 
7

Financial Products
Accrued expenses
 
(7
)
 
(16
)
Interest rate contracts
 
 
 
 
 

Financial Products
Accrued expenses
 
(2
)
 
(1
)
Commodity contracts
 
 
 
 
 

Machinery and Power Systems
Receivables – trade and other
 
2

 
2

Machinery and Power Systems
Accrued expenses
 
(1
)
 
(9
)
 
 
 
$
(61
)
 
$
(87
)
 
 
 
 
 
 
Effect of derivatives designated as hedging instruments on Consolidated Statement of Results of Operations
The effect of derivatives designated as hedging instruments on the Consolidated Statement of Results of Operations is as follows: 
 
Fair Value Hedges
(Millions of dollars)
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2012
 
Nine Months Ended September 30, 2012
 
Classification
 
Gains (Losses) 
on Derivatives
 
Gains (Losses) 
on Borrowings
 
Gains (Losses) 
on Derivatives
 
Gains (Losses) 
on Borrowings
Interest rate contracts
 
 
 
 
 
 
 
 
 

Financial Products
Other income (expense)
 
$
7

 
$
(3
)
 
$
4

 
$
7

 
 
 
$
7

 
$
(3
)
 
$
4

 
$
7

 
 
 
Three Months Ended September 30, 2011
 
Nine Months Ended September 30, 2011
 
Classification
 
Gains (Losses) 
on Derivatives
 
Gains (Losses) 
on Borrowings
 
Gains (Losses) 
on Derivatives
 
Gains (Losses) 
on Borrowings
Interest rate contracts
 
 
 
 
 
 
 
 
 
Machinery and Power Systems
Other income (expense)
 
$
—

 
$
—

 
$
(1
)
 
$
1

Financial Products
Other income (expense)
 
70

 
(77
)
 
59

 
(65
)
 
 
 
$
70

 
$
(77
)
 
$
58

 
$
(64
)
 
 
 
 
 
 
 
 
 
 

Cash Flow Hedges
(Millions of dollars)
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2012
 
 
 
 
Recognized in Earnings
 
 
Amount of Gains
(Losses) Recognized 
in AOCI
(Effective Portion)
 
Classification of 
Gains (Losses)
 
Amount of Gains
(Losses) Reclassified 
from AOCI
(Effective Portion)
 
Recognized
in Earnings 
(Ineffective
Portion)
 
Foreign exchange contracts
 

 
 
 
 

 
 

 
Machinery and Power Systems
$
(6
)
 
Other income (expense)
 
$
(14
)
 
$
—

 
Interest rate contracts
—

 
 
 
 
 
 
 
Machinery and Power Systems
—

 
Other income (expense)
 
1

 
—

 
Financial Products
(6
)
 
Interest expense of Financial Products
 
(1
)
 
—


 
$
(12
)
 
 
 
$
(14
)
 
$
—

 
 
Three Months Ended September 30, 2011
 
 
 
 
Recognized in Earnings
 
 
Amount of Gains
(Losses) Recognized 
in AOCI
(Effective Portion)
 
Classification of 
Gains (Losses)
 
Amount of Gains
(Losses) Reclassified 
from AOCI
(Effective Portion)
 
Recognized
in Earnings 
(Ineffective
Portion)
 
Foreign exchange contracts
 
 
 
 
 
 
 
 
Machinery and Power Systems
$
62

 
Other income (expense)
 
$
43

 
$
—

 
Interest rate contracts
 

 
 
 
 

 
 

 
Machinery and Power Systems
—

 
Other income (expense)
 
(1
)
 
—

 
Financial Products
(4
)
 
Interest expense of Financial Products
 
(3
)
 
(2
)
1 
 
$
58

 
 
 
$
39

 
$
(2
)
 
 
 
Nine Months Ended September 30, 2012
 
 
 
 
Recognized in Earnings
 
 
Amount of Gains
(Losses) Recognized 
in AOCI
(Effective Portion)
 
Classification of 
Gains (Losses)
 
Amount of Gains
(Losses) Reclassified 
from AOCI
(Effective Portion)
 
Recognized
in Earnings 
(Ineffective
Portion)
 
Foreign exchange contracts
 
 
 
 
 
 
 
 
Machinery and Power Systems
$
(48
)
 
Other income (expense)
 
$
(13
)
 
$
—

 
Interest rate contracts
 
 
 
 
 

 
 

 
Machinery and Power Systems
—

 
Other income (expense)
 
—

 
—

 
Financial Products
(8
)
 
Interest expense of Financial Products
 
(3
)
 
(1
)
1 

 
$
(56
)
 
 
 
$
(16
)
 
$
(1
)
 
 
Nine Months Ended September 30, 2011
 
 
 
 
Recognized in Earnings
 
 
Amount of Gains
(Losses) Recognized 
in AOCI
(Effective Portion)
 
Classification of 
Gains (Losses)
 
Amount of Gains
(Losses) Reclassified 
from AOCI
(Effective Portion)
 
Recognized
in Earnings 
(Ineffective
Portion)
 
Foreign exchange contracts
 
 
 
 
 
 
 
 
Machinery and Power Systems
$
44

 
Other income (expense)
 
$
52

 
$
—

 
Interest rate contracts
 

 
 
 
 

 
 

 
Machinery and Power Systems
—

 
Other income (expense)
 
(2
)
 
—

 
Financial Products
(5
)
 
Interest expense of Financial Products
 
(15
)
 
(1
)
1 

 
$
39

 
 
 
$
35

 
$
(1
)
 
 
 
 
 
 
 
 
 
 
1 The ineffective portion recognized in earnings is included in Other income (expense).
 
 
 
 
 
Effect of derivatives not designated as hedging instruments on the Consolidated Statement of Results of Operations
The effect of derivatives not designated as hedging instruments on the Consolidated Statement of Results of Operations is as follows: 
 
(Millions of dollars)
 
 
 

 
 
 
 
Classification of Gains (Losses)
 
Three Months Ended September 30, 2012
 
Nine Months Ended September 30, 2012
 
Foreign exchange contracts
 
 
 
 
 
 
Machinery and Power Systems
Other income (expense)
 
$
(9
)
 
$
21

 
Financial Products
Other income (expense)
 
5

 
7

 
Commodity contracts
 
 
 

 
 
 
Machinery and Power Systems
Other income (expense)
 
3

 
3

 
 
 
 
$
(1
)
 
$
31

 
 
 
 
 
 

 
 
 
Classification of Gains (Losses)
 
Three Months Ended September 30, 2011
 
Nine Months Ended September 30, 2011
Foreign exchange contracts
 
 
 
 
 
Machinery and Power Systems
Other income (expense)
 
$
(1
)
 
$
46

Financial Products
Other income (expense)
 
(10
)
 
(12
)
Interest rate contracts
 
 
 
 
 
Machinery and Power Systems
Other income (expense)
 
—

 
(149
)
Commodity contracts
 
 
 
 
 
Machinery and Power Systems
Other income (expense)
 
(23
)
 
(21
)
 
 
 
$
(34
)
 
$
(136
)