frm8k093008.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(Mark
One)
þ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the quarterly period ended September
30, 2008
OR
|
|
¨ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the transition period from ____ to ____
|
|
Commission
file number 001-00035
GENERAL ELECTRIC
COMPANY
(Exact
name of registrant as specified in its
charter)
|
New
York
|
|
14-0689340
|
(State
or other jurisdiction of incorporation or organization)
|
|
(I.R.S.
Employer Identification No.)
|
|
|
|
3135
Easton Turnpike, Fairfield, CT
|
|
06828-0001
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
|
(Registrant’s
telephone number, including area code) (203)
373-2211
_______________________________________________
(Former
name, former address and former fiscal year,
if
changed since last report)
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes þ No ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer þ
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company ¨
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ No þ
There
were 9,955,456,000 shares of common stock with a par value of $0.06 per share
outstanding at September 26, 2008.
General
Electric Company
|
|
Page
|
Part
I -
Financial Information
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|
|
|
|
|
Item
1. Financial Statements
|
|
|
Condensed
Statement of Earnings
|
|
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
8
|
|
|
29
|
|
|
47
|
|
|
47
|
|
|
|
Part
II -
Other Information
|
|
|
|
|
|
|
|
48
|
|
|
48
|
|
|
52
|
|
|
52
|
|
|
53
|
Forward-Looking
Statements
This
document contains “forward-looking statements”– that is, statements related to
future, not past, events. In this context, forward-looking statements often
address our expected future business and financial performance, and often
contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,”
“seek,” or “will.” Forward-looking statements by their nature address matters
that are, to different degrees, uncertain. For us, particular uncertainties that
could adversely or positively affect our future results include: the behavior of
financial markets, including fluctuations in interest and exchange rates,
commodity and equity prices and the value of financial assets; continued
volatility and further deterioration of the capital markets; the commercial and
consumer credit environment; the impact of regulation and regulatory,
investigative and legal actions; strategic actions, including acquisitions and
dispositions; future integration of acquired businesses; future financial
performance of major industries which we serve, including, without limitation,
the air and rail transportation, energy generation, media, real estate and
healthcare industries; and numerous other matters of national, regional and
global scale, including those of a political, economic, business and competitive
nature. These uncertainties may cause our actual future results to be materially
different than those expressed in our forward-looking statements. We do not
undertake to update our forward-looking statements.
Part
I. Financial Information
Item
1. Financial Statements
Condensed
Statement of Earnings
General
Electric Company and consolidated affiliates
|
Three
months ended September 30 (Unaudited)
|
|
|
Consolidated
|
|
|
GE(a)
|
|
Financial
Services
(GECS)
|
|
(In
millions; per-share amounts in dollars)
|
|
2008
|
|
|
2007
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
of goods
|
$
|
17,924
|
|
$
|
15,354
|
|
|
$
|
17,473
|
|
$
|
15,271
|
|
$
|
579
|
|
$
|
277
|
|
Sales
of services
|
|
11,236
|
|
|
9,301
|
|
|
|
11,395
|
|
|
9,419
|
|
|
–
|
|
|
–
|
|
Other
income
|
|
544
|
|
|
384
|
|
|
|
659
|
|
|
464
|
|
|
–
|
|
|
–
|
|
GECS
earnings from continuing operations
|
|
–
|
|
|
–
|
|
|
|
2,010
|
|
|
3,219
|
|
|
–
|
|
|
–
|
|
GECS
revenues from services
|
|
17,530
|
|
|
17,473
|
|
|
|
–
|
|
|
–
|
|
|
17,852
|
|
|
17,789
|
|
Total
revenues
|
|
47,234
|
|
|
42,512
|
|
|
|
31,537
|
|
|
28,373
|
|
|
18,431
|
|
|
18,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods sold
|
|
14,184
|
|
|
12,113
|
|
|
|
13,826
|
|
|
12,071
|
|
|
486
|
|
|
236
|
|
Cost
of services sold
|
|
7,953
|
|
|
6,145
|
|
|
|
8,112
|
|
|
6,262
|
|
|
–
|
|
|
–
|
|
Interest
and other financial charges
|
|
6,955
|
|
|
6,070
|
|
|
|
525
|
|
|
473
|
|
|
6,723
|
|
|
5,780
|
|
Investment
contracts, insurance losses and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
insurance
annuity benefits
|
|
787
|
|
|
849
|
|
|
|
–
|
|
|
–
|
|
|
839
|
|
|
889
|
|
Provision
for losses on financing receivables
|
|
1,641
|
|
|
1,190
|
|
|
|
–
|
|
|
–
|
|
|
1,641
|
|
|
1,190
|
|
Other
costs and expenses
|
|
10,542
|
|
|
10,204
|
|
|
|
3,541
|
|
|
3,684
|
|
|
7,093
|
|
|
6,694
|
|
Minority
interest in net earnings of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
consolidated
affiliates
|
|
156
|
|
|
190
|
|
|
|
60
|
|
|
136
|
|
|
96
|
|
|
54
|
|
Total
costs and expenses
|
|
42,218
|
|
|
36,761
|
|
|
|
26,064
|
|
|
22,626
|
|
|
16,878
|
|
|
14,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
before
income taxes
|
|
5,016
|
|
|
5,751
|
|
|
|
5,473
|
|
|
5,747
|
|
|
1,553
|
|
|
3,223
|
|
Benefit
(provision) for income taxes
|
|
(539
|
)
|
|
(640
|
)
|
|
|
(996
|
)
|
|
(636
|
)
|
|
457
|
|
|
(4
|
)
|
Earnings
from continuing operations
|
|
4,477
|
|
|
5,111
|
|
|
|
4,477
|
|
|
5,111
|
|
|
2,010
|
|
|
3,219
|
|
Earnings
(loss) from discontinued operations,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net
of taxes
|
|
(165
|
)
|
|
448
|
|
|
|
(165
|
)
|
|
448
|
|
|
(170
|
)
|
|
(1,352
|
)
|
Net
earnings
|
$
|
4,312
|
|
$
|
5,559
|
|
|
$
|
4,312
|
|
$
|
5,559
|
|
$
|
1,840
|
|
$
|
1,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per-share
amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per-share
amounts – earnings from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
$
|
0.45
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
$
|
0.45
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per-share
amounts – net earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
$
|
0.43
|
|
$
|
0.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
$
|
0.43
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared per share
|
$
|
0.31
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Represents
the adding together of all affiliated companies except General Electric
Capital Services, Inc. (GECS or financial services) which is presented on
a one-line basis.
|
See
accompanying notes. Separate information is shown for “GE” and “Financial
Services (GECS).” Transactions between GE and GECS have been eliminated
from the “Consolidated” columns.
|
Condensed
Statement of Earnings
General
Electric Company and consolidated affiliates
|
Nine
months ended September 30 (Unaudited)
|
|
|
Consolidated
|
|
|
GE(a)
|
|
Financial
Services
(GECS)
|
|
(In
millions; per-share amounts in dollars)
|
|
2008
|
|
|
2007
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
of goods
|
$
|
50,092
|
|
$
|
43,352
|
|
|
$
|
48,876
|
|
$
|
43,373
|
|
$
|
1,474
|
|
$
|
337
|
|
Sales
of services
|
|
31,489
|
|
|
26,867
|
|
|
|
32,024
|
|
|
27,274
|
|
|
–
|
|
|
–
|
|
Other
income
|
|
1,693
|
|
|
2,319
|
|
|
|
1,984
|
|
|
2,550
|
|
|
–
|
|
|
–
|
|
GECS
earnings from continuing operations
|
|
–
|
|
|
–
|
|
|
|
7,240
|
|
|
9,042
|
|
|
–
|
|
|
–
|
|
GECS
revenues from services
|
|
53,028
|
|
|
51,417
|
|
|
|
–
|
|
|
–
|
|
|
54,027
|
|
|
52,308
|
|
Total
revenues
|
|
136,302
|
|
|
123,955
|
|
|
|
90,124
|
|
|
82,239
|
|
|
55,501
|
|
|
52,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods sold
|
|
39,977
|
|
|
34,607
|
|
|
|
38,971
|
|
|
34,681
|
|
|
1,264
|
|
|
284
|
|
Cost
of services sold
|
|
20,882
|
|
|
17,005
|
|
|
|
21,417
|
|
|
17,412
|
|
|
–
|
|
|
–
|
|
Interest
and other financial charges
|
|
20,103
|
|
|
17,279
|
|
|
|
1,681
|
|
|
1,428
|
|
|
19,242
|
|
|
16,478
|
|
Investment
contracts, insurance losses and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
insurance
annuity benefits
|
|
2,412
|
|
|
2,601
|
|
|
|
–
|
|
|
–
|
|
|
2,557
|
|
|
2,744
|
|
Provision
for losses on financing receivables
|
|
4,453
|
|
|
3,132
|
|
|
|
–
|
|
|
–
|
|
|
4,453
|
|
|
3,132
|
|
Other
costs and expenses
|
|
31,317
|
|
|
29,733
|
|
|
|
10,780
|
|
|
10,636
|
|
|
20,862
|
|
|
19,449
|
|
Minority
interest in net earnings of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
consolidated
affiliates
|
|
502
|
|
|
634
|
|
|
|
318
|
|
|
445
|
|
|
184
|
|
|
189
|
|
Total
costs and expenses
|
|
119,646
|
|
|
104,991
|
|
|
|
73,167
|
|
|
64,602
|
|
|
48,562
|
|
|
42,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
before
income taxes
|
|
16,656
|
|
|
18,964
|
|
|
|
16,957
|
|
|
17,637
|
|
|
6,939
|
|
|
10,369
|
|
Benefit
(provision) for income taxes
|
|
(2,434
|
)
|
|
(3,334
|
)
|
|
|
(2,735
|
)
|
|
(2,007
|
)
|
|
301
|
|
|
(1,327
|
)
|
Earnings
from continuing operations
|
|
14,222
|
|
|
15,630
|
|
|
|
14,222
|
|
|
15,630
|
|
|
7,240
|
|
|
9,042
|
|
Loss
from discontinued operations,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net
of taxes
|
|
(534
|
)
|
|
(118
|
)
|
|
|
(534
|
)
|
|
(118
|
)
|
|
(568
|
)
|
|
(1,986
|
)
|
Net
earnings
|
$
|
13,688
|
|
$
|
15,512
|
|
|
$
|
13,688
|
|
$
|
15,512
|
|
$
|
6,672
|
|
$
|
7,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per-share
amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per-share
amounts – earnings from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
$
|
1.42
|
|
$
|
1.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
$
|
1.43
|
|
$
|
1.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per-share
amounts – net earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
$
|
1.37
|
|
$
|
1.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
$
|
1.37
|
|
$
|
1.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared per share
|
$
|
0.93
|
|
$
|
0.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Represents
the adding together of all affiliated companies except General Electric
Capital Services, Inc. (GECS or financial services) which is presented on
a one-line basis.
|
See
accompanying notes. Separate information is shown for “GE” and “Financial
Services (GECS).” Transactions between GE and GECS have been eliminated
from the “Consolidated” columns.
