Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

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, 2013 and December 31, 2012 are summarized below:

(Millions of dollars)	September 30, 2013
	Level 1		Level 2		Level 3		Total Assets / Liabilities, at Fair Value
Assets
Available-for-sale securities
Government debt
U.S. treasury bonds	$	11	$	—	$	—	$	11
Other U.S. and non-U.S. government bonds	—		126		—		126
Corporate bonds
Corporate bonds	—		672		—		672
Asset-backed securities	—		75		—		75
Mortgage-backed debt securities
U.S. governmental agency	—		337		—		337
Residential	—		21		—		21
Commercial	—		93		—		93
Equity securities
Large capitalization value	231		—		—		231
Smaller company growth	45		—		—		45
Total available-for-sale securities	287		1,324		—		1,611
Derivative financial instruments, net	—		186		—		186
Total Assets	$	287	$	1,510	$	—	$	1,797
Liabilities
Guarantees	$	—	$	—	$	15	$	15
Total Liabilities	$	—	$	—	$	15	$	15

(Millions of dollars)	December 31, 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	—		146		—		146
Corporate bonds
Corporate bonds	—		664		—		664
Asset-backed securities	—		96		—		96
Mortgage-backed debt securities
U.S. governmental agency	—		299		—		299
Residential	—		25		—		25
Commercial	—		127		—		127
Equity securities
Large capitalization value	185		—		—		185
Smaller company growth	34		—		—		34
Total available-for-sale securities	229		1,357		—		1,586
Derivative financial instruments, net	—		154		—		154
Total Assets	$	229	$	1,511	$	—	$	1,740
Liabilities
Guarantees	$	—	$	—	$	14	$	14
Total Liabilities	$	—	$	—	$	14	$	14

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

Below are roll-forwards of liabilities measured at fair value using Level 3 inputs for the nine months ended September 30, 2013 and 2012.  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, 2012	$	14
Issuance of guarantees	6
Expiration of guarantees	(5		)
Balance at September 30, 2013	$	15
Balance at December 31, 2011	$	7
Acquisitions	6
Issuance of guarantees	7
Expiration of guarantees	(3		)
Balance at September 30, 2012	$	17

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, 2013				December 31, 2012
(Millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Levels	Reference
Assets
Cash and short-term investments	$	6,357	$	6,357	$	5,490	$	5,490	1
Restricted cash and short-term investments	50		50		53		53		1
Available-for-sale securities	1,611		1,611		1,586		1,586		1 & 2	Note 8
Finance receivables – net (excluding finance leases 1)	16,077		15,952		15,404		15,359		2	Note 16
Wholesale inventory receivables – net (excluding finance leases 1)	1,616		1,542		1,674		1,609		2	Note 16
Foreign currency contracts – net	51		51		—		—		2	Note 4
Interest rate swaps – net	136		136		219		219		2	Note 4
Commodity contracts – net	—		—		1		1		2	Note 4
Liabilities
Short-term borrowings	5,847		5,847		5,287		5,287		1
Long-term debt (including amounts due within one year)
Machinery and Power Systems	9,061		10,337		9,779		11,969		2
Financial Products	24,629		25,239		25,077		26,063		2
Foreign currency contracts – net	—		—		66		66		2	Note 4
Commodity contracts – net	1		1		—		—		2	Note 4
Guarantees	15		15		14		14		3	Note 10

¹  Total excluded items have a net carrying value at September 30, 2013 and December 31, 2012 of $8,132 million and $7,959 million, respectively.