Derivative Financial Instruments and Risk Management (Tables)

3 Months Ended

Mar. 31, 2012

Derivative Financial Instruments and Risk Management

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

	Consolidated Statement of Financial	Asset (Liability) Fair Value
(Millions of dollars)	Position Location	March 31, 2012			December 31, 2011
Designated derivatives
Foreign exchange contracts
Machinery and Power Systems	Receivables — trade and other	$	62		$	54
Machinery and Power Systems	Long-term receivables — trade and other	2			19
Machinery and Power Systems	Accrued expenses	(91		)	(73		)
Machinery and Power Systems	Other liabilities	(15		)	(10		)
Interest rate contracts
Financial Products	Receivables — trade and other	19			15
Financial Products	Long-term receivables — trade and other	220			233
Financial Products	Accrued expenses	(5		)	(6		)
		$	192		$	232
Undesignated derivatives
Foreign exchange contracts
Machinery and Power Systems	Receivables — trade and other	$	18		$	27
Machinery and Power Systems	Accrued expenses	(12		)	(12		)
Machinery and Power Systems	Other liabilities	(20		)	(85		)
Financial Products	Receivables — trade and other	10			7
Financial Products	Accrued expenses	(5		)	(16		)
Interest rate contracts
Financial Products	Accrued expenses	(1		)	(1		)
Commodity contracts
Machinery and Power Systems	Receivables — trade and other	4			2
Machinery and Power Systems	Accrued expenses	(3		)	(9		)
		$	(9	)	$	(87	)

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

		Three Months Ended March 31, 2012
Fair Value Hedges (Millions of dollars)	Classification	Gains (Losses)on Derivatives			Gains (Losses)on Borrowings
Interest rate contracts
Financial Products	Other income (expense)	$	(9	)	$	15
		$	(9	)	$	15

		Three Months Ended March 31, 2011
	Classification	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)	(53		)	52
		$	(54	)	$	53

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

	Three Months Ended March 31, 2012
			Recognized in Earnings
Cash Flow Hedges(Millions of dollars)	Amount of Gains(Losses) Recognizedin AOCI(Effective Portion)		Classification ofGains (Losses)	Amount of Gains(Losses) Reclassifiedfrom AOCI(EffectivePortion)			Recognizedin Earnings(IneffectivePortion)
Foreign exchange contracts
Machinery and Power Systems	$	42	Other income (expense)	$	5		$	—
Interest rate contracts
Machinery and Power Systems	—		Other income (expense)	(1		)	—
Financial Products	—		Interest expense of Financial Products	(1		)	—		(1)
	$	42		$	3		$	—

	Three Months Ended March 31, 2011
			Recognized in Earnings
	Amount of Gains(Losses) Recognizedin AOCI(Effective Portion)		Classification ofGains (Losses)	Amount of Gains(Losses) Reclassifiedfrom AOCI(EffectivePortion)			Recognizedin Earnings(IneffectivePortion)
Foreign exchange contracts
Machinery and Power Systems	$	27	Other income (expense)	$	18		$	—
Interest rate contracts
Financial Products	—		Interest expense of Financial Products	(6		)	1		(1)
	$	27		$	12		$	1

(1)  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 March 31, 2012		Three Months Ended March 31, 2011
Foreign exchange contracts
Machinery and Power Systems	Other income (expense)	$	65	$	32
Financial Products	Other income (expense)	7		—
Interest rate contracts
Machinery and Power Systems	Other income (expense)	—		(25		)
Commodity contracts
Machinery and Power Systems	Other income (expense)	6		4
		$	78	$	11