|
Condensed
Statement of Financial Position
General
Electric Company and consolidated affiliates
|
Consolidated
|
|
|
GE(a)
|
|
Financial
Services
(GECS)
|
|
(In
millions; except share amounts)
|
September
30,
2008
|
|
December
31,
2007
|
|
|
September
30,
2008
|
|
December
31,
2007
|
|
September
30,
2008
|
|
December
31,
2007
|
|
|
(Unaudited)
|
|
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and equivalents
|
$
|
16,301
|
|
$
|
15,731
|
|
|
$
|
3,498
|
|
$
|
6,702
|
|
$
|
13,075
|
|
$
|
9,439
|
|
Investment
securities
|
|
43,459
|
|
|
45,276
|
|
|
|
276
|
|
|
343
|
|
|
43,188
|
|
|
44,941
|
|
Current
receivables
|
|
22,439
|
|
|
22,259
|
|
|
|
14,792
|
|
|
15,093
|
|
|
–
|
|
|
–
|
|
Inventories
|
|
14,719
|
|
|
12,897
|
|
|
|
14,646
|
|
|
12,834
|
|
|
73
|
|
|
63
|
|
Financing
receivables – net
|
|
413,170
|
|
|
376,123
|
|
|
|
–
|
|
|
–
|
|
|
421,788
|
|
|
384,067
|
|
Other
GECS receivables
|
|
15,620
|
|
|
16,514
|
|
|
|
–
|
|
|
–
|
|
|
21,072
|
|
|
22,078
|
|
Property,
plant and equipment (including
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equipment
leased to others) – net
|
|
80,095
|
|
|
77,888
|
|
|
|
14,316
|
|
|
14,142
|
|
|
65,779
|
|
|
63,746
|
|
Investment
in GECS
|
|
–
|
|
|
–
|
|
|
|
55,698
|
|
|
57,676
|
|
|
–
|
|
|
–
|
|
Goodwill
|
|
83,061
|
|
|
81,116
|
|
|
|
56,742
|
|
|
55,689
|
|
|
26,319
|
|
|
25,427
|
|
Other
intangible assets – net
|
|
15,593
|
|
|
16,142
|
|
|
|
11,401
|
|
|
11,633
|
|
|
4,192
|
|
|
4,509
|
|
All
other assets
|
|
123,855
|
|
|
122,848
|
|
|
|
43,481
|
|
|
40,608
|
|
|
81,628
|
|
|
83,392
|
|
Assets
of discontinued operations
|
|
1,238
|
|
|
8,889
|
|
|
|
–
|
|
|
66
|
|
|
1,238
|
|
|
8,823
|
|
Total
assets
|
$
|
829,550
|
|
$
|
795,683
|
|
|
$
|
214,850
|
|
$
|
214,786
|
|
$
|
678,352
|
|
$
|
646,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
218,748
|
|
$
|
195,100
|
|
|
$
|
4,394
|
|
$
|
4,106
|
|
$
|
215,409
|
|
$
|
192,420
|
|
Accounts
payable, principally trade accounts
|
|
20,679
|
|
|
21,338
|
|
|
|
11,409
|
|
|
11,120
|
|
|
13,952
|
|
|
14,714
|
|
Progress
collections and price adjustments accrued
|
|
12,835
|
|
|
9,885
|
|
|
|
13,422
|
|
|
10,374
|
|
|
–
|
|
|
–
|
|
Other
GE current liabilities
|
|
20,344
|
|
|
18,916
|
|
|
|
20,447
|
|
|
18,916
|
|
|
–
|
|
|
–
|
|
Long-term
borrowings
|
|
329,915
|
|
|
319,013
|
|
|
|
10,018
|
|
|
11,656
|
|
|
321,019
|
|
|
308,502
|
|
Investment
contracts, insurance liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
insurance annuity benefits
|
|
34,533
|
|
|
34,068
|
|
|
|
–
|
|
|
–
|
|
|
34,886
|
|
|
34,359
|
|
All
other liabilities
|
|
55,933
|
|
|
59,316
|
|
|
|
32,034
|
|
|
32,859
|
|
|
23,951
|
|
|
26,522
|
|
Deferred
income taxes
|
|
14,269
|
|
|
12,490
|
|
|
|
3,942
|
|
|
3,391
|
|
|
10,327
|
|
|
9,099
|
|
Liabilities
of discontinued operations
|
|
931
|
|
|
1,994
|
|
|
|
188
|
|
|
302
|
|
|
743
|
|
|
1,692
|
|
Total
liabilities
|
|
708,187
|
|
|
672,120
|
|
|
|
95,854
|
|
|
92,724
|
|
|
620,287
|
|
|
587,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority
interest in equity of consolidated affiliates
|
|
9,036
|
|
|
8,004
|
|
|
|
6,669
|
|
|
6,503
|
|
|
2,367
|
|
|
1,501
|
|
Common
stock (9,955,456,000 and 9,987,599,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares
outstanding at September 30, 2008 and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2007, respectively)
|
|
669
|
|
|
669
|
|
|
|
669
|
|
|
669
|
|
|
1
|
|
|
1
|
|
Accumulated
gains (losses) – net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
securities
|
|
(2,290
|
)
|
|
124
|
|
|
|
(2,290
|
)
|
|
124
|
|
|
(2,251
|
)
|
|
110
|
|
Currency
translation adjustments
|
|
7,200
|
|
|
10,708
|
|
|
|
7,200
|
|
|
10,708
|
|
|
4,816
|
|
|
7,472
|
|
Cash
flow hedges
|
|
(2,168
|
)
|
|
(668
|
)
|
|
|
(2,168
|
)
|
|
(668
|
)
|
|
(2,096
|
)
|
|
(727
|
)
|
Benefit
plans
|
|
(916
|
)
|
|
(1,840
|
)
|
|
|
(916
|
)
|
|
(1,840
|
)
|
|
(84
|
)
|
|
(105
|
)
|
Other
capital
|
|
25,906
|
|
|
26,100
|
|
|
|
25,906
|
|
|
26,100
|
|
|
12,580
|
|
|
12,574
|
|
Retained
earnings
|
|
121,755
|
|
|
117,362
|
|
|
|
121,755
|
|
|
117,362
|
|
|
42,732
|
|
|
38,351
|
|
Less
common stock held in treasury
|
|
(37,829
|
)
|
|
(36,896
|
)
|
|
|
(37,829
|
)
|
|
(36,896
|
)
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
shareowners’ equity
|
|
112,327
|
|
|
115,559
|
|
|
|
112,327
|
|
|
115,559
|
|
|
55,698
|
|
|
57,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and equity
|
$
|
829,550
|
|
$
|
795,683
|
|
|
$
|
214,850
|
|
$
|
214,786
|
|
$
|
678,352
|
|
$
|
646,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
sum of accumulated gains (losses) on investment securities, currency
translation adjustments, cash flow hedges and benefit plans constitutes
“Accumulated nonowner changes other than earnings,” and was $1,826 million
and $8,324 million at September 30, 2008, and December 31, 2007,
respectively.
|
(a)
|
Represents
the adding together of all affiliated companies except General Electric
Capital Services, Inc. (GECS or financial services) which is presented on
a one-line basis.
|
See
accompanying notes. Separate information is shown for “GE” and “Financial
Services (GECS).” Transactions between GE and GECS have been eliminated
from the “Consolidated” columns.
|
Condensed
Statement of Cash Flows
General
Electric Company and consolidated affiliates
|
Nine
months ended September 30 (Unaudited)
|
|
|
Consolidated
|
|
|
GE(a)
|
|
Financial
Services
(GECS)
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows – operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
13,688
|
|
$
|
15,512
|
|
|
$
|
13,688
|
|
$
|
15,512
|
|
$
|
6,672
|
|
$
|
7,056
|
|
Loss
from discontinued operations
|
|
534
|
|
|
118
|
|
|
|
534
|
|
|
118
|
|
|
568
|
|
|
1,986
|
|
Adjustments
to reconcile net earnings to cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
provided
from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization of property,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plant
and equipment
|
|
8,216
|
|
|
7,431
|
|
|
|
1,587
|
|
|
1,577
|
|
|
6,629
|
|
|
5,854
|
|
Net
earnings from continuing operations retained by GECS
|
|
–
|
|
|
–
|
|
|
|
(4,949
|
)
|
|
(3,171
|
)
|
|
–
|
|
|
–
|
|
Deferred
income taxes
|
|
1,798
|
|
|
828
|
|
|
|
(454
|
)
|
|
278
|
|
|
2,252
|
|
|
550
|
|
Decrease
(increase) in GE current receivables
|
|
(1,344
|
)
|
|
(159
|
)
|
|
|
41
|
|
|
1,004
|
|
|
–
|
|
|
–
|
|
Increase
in inventories
|
|
(1,765
|
)
|
|
(2,017
|
)
|
|
|
(1,624
|
)
|
|
(1,959
|
)
|
|
(10
|
)
|
|
(4
|
)
|
Increase
(decrease) in accounts payable
|
|
(411
|
)
|
|
(2,665
|
)
|
|
|
444
|
|
|
(1,071
|
)
|
|
(669
|
)
|
|
(1,359
|
)
|
Increase
in GE progress collections
|
|
3,103
|
|
|
2,998
|
|
|
|
3,241
|
|
|
2,805
|
|
|
–
|
|
|
–
|
|
Provision
for losses on GECS financing receivables
|
|
4,453
|
|
|
3,132
|
|
|
|
–
|
|
|
–
|
|
|
4,453
|
|
|
3,132
|
|
All
other operating activities
|
|
(468
|
)
|
|
(1,052
|
)
|
|
|
1,127
|
|
|
1,574
|
|
|
(1,751
|
)
|
|
(3,000
|
)
|
Cash
from operating activities – continuing operations
|
|
27,804
|
|
|
24,126
|
|
|
|
13,635
|
|
|
16,667
|
|
|
18,144
|
|
|
14,215
|
|
Cash
from (used for) operating activities – discontinued
operations
|
|
497
|
|
|
4,099
|
|
|
|
(9
|
)
|
|
(856
|
)
|
|
506
|
|
|
4,757
|
|
Cash
from operating activities
|
|
28,301
|
|
|
28,225
|
|
|
|
13,626
|
|
|
15,811
|
|
|
18,650
|
|
|
18,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows – investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
to property, plant and equipment
|
|
(11,484
|
)
|
|
(12,115
|
)
|
|
|
(2,263
|
)
|
|
(2,025
|
)
|
|
(9,468
|
)
|
|
(10,334
|
)
|
Dispositions
of property, plant and equipment
|
|
7,286
|
|
|
7,218
|
|
|
|
–
|
|
|
–
|
|
|
7,286
|
|
|
7,218
|
|
Net
increase in GECS financing receivables
|
|
(26,898
|
)
|
|
(24,482
|
)
|
|
|
–
|
|
|
–
|
|
|
(28,359
|
)
|
|
(24,662
|
)
|
Proceeds
from sales of discontinued operations
|
|
5,423
|
|
|
11,457
|
|
|
|
203
|
|
|
10,826
|
|
|
5,220
|
|
|
–
|
|
Proceeds
from principal business dispositions
|
|
4,480
|
|
|
2,114
|
|
|
|
58
|
|
|
1,012
|
|
|
4,422
|
|
|
1,102
|
|
Payments
for principal businesses purchased
|
|
(27,042
|
)
|
|
(14,910
|
)
|
|
|
(2,053
|
)
|
|
(7,388
|
)
|
|
(24,989
|
)
|
|
(7,522
|
)
|
All
other investing activities
|
|
(3,283
|
)
|
|
(6,792
|
)
|
|
|
(56
|
)
|
|
(2,108
|
)
|
|
(2,948
|
)
|
|
(4,519
|
)
|
Cash
from (used for) investing activities – continuing
operations
|
|
(51,518
|
)
|
|
(37,510
|
)
|
|
|
(4,111
|
)
|
|
317
|
|
|
(48,836
|
)
|
|
(38,717
|
)
|
Cash
from (used for) investing activities – discontinued
operations
|
|
(616
|
)
|
|
(3,973
|
)
|
|
|
9
|
|
|
1,002
|
|
|
(625
|
)
|
|
(4,777
|
)
|
Cash
from (used for) investing activities
|
|
(52,134
|
)
|
|
(41,483
|
)
|
|
|
(4,102
|
)
|
|
1,319
|
|
|
(49,461
|
)
|
|
(43,494
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows – financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
decrease in borrowings (maturities of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90
days or less)
|
|
(18,298
|
)
|
|
(8,589
|
)
|
|
|
(1,719
|
)
|
|
(2,853
|
)
|
|
(16,949
|
)
|
|
(8,467
|
)
|
Newly
issued debt (maturities longer than 90 days)
|
|
99,373
|
|
|
81,450
|
|
|
|
122
|
|
|
4,663
|
|
|
99,228
|
|
|
76,834
|
|
Repayments
and other reductions (maturities longer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
than
90 days)
|
|
(45,055
|
)
|
|
(36,801
|
)
|
|
|
(145
|
)
|
|
(171
|
)
|
|
(44,910
|
)
|
|
(36,630
|
)
|
Net
purchases of GE shares for treasury
|
|
(1,678
|
)
|
|
(7,220
|
)
|
|
|
(1,678
|
)
|
|
(7,220
|
)
|
|
–
|
|
|
–
|
|
Dividends
paid to shareowners
|
|
(9,308
|
)
|
|
(8,651
|
)
|
|
|
(9,308
|
)
|
|
(8,651
|
)
|
|
(2,291
|
)
|
|
(5,871
|
)
|
All
other financing activities
|
|
(750
|
)
|
|
(1,068
|
)
|
|
|
–
|
|
|
–
|
|
|
(750
|
)
|
|
(1,068
|
)
|
Cash
from (used for) financing activities – continuing
operations
|
|
24,284
|
|
|
19,121
|
|
|
|
(12,728
|
)
|
|
(14,232
|
)
|
|
34,328
|
|
|
24,798
|
|
Cash
used for financing activities – discontinued operations
|
|
(4
|
)
|
|
(151
|
)
|
|
|
–
|
|
|
(146
|
)
|
|
(4
|
)
|
|
(5
|
)
|
Cash
from (used for) financing activities
|
|
24,280
|
|
|
18,970
|
|
|
|
(12,728
|
)
|
|
(14,378
|
)
|
|
34,324
|
|
|
24,793
|
|
Increase
(decrease) in cash and equivalents
|
|
447
|
|
|
5,712
|
|
|
|
(3,204
|
)
|
|
2,752
|
|
|
3,513
|
|
|
271
|
|
Cash
and equivalents at beginning of year
|
|
16,031
|
|
|
14,276
|
|
|
|
6,702
|
|
|
4,480
|
|
|
9,739
|
|
|
12,629
|
|
Cash
and equivalents at September 30
|
|
16,478
|
|
|
19,988
|
|
|
|
3,498
|
|
|
7,232
|
|
|
13,252
|
|
|
12,900
|
|
Less
cash and equivalents of discontinued operations at September
30
|
|
177
|
|
|
165
|
|
|
|
–
|
|
|
–
|
|
|
177
|
|
|
165
|
|
Cash
and equivalents of continuing operations at September 30
|
$
|
16,301
|
|
$
|
19,823
|
|
|
$
|
3,498
|
|
$
|
7,232
|
|
$
|
13,075
|
|
$
|
12,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Represents
the adding together of all affiliated companies except General Electric
Capital Services, Inc. (GECS or financial services) which is presented on
a one-line basis.
