Derivative Financial Instruments and Risk Management (Tables)

3 Months Ended

Mar. 31, 2022

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 were as follows:

(Millions of dollars)	Fair Value
	March 31, 2022				December 31, 2021
	Assets1		Liabilities2		Assets1		Liabilities2
Designated derivatives
Foreign exchange contracts	$	242	$	(127)	$	228	$	(64)
Interest rate contracts	75		(87)		38		(15)
Total	$	317	$	(214)	$	266	$	(79)
Undesignated derivatives
Foreign exchange contracts	$	58	$	(88)	$	46	$	(42)
Commodity contracts	87		—		30		(9)
Total	$	145	$	(88)	$	76	$	(51)
1 Assets are classified on the Consolidated Statement of Financial Position as Receivables - trade and other or Long-term receivables - trade and other.
2 Liabilities are classified on the Consolidated Statement of Financial Position as Accrued expenses or Other liabilities.

 

Derivative Instruments, Gain (Loss)

Gains (Losses) on derivative instruments are categorized as follows:

(Millions of dollars)	Three Months Ended March 31
	Fair Value / Undesignated Hedges				Cash Flow Hedges
	Gains (Losses) Recognized on the Consolidated Statement of Results of Operations1				Gains (Losses) Recognized in AOCI				Gains (Losses) Reclassified from AOCI2
	2022		2021		2022		2021		2022		2021
Foreign exchange contracts	$	(63)	$	78	$	(9)	$	72	$	26	$	129
Interest rate contracts	7		7		56		7		(7)		(11)
Commodity contracts	93		20		—		—		—		—
Total	$	37	$	105	$	47	$	79	$	19	$	118
1 Foreign exchange contract and Commodity contract gains (losses) are included in Other income (expense). Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products.
2 Foreign exchange contract gains (losses) are primarily included in Sales of Machinery, Energy & Transportation and Other income (expense) in the Consolidated Statement of Results of Operations. Interest rate contract gains (losses) are primarily included in Interest expense of Financial Products in the Consolidated Statement of Results of Operations.

Cumulative basis adjustments for fair value hedges

The following amounts were recorded on the Consolidated Statement of Financial Position related to cumulative basis adjustments for fair value hedges:

(Millions of dollars)	Carrying Value of the Hedged Liabilities				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Liabilities
	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Long-term debt due within one year	$	750	$	755	$	—	$	5
Long-term debt due after one year	2,419		1,304		(87)		(2)
Total	$	3,169	$	2,059	$	(87)	$	3

Offsetting Assets and Liabilities

The effect of the net settlement provisions of the master netting agreements on our derivative balances upon an event of default or termination event was as follows:

(Millions of dollars)	March 31, 2022				December 31, 2021
	Assets		Liabilities		Assets		Liabilities
Gross Amounts Recognized	$	462	$	(302)	$	342	$	(130)
Financial Instruments Not Offset	(152)		152		(114)		114
Cash Collateral Received	—		—		—		—
Net Amount	$	310	$	(150)	$	228	$	(16)