Fair value disclosures (Tables)

12 Months Ended

Dec. 31, 2013

Assets and liabilities measured on a recurring basis at fair value

Assets and liabilities measured on a recurring basis at fair value, primarily related to Financial Products, included in Statement 3 as of December 31, 2013, 2012 and 2011 are summarized below:



	December 31, 2013
(Millions of dollars)	Level 1		Level 2		Level 3		Total Assets / Liabilities, at Fair Value
Assets
Available-for-sale securities
Government debt
U.S. treasury bonds	$	10	$	—	$	—	$	10
Other U.S. and non-U.S. government bonds	—		120		—		120

Corporate bonds
Corporate bonds	—		633		—		633
Asset-backed securities	—		72		—		72

Mortgage-backed debt securities
U.S. governmental agency	—		321		—		321
Residential	—		18		—		18
Commercial	—		93		—		93

Equity securities
Large capitalization value	254		—		—		254
Smaller company growth	49		—		—		49
Total available-for-sale securities	313		1,257		—		1,570

Derivative financial instruments, net	—		161		—		161
Total Assets	$	313	$	1,418	$	—	$	1,731

Liabilities
Guarantees	$	—	$	—	$	13	$	13
Total Liabilities	$	—	$	—	$	13	$	13



	December 31, 2012
(Millions of dollars)	Level 1		Level 2		Level 3		Total Assets / Liabilities, at Fair Value
Assets
Available-for-sale securities
Government debt
U.S. treasury bonds	$	10	$	—	$	—	$	10
Other U.S. and non-U.S. government bonds	—		146		—		146

Corporate bonds
Corporate bonds	—		664		—		664
Asset-backed securities	—		96		—		96

Mortgage-backed debt securities
U.S. governmental agency	—		299		—		299
Residential	—		25		—		25
Commercial	—		127		—		127

Equity securities
Large capitalization value	185		—		—		185
Smaller company growth	34		—		—		34
Total available-for-sale securities	229		1,357		—		1,586

Derivative financial instruments, net	—		154		—		154
Total Assets	$	229	$	1,511	$	—	$	1,740

Liabilities
Guarantees	$	—	$	—	$	14	$	14
Total Liabilities	$	—	$	—	$	14	$	14



	December 31, 2011
(Millions of dollars)	Level 1		Level 2		Level 3		Total Assets / Liabilities, at Fair Value
Assets
Available-for-sale securities
Government debt
U.S. treasury bonds	$	10	$	—	$	—	$	10
Other U.S. and non-U.S. government bonds	—		92		—		92

Corporate bonds
Corporate bonds	—		572		—		572
Asset-backed securities	—		111		—		111

Mortgage-backed debt securities
U.S. governmental agency	—		310		—		310
Residential	—		30		—		30
Commercial	—		145		—		145

Equity securities
Large capitalization value	148		—		—		148
Smaller company growth	29		—		—		29
Total available-for-sale securities	187		1,260		—		1,447

Derivative financial instruments, net	—		145		—		145
Total Assets	$	187	$	1,405	$	—	$	1,592

Liabilities
Guarantees	$	—	$	—	$	7	$	7
Total Liabilities	$	—	$	—	$	7	$	7

Roll-forwards of liabilities measured at fair value using Level 3 inputs

Below are roll-forwards of liabilities measured at fair value using Level 3 inputs for the years ended December 31, 2013, 2012 and 2011. These instruments were valued using pricing models that, in management’s judgment, reflect the assumptions of a market participant.



(Millions of dollars)	Guarantees
Balance at December 31, 2010	$	10
Issuance of guarantees	4
Expiration of guarantees	(7		)
Balance at December 31, 2011	$	7
Acquisitions	6
Issuance of guarantees	7
Expiration of guarantees	(6		)
Balance at December 31, 2012	$	14
Issuance of guarantees	6
Expiration of guarantees	(7		)
Balance at December 31, 2013	$	13

Fair values of financial instruments

Please refer to the table below for the fair values of our financial instruments.



TABLE III—Fair Values of Financial Instruments
	2013				2012				2011
(Millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Levels	Reference
Assets at December 31,
Cash and short-term investments	$	6,081	$	6,081	$	5,490	$	5,490	$	3,057	$	3,057	1	Statement 3
Restricted cash and short-term investments	53		53		53		53		87		87		1	Statement 3
Available-for-sale securities	1,570		1,570		1,586		1,586		1,447		1,447		1 & 2	Notes 11 & 19
Finance receivables–net (excluding finance leases ¹)	16,049		15,913		15,404		15,359		12,689		12,516		2	Note 6 & 19
Wholesale inventory receivables–net (excluding finance leases ¹)	1,529		1,467		1,674		1,609		1,591		1,505		2	Note 6 & 19
Foreign currency contracts–net	45		45		—		—		—		—		2	Notes 3 & 19
Interest rate swaps–net	116		116		219		219		241		241		2	Notes 3 & 19
Commodity contracts–net	—		—		1		1		—		—		2	Notes 3 & 19

Liabilities at December 31,
Short-term borrowings	3,679		3,679		5,287		5,287		3,988		3,988		1	Note 13
Long-term debt (including amounts due within one year):
Machinery and Power Systems	8,759		9,905		9,779		11,969		8,973		10,737		2	Note 14
Financial Products	25,312		25,849		25,077		26,063		21,631		22,674		2	Note 14
Foreign currency contracts–net	—		—		66		66		89		89		2	Notes 3 & 19
Commodity contracts–net	—		—		—		—		7		7		2	Notes 3 & 19
Guarantees	13		13		14		14		7		7		3	Note 21


¹	Total excluded items have a net carrying value at December 31, 2013, 2012 and 2011 of $8,053 million, $7,959 million and $7,324 million, respectively.

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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