|
See
accompanying notes. Separate information is shown for “GE” and “Financial
Services (GECS).” Transactions between GE and GECS have been eliminated
from the “Consolidated” columns and are discussed in Note
17.
|
Summary
of Operating Segments
General
Electric Company and consolidated affiliates
|
Three
months ended
September
30 (Unaudited)
|
|
Nine
months ended
September
30 (Unaudited)
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology
Infrastructure
|
$
|
11,450
|
|
$
|
10,549
|
|
$
|
33,761
|
|
$
|
30,309
|
|
Energy
Infrastructure
|
|
9,769
|
|
|
7,386
|
|
|
27,164
|
|
|
21,251
|
|
Capital
Finance
|
|
17,292
|
|
|
16,979
|
|
|
52,242
|
|
|
48,447
|
|
NBC
Universal
|
|
5,073
|
|
|
3,756
|
|
|
12,539
|
|
|
10,865
|
|
Consumer
& Industrial
|
|
2,989
|
|
|
3,163
|
|
|
8,990
|
|
|
9,337
|
|
Total
segment revenues
|
|
46,573
|
|
|
41,833
|
|
|
134,696
|
|
|
120,209
|
|
Corporate
items and eliminations
|
|
661
|
|
|
679
|
|
|
1,606
|
|
|
3,746
|
|
Consolidated
revenues
|
$
|
47,234
|
|
$
|
42,512
|
|
$
|
136,302
|
|
$
|
123,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology
Infrastructure
|
$
|
1,900
|
|
$
|
1,869
|
|
$
|
5,657
|
|
$
|
5,408
|
|
Energy
Infrastructure
|
|
1,425
|
|
|
1,086
|
|
|
4,074
|
|
|
3,016
|
|
Capital
Finance
|
|
2,020
|
|
|
3,021
|
|
|
7,602
|
|
|
9,080
|
|
NBC
Universal
|
|
645
|
|
|
589
|
|
|
2,266
|
|
|
2,184
|
|
Consumer
& Industrial
|
|
47
|
|
|
255
|
|
|
329
|
|
|
780
|
|
Total
segment profit
|
|
6,037
|
|
|
6,820
|
|
|
19,928
|
|
|
20,468
|
|
Corporate
items and eliminations
|
|
(39
|
)
|
|
(600
|
)
|
|
(1,290
|
)
|
|
(1,403
|
)
|
GE
interest and other financial charges
|
|
(525
|
)
|
|
(473
|
)
|
|
(1,681
|
)
|
|
(1,428
|
)
|
GE
provision for income taxes
|
|
(996
|
)
|
|
(636
|
)
|
|
(2,735
|
)
|
|
(2,007
|
)
|
Earnings
from continuing operations
|
|
4,477
|
|
|
5,111
|
|
|
14,222
|
|
|
15,630
|
|
Earnings
(loss) from discontinued operations,
|
|
|
|
|
|
|
|
|
|
|
|
|
net
of taxes
|
|
(165
|
)
|
|
448
|
|
|
(534
|
)
|
|
(118
|
)
|
Consolidated
net earnings
|
$
|
4,312
|
|
$
|
5,559
|
|
$
|
13,688
|
|
$
|
15,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Segment
profit always excludes the effects of principal pension plans, results
reported as discontinued operations and accounting changes, and may
exclude matters such as charges for restructuring; rationalization and
other similar expenses; in-process research and development and certain
other acquisition-related charges and balances; technology and product
development costs; certain gains and losses from dispositions; and
litigation settlements or other charges, responsibility for which preceded
the current management team. Segment profit excludes or includes interest
and other financial charges and income taxes according to how a particular
segment’s management is measured – excluded in determining segment profit,
which we sometimes refer to as “operating profit,” for Technology
Infrastructure, Energy Infrastructure, NBC Universal and Consumer &
Industrial; included in determining segment profit, which we sometimes
refer to as “net earnings,” for Capital Finance.
|
See
accompanying notes to condensed, consolidated financial
statements.
|
Notes
to Condensed, Consolidated Financial Statements (Unaudited)
1.
Summary of Significant Accounting Policies
The
accompanying condensed, consolidated financial statements represent the
consolidation of General Electric Company and all companies that we directly or
indirectly control, either through majority ownership or otherwise. See Note 1
to the consolidated financial statements for the year ended December 31, 2007,
included in our Form 8-K dated October 8, 2008, which discusses our
consolidation and financial statement presentation. As used in this report on
Form 10-Q (Report) and in the financial statements included in our Form 8-K
dated October 8, 2008, “GE” represents the adding together of all affiliated
companies except General Electric Capital Services, Inc. (GECS or financial
services), which is presented on a one-line basis; GECS consists of General
Electric Capital Services, Inc. and all of its affiliates; and “Consolidated”
represents the adding together of GE and GECS with the effects of transactions
between the two eliminated. GE includes Technology Infrastructure, Energy
Infrastructure, NBC Universal and Consumer & Industrial. GECS includes
Capital Finance. We have reclassified certain prior-period amounts to conform to
the current-period’s presentation. Unless otherwise indicated, information in
these notes to condensed, consolidated financial statements relates to
continuing operations.
Our
accounting policy for sales of goods and services is included below. See Note 1
to the consolidated financial statements for the year ended December 31, 2007,
included in our Form 8-K dated October 8, 2008, for a summary of the remainder
of our significant accounting policies.
Sales
of goods and services
We
record all sales of goods and services only when a firm sales agreement is in
place, delivery has occurred or services have been rendered and collectibility
of the fixed or determinable sales price is reasonably assured. In addition, if
a sales agreement includes customer acceptance provisions, we recognize revenues
as follows:
·
|
In
arrangements where we provide equipment and software for trial and
evaluation purposes, we only recognize revenue after the customer accepts
the product as set forth in the contract. In rare instances, we offer
acceptance provisions that lapse over time. In these instances, we only
recognize revenue upon the earlier of customer acceptance or after the
specified time elapses.
|
·
|
If
a sales agreement includes general return rights, revenue is deferred
until the return rights lapse unless future returns can be reasonably
estimated, in which case revenue is recognized and an allowance is
recorded for the returns.
|
·
|
In
situations where acceptance provisions are based on seller-specified
objective criteria, we recognize revenue only after we have demonstrated
that the delivered product meets those
specifications.
|
·
|
If
a sales agreement includes customer-specified objective criteria, we
recognize revenue when formal acceptance occurs or we have reliably
demonstrated that all specified customer acceptance criteria have been
met.
|
Sales
of goods in the Consumer & Industrial segment typically do not include
multiple product and/or service elements. In contrast, sales of goods in the
Technology Infrastructure and Energy Infrastructure segments sometimes include
multiple components. Our arrangements with multiple components usually involve
future service deliverables such as installation, training or the future
delivery of ancillary equipment. In such agreements, the amount assigned to each
component is based on the total price and the undelivered component’s
objectively determined fair value, determined from sources such as the separate
selling price for that or a similar component or from competitor prices for
similar components. If fair value of an undelivered component cannot be
satisfactorily determined, we defer revenue until all multiple components are
delivered.
Certain
of our sales of products and services involve inconsequential or perfunctory
performance obligations. These obligations can include non-essential
installation or training, non-essential third party supplied items related to
sales of healthcare devices, commissioning services related to the sales of
locomotives, and provision of product manuals and limited technical product
support. We consider these obligations to be inconsequential and perfunctory as
their fair value is relatively insignificant relative to the related revenue; we
have a demonstrated history of completing the remaining tasks in a timely
manner; the work can be performed by customers or other contractors; and in the
event that we were to fail to complete the remaining obligations under the sales
contract, we do not have a refund obligation. When the only remaining
undelivered performance obligation under an arrangement is inconsequential or
perfunctory, we recognize revenue on the total contract and provide for the cost
of the unperformed obligation.
Except
for goods sold under long-term agreements, we recognize sales of goods under the
provisions of U.S. Securities and Exchange Commission (SEC) Staff Accounting
Bulletin (SAB) 104, Revenue
Recognition. Among other things, we recognize such sales when we have no
risk of transit damage, a policy that in certain cases requires us to delay
recognition of otherwise qualified sales until the goods have been physically
delivered. We often sell consumer products, home videos and computer hardware
and software products with a right of return. We use our accumulated experience
to estimate and provide for such returns when we record the sale. Unless
otherwise noted, we do not provide for anticipated losses before we record
sales.
We
account for revenue recognition on agreements for sales of goods and services
under power generation unit and uprate contracts; nuclear fuel assemblies;
larger oil drilling equipment projects; turbo-machinery unit contracts; military
development contracts; and long-term construction projects, including
construction of information technology systems in our Healthcare business, under
AICPA Statement of Position (SOP) 81-1, Accounting for Performance of
Construction-Type and Certain Production-Type Contracts. Under SOP 81-1,
we estimate total contract revenue net of price concessions as well as total
contract costs. For goods sold under power generation unit and uprate contracts,
nuclear fuel assemblies, turbo-machinery unit contracts and military development
contracts, we recognize sales as we complete major contract-specified
deliverables, most often when customers receive title to the goods or accept the
services as performed. For larger oil drilling equipment projects and long-term
construction projects, we recognize sales based on our progress towards contract
completion measured by actual costs incurred in relation to our estimate of
total expected costs. We measure SOP 81-1 revenues by applying our
contract-specific estimated margin rates to incurred costs. We routinely update
our estimates of future costs for agreements in process and report any
cumulative effects of such adjustments in current operations. We provide for any
loss that we expect to incur on these agreements when that loss is
probable.
