Derivative Financial Instruments and Risk Management (Tables)

9 Months Ended

Sep. 30, 2011

Derivative Financial Instruments and Risk Management

Location and fair value of derivative instruments reported in the Statement of Financial Position

(Millions of dollars)
		Asset (Liability) Fair Value
	Statement of Financial Position Location	September 30, 2011	December 31, 2010
Designated derivatives
Foreign exchange contracts
Machinery and Power Systems	Receivables – trade and other	$65	$65
Machinery and Power Systems	Long-term receivables – trade and other	57	52
Machinery and Power Systems	Accrued expenses	(58)	(66)
Machinery and Power Systems	Other liabilities	(4)	(1)
Interest rate contracts
Machinery and Power Systems	Receivables – trade and other	—	1
Financial Products	Receivables – trade and other	11	14
Financial Products	Long-term receivables – trade and other	258	197
Financial Products	Accrued expenses	(7)	(18)
		$322	$244
Undesignated derivatives
Foreign exchange contracts
Machinery and Power Systems	Receivables – trade and other	$81	$120
Machinery and Power Systems	Long-term receivables – trade and other	1	—
Machinery and Power Systems	Accrued expenses	(31)	(46)
Machinery and Power Systems	Other liabilities	(90)	(58)
Financial Products	Receivables – trade and other	13	6
Financial Products	Accrued expenses	(20)	(9)
Interest rate contracts
Machinery and Power Systems	Accrued expenses	—	(6)
Financial Products	Accrued expenses	(1)	(1)
Commodity contracts
Machinery and Power Systems	Receivables – trade and other	3	17
Machinery and Power Systems	Accrued expenses	(17)	—
		$(61)	$23

Schedule of effect of derivatives designated as hedging instruments on Consolidated Statement of Results of Operations

Fair Value Hedges (Millions of dollars)
		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)

		Three Months Ended September 30, 2010		Nine Months Ended September 30, 2010
	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)	$63	$(61)	$204	$(195)
		$63	$(61)	$204	$(195)

Cash Flow Hedges

Cash Flow Hedges (Millions of dollars)
	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)

	Three Months Ended September 30, 2010
		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	$37	Other income (expense)	$15	$1
Interest rate contracts
Machinery and Power Systems	—	Other income (expense)	(1)	—
Financial Products	(2)	Interest expense of Financial Products	(10)	(2)1
	$35		$4	$(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)

	Nine Months Ended September 30, 2010
		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	$(36)	Other income (expense)	$(4)	$1
Interest rate contracts
Machinery and Power Systems	—	Other income (expense)	(2)	—
Financial Products	(8)	Interest expense of Financial Products	(42)	(1)1
	$(44)		$(48)	$—
1  The classification of the ineffective portion recognized in earnings is included in Other income (expense).

Effect of derivatives not designated as hedging instruments on the Statement of Results of Operations

(Millions of dollars)
	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)

	Classification of Gains (Losses)	Three Months Ended September 30, 2010	Nine Months Ended September 30, 2010
Foreign exchange contracts
Machinery and Power Systems	Other income (expense)	$(21)	$(14)
Financial Products	Other income (expense)	12	23
Interest rate contracts
Machinery and Power Systems	Other income (expense)	—	(2)
Financial Products	Other income (expense)	2	3
Commodity contracts
Machinery and Power Systems	Other income (expense)	10	7
		$3	$17