Derivative Financial Instruments and Risk Management (Tables)

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Location and fair value of derivative instruments reported in the Consolidated Statements of Financial Position

The location and fair value of derivative instruments reported in the Consolidated Statements of Financial Position were as follows:

(Millions of dollars)
		Asset (Liability) Fair Value
	Consolidated Statements of Financial Position Location	June 30, 2013			December 31, 2012
Designated derivatives
Interest rate contracts	Other assets	$	153		$	226
Interest rate contracts	Accrued expenses	(6		)	(8		)
		$	147		$	218
Undesignated derivatives
Foreign exchange contracts	Other assets	$	10		$	10
Foreign exchange contracts	Accrued expenses	(3		)	(5		)
Cross currency contracts	Other assets	6			—
Cross currency contracts	Accrued expenses	—			(1		)
Interest rate contracts	Other assets	1			2
Interest rate contracts	Accrued expenses	—			(1		)
		$	14		$	5

Deferred gains (losses) recorded in AOCI on the Consolidated Statements of Changes in Stockholder's Equity

For the six months ended June 30, 2013 and 2012, the deferred gains (losses) recorded in AOCI on the Consolidated Statements of Changes in Stockholder’s Equity associated with our cash flow interest rate contract hedges were as follows:

(Millions of dollars)
Balance as of December 31, 2012, net of tax of $4	$	(8	)
Gains (losses) deferred during the period, net of tax of $(1)	2
(Gains) losses reclassified to earnings, net of tax of $1	2
Balance as of June 30, 2013, net of tax of $2	$	(4	)

(Millions of dollars)
Balance as of December 31, 2011, net of tax of $3	$	(6	)
Gains (losses) deferred during the period, net of tax of $1	(1		)
(Gains) losses reclassified to earnings, net of tax of $1	1
Balance as of June 30, 2012, net of tax of $3	$	(6	)

Schedule of effect of derivatives designated as fair value hedging instruments in the Consolidated Statements of Profit

The effect of derivatives designated as hedging instruments on the Consolidated Statements of Profit was as follows:

Fair Value Hedges
(Millions of dollars)
		Three Months Ended June 30, 2013					Three Months Ended June 30, 2012
	Classification	Gains (Losses) on Derivatives			Gains (Losses) on Borrowings		Gains (Losses) on Derivatives			Gains  (Losses) on Borrowings
Interest rate contracts	Other income (expense)	$	(49	)	$	50	$	6		$	(5	)
		Six Months Ended June 30, 2013					Six Months Ended June 30, 2012
	Classification	Gains (Losses) on Derivatives			Gains (Losses) on Borrowings		Gains (Losses) on Derivatives			Gains  (Losses) on Borrowings
Interest rate contracts	Other income (expense)	$	(78	)	$	80	$	(3	)	$	10

Schedule of effect of derivatives designated as cash flow hedging instruments in the Consolidated Statements of Profit

Cash Flow Hedges
(Millions of dollars)
		Three Months Ended June 30, 2013
	Classification	Reclassified from AOCI to Earnings (Effective Portion)			Recognized in Earnings (Ineffective Portion)
Interest rate contracts	Interest expense	$	(2	)	$	—
Interest rate contracts	Other income (expense)	—			—
		$	(2	)	$	—
		Three Months Ended June 30, 2012
	Classification	Reclassified from AOCI to Earnings (Effective Portion)			Recognized in Earnings (Ineffective Portion)
Interest rate contracts	Interest expense	$	(1	)	$	—
Interest rate contracts	Other income (expense)	—			(1		)
		$	(1	)	$	(1	)
		Six Months Ended June 30, 2013
	Classification	Reclassified from AOCI to Earnings (Effective Portion)			Recognized in Earnings (Ineffective Portion)
Interest rate contracts	Interest expense	$	(3	)	$	—
Interest rate contracts	Other income (expense)	—			—
		$	(3	)	$	—
		Six Months Ended June 30, 2012
	Classification	Reclassified from AOCI to Earnings (Effective Portion)			Recognized in Earnings (Ineffective Portion)
Interest rate contracts	Interest expense	$	(2	)	$	—
Interest rate contracts	Other income (expense)	—			(1		)
		$	(2	)	$	(1	)

Schedule of effect of derivatives not designated as hedging instruments on the Consolidated Statements of Profit

The effect of derivatives not designated as hedging instruments on the Consolidated Statements of Profit was as follows:

Undesignated Derivatives
(Millions of dollars)		Three Months Ended June 30,
	Classification	2013			2012
Foreign exchange contracts	Other income (expense)	$	5		$	(5	)
Cross currency contracts	Other income (expense)	11			—
Interest rate contracts	Other income (expense)	—			—
		$	16		$	(5	)
		Six Months Ended June 30,
	Classification	2013			2012
Foreign exchange contracts	Other income (expense)	$	(6	)	$	2
Cross currency contracts	Other income (expense)	7			—
Interest rate contracts	Other income (expense)	—			—
		$	1		$	2

Schedule of offsetting of derivative 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 a termination event is as follows:

Offsetting of Derivative Assets and Liabilities
(Millions of dollars)
	June 30, 2013			December 31, 2012
Derivative Assets
Gross Amount of Recognized Assets	$	170		$	238
Gross Amounts Offset	—			—
Net Amount of Assets(1)	170			238
Gross Amounts Not Offset
Financial Instruments	(8		)	(12		)
Cash Collateral Received	—			—
Net Amount	$	162		$	226
Derivative Liabilities
Gross Amount of Recognized Liabilities	$	(9	)	$	(15	)
Gross Amounts Offset	—			—
Net Amount of Liabilities(1)	(9		)	(15		)
Gross Amounts Not Offset
Financial Instruments	8			12
Cash Collateral Received	—			—
Net Amount	$	(1	)	$	(3	)

⁽¹⁾ As presented in the Consolidated Statements of Financial Position.