We
recognize revenue upon delivery for sales of aircraft engines, military
propulsion equipment and related spare parts not sold under long-term product
services agreements. Delivery of large and small commercial engines, non-U.S.
military equipment and all related spare parts occurs on shipment; delivery of
military propulsion equipment sold to the U.S. Government or agencies thereof
occurs upon receipt of a Material Inspection and Receiving Report, DD Form 250
or Memorandum of Shipment. Large commercial engines (CF6, CFM56, GE90, GEnx and
GP7000) are complex aerospace equipment manufactured to customer order under a
variety of sometimes-complex, long-term agreements. We measure sales of large
commercial engines by applying our contract-specific estimated margin rates to
incurred costs. We routinely update our estimates of future costs for large
commercial engine agreements in process and report any cumulative effects of
such adjustments in current operations. We measure revenue for small aircraft
engines, military propulsion equipment and spare parts not subject to long-term
product services agreements based on the specific contract on a
specifically-measured output basis. We provide for any loss that we expect to
incur on these agreements when that loss is probable; consistent with industry
practice, for commercial engines, we make such provision only if such losses are
not recoverable from future highly probable sales of spare parts for those
engines.
We
sell product services under long-term agreements in our Technology
Infrastructure and Energy Infrastructure segments, principally in Aviation,
Energy and Transportation, where costs of performing services are incurred on
other than a straight-line basis. We also sell product services in Healthcare,
where such costs are expected to be on a straight-line basis. All of these
agreements are accounted for under Financial Accounting Standards Board (FASB)
Technical Bulletin (FTB) 90-1, Accounting for Separately Priced
Extended Warranty and Product Maintenance Contracts. For the Aviation,
Energy and Transportation FTB 90-1 agreements, we recognize related sales based
on the extent of our progress towards completion measured by actual costs
incurred in relation to total expected costs. We routinely update our estimates
of future costs for agreements in process and report any cumulative effects of
such adjustments in current operations. For the Healthcare FTB 90-1 agreements,
we recognize revenues on a straight-line basis and expense related costs as
incurred. We provide for any loss that we expect to incur on any of these
agreements when that loss is probable.
NBC
Universal records broadcast and cable television and Internet advertising sales
when advertisements are aired, net of provision for any viewer shortfalls (make
goods). We record sales from theatrical distribution of films as the films are
exhibited; sales of home videos, net of a return provision, when the videos are
delivered to and available for sale by retailers; fees from cable/satellite
operators when services are provided; and licensing of film and television
programming when we make the material available for airing.
Accounting
changes
On
January 1, 2008, we adopted FASB Statement of Financial Accounting Standards
(SFAS) 157, Fair Value
Measurements, and SFAS 159, The Fair Value Option for Financial
Assets and Financial Liabilities, which are more fully discussed in Note
14 to the condensed, consolidated financial statements.
2.
Interim Period Presentation
The
condensed, consolidated financial statements and notes thereto are unaudited.
These statements include all adjustments (consisting of normal recurring
accruals) that we considered necessary to present a fair statement of our
results of operations, financial position and cash flows. The results reported
in these condensed, consolidated financial statements should not be regarded as
necessarily indicative of results that may be expected for the entire year. It
is suggested that these condensed, consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in our Form
8-K dated October 8, 2008. We label our quarterly information using a calendar
convention, that is, first quarter is labeled as ending on March 31, second
quarter as ending on June 30, and third quarter as ending on September 30. It is
our longstanding practice to establish interim quarterly closing dates using a
fiscal calendar, which requires our businesses to close their books on either a
Saturday or Sunday, depending on the business. The effects of this practice are
modest and only exist within a reporting year. The fiscal closing calendar from
1993 through 2013 is available on our website,
www.ge.com/secreports.
3.
Discontinued Operations
Discontinued
operations is comprised of our Japanese personal loan business (Lake) and our
Japanese mortgage and card businesses, excluding our minority ownership in GE
Nissen Credit Co., Ltd. (GE Money Japan), our U.S. mortgage business (WMC),
Plastics, Advanced Materials, GE Life, Genworth Financial, Inc. (Genworth) and
most of GE Insurance Solutions Corporation (GE Insurance Solutions). Associated
results of operations, financial position and cash flows are separately reported
as discontinued operations for all periods presented.
GE
Money Japan
During
the third quarter of 2007, we committed to a plan to sell Lake upon determining
that, despite restructuring, Japanese regulatory limits for interest charges on
unsecured personal loans did not permit us to earn an acceptable return. During
the second quarter of 2008, we committed to sell GE Money Japan, resulting in
the addition of our Japanese mortgage and card businesses to discontinued
operations. Subsequent to the end of the second quarter, we reached an agreement
to sell these businesses and completed the sale during the third quarter of
2008. In connection with this agreement, and primarily related to our Japanese
mortgage and card businesses, we recorded an incremental $247 million impairment
loss in the first nine months of 2008. Under this agreement, the sale proceeds
will be increased or reduced to reflect our portion of actual interest refund
claims based on terms specified in the agreement. GE Money Japan revenues from
discontinued operations were $209 million and $298 million in the third quarters
of 2008 and 2007, respectively, and $760 million and $1,017 million in the first
nine months of 2008 and 2007, respectively. In total, GE Money Japan losses from
discontinued operations, net of taxes, were $160 million and $1,030 million in
the third quarters of 2008 and 2007, respectively, and $508 million and $1,077
million in the first nine months of 2008 and 2007, respectively.
WMC
During
the fourth quarter of 2007, we completed the sale of our U.S. mortgage business.
In connection with the transaction, WMC retained certain obligations related to
loans sold prior to the disposal of the business, including WMC’s contractual
obligations to repurchase previously sold loans as to which there was an early
payment default or with respect to which certain contractual representations and
warranties were not met. Reserves related to these obligations were $224 million
at September 30, 2008. The amount of these reserves is based upon pending and
estimated future loan repurchase requests, the estimated percentage of loans
validly tendered for repurchase, and our estimated losses on loans repurchased.
Based on our historical experience, we estimate that a small percentage of the
total loans we originated and sold will be tendered for repurchase, and of those
tendered, only a limited amount will qualify as “validly tendered,” meaning the
loans sold did not satisfy specified contractual obligations. The amount of our
current reserve represents our best estimate of losses with respect to our
repurchase obligations. However, actual losses could exceed our reserve amount,
if actual claim rates, valid tenders or losses we incur on repurchased loans,
are higher than historically observed. WMC revenues from discontinued operations
were $(7) million and $(431) million in the third quarters of 2008 and 2007,
respectively, and $(64) million and $(1,291) million in the first nine months of
2008 and 2007, respectively. In total, WMC’s losses from discontinued
operations, net of taxes, were $8 million and $332 million in the third quarters
of 2008 and 2007, respectively, and $35 million and $916 million in the first
nine months of 2008 and 2007, respectively.
Plastics
and Advanced Materials
During
the third quarter of 2007, we completed the sale of our Plastics business to
Saudi Basic Industries Corporation. Also, during the fourth quarter of 2006, we
sold our Advanced Materials business. Plastics revenues from discontinued
operations were $1,001 million in the third quarter of 2007 and $4,286 million
in the first nine months of 2007. In total, Plastics and Advanced Materials
earnings from discontinued operations, net of taxes, were $5 million and $1,800
million in the third quarters of 2008 and 2007, respectively, and $34 million
and $1,868 million in the first nine months of 2008 and 2007,
respectively.
Insurance
In
total, earnings (losses) from insurance-related discontinued operations, net of
taxes, were $(2) million and $10 million in the third quarters of 2008 and 2007,
respectively, and $(25) million and $7 million in the first nine months of 2008
and 2007, respectively.
Summarized
financial information for discontinued GE industrial operations is shown
below.
|
Three
months ended
September
30
|
|
Nine
months ended
September
30
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
|
–
|
|
$
|
1,001
|
|
$
|
–
|
|
$
|
4,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
before
income taxes
|
$
|
10
|
|
$
|
28
|
|
$
|
–
|
|
$
|
238
|
|
Income
tax benefit (expense)
|
|
(4
|
)
|
|
61
|
|
|
16
|
|
|
69
|
|
Earnings
from discontinued operations before
|
|
|
|
|
|
|
|
|
|
|
|
|
disposal,
net of taxes
|
$
|
6
|
|
$
|
89
|
|
$
|
16
|
|
$
|
307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disposal
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
(loss) on disposal before income taxes
|
$
|
(1
|
)
|
$
|
2,554
|
|
$
|
18
|
|
$
|
2,363
|
|
Income
tax expense
|
|
–
|
|
|
(843
|
)
|
|
–
|
|
|
(802
|
)
|
Gain
(loss) on disposal, net of taxes
|
$
|
(1
|
)
|
$
|
1,711
|
|
$
|
18
|
|
$
|
1,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
from discontinued operations, net of taxes(a)
|
$
|
5
|
|
$
|
1,800
|
|
$
|
34
|
|
$
|
1,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The
sum of GE industrial earnings from discontinued operations, net of taxes,
and GECS loss from discontinued operations, net of taxes, below are
reported as GE industrial earnings (loss) from discontinued operations,
net of taxes, on the Condensed Statement of
Earnings.
|
Assets
of GE industrial discontinued operations were $66 million at December 31, 2007.
There were no such assets at September 30, 2008. Liabilities of GE industrial
discontinued operations were $188 million and $302 million at September 30,
2008, and December 31, 2007, respectively, and primarily represent taxes payable
and pension liabilities related to the sale of our Plastics
business.
Summarized
financial information for discontinued GECS operations is shown
below.
|
Three
months ended
September
30
|
|
Nine
months ended
September
30
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
|
202
|
|
$
|
(133
|
)
|
$
|
696
|
|
$
|
(274
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from discontinued operations before
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes
|
$
|
(207
|
)
|
$
|
(615
|
)
|
$
|
(516
|
)
|
$
|
(1,929
|
)
|
Income
tax benefit
|
|
50
|
|
|
184
|
|
|
193
|
|
|
863
|
|
Loss
from discontinued operations,
|
|
|
|
|
|
|
|
|
|
|
|
|
net
of taxes
|
$
|
(157
|
)
|
$
|
(431
|
)
|
$
|
(323
|
)
|
$
|
(1,066
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disposal
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
on disposal before income taxes
|
$
|
(1,277
|
)
|
$
|
(1,549
|
)
|
$
|
(1,499
|
)
|
$
|
(1,560
|
)
|
Income
tax benefit
|
|
1,264
|
|
|
628
|
|
|
1,254
|
|
|
640
|
|
Loss
on disposal, net of taxes
|
$
|
(13
|
)
|
$
|
(921
|
)
|
$
|
(245
|
)
|
$
|
(920
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from discontinued operations, net of taxes
|
$
|
(170
|
)
|
$
|
(1,352
|
)
|
$
|
(568
|
)
|
$
|
(1,986
|
)
|
|
At
|
(In
millions)
|
September
30,
2008
|
|
December
31,
2007
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash
and equivalents
|
$
|
177
|
|
$
|
300
|
|
Financing
receivables – net
|
|
–
|
|
|
6,675
|
|
Other
|
|
1,061
|
|
|
1,848
|
|
Assets
of discontinued operations
|
$
|
1,238
|
|
$
|
8,823
|
|
|
At
|
(In
millions)
|
September
30,
2008
|
|
December
31,
2007
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Liabilities
of discontinued operations
|
$
|
743
|
|
$
|
1,692
|
|
4.
