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Derivative Financial Instruments and Risk Management (Tables)
 3 Months Ended
Mar. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Location and fair value of derivative instruments reported in the Consolidated Statement of Financial Position
The location and fair value of derivative instruments reported in the Consolidated Statement of Financial Position are as follows:
 
(Millions of dollars)
 
 
 
 
 
 
Consolidated Statement of Financial
 
Asset (Liability) Fair Value
 
Position Location
 
March 31, 2014
 
December 31, 2013
Designated derivatives
 
 
 
 
 
Foreign exchange contracts
 
 
 

 
 

Machinery, Energy & Transportation
Receivables – trade and other
 
$
38

 
$
54

Machinery, Energy & Transportation
Accrued expenses
 
(19
)
 
(39
)
Interest rate contracts
 
 
 
 
 

Machinery, Energy & Transportation
Accrued expenses
 
(38
)
 
—

Financial Products
Receivables – trade and other
 
11

 
7

Financial Products
Long-term receivables – trade and other
 
97

 
115

Financial Products
Accrued expenses
 
(6
)
 
(6
)
 
 
 
$
83

 
$
131

Undesignated derivatives
 
 
 

 
 

Foreign exchange contracts
 
 
 

 
 

Machinery, Energy & Transportation
Receivables – trade and other
 
$
12

 
$
19

Machinery, Energy & Transportation
Accrued expenses
 
(2
)
 
(1
)
Financial Products
Receivables – trade and other
 
4

 
7

Financial Products
Long-term receivables – trade and other
 
7

 
9

Financial Products
Accrued expenses
 
(6
)
 
(4
)
Commodity contracts
 
 
 
 
 

Machinery, Energy & Transportation
Receivables – trade and other
 
1

 
—

Machinery, Energy & Transportation
Accrued expenses
 
(2
)
 
—

 
 
 
$
14

 
$
30

 
 
 
 
 
 
Total notional amounts of derivative instruments
The total notional amounts of the derivative instruments are as follows:

(Millions of dollars)
 
 
 
 
 
 
March 31, 2014
 
December 31, 2013
 
 
 
 
 
Machinery, Energy & Transportation
 
$
4,493

 
$
3,565

Financial Products
 
$
6,517

 
$
6,743

 
 
 
 
 
Effect of derivatives designated as hedging instruments on Consolidated Statement of Results of Operations
The effect of derivatives designated as hedging instruments on the Consolidated Statement of Results of Operations is as follows: 

Fair Value Hedges
(Millions of dollars)
 
 
 
 
 
 
 
 
Three Months Ended
March 31, 2014
 
Three Months Ended
March 31, 2013
 
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)
 
$
(13
)
 
$
15

 
$
(29
)
 
$
30

 
 
 
$
(13
)
 
$
15

 
$
(29
)
 
$
30

 
 
 
 
 
 
 
 
 
 

Cash Flow Hedges
(Millions of dollars)
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2014
 
 
 
 
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, Energy & Transportation
$
13

 
Other income (expense)
 
$
10


$
—

 
Interest rate contracts
 
 
 
 
 
 
 
 
Machinery, Energy & Transportation
(37
)
 
Other income (expense)
 
(1
)
 
—

 
Financial Products
(2
)
 
Interest expense of Financial Products
 
(1
)
 
—


 
$
(26
)
 
 
 
$
8

 
$
—

 

 
Three Months Ended March 31, 2013
 
 
 
 
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, Energy & Transportation
$
(49
)
 
Other income (expense)
 
$
(17
)
1 

$
—

 
Interest rate contracts
 

 
 
 
 

 
 

 
Financial Products
—

 
Interest expense of Financial Products
 
(1
)
 
—


 
$
(49
)
 
 
 
$
(18
)
 
$
—

 
 
 
 
 
 
 
 
 
 

1 
Includes $3 million loss reclassified from AOCI to Other income (expense) in 2013 as certain derivatives were dedesignated as the related transactions are no longer probable to occur.
 
