Objectives and Strategies for Using Derivatives (Tables)

12 Months Ended

Dec. 31, 2011

Objectives and Strategies for Using Derivatives

Schedule of Fair Value of all Derivative Instruments

	Assets				Liabilities
	2011		2010		2011		2010
	(Millions of dollars)
Foreign currency exchange risk	$	45	$	46	$	33	$	39
Interest rate risk	16		24		75		2
Commodity price risk	—		—		12		7
Total	$	61	$	70	$	120	$	48

Schedule of Effect of Derivative Financial Instruments on Consolidated Statement of Income

	Income Statement Classifications	(Gain) or Loss Recognized in Income
		2011			2010			2009
		(Millions of dollars)
Undesignated foreign exchange hedging instruments	Other (income) and expense, net(a)	$	(3	)	$	(57	)	$	95
Fair Value Hedges
Foreign exchange contracts	Other (income) and expense, net	$	—		$	(1	)	$	6
Hedged foreign exchange monetary assets and liabilities	Other (income) and expense, net	$	—		$	1		$	(6	)
Interest rate swap contracts	Interest expense	$	(14	)	$	(8	)	$	(9	)
Hedged debt instruments	Interest expense	$	14		$	8		$	9

	Amount of (Gain) or Loss Recognized In AOCI								Income Statement Classification of (Gain) or Loss Reclassified from AOCI	(Gain) or Loss Reclassified from AOCI to Income
	2011			2010		2009				2011			2010			2009
	(Millions of dollars)									(Millions of dollars)
Cash Flow Hedges
Interest rate contracts	$	81		$	21	$	(29	)	Interest expense	$	(3	)	$	(3	)	$	(3	)
Foreign exchange contracts	(7		)	—		32			Cost of products sold	40			7			5
Foreign exchange contracts	(8		)	—		—			Other (income) and expense, net	(8		)	—			—
Commodity contracts	15			16		26			Cost of products sold	10			13			43
Total	$	81		$	37	$	29			$	39		$	17		$	45
Net Investment Hedges
Foreign exchange contracts	$	(6	)	$	6	$	18			$	—		$	—		$	—

(a) (Gains) and losses on these instruments primarily relate to derivatives entered into with third parties to manage foreign currency exchange exposure on remeasurement of non-functional currency denominated monetary assets and liabilities. Consequently, the effect on earnings from the use of these non-designated derivatives is substantially neutralized by the recorded transactional gains and losses recorded on the underlying assets and liabilities.

Schedule of Fair Value of Derivative Instruments by Balance Sheet Location

Fair Values of Derivative Instruments
	Balance Sheet Location	2011		2010
Assets		(Millions of dollars)
Derivatives designated as hedging instruments:
Interest rate contracts	Other current assets	$	3	$	—
Interest rate contracts	Other assets	11		24
Foreign exchange contracts	Other current assets	25		4
Foreign exchange contracts	Other assets	9		1
Total		48		29
Undesignated derivatives:
Foreign exchange contracts and other	Other current assets	13		41
Total asset derivatives		$	61	$	70
Liabilities
Derivatives designated as hedging instruments:
Interest rate contracts	Accrued expenses	$	44	$	—
Interest rate contracts	Other liabilities	31		2
Foreign exchange contracts	Accrued expenses	6		16
Foreign exchange contracts	Other liabilities	—		3
Commodity contracts	Accrued expenses	11		7
Commodity contracts	Other liabilities	1		—
Total		93		28
Undesignated derivatives:
Foreign exchange contracts and other	Accrued expenses	27		20
Total liability derivatives		$	120	$	48