GECS Revenues from Services
GECS
revenues from services are summarized in the following table.
|
Three
months ended
September
30
|
|
Nine
months ended
September
30
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on loans
|
$
|
7,198
|
|
$
|
6,075
|
|
$
|
20,426
|
|
$
|
17,438
|
|
Equipment
leased to others
|
|
3,967
|
|
|
3,754
|
|
|
11,686
|
|
|
11,207
|
|
Fees
|
|
1,989
|
|
|
1,661
|
|
|
4,798
|
|
|
4,871
|
|
Investment
income(a)
|
|
604
|
|
|
1,016
|
|
|
2,562
|
|
|
3,630
|
|
Financing
leases
|
|
1,107
|
|
|
1,136
|
|
|
3,456
|
|
|
3,489
|
|
Real
estate investments
|
|
803
|
|
|
1,364
|
|
|
3,102
|
|
|
3,420
|
|
Premiums
earned by insurance activities
|
|
554
|
|
|
583
|
|
|
1,664
|
|
|
1,653
|
|
Associated
companies
|
|
560
|
|
|
663
|
|
|
1,676
|
|
|
1,678
|
|
Gross
securitization gains
|
|
265
|
|
|
368
|
|
|
859
|
|
|
1,479
|
|
Other
items
|
|
805
|
|
|
1,169
|
|
|
3,798
|
|
|
3,443
|
|
Total
|
$
|
17,852
|
|
$
|
17,789
|
|
$
|
54,027
|
|
$
|
52,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Included
gain on sale of Swiss Reinsurance Company common stock of $566 million
during first quarter of 2007.
|
5.
Postretirement Benefit Plans
We
sponsor a number of pension and retiree health and life insurance benefit plans.
Principal pension plans include the GE Pension Plan and the GE Supplementary
Pension Plan. Principal retiree benefit plans generally provide health and life
insurance benefits to employees who retire under the GE Pension Plan with 10 or
more years of service. Other pension plans include the U.S. and non-U.S. pension
plans with pension assets or obligations greater than $50 million. Smaller
pension plans and other retiree benefit plans are not material individually or
in the aggregate. The effect on operations of the pension plans
follows.
|
Principal
Pension Plans
|
|
|
Three
months ended
September
30
|
|
Nine
months ended
September
30
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected
return on plan assets
|
$
|
(1,075
|
)
|
$
|
(986
|
)
|
$
|
(3,225
|
)
|
$
|
(2,959
|
)
|
Service
cost for benefits earned
|
|
314
|
|
|
389
|
|
|
934
|
|
|
1,009
|
|
Interest
cost on benefit obligation
|
|
663
|
|
|
599
|
|
|
1,988
|
|
|
1,810
|
|
Prior
service cost amortization
|
|
80
|
|
|
76
|
|
|
242
|
|
|
195
|
|
Net
actuarial loss amortization
|
|
60
|
|
|
173
|
|
|
181
|
|
|
524
|
|
Pension
plans cost
|
$
|
42
|
|
$
|
251
|
|
$
|
120
|
|
$
|
579
|
|
|
Other
Pension Plans
|
|
|
Three
months ended
September
30
|
|
Nine
months ended
September
30
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected
return on plan assets
|
$
|
(135
|
)
|
$
|
(127
|
)
|
$
|
(412
|
)
|
$
|
(369
|
)
|
Service
cost for benefits earned
|
|
81
|
|
|
97
|
|
|
243
|
|
|
269
|
|
Interest
cost on benefit obligation
|
|
123
|
|
|
117
|
|
|
374
|
|
|
340
|
|
Prior
service cost amortization
|
|
3
|
|
|
2
|
|
|
9
|
|
|
5
|
|
Net
actuarial loss amortization
|
|
21
|
|
|
47
|
|
|
64
|
|
|
130
|
|
Pension
plans cost
|
$
|
93
|
|
$
|
136
|
|
$
|
278
|
|
$
|
375
|
|
The
effect on operations of principal retiree health and life insurance plans
follows.
|
Principal
Retiree Health and
Life
Insurance Plans
|
|
|
Three
months ended
September
30
|
|
Nine
months ended
September
30
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected
return on plan assets
|
$
|
(32
|
)
|
$
|
(31
|
)
|
$
|
(98
|
)
|
$
|
(93
|
)
|
Service
cost for benefits earned
|
|
71
|
|
|
120
|
|
|
214
|
|
|
196
|
|
Interest
cost on benefit obligation
|
|
182
|
|
|
163
|
|
|
568
|
|
|
388
|
|
Prior
service cost amortization
|
|
168
|
|
|
187
|
|
|
504
|
|
|
420
|
|
Net
actuarial gain amortization
|
|
(23
|
)
|
|
–
|
|
|
(26
|
)
|
|
(15
|
)
|
Retiree
benefit plans cost
|
$
|
366
|
|
$
|
439
|
|
$
|
1,162
|
|
$
|
896
|
|
6.
Income Taxes
The
balance of “unrecognized tax benefits,” the amount of related interest and
penalties we have provided and what we believe to be the range of reasonably
possible changes in the next 12 months, were:
|
At
|
(In
millions)
|
September
30,
2008
|
|
December
31,
2007
|
|
|
|
|
|
|
|
Unrecognized
tax benefits
|
$
|
6,484
|
|
$
|
6,331
|
|
Portion
that, if recognized, would reduce tax expense and effective tax rate(a)
|
|
4,177
|
|
|
4,268
|
|
Accrued
interest on unrecognized tax benefits
|
|
1,179
|
|
|
923
|
|
Accrued
penalties on unrecognized tax benefits
|
|
103
|
|
|
77
|
|
Reasonably
possible reduction to the balance of unrecognized tax
benefits
|
|
|
|
|
|
|
in
succeeding 12 months
|
|
0-1,500
|
|
|
0-1,500
|
|
Portion
that, if recognized, would reduce tax expense and effective tax rate(a)
|
|
0-1,150
|
|
|
0-1,250
|
|
|
|
|
|
|
|
|
(a)
|
Some
portion of such reduction might be reported as discontinued
operations.
|
The
IRS is currently auditing our consolidated income tax returns for 2003-2007. In
addition, certain other U.S. tax deficiency issues and refund claims for
previous years remain unresolved. It is reasonably possible that the 2003-2005
U.S. audit cycle will be completed during the next 12 months, which could result
in a decrease in our balance of unrecognized tax benefits. We believe that there
are no other jurisdictions in which the outcome of unresolved issues or claims
is likely to be material to our results of operations, financial position or
cash flows. We further believe that we have made adequate provision for all
income tax uncertainties.
7.
Earnings Per Share Information
GE’s
authorized common stock consists of 13,200,000,000 shares having a par value of
$0.06 each. Information related to the calculation of earnings per share
follows.
|
Three
months ended September 30
|
|
|
2008
|
|
2007
|
|
(In
millions; per-share amounts in dollars)
|
Diluted
|
|
Basic
|
|
Diluted
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
from continuing operations for
|
|
|
|
|
|
|
|
|
|
|
|
|
per-share
calculation(a)
|
$
|
4,478
|
|
$
|
4,477
|
|
$
|
5,111
|
|
$
|
5,111
|
|
Earnings
(loss) from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
for
per-share calculation
|
$
|
(165
|
)
|
$
|
(165
|
)
|
$
|
448
|
|
$
|
448
|
|
Net
earnings available for per-share calculation
|
$
|
4,313
|
|
$
|
4,312
|
|
$
|
5,559
|
|
$
|
5,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
equivalent shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
of GE common stock outstanding
|
|
9,953
|
|
|
9,953
|
|
|
10,177
|
|
|
10,177
|
|
Employee
compensation-related shares,
|
|
|
|
|
|
|
|
|
|
|
|
|
including
stock options
|
|
17
|
|
|
-
|
|
|
38
|
|
|
-
|
|
Total
average equivalent shares
|
|
9,970
|
|
|
9,953
|
|
|
10,215
|
|
|
10,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per-share
amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
from continuing operations
|
$
|
0.45
|
|
$
|
0.45
|
|
$
|
0.50
|
|
$
|
0.50
|
|
Earnings
(loss) from discontinued operations
|
$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
$
|
0.04
|
|
$
|
0.04
|
|
Net
earnings
|
$
|
0.43
|
|
$
|
0.43
|
|
$
|
0.54
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Including
dividend equivalents.
|
|
Nine
months ended September 30
|
|
|
2008
|
|
2007
|
|
(In
millions; per-share amounts in dollars)
|
Diluted
|
|
Basic
|
|
Diluted
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
from continuing operations for
|
|
|
|
|
|
|
|
|
|
|
|
|
per-share
calculation(a)
|
$
|
14,223
|
|
$
|
14,222
|
|
$
|
15,631
|
|
$
|
15,630
|
|
Loss
from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
for
per-share calculation
|
$
|
(534
|
)
|
$
|
(534
|
)
|
$
|
(118
|
)
|
$
|
(118
|
)
|
Net
earnings available for per-share calculation
|
$
|
13,689
|
|
$
|
13,688
|
|
$
|
15,512
|
|
$
|
15,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
equivalent shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
of GE common stock outstanding
|
|
9,965
|
|
|
9,965
|
|
|
10,230
|
|
|
10,230
|
|
Employee
compensation-related shares,
|
|
|
|
|
|
|
|
|
|
|
|
|
including
stock options
|
|
24
|
|
|
-
|
|
|
36
|
|
|
-
|
|
Total
average equivalent shares
|
|
9,989
|
|
|
9,965
|
|
|
10,266
|
|
|
10,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per-share
amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
from continuing operations
|
$
|
1.42
|
|
$
|
1.43
|
|
$
|
1.52
|
|
$
|
1.53
|
|
Loss
from discontinued operations
|
$
|
(0.05
|
)
|
$
|
(0.05
|
)
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
Net
earnings
|
$
|
1.37
|
|
$
|
1.37
|
|
$
|
1.51
|
|
$
|
1.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Including
dividend equivalents.
|
Earnings-per-share
amounts are computed independently for earnings from continuing operations,
earnings (loss) from discontinued operations and net earnings. As a result, the
sum of per-share amounts from continuing operations and discontinued operations
may not equal the total per-share amounts for net earnings. Additionally,
earnings-per-share amounts are computed independently for each quarter. As a
result, the sum of the per-share amounts for each quarter may not equal the
year-to-date amounts.
8.
Inventories
Inventories
consisted of the following.
|
At
|
(In
millions)
|
September
30,
2008
|
|
December
31,
2007
|
|
|
|
|
|
|
|
Raw
materials and work in process
|
$
|
9,343
|
|
$
|
7,893
|
|
Finished
goods
|
|
5,364
|
|
|
5,088
|
|
Unbilled
shipments
|
|
649
|
|
|
539
|
|
|
|
15,356
|
|
|
13,520
|
|
Less
revaluation to LIFO
|
|
(637
|
)
|
|
(623
|
)
|
Total
|
$
|
14,719
|
|
$
|
12,897
|
|
9.
