Derivative Financial Instruments and Risk Management (Tables)

The following tables summarize fair value measurements of our derivative instruments measured on a recurring basis (dollars in millions):



	March 31, 2012
	Derivative Assets						Derivative Liabilities
	Notional		Current(a)		Non-Current(b)		Current(c)		Non-Current(d)
Foreign currency	$	7,294	$	68	$	—	$	49	$	—
Commodity	3,240		16		9		2		—
Embedded	1,456		25		82		2		4
Total	$	11,990	$	109	$	91	$	53	$	4

	December 31, 2011
	Derivative Assets						Derivative Liabilities
	Notional		Current(a)		Non-Current(b)		Current(c)		Non-Current(d)
Foreign currency	$	6,507	$	64	$	—	$	46	$	—
Commodity	2,566		9		—		10		5
Embedded	1,461		28		124		1		5
Total	$	10,534	$	101	$	124	$	57	$	10

__________


(a)	Recorded in Other current assets and deferred income taxes.


(b)	Recorded in Other assets and deferred income taxes.


(c)	Recorded in Accrued liabilities.


(d)	Recorded in Other liabilities and deferred income ta

The following tables summarize information regarding marketable securities (dollars in millions):



	March 31, 2012
			Unrealized				Fair		Fair Value Measurements on a Recurring Basis
	Cost		Gains		Losses		Value		Level 1		Level 2		Level 3
Cash and cash equivalents
Available-for-sale securities
U.S. government and agencies	$	5,001	$	—	$	—	$	5,001	$	—	$	5,001	$	—
Sovereign debt	380		—		—		380		—		380		—
Certificates of deposit	438		—		—		438		—		438		—
Money market funds	981		—		—		981		981		—		—
Corporate debt	5,180		—		—		5,180		—		5,180		—
Total marketable securities classified as cash equivalents	$	11,980	$	—	$	—	11,980		$	981	$	10,999	$	—
Cash, time deposits, and other cash equivalents							5,398
Total cash and cash equivalents							$	17,378
Marketable securities - current
Available-for-sale securities
U.S. government and agencies	$	3,622	$	1	$	—	$	3,623	$	—	$	3,623	$	—
Sovereign debt	77		1		—		78		—		78		—
Certificates of deposit	42		—		—		42		—		42		—
Corporate debt	4,260		5		3		4,262		—		4,262		—
Total available-for-sale securities	$	8,001	$	7	$	3	8,005		—		8,005		—
Trading securities
Equity			$	5	$	—	39		39		—		—
Sovereign debt(a)			91		8		6,565		—		6,565		—
Other debt			1		—		77		—		77		—
Total trading securities			$	97	$	8	6,681		39		6,642		—
Total marketable securities - current							14,686		39		14,647		—
Marketable securities - non-current
Available-for-sale securities
Equity(b)	$	404	$	—	$	5	399		399		—		—
Total marketable securities - non-current	$	404	$	—	$	5	399		399		—		—
Total marketable securities							$	15,085	$	438	$	14,647	$	—
Restricted cash and marketable securities
Available-for-sale securities
Money market funds	$	1,264	$	—	$	—	$	1,264	$	1,264	$	—	$	—
Sovereign debt	16		—		—		16		—		16		—
Other	163		—		—		163		—		163		—
Total marketable securities classified as restricted cash and marketable securities	$	1,443	$	—	$	—	1,443		$	1,264	$	179	$	—
Restricted cash, time deposits, and other restricted cash equivalents							632
Total restricted cash and marketable securities							$	2,075

________


(a)	Unrealized gains/losses are primarily related to remeasurement of Canadian dollar (CAD) denominated securities.


(b)	Represents our seven percent ownership in Peugeot S.A. (PSA) acquired in connection with our agreement with PSA to create a long-term and broad-scale global strategic alliance. The shares are subject to certain trading restrictions until May 29, 2012. The investment is recorded in Other assets and deferred income taxes.



