Fair Value Disclosures (Tables)

9 Months Ended

Sep. 30, 2016

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 our Consolidated Statement of Financial Position as of September 30, 2016 and December 31, 2015 are summarized below:



	September 30, 2016
(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	—		68		—		68
Corporate bonds
Corporate bonds	—		710		—		710
Asset-backed securities	—		135		—		135
Mortgage-backed debt securities
U.S. governmental agency	—		286		—		286
Residential	—		10		—		10
Commercial	—		63		—		63
Equity securities
Large capitalization value	299		—		—		299
Smaller company growth	57		—		—		57
Total available-for-sale securities	366		1,272		—		1,638
REIT	—		—		72		72
Total Assets	$	366	$	1,272	$	72	$	1,710
Liabilities
Derivative financial instruments, net	—		29		—		29
Total Liabilities	$	—	$	29	$	—	$	29



	December 31, 2015
(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	$	9	$	—	$	—	$	9
Other U.S. and non-U.S. government bonds	—		72		—		72
Corporate bonds
Corporate bonds	—		708		—		708
Asset-backed securities	—		129		—		129
Mortgage-backed debt securities
U.S. governmental agency	—		292		—		292
Residential	—		12		—		12
Commercial	—		61		—		61
Equity securities
Large capitalization value	273		—		—		273
Smaller company growth	54		—		—		54
Total available-for-sale securities	336		1,274		—		1,610
REIT	—		—		25		25
Derivative financial instruments, net	—		49		—		49
Total Assets	$	336	$	1,323	$	25	$	1,684

Roll-forward of assets measured at fair value using Level 3 inputs

The fair value of our REIT investment is measured based on NAV, which is considered a Level 3 input. A roll-forward for the nine months ended September 30, 2016 of our REIT investment is as follows.



(Millions of dollars)	REIT
Balance at December 31, 2015	$	25
Purchases of securities	45
Sale of securities	—
Gains (losses) included in Accumulated other comprehensive income (loss)	2
Balance at September 30, 2016	$	72

Fair values of financial instruments

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



	Fair Value of Financial Instruments
	September 30, 2016				December 31, 2015
(Millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Levels	Reference
Assets
Cash and short-term investments	$	6,113	$	6,113	$	6,460	$	6,460	1
Restricted cash and short-term investments	28		28		52		52		1
Investments in debt and equity securities	1,710		1,710		1,635		1,635		1, 2 & 3	Note 8
Finance receivables – net (excluding finance leases ¹)	16,571		16,565		16,515		16,551		3	Note 16
Wholesale inventory receivables – net (excluding finance leases ¹)	1,633		1,601		1,821		1,775		3	Note 16
Foreign currency contracts – net	—		—		13		13		2	Note 4
Interest rate contracts – net	3		3		48		48		2	Note 4
Commodity contracts – net	6		6		—		—		2	Note 4

Liabilities
Short-term borrowings	6,965		6,965		6,967		6,967		1
Long-term debt (including amounts due within one year)
Machinery, Energy & Transportation	8,985		11,037		9,477		10,691		2
Financial Products	21,160		21,669		21,569		21,904		2
Foreign currency contracts – net	38		38		—		—		2	Note 4
Commodity contracts – net	—		—		12		12		2	Note 4
Guarantees	12		12		12		12		3	Note 10


¹	Total excluded items have a net carrying value at September 30, 2016 and December 31, 2015 of $6,221 million and $6,452 million, respectively.