GECS Financing Receivables
GECS
financing receivables - net, consisted of
the following.
|
At
|
(In
millions)
|
September
30,
2008
|
|
December
31,
2007
|
|
|
|
|
|
|
|
Loans,
net of deferred income
|
$
|
352,949
|
|
$
|
313,290
|
|
Investment
in financing leases, net of deferred income
|
|
73,487
|
|
|
75,015
|
|
|
|
426,436
|
|
|
388,305
|
|
Less
allowance for losses (Note 10)
|
|
(4,648
|
)
|
|
(4,238
|
)
|
Financing
receivables – net(a)
|
$
|
421,788
|
|
$
|
384,067
|
|
|
|
|
|
|
|
|
(a)
|
Included
$7,172 million and $9,708 million related to consolidated, liquidating
securitization entities at September 30, 2008, and December 31, 2007,
respectively.
|
Details
of GECS financing receivables – net follow.
|
At
|
(In
millions)
|
September
30,
2008
|
|
December
31,
2007
|
|
|
|
|
|
|
|
Commercial
Lending and Leasing (CLL)
|
|
|
|
|
|
|
Equipment
and leasing and other
|
$
|
109,906
|
|
$
|
96,817
|
|
Commercial
and industrial
|
|
69,133
|
|
|
58,863
|
|
|
|
179,039
|
|
|
155,680
|
|
|
|
|
|
|
|
|
Real
Estate
|
|
48,090
|
|
|
32,228
|
|
|
|
|
|
|
|
|
GE
Money
|
|
|
|
|
|
|
Non-U.S.
residential mortgages(a)
|
|
72,117
|
|
|
73,042
|
|
Non-U.S.
installment and revolving credit
|
|
33,554
|
|
|
34,669
|
|
U.S.
installment and revolving credit
|
|
29,058
|
|
|
27,914
|
|
Non-U.S.
auto
|
|
24,281
|
|
|
27,368
|
|
Other
|
|
12,009
|
|
|
10,198
|
|
|
|
171,019
|
|
|
173,191
|
|
|
|
|
|
|
|
|
GECAS(b)
|
|
15,483
|
|
|
14,197
|
|
|
|
|
|
|
|
|
Energy
Financial Services
|
|
8,613
|
|
|
7,898
|
|
|
|
|
|
|
|
|
Other(c)
|
|
4,192
|
|
|
5,111
|
|
|
|
426,436
|
|
|
388,305
|
|
Less
allowance for losses
|
|
(4,648
|
)
|
|
(4,238
|
)
|
Total
|
$
|
421,788
|
|
$
|
384,067
|
|
|
|
|
|
|
|
|
(a)
|
At
September 30, 2008, net of credit insurance, approximately 26% of this
portfolio comprised loans with introductory, below market rates that are
scheduled to adjust at future dates; with high loan-to-value ratios at
inception; whose terms permitted interest-only payments; or whose terms
resulted in negative amortization. At the origination date, all of these
loans were underwritten to the reset value.
|
|
(b)
|
Included
loans and financing leases of $13,101 million and $11,685 million at
September 30, 2008, and December 31, 2007, respectively, related to
commercial aircraft at Aviation Financial Services.
|
|
(c)
|
Included
loans and financing leases of $4,192 million and $5,106 million at
September 30, 2008, and December 31, 2007, respectively, related to
certain consolidated, liquidating securitization entities.
|
|
10.
GECS Allowance for Losses on Financing Receivables
|
Balance
January
1,
2008
|
|
Provision
charged
to
operations
|
|
Currency
exchange
|
|
Other(a)
|
|
Gross
write-offs
|
|
Recoveries
|
|
Balance
September
30,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment
and leasing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
other
|
$
|
661
|
|
$
|
391
|
|
$
|
4
|
|
$
|
88
|
|
$
|
(536
|
)
|
$
|
69
|
|
$
|
677
|
|
Commercial
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
industrial
|
|
276
|
|
|
233
|
|
|
(10
|
)
|
|
5
|
|
|
(164
|
)
|
|
12
|
|
|
352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
Estate
|
|
168
|
|
|
47
|
|
|
(4
|
)
|
|
8
|
|
|
(10
|
)
|
|
1
|
|
|
210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GE
Money
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-U.S.
residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
mortgages
|
|
246
|
|
|
147
|
|
|
(20
|
)
|
|
5
|
|
|
(135
|
)
|
|
52
|
|
|
295
|
|
Non-U.S.
installment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
revolving credit
|
|
1,371
|
|
|
1,259
|
|
|
(51
|
)
|
|
(6
|
)
|
|
(1,968
|
)
|
|
722
|
|
|
1,327
|
|
U.S.
installment and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
revolving
credit
|
|
985
|
|
|
1,908
|
|
|
–
|
|
|
(416
|
)
|
|
(1,477
|
)
|
|
215
|
|
|
1,215
|
|
Non-U.S.
auto
|
|
324
|
|
|
260
|
|
|
(19
|
)
|
|
(40
|
)
|
|
(479
|
)
|
|
225
|
|
|
271
|
|
Other
|
|
162
|
|
|
131
|
|
|
(3
|
)
|
|
31
|
|
|
(182
|
)
|
|
54
|
|
|
193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GECAS
|
|
8
|
|
|
47
|
|
|
–
|
|
|
–
|
|
|
(1
|
)
|
|
–
|
|
|
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
19
|
|
|
12
|
|
|
–
|
|
|
3
|
|
|
–
|
|
|
–
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
18
|
|
|
18
|
|
|
–
|
|
|
(1
|
)
|
|
(15
|
)
|
|
–
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
4,238
|
|
$
|
4,453
|
|
$
|
(103
|
)
|
$
|
(323
|
)
|
$
|
(4,967
|
)
|
$
|
1,350
|
|
$
|
4,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Other
primarily included the effects of acquisitions and securitization
activity.
|
11.
Property, Plant and Equipment
Property,
plant and equipment (including equipment leased to others) – net, consisted of
the following.
|
At
|
(In
millions)
|
September
30,
2008
|
|
December
31,
2007
|
|
|
|
|
|
|
|
Original
cost
|
$
|
127,594
|
|
$
|
119,571
|
|
Less
accumulated depreciation and amortization
|
|
(47,499
|
)
|
|
(41,683
|
)
|
Property,
plant and equipment (including equipment leased to others) -
net
|
$
|
80,095
|
|
$
|
77,888
|
|
12.
Goodwill and Other Intangible Assets
Goodwill
and other intangible assets – net, consisted of the following.
|
At
|
(In
millions)
|
September
30,
2008
|
|
December
31,
2007
|
|
|
|
|
|
|
|
Goodwill
|
$
|
83,061
|
|
$
|
81,116
|
|
|
|
|
|
|
|
|
Other
intangible assets
|
|
|
|
|
|
|
Intangible
assets subject to amortization
|
$
|
13,103
|
|
$
|
13,787
|
|
Indefinite-lived
intangible assets(a)
|
|
2,490
|
|
|
2,355
|
|
Total
|
$
|
15,593
|
|
$
|
16,142
|
|
|
|
|
|
|
|
|
(a)
|
Indefinite-lived
intangible assets principally comprised trademarks, tradenames and U.S.
Federal Communications Commission
licenses.
|
Changes
in goodwill balances follow.
(In
millions)
|
Balance
January
1,
2008
|
|
Acquisitions/
purchase
accounting
adjustments
|
|
Dispositions,
currency
exchange
and
other
|
|
Balance
September
30,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology
Infrastructure
|
$
|
26,130
|
|
|
$
|
555
|
|
|
|
$
|
(216
|
)
|
|
$
|
26,469
|
|
Energy
Infrastructure
|
|
9,960
|
|
|
|
782
|
|
|
|
|
(276
|
)
|
|
|
10,466
|
|
Capital
Finance
|
|
25,427
|
|
|
|
1,729
|
|
|
|
|
(837
|
)
|
|
|
26,319
|
|
NBC
Universal
|
|
18,733
|
|
|
|
403
|
|
|
|
|
(155
|
)
|
|
|
18,981
|
|
Consumer
& Industrial
|
|
866
|
|
|
|
–
|
|
|
|
|
(40
|
)
|
|
|
826
|
|
Total
|
$
|
81,116
|
|
|
$
|
3,469
|
|
|
|
$
|
(1,524
|
)
|
|
$
|
83,061
|
|
Goodwill
balances increased $2,712 million from new acquisitions. The most significant
increases related to acquisitions of Hydril Pressure Control ($689 million at
Energy Infrastructure), Merrill Lynch Capital ($608 million at Capital Finance),
Whatman Plc. ($587 million at Technology Infrastructure), Bank BPH ($399 million
at Capital Finance) and CDM Resource Management, Ltd. ($229 million at Capital
Finance). During 2008, the goodwill balance increased by $757 million related to
purchase accounting adjustments to prior-year acquisitions. The most significant
of these adjustments were increases of $211 million and $176 million associated
with the 2007 acquisitions of Oxygen Media Corp. by NBC Universal and Sanyo
Electric Credit Co., Ltd. by Capital Finance, respectively. In 2008, goodwill
balances decreased $870 million as a result of the stronger U.S.
dollar.
Intangible
assets subject to amortization
|
At
|
|
|
September
30, 2008
|
|
December
31, 2007
|
|
(In
millions)
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer-related
|
$
|
6,560
|
|
|
$
|
(1,576
|
)
|
|
$
|
4,984
|
|
$
|
6,921
|
|
|
$
|
(1,567
|
)
|
|
$
|
5,354
|
|
Patents,
licenses and trademarks
|
|
5,501
|
|
|
|
(2,156
|
)
|
|
|
3,345
|
|
|
4,989
|
|
|
|
(1,678
|
)
|
|
|
3,311
|
|
Capitalized
software
|
|
6,939
|
|
|
|
(4,240
|
)
|
|
|
2,699
|
|
|
6,405
|
|
|
|
(3,684
|
)
|
|
|
2,721
|
|
Lease
valuations
|
|
1,771
|
|
|
|
(521
|
)
|
|
|
1,250
|
|
|
1,841
|
|
|
|
(360
|
)
|
|
|
1,481
|
|
Present
value of future profits
|
|
831
|
|
|
|
(393
|
)
|
|
|
438
|
|
|
818
|
|
|
|
(364
|
)
|
|
|
454
|
|
All
other
|
|
729
|
|
|
|
(342
|
)
|
|
|
387
|
|
|
783
|
|
|
|
(317
|
)
|
|
|
466
|
|
Total
|
$
|
22,331
|
|
|
$
|
(9,228
|
)
|
|
$
|
13,103
|
|
$
|
21,757
|
|
|
$
|
(7,970
|
)
|
|
$
|
13,787
|
|
Consolidated
amortization related to intangible assets subject to amortization was $445
million and $546 million for the quarters ended September 30, 2008 and 2007,
respectively. Consolidated amortization related to intangible assets subject to
amortization for the nine months ended September 30, 2008 and 2007, was $1,469
million and $1,459 million, respectively.
13.
GECS Borrowings
GECS
borrowings are summarized in the following table.
|
At
|
(In
millions)
|
September
30,
2008
|
|
December
31,
2007
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
paper
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
Unsecured
|
$
|
62,252
|
|
$
|
72,392
|
|
Asset-backed(a)
|
|
3,864
|
|
|
4,775
|
|
Non-U.S.
|
|
25,681
|
|
|
28,711
|
|
Current
portion of long-term debt(b)
|
|
68,152
|
|
|
56,301
|
|
Bank
deposits(c)(d)
|
|
31,781
|
|
|
11,486
|
|
Bank
borrowings(e)
|
|
13,353
|
|
|
6,915
|
|
GE
Interest Plus notes(f)
|
|
8,348
|
|
|
9,590
|
|
Other
|
|
1,978
|
|
|
2,250
|
|
Total
|
|
215,409
|
|
|
192,420
|
|
|
|
|
|
|
|
|
Long-term
borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior
notes
|
|
|
|
|
|
|
Unsecured(g)
|
|
302,689
|
|
|
283,097
|
|
Asset-backed(h)
|
|
5,279
|
|
|
5,528
|
|
Extendible
notes
|
|
2,197
|
|
|
8,500
|
|
Subordinated
notes(i)(j)
|
|
10,854
|
|
|
11,377
|
|
Total
|
|
321,019
|
|
|
308,502
|
|
Total
borrowings
|
$
|
536,428
|
|
$
|
500,922
|
|
|
|
|
|
|
|
|
(a)
|
Consists
entirely of obligations of consolidated, liquidating securitization
entities.
|
(b)
|
Included
$397 million and $1,106 million of asset-backed senior notes, issued by
consolidated, liquidating securitization entities at September 30, 2008,
and December 31, 2007, respectively.
|
(c)
|
Included
$16,305 million and $10,789 million of deposits in non-U.S. banks at
September 30, 2008, and December 31, 2007, respectively.
|
(d)
|
Included
certificates of deposits distributed by brokers of $15,476 million and
$697 million at September 30, 2008, and December 31, 2007,
respectively.
|
(e)
|
Term
borrowings from banks with a remaining term to maturity of less than 12
months.
|
(f)
|
Entirely
variable denomination floating rate demand notes.
|
(g)
|
Included
$1,684 million of certificates of deposits with maturities greater than
one year at September 30, 2008, and no such certificates of deposits at
December 31, 2007.
|
(h)
|
Included
$2,421 million and $3,410 million of asset-backed senior notes, issued by
consolidated, liquidating securitization entities at September 30, 2008,
and December 31, 2007, respectively.
|
(i)
|
Included
$750 million of subordinated notes guaranteed by GE at September 30, 2008,
and December 31, 2007.
|
(j)
|
Included
$7,741 million and $8,064 million of subordinated debentures receiving
rating agency equity credit at September 30, 2008, and December 31, 2007,
respectively.
|
14.