 
 
 
 
Effect of derivatives not designated as hedging instruments on the Consolidated Statement of Results of Operations
The effect of derivatives not designated as hedging instruments on the Consolidated Statement of Results of Operations is as follows: 
 
(Millions of dollars)
 
 
 

 
 
 
Classification of Gains (Losses)
 
Three Months Ended
March 31, 2014
 
Three Months Ended
March 31, 2013
Foreign exchange contracts
 
 
 
 
 
Machinery, Energy & Transportation
Other income (expense)
 
$
11

 
$
(20
)
Financial Products
Other income (expense)
 
(5
)
 
(15
)
Commodity contracts
 
 
 

 
 
Machinery, Energy & Transportation
Other income (expense)
 
(1
)
 
(1
)
 
 
 
$
5

 
$
(36
)
 
 
 
 
 
 
Effect of net settlement provisions of the master netting agreements on derivative assets
The effect of the net settlement provisions of the master netting agreements on our derivative balances upon an event of default or termination event is as follows:
March 31, 2014
 
 
 
 
 
 
 
Gross Amounts Not Offset in the Statement of Financial Position
 
 
(Millions of dollars)
 
Gross Amount of Recognized Assets
 
Gross Amounts Offset in the Statement of Financial Position
 
Net Amount of Assets Presented in the Statement of Financial Position
 
Financial Instruments
 
Cash Collateral Received
 
Net Amount of Assets
Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
Machinery, Energy & Transportation
 
$
51

 
$
—

 
$
51

 
$
(39
)
 
$
—

 
$
12

Financial Products
 
119

 
—

 
119

 
(7
)
 
—

 
112

 Total
 
$
170

 
$
—

 
$
170

 
$
(46
)
 
$
—

 
$
124

December 31, 2013
 
 
 
 
 
 
 
Gross Amounts Not Offset in the Statement of Financial Position
 
 
(Millions of dollars)
 
Gross Amount of Recognized Assets
 
Gross Amounts Offset in the Statement of Financial Position
 
Net Amount of Assets Presented in the Statement of Financial Position
 
Financial Instruments
 
Cash Collateral Received
 
Net Amount of Assets
Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
Machinery, Energy & Transportation
 
$
73

 
$
—

 
$
73

 
$
(32
)
 
$
—

 
$
41

Financial Products
 
138

 
—

 
138

 
(9
)
 
—

 
129

 Total
 
$
211

 
$
—

 
$
211

 
$
(41
)
 
$
—

 
$
170
Effect of net settlement provisions of the master netting agreements on derivative liabilities
December 31, 2013
 
 
 
 
 
 
 
Gross Amounts Not Offset in the Statement of Financial Position
 
 
(Millions of dollars)
 
Gross Amount of Recognized Liabilities
 
Gross Amounts Offset in the Statement of Financial Position
 
Net Amount of Liabilities Presented in the Statement of Financial Position
 
Financial Instruments
 
Cash Collateral Pledged
 
Net Amount of Liabilities
Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
Machinery, Energy & Transportation
 
$
(40
)
 
$
—

 
$
(40
)
 
$
32

 
$
—

 
$
(8
)
Financial Products
 
(10
)
 
—

 
(10
)
 
9

 
—

 
(1
)
 Total
 
$
(50
)
 
$
—

 
$
(50
)
 
$
41

 
$
—

 
$
(9
)
 
 
 
 
 
 
 
 
 
 
 
 
 


March 31, 2014
 
 
 
 
 
 
 
Gross Amounts Not Offset in the Statement of Financial Position
 
 
(Millions of dollars)
 
Gross Amount of Recognized Liabilities
 
Gross Amounts Offset in the Statement of Financial Position
 
Net Amount of Liabilities Presented in the Statement of Financial Position
 
Financial Instruments
 
Cash Collateral Pledged
 
Net Amount of Liabilities
Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
Machinery, Energy & Transportation
 
$
(61
)
 
$
—

 
$
(61
)
 
$
39

 
$
—

 
$
(22
)
Financial Products
 
(12
)
 
—

 
(12
)
 
7

 
—

 
(5
)
 Total
 
$
(73
)
 
$
—

 
$
(73
)
 
$
46

 
$
—

 
$
(27
)