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Derivative financial instruments and risk management (Tables)
 12 Months Ended
Dec. 31, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Location and fair value of derivative instruments reported in the Consolidated Financial Position
The location and fair value of derivative instruments reported in Statement 3 are as follows:
 
 
(Millions of dollars)
Consolidated Statement of Financial Position Location
 
Asset (Liability) Fair Value
 
 
 
Years ended December 31,
 
 
 
2012
 
2011
 
2010
Designated derivatives
 
 
 

 
 

 
 

Foreign exchange contracts
 
 
 

 
 

 
 

Machinery and Power Systems
Receivables — trade and other
 
$
28

 
$
54

 
$
65

Machinery and Power Systems
Long-term receivables — trade and other
 
—

 
19

 
52

Machinery and Power Systems
Accrued expenses
 
(66
)
 
(73
)
 
(66
)
Machinery and Power Systems
Other liabilities
 
—

 
(10
)
 
(1
)
Interest rate contracts
 
 
 

 
 

 
 

Machinery and Power Systems
Receivables — trade and other
 
—

 
—

 
1

Financial Products
Receivables — trade and other
 
17

 
15

 
14

Financial Products
Long-term receivables — trade and other
 
209

 
233

 
197

Financial Products
Accrued expenses
 
(8
)
 
(6
)
 
(18
)
 
 
 
$
180

 
$
232

 
$
244

 
 
 
 
 
 
 
 
Undesignated derivatives
 
 
 

 
 

 
 

Foreign exchange contracts
 
 
 

 
 

 
 

Machinery and Power Systems
Receivables — trade and other
 
$
31

 
$
27

 
$
120

Machinery and Power Systems
Accrued expenses
 
(63
)
 
(12
)
 
(46
)
Machinery and Power Systems
Other liabilities
 
—

 
(85
)
 
(58
)
Financial Products
Receivables — trade and other
 
10

 
7

 
6

Financial Products
Accrued expenses
 
(6
)
 
(16
)
 
(9
)
Interest rate contracts
 
 
 

 
 

 
 

Machinery and Power Systems
Accrued expenses
 
—

 
—

 
(6
)
Financial Products
Receivables — trade and other
 
2

 
—

 
—

Financial Products
Accrued expenses
 
(1
)
 
(1
)
 
(1
)
Commodity contracts
 
 
 

 
 

 
 

Machinery and Power Systems
Receivables — trade and other
 
1

 
2

 
17

Machinery and Power Systems
Accrued expenses
 
—

 
(9
)
 
—

 
 
 
$
(26
)
 
$
(87
)
 
$
23

 
 
 
 
 
 
 
 
Schedule of effect of derivatives designated as fair value hedging instruments on Consolidated Results of Operations
The effect of derivatives designated as hedging instruments on Statement 1 is as follows:
 

Fair Value Hedges
 
 
 
Year ended December 31, 2012
(Millions of dollars)
 
Classification
 
Gains (Losses)
 on Derivatives
 
Gains (Losses)
 on Borrowings
Interest rate contracts
 
 
 
 

 
 

Financial Products
 
Other income (expense)
 
$
(20
)
 
$
36

 
 
 
 
$
(20
)
 
$
36

 
 
 
 
 
 
 
 
 
 
 
Year ended December 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)
 
39

 
(44
)
 
 
 
 
$
38

 
$
(43
)
 
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2010
 
 
Classification
 
Gains (Losses)
 on Derivatives
 
Gains (Losses)
 on Borrowings
Interest rate contracts
 
 
 
 

 
 

Financial Products
 
Other income (expense)
 
$
107

 
$
(98
)
 
 
 
 
$
107

 
$
(98
)
 
 
 
 
 
 
 
Schedule of effect of derivatives designated as cash flow hedging instruments on Consolidated Results of Operations
Cash Flow Hedges
 
 
 
 
 
 
 
 
 
(Millions of dollars)
 
Year ended December 31, 2012
 
 
 
 
 
Recognized in Earnings
 
 
 
Amount of
Gains (Losses) Recognized in AOCI (Effective Portion)
 
Classification of
Gains (Losses)
 
Amount of Gains (Losses) Reclassified from AOCI to Earnings
 
Recognized in Earnings (Ineffective Portion)
 
Foreign exchange contracts
 
 

 
 
 
 

 
 

 
Machinery and Power Systems
 
$
(78
)
 
Other income (expense)
 
$
(30
)
2 

$
—

 
Interest rate contracts
 
 

 
 
 
 

 
 

 
Financial Products
 
1

 
Interest expense of Financial Products
 
4

 
(1
)
1 
 
 
$
(77
)
 
 
 
$
(26
)
 
$
(1
)

 
 
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2011
 
 
 
 
 
Recognized in Earnings
 
 
 
Amount of
Gains (Losses) Recognized in AOCI (Effective Portion)
 
Classification of
Gains (Losses)
 
Amount of
Gains (Losses)
Reclassified
from AOCI to
Earnings
 
Recognized in Earnings (Ineffective Portion)
 
Foreign exchange contracts
 
 

 
 
 
 

 
 

 
Machinery and Power Systems
 
$
34

 
Other income (expense)
 
$
70

 
$
—

 
Interest rate contracts
 
 

 
 
 
 

 
 

 
Machinery and Power Systems
 
—

 
Other income (expense)
 
(3
)
 
—

 
Financial Products
 
(1
)
 
Interest expense of Financial Products
 
(12
)
 
(2
)
1 
 
 
$
33

 
 
 
$
55

 
$
(2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2010
 
 
 
 
 
Recognized in Earnings
 
 
 
Amount of
Gains (Losses) Recognized in AOCI (Effective Portion)
 
Classification of
 Gains (Losses)
 
Amount of
Gains (Losses)
Reclassified
from AOCI to
Earnings
 
Recognized in Earnings (Ineffective Portion)
 
Foreign exchange contracts
 
 
 
 
 
 
 
 
 
Machinery and Power Systems
 
$
(72
)
 
Other income (expense)
 
$
(1
)
 
$
2

 
Interest rate contracts
 
 

 
 
 
 

 
 

 
Machinery and Power Systems
 
—

 
Other income (expense)
 
(3
)
 
—

 
Financial Products
 
(7
)
 
Interest expense of Financial Products
 
(49
)
 
(1
)
1 
 
 
$
(79
)
 
 
 
$
(53
)
 
$
1

 
 
 
 
 
 
 
 
 
 
 
Effect of derivatives not designated as hedging instruments on the Consolidated Results of Operations
 The effect of derivatives not designated as hedging instruments on Statement 1 is as follows:
 
 
 
 
 
Years ended December 31,
(Millions of dollars)
 
Classification of Gains (Losses)
 
2012
 
2011
 
2010
Foreign exchange contracts
 
 
 
 

 
 

 
 

Machinery and Power Systems
 
Other income (expense)
 
$
62

 
$
62

 
$
(45
)
Financial Products
 
Other income (expense)
 
6

 
(15
)
 
16

Interest rate contracts
 
 
 
 

 
 

 
 

Machinery and Power Systems
 
Other income (expense)
 
2

 
(149
)
 
(8
)
Financial Products
 
Other income (expense)
 
—

 
—

 
2

Commodity contracts
 
 
 
 

 
 

 
 

Machinery and Power Systems
 
Other income (expense)
 
2

 
(17
)
 
15

 
 
 
 
$
72

 
$
(119
)
 
$
(20
)