Fair Value Measurements
Effective
January 1, 2008, we adopted SFAS 157, Fair Value Measurements, for
all financial instruments and non-financial instruments accounted for at fair
value on a recurring basis. SFAS 157 establishes a new framework for
measuring fair value and expands related disclosures. Broadly, the SFAS 157
framework requires fair value to be determined based on the exchange price that
would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an
orderly transaction between market participants. SFAS 157 establishes market or
observable inputs as the preferred source of values, followed by assumptions
based on hypothetical transactions in the absence of market inputs.
The
valuation techniques required by SFAS 157 are based upon observable and
unobservable inputs. Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect our market assumptions.
These two types of inputs create the following fair value
hierarchy:
|
Level 1 –
|
Quoted
prices for identical instruments in active
markets.
|
|
Level 2 –
|
Quoted
prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active; and
model-derived valuations whose inputs are observable or whose significant
value drivers are observable.
|
|
Level 3 –
|
Significant
inputs to the valuation model are
unobservable.
|
We
maintain policies and procedures to value instruments using the best and most
relevant data available. In addition, we have risk management teams that review
valuation, including independent price validation for certain instruments.
Further, in other instances, we retain independent pricing vendors to assist in
valuing certain instruments.
The
following section describes the valuation methodologies we use to measure
different financial instruments at fair value.
Investments
in debt and equity securities
When
available, we use quoted market prices to determine the fair value of investment
securities, and they are included in Level 1.
When
quoted market prices are unobservable, we use quotes from independent pricing
vendors based on recent trading activity and other relevant information
including market interest rate curves, referenced credit spreads and estimated
prepayment rates where applicable. These investments are included in Level 2 and
primarily comprise our portfolio of corporate fixed income, and government,
mortgage and asset-backed securities. In infrequent circumstances, our pricing
vendors may provide us with valuations that are based on significant
unobservable inputs, and in those circumstances we classify the investment
securities in Level 3.
As
part of our adoption of SFAS 157 in the first quarter of 2008, we conducted a
review of our primary pricing vendor, with the assistance of an accounting firm,
to validate that the inputs used in that vendor’s pricing process are deemed to
be market observable as defined in the standard. More specifically, we used a
combination of approaches to validate that the process used by the pricing
vendor is consistent with the requirements of the standard and that the levels
assigned to these valuations are reasonable. While we were not provided access
to proprietary models of the vendor, our review included on-site walk-throughs
of the pricing process, methodologies and control procedures for each asset
class for which prices are provided. Our review also included an examination of
the underlying inputs and assumptions for a sample of individual securities, a
process we have continued to perform for each reporting period. Based on this
examination, and the ongoing review performed, we believe that the valuations
used in our financial statements are reasonable and are appropriately classified
in the fair value hierarchy. As of September 30, 2008, the valuation provided by
pricing services was $27,897 million and was classified in Level 2. The
valuations provided by pricing services based on significant unobservable inputs
was insignificant and those investment securities are classified as Level
3.
Retained
interests in securitizations are valued using a discounted cash flow model that
considers the underlying structure of the securitization and estimated net
credit exposure, prepayment assumptions, discount rates and expected life.
Investment securities priced using non-binding broker quotes and retained
interests are included in Level 3. We use non-binding broker quotes as our
primary basis for valuation when there is limited, or no, relevant market
activity for a specific instrument or for other instruments that share similar
characteristics. We have not adjusted the prices we have obtained. Level 3
investment securities valued using non-binding broker quotes totaled $2,061
million at September 30, 2008, and were classified as available-for-sale
securities.
We
receive one quote for Level 2 and Level 3 securities where third party quotes
are used as our basis for fair value measurement. As is the case with our
primary pricing vendor, third party providers of quotes do not provide access to
their proprietary valuation models, inputs and assumptions. Accordingly, our
risk management personnel conduct internal reviews of pricing for all such
investment securities at least quarterly to ensure reasonability of valuations
used in our financial statements. These reviews are designed to identify prices
that appear stale, those that have changed significantly from prior valuations,
and other anomalies that may indicate that a price may not be accurate. We also
follow established routines for reviewing and reconfirming valuations with the
pricing provider, if deemed appropriate. In addition, the pricing vendor has an
established challenge process in place for all security valuations, which
facilitates identification and resolution of potentially erroneous prices. Based
on the information available, we believe that the fair values provided by the
brokers are consistent with the principles of SFAS 157.
Private
equity investments held in investment company affiliates are initially valued at
cost. Valuations are reviewed at the end of each quarter utilizing available
market data to determine whether or not any fair value adjustments are
necessary. Such market data include any comparable public company trading
multiples. Unobservable inputs include company-specific fundamentals and other
third party transactions in that security. Our valuation methodology for private
equity investments is applied consistently and these investments are generally
included in Level 3.
Derivatives
We
use closing prices for derivatives included in Level 1, which are traded either
on exchanges or liquid over-the-counter markets.
The
remainder of the derivatives portfolio is valued using internal models, most of
which are primarily based on market observable inputs including interest rate
curves and both forward and spot prices for currencies and commodities.
Derivative assets and liabilities included in Level 2 primarily represent
interest rate swaps, cross-currency swaps and foreign currency and commodity
forward and option contracts.
Derivative
assets and liabilities included in Level 3 primarily represent interest rate
products that contain embedded optionality or prepayment features.
Loans
When
available, we use observable market data, including pricing on recent closed
market transactions, to value loans which are included in Level 2. When this
data is unobservable, we use valuation methodologies using current market
interest rate data adjusted for inherent credit risk and such loans are included
in Level 3. When appropriate, loans are valued using collateral values as a
practical expedient.
Effective
January 1, 2008, we adopted SFAS 159, The Fair Value Option for Financial
Assets and Financial Liabilities. Upon adoption, we elected to report
$172 million of commercial mortgage loans at fair value in order to have them on
the same accounting basis (measured at fair value through earnings) as the
derivatives economically hedging these loans.
The
following table presents our assets and liabilities measured at fair value on a
recurring basis at September 30, 2008. Included in the table are investment
securities of $21,994 million, primarily supporting obligations to annuitants
and policyholders in our run-off insurance businesses, and $9,953 million
supporting obligations to holders of guaranteed investment contracts. Such
securities are primarily investment grade. In addition, the table includes
$6,521 million and $3,306 million of derivative assets and liabilities,
respectively, with highly rated counterparties, primarily used for risk
management purposes. Also included are retained interests in securitizations
totaling $5,944 million.
(a)
|
FASB
Interpretation (FIN) 39, Offsetting of Amounts Related
to Certain Contracts, permits the netting of derivative receivables
and derivative payables when a legally enforceable master netting
agreement exists. Includes fair value adjustments related to our own and
counterparty credit risk.
|
(b)
|
Includes
private equity investments and loans designated under the fair value
option.
|
(c)
|
Primarily
represents the liability associated with certain of our deferred incentive
compensation plans accounted for in accordance with EITF Issue 97-14,
Accounting for Deferred
Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust
and Invested.
|
The
following tables present the changes in Level 3 instruments measured on a
recurring basis for the three and nine months ended September 30, 2008. The
majority of our Level 3 balances consist of investment securities classified as
available-for-sale with changes in fair value recorded in equity.
Changes
in Level 3 instruments for the three months ended September 30,
2008
|
July
1,
2008
|
|
Net
realized/
unrealized
gains
(losses)
included
in
earnings(a)
|
|
Net
realized/
unrealized
gains
(losses)
included
in
accumulated
nonowner
changes
other
than
earnings
|
|
Purchases,
issuances
and
settlements
|
|
Transfers
in
and/or
out
of
Level
3(b)
|
|
Sep-
tember
30,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,830
|
|
$
|
278
|
|
$
|
(321
|
)
|
$
|
(484
|
)
|
$
|
(291
|
)
|
$
|
13,012
|
|
|
$
|
128
|
|
|
|
491
|
|
|
414
|
|
|
18
|
|
|
(61
|
|
|
|
|
|
871
|
|
|
|
359
|
|
|
|
1,349
|
|
|
(84
|
|
|
(39
|
|
|
(5
|
|
|
|
|
|
1,220
|
|
|
|
(88
|
|
|
|
15,670
|
|
|
608
|
|
|
(342
|
|
|
(550
|
|
|
|
|
|
15,103
|
|
|
|
399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Earnings
effects are primarily included in the “GECS revenues from services” and
“Interest and other financial charges” captions in the Condensed Statement
of Earnings.
|
(b)
|
Transfers
in and out of Level 3 are considered to occur at the beginning of the
period.
|
(c)
|
Represents
the amount of total gains or losses for the period included in earnings
attributable to the change in unrealized gains (losses) relating to assets
and liabilities classified as Level 3 that are still held at September 30,
2008.
|
(d)
|
Earnings
from Derivatives were more than offset by $190 million in losses from
related derivatives included in Level 2 and $253 million in losses from
qualifying fair value hedges.
|
(e)
|
Represents
derivative assets net of derivative liabilities and includes cash accruals
of $23 million not reflected in the fair value hierarchy
table.
|
Changes
in Level 3 instruments for the nine months ended September 30, 2008
|
Jan-
uary
1,
2008
|
|
Net
realized/
unrealized
gains
(losses)
included
in
earnings(a)
|
|
Net
realized/
unrealized
gains
(losses)
included
in
accumulated
nonowner
changes
other
than
earnings
|
|
Purchases,
issuances
and
settlements
|
|
Transfers
in
and/or
out
of
Level
3(b)
|
|
Sep-
tember
30,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
12,447
|
|
$
|
619
|
|
$
|
(503
|
)
|
$
|
60
|
|
$
|
389
|
|
$
|
13,012
|
|
|
$
|
101
|
|
|
|
265
|
|
|
719
|
|
|
40
|
|
|
(162
|
|
|
|
|
|
871
|
|
|
|
554
|
|
|
|
1,330
|
|
|
(110
|
|
|
(9
|
|
|
(41
|
|
|
|
|
|
1,220
|
|
|
|
(54
|
|
|
|
14,042
|
|
|
1,228
|
|
|
(472
|
|
|
(143
|
|
|
|
|
|
15,103
|
|
|
|
601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Earnings
effects are primarily included in the “GECS revenues from services” and
“Interest and other financial charges” captions in the Condensed Statement
of Earnings.
|
(b)
|
Transfers
in and out of Level 3 are considered to occur at the beginning of the
period.
|
(c)
|
Represents
the amount of total gains or losses for the period included in earnings
attributable to the change in unrealized gains (losses) relating to assets
and liabilities classified as Level 3 that are still held at September 30,
2008.
|
(d)
|
Earnings
from Derivatives were partially offset by $275 million in losses from
related derivatives included in Level 2 and $309 million in losses from
qualifying fair value hedges.
|
(e)
|
Represents
derivative assets net of derivative liabilities and includes cash accruals
of $23 million not reflected in the fair value hierarchy
table.
|
Certain
assets measured at fair value on a non-recurring basis, and therefore not
included in the preceding tables, were $257 million identified as Level 2 and
$1,971 million identified as Level 3. We recognized $121 million and $383
million of losses related to non-recurring fair value measurements of loans, and
$199 million and $275 million of other-than-temporary impairments of cost and
equity method investments during the third quarter and first nine months of
2008, respectively.
15.
