Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Disclosures [Abstract]

Assets and liabilities measured 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 June 30, 2012 and December 31, 2011 are summarized below:

(Millions of dollars)	June 30, 2012
	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	—		123		—		123
Corporate bonds
Corporate bonds	—		623		—		623
Asset-backed securities	—		95		—		95
Mortgage-backed debt securities
U.S. governmental agency	—		278		—		278
Residential	—		26		—		26
Commercial	—		137		—		137
Equity securities
Large capitalization value	168		—		—		168
Smaller company growth	33		—		—		33
Total available-for-sale securities	211		1,282		—		1,493
Derivative financial instruments, net	—		145		—		145
Total Assets	$	211	$	1,427	$	—	$	1,638
Liabilities
Guarantees	$	—	$	—	$	15	$	15
Total Liabilities	$	—	$	—	$	15	$	15

(Millions of dollars)	December 31, 2011
	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 assets and liabilities measured at fair value using Level 3 inputs

Below are roll-forwards of assets and liabilities measured at fair value using Level 3 inputs for the six months ended June 30, 2012 and 2011.  These instruments were valued using pricing models that, in management’s judgment, reflect the assumptions of a marketplace participant.

(Millions of dollars)	Guarantees
Balance at December 31, 2011	$	7
Acquisitions	6
Issuance of guarantees	3
Expiration of guarantees	(1		)
Balance at June 30, 2012	$	15
Balance at December 31, 2010	$	10
Issuance of guarantees	1
Expiration of guarantees	(4		)
Balance at June 30, 2011	$	7

Fair Values of Financial Instruments

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

Fair Value of Financial Instruments
	June 30, 2012				December 31, 2011
(Millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Levels	Reference
Assets
Cash and short-term investments	$	5,103	$	5,103	$	3,057	$	3,057	1
Restricted cash and short-term investments	189		189		87		87		1
Available-for-sale securities	1,493		1,493		1,447		1,447		1 & 2	Note 8
Finance receivables—net (excluding finance leases1)	14,146		14,079		12,689		12,516		2	Note 15
Wholesale inventory receivables—net (excluding finance leases1)	1,441		1,372		1,591		1,505		2	Note 15
Interest rate swaps—net	235		235		241		241		2	Note 4
Liabilities
Short-term borrowings	5,047		5,047		3,988		3,988		1
Long-term debt (including amounts due within one year)
Machinery and Power Systems	10,438		12,370		8,973		10,737		2
Financial Products	23,831		24,859		21,631		22,674		2
Foreign currency contracts—net	87		87		89		89		2	Note 4
Commodity contracts—net	3		3		7		7		2	Note 4
Guarantees	15		15		7		7		3	Note 10

¹ Total excluded items have a net carrying value at June 30, 2012 and December 31, 2011 of $7,601 million and $7,324 million, respectively.