	December 31, 2011
			Unrealized				Fair		Fair Value Measurements on a Recurring Basis
	Cost		Gains		Losses		Value		Level 1		Level 2		Level 3
Cash and cash equivalents
Available-for-sale securities
U.S. government and agencies	$	239	$	—	$	—	$	239	$	—	$	239	$	—
Sovereign debt	490		—		—		490		—		490		—
Certificates of deposit	2,028		—		—		2,028		—		2,028		—
Money market funds	1,794		—		—		1,794		1,794		—		—
Corporate debt	5,112		—		—		5,112		—		5,112		—
Total available-for-sale securities	$	9,663	$	—	$	—	9,663		1,794		7,869		—
Trading securities
Sovereign debt(a)			$	8	$	—	497		—		497		—
Total trading securities			$	8	$	—	497		—		497		—
Total marketable securities classified as cash equivalents							10,160		$	1,794	$	8,366	$	—
Cash, time deposits, and other cash equivalents							5,911
Total cash and cash equivalents							$	16,071
Marketable securities - current
Available-for-sale securities
U.S. government and agencies	$	5,214	$	2	$	—	$	5,216	$	—	$	5,216	$	—
Sovereign debt	143		—		—		143		—		143		—
Certificates of deposit	178		—		—		178		—		178		—
Corporate debt	4,566		3		4		4,565		—		4,565		—
Total available-for-sale securities	$	10,101	$	5	$	4	10,102		—		10,102		—
Trading securities
Equity			$	—	$	5	34		34		—		—
Sovereign debt(a)			18		33		5,936		—		5,936		—
Other debt			1		2		76		—		76		—
Total trading securities			$	19	$	40	6,046		34		6,012		—
Total marketable securities - current							$	16,148	$	34	$	16,114	$	—
Restricted cash and marketable securities
Available-for-sale securities
Money market funds	$	1,363	$	—	$	—	$	1,363	$	1,363	$	—	$	—
Sovereign debt	15		—		—		15		—		15		—
Other	161		3		—		164		—		164		—
Total marketable securities classified as restricted cash and marketable securities	$	1,539	$	3	$	—	1,542		$	1,363	$	179	$	—
Restricted cash, time deposits, and other restricted cash equivalents							691
Total restricted cash and marketable securities							$	2,233

________


(a)	Unrealized gains/losses are primarily related to remeasurement of CAD denominated securities

The following table summarizes equipment on operating leases to daily rental car companies measured at fair value using Level 3 inputs on a nonrecurring basis (dollars in millions):



			Fair Value Measurements on a Nonrecurring Basis
	Fair Value Measures		Level 1		Level 2		Level 3
Three months ended March 31, 2012	$	937	$	—	$	—	$	937
Three months ended March 31, 2011	$	926	$	—	$	—	$	926

Impairment of vehicles leased to daily rental car companies with guaranteed repurchase obligations is determined to exist if the expected cash flows are lower than the carrying amount of the vehicle. We have multiple, distinct portfolios of vehicles leased to rental car companies and may have multiple impairments within a period. Expected cash flows include all estimated net revenue and costs associated with the sale to daily rental car companies through disposal at auction. The fair value measurements are determined, reviewed and approved on a monthly basis by personnel with appropriate knowledge of transactions with daily rental car companies and auction transactions.

The following table summarizes the significant quantitative unobservable inputs and assumptions used in the fair value measurement of Equipment on operating leases, net in the three months ended March 31, 2012 (dollars in millions):



	Valuation Technique	Significant Unobservable Input	Amount
Impaired equipment on operating leases	Cash flow	Estimated net revenue	$	960
		Estimated cost	$	1,015

The following table summarizes the significant quantitative unobservable inputs and assumptions used in the fair value measurement of the derivatives at March 31, 2012:



	Valuation Technique	Significant Unobservable Input	Metric
Commodity	Discounted cash flow	Coal forward price in EUR(a)	€106.22
		Heavy fuel oil forward price in EUR(a)	€512.78
		Supplier nonperformance risk (average)	3.68%
Embedded	Discounted cash flow	Average EUR/TRY forward exchange rate(b)	€2.86
		Volume commitment and vehicle mix in EUR(c)	€1.0 billion

__________


(a)	Forward prices are estimated to be equivalents of the spot price as published by a governmental agency.


(b)	Calculated by adjusting market forward rates for the spread between current market and Turkish central bank spot prices.


(c)	Volume commitment is spread evenly on a monthly basis and vehicle mix is pursuant to management forecasts

The following table summarizes the activity for our derivative investments measured using Level 3 inputs (dollars in millions):



	Three Months Ended March 31, 2012									Three Months Ended March 31, 2011
	Embedded			Commodity			Total			Embedded		Commodity		Total
Balance at beginning of period	$	148		$	(10	)	$	138		$	—	$	—	$	—
Total realized/unrealized gains (losses)(a)
Included in earnings	(43		)	4			(39		)	53		—		53
Included in other comprehensive income	4			—			4			4		—		4
Settlements	(5		)	(2		)	(7		)	—		—		—
Issuances	—			24			24			—		—		—
Balance at end of period	$	104		$	16		$	120		$	57	$	—	$	57

Amount of total gains (losses) in the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at the reporting date	$	(47	)	$	5		$	(42	)	$	53	$	—	$	53

tives

The following table summarizes derivative gains (losses) recorded in Interest income and other non-operating income, net (dollars in milli

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income, and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issuances, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods. Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

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Reference 1: http://www.xbrl.org/2003/role/presentationRef

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-Name Accounting Standards Codification

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Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

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Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

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-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258

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Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

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-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19190-110258

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- Definition

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

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- Definition

Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

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