Shareowners’ Equity
A
summary of increases (decreases) in shareowners’ equity that did not result
directly from transactions with shareowners, net of income taxes,
follows.
|
Three
months ended
September
30
|
|
Nine
months ended
September
30
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
4,312
|
|
$
|
5,559
|
|
$
|
13,688
|
|
$
|
15,512
|
|
Investment
securities -
net
|
|
(1,086
|
)
|
|
3
|
|
|
(2,414
|
)
|
|
(1,156
|
)
|
Currency
translation adjustments -
net
|
|
(4,912
|
)
|
|
1,979
|
|
|
(3,508
|
)
|
|
3,723
|
|
Cash
flow hedges -
net
|
|
(1,622
|
)
|
|
(789
|
)
|
|
(1,500
|
)
|
|
(60
|
)
|
Benefit
plans -
net
|
|
210
|
|
|
(2,045
|
)
|
|
924
|
|
|
(1,525
|
)
|
Total
|
$
|
(3,098
|
)
|
$
|
4,707
|
|
$
|
7,190
|
|
$
|
16,494
|
|
16.
Off-Balance Sheet Arrangements
The
following table represents assets in off-balance sheet securitization
entities.
|
At
|
(In
millions)
|
September
30,
2008
|
|
December
31,
2007
|
|
|
|
|
|
|
|
Receivables
secured by
|
|
|
|
|
|
|
Equipment
|
$
|
6,169
|
|
$
|
6,552
|
|
Commercial
real estate
|
|
8,333
|
|
|
9,244
|
|
Other
assets
|
|
11,085
|
|
|
12,880
|
|
Credit
card receivables
|
|
21,910
|
|
|
22,793
|
|
Trade
receivables
|
|
2,562
|
|
|
2,036
|
|
Total
securitized assets(a)(b)
|
$
|
50,059
|
|
$
|
53,505
|
|
|
|
|
|
|
|
|
(a)
|
At
September 30, 2008, and December 31, 2007, liquidity support amounted to
$2,301 million and $2,810 million, respectively. Credit support amounted
to $2,319 million and $2,804 million at September 30, 2008, and December
31, 2007, respectively.
|
(b)
|
Liabilities
for recourse obligations related to off-balance sheet assets were $2
million at both September 30, 2008, and December 31,
2007.
|
17.
Intercompany Transactions
Effects
of transactions between related companies are eliminated and consist primarily
of GECS services for trade receivables management and material procurement; GE
customer receivables sold to GECS; buildings and equipment (including
automobiles) leased by GE from GECS; information technology (IT) and other
services sold to GECS by GE; aircraft engines manufactured by GE that are
installed on aircraft purchased by GECS from third-party producers for lease to
others; medical equipment manufactured by GE that is leased by GECS to others;
and various investments, loans and allocations of GE corporate overhead
costs.
These
intercompany transactions are reported in the GE and GECS columns of our
financial statements (and include customer receivables sold from GE to GECS),
but are eliminated in deriving our Consolidated financial statements. The
effects of these eliminations on our Consolidated cash flows from operating,
investing and financing activities follow.
|
Nine
months
ended
September 30
|
|
(In
millions)
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
Sum
of GE and GECS cash from operating activities – continuing
operations
|
$
|
31,779
|
|
$
|
30,882
|
|
Elimination
of GECS dividend to GE
|
|
(2,291
|
)
|
|
(5,871
|
)
|
Net
increase in GE customer receivables sold to GECS
|
|
(1,255
|
)
|
|
(772
|
)
|
Other
reclassifications and eliminations
|
|
(429
|
)
|
|
(113
|
)
|
Consolidated
cash from operating activities – continuing operations
|
$
|
27,804
|
|
$
|
24,126
|
|
|
Nine
months
ended
September 30
|
|
(In
millions)
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
Sum
of GE and GECS cash used for investing activities – continuing
operations
|
$
|
(52,947
|
)
|
$
|
(38,400
|
)
|
Net
increase in GE customer receivables sold to GECS
|
|
1,255
|
|
|
772
|
|
Other
reclassifications and eliminations
|
|
174
|
|
|
118
|
|
Consolidated
cash used for investing activities – continuing operations
|
$
|
(51,518
|
)
|
$
|
(37,510
|
)
|
|
Nine
months
ended
September 30
|
|
(In
millions)
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
Sum
of GE and GECS cash from financing activities – continuing
operations
|
$
|
21,600
|
|
$
|
10,566
|
|
Elimination
of short-term intercompany borrowings(a)
|
|
370
|
|
|
2,731
|
|
Elimination
of GECS dividend to GE
|
|
2,291
|
|
|
5,871
|
|
Other
reclassifications and eliminations
|
|
23
|
|
|
(47
|
)
|
Consolidated
cash from financing activities – continuing operations
|
$
|
24,284
|
|
$
|
19,121
|
|
|
|
|
|
|
|
|
(a)
|
Represents
GE investment in GECS short-term borrowings, such as commercial
paper.
|
18.
Subsequent Events
On
October 7, 2008, GE completed an offering of 547,825,000 shares of common stock
at a price of $22.25 per share. The underwriters of the offering have an option
expiring November 1, 2008 to purchase from GE up to an additional 82,173,750
shares.
On
October 16, 2008, GE issued 30,000 shares of GE’s 10% cumulative perpetual
preferred stock, par value $1.00 per share, having an aggregate liquidation
value of $3.0 billion, and warrants to purchase 134,831,460 shares of GE’s
common stock, par value $0.06 per share, for an aggregate purchase price of $3.0
billion in cash. The preferred stock is redeemable at GE’s option after three
years, in whole or in part, at a price of 110% of liquidation value plus accrued
and unpaid dividends. The warrants are exercisable at the holder’s option at any
time and from time to time, in whole or in part, for five years at an exercise
price of $22.25 per share of common stock and are settled through physical share
issuance.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
A.
Results of Operations
General
Electric Company’s consolidated financial statements represent the combination
of the industrial manufacturing and product services businesses of General
Electric Company (GE) and the financial services businesses of General Electric
Capital Services, Inc. (GECS or financial services).
In
the accompanying analysis of financial information, we sometimes use information
derived from consolidated financial information but not presented in our
financial statements prepared in accordance with U.S. generally accepted
accounting principles (GAAP). Certain of these data are considered “non-GAAP
financial measures” under the U.S. Securities and Exchange Commission (SEC)
rules. For such measures, we have provided supplemental explanations and
reconciliations in Exhibit 99 to this report on Form 10-Q.
Unless
otherwise indicated, we refer to captions such as revenues and earnings from
continuing operations simply as “revenues” and “earnings” throughout this
Management’s Discussion and Analysis. Similarly, discussion of other matters in
our condensed, consolidated financial statements relates to continuing
operations unless otherwise indicated.
Overview
General
Electric Company’s earnings from continuing operations decreased 12% to $4.477
billion in the third quarter of 2008 compared with $5.111 billion in 2007.
Earnings per share (EPS) from continuing operations were $0.45 in the third
quarter of 2008, down 10% compared with $0.50 in the third quarter of
2007.
For
the first nine months of 2008, earnings from continuing operations decreased 9%
to $14.222 billion compared with $15.630 billion for the same period in 2007.
EPS from continuing operations were $1.42 in the first nine months of 2008, down
7% compared with $1.52 in the first nine months of 2007.
Loss
from discontinued operations, net of taxes, was $0.2 billion in the third
quarter of 2008 compared with earnings of $0.4 billion for the same period in
2007, including the results of our Japanese personal loan business (Lake) and
our Japanese mortgage and card businesses, excluding our minority ownership in
GE Nissen Credit Co., Ltd. (GE Money Japan), our U.S. mortgage business (WMC),
Plastics, Advanced Materials, most of GE Insurance Solutions Corporation (GE
Insurance Solutions), GE Life and Genworth Financial, Inc.
(Genworth).
Loss
from discontinued operations, net of taxes, was $0.5 billion in the first nine
months of 2008 compared with $0.1 billion for the same period in
2007.
Net
earnings decreased 22% to $4.312 billion and EPS decreased 20% to $0.43 in the
third quarter of 2008 compared with $5.559 billion and $0.54, respectively, in
the third quarter of 2007.
For
the first nine months of 2008, net earnings decreased 12% to $13.688 billion
compared with $15.512 billion for the same period in 2007, and EPS decreased 9%
to $1.37 compared with $1.51 in the first nine months of 2007.
Revenues
of $47.2 billion in the third quarter of 2008 were 11% higher than in the
corresponding period of 2007, reflecting organic growth of 3%, the weaker U.S.
dollar, the net effects of acquisitions and dispositions and the effects of the
2008 Olympics broadcasts. A reconciliation between reported and organic revenues
is shown in Exhibit 99. Industrial sales increased 17% to $28.9 billion,
reflecting strong organic growth, the effects of the 2008 Olympics broadcasts,
the weaker U.S. dollar and the net effects of acquisitions and dispositions.
Sales of product services (including sales of spare parts and related services)
grew 8% to $8.5 billion in the third quarter of 2008. Financial services
revenues increased 2% over the comparable period of last year to $18.4 billion,
reflecting the net effects of acquisitions and dispositions and the weaker U.S.
dollar, partially offset by organic revenue declines.
Revenues
for the first nine months of 2008 rose 10% to $136.3 billion compared with
$124.0 billion for the first nine months of 2007. Industrial sales of $80.9
billion were 15% higher than in 2007 reflecting strong organic growth, the net
effects of acquisitions and dispositions, the weaker U.S. dollar and the effects
of the 2008 Olympics broadcasts. Financial services revenues for the first nine
months of 2008 increased 5% to $55.5 billion as a result of the effects of
acquisitions and dispositions and the weaker U.S. dollar, partially offset by
organic revenue declines, including the 2007 gain on sale of Swiss Reinsurance
Company (Swiss Re) common stock.
Overall,
acquisitions contributed $1.7 billion and $2.2 billion to consolidated revenues
in the third quarters of 2008 and 2007, respectively. Our consolidated earnings
in the third quarters of 2008 and 2007 included approximately $0.2 billion and
$0.1 billion, respectively, from acquired businesses. We integrate acquisitions
as quickly as possible. Only revenues and earnings from the date we complete the
acquisition through the end of the fourth following quarter are attributed to
such businesses. Dispositions also affected our operations through lower
revenues of $0.1 billion and $1.1 billion in the third quarters of 2008 and
2007, respectively. The effect of dispositions on earnings was an insignificant
amount in the third quarter of 2008 and a decrease of $0.2 billion in the third
quarter of 2007.
Acquisitions
contributed $6.1 billion and $5.3 billion to consolidated revenues in the first
nine months of 2008 and 2007, respectively. Our consolidated net earnings in the
first nine months of 2008 and 2007 included approximately $0.6 billion and $0.3
billion, respectively, from acquired businesses. Dispositions also affected our
operations through higher revenues of $0.3 billion in the first nine months of
2008 and lower revenues of $2.9 billion in the first nine months of 2007. The
effects of dispositions on earnings was an increase of $0.4 billion and $0.3
billion in the first nine months of 2008 and 2007, respectively.
The
most significant acquisitions affecting results in 2008 were Smiths Aerospace
Group Ltd. and Whatman Plc. at Technology Infrastructure; Vetco Gray; Hydril
Pressure Control; and Sondex PLC at Energy Infrastructure; Regency Energy
Partners LP; Merrill Lynch Capital; Sanyo Electric Credit Co., Ltd. (Sanyo);
CitiCapital; Bank BPH; and Diskont und Kredit AG and Disko Leasing GmbH (DISKO)
and ASL Auto Service-Leasing GmbH (ASL), the leasing businesses of KG Allgemeine
Leasing GmbH & Co. at Capital Finance; and Oxygen Media Corp. and
Sparrowhawk Holdings Ltd. at NBC Universal.
We
continue to explore strategic options for our Consumer & Industrial segment,
including our Appliance business.
Operating
segments comprise our five businesses focused on the broad markets they serve:
Technology Infrastructure, Energy Infrastructure, Capital Finance, NBC Universal
and Consumer & Industrial.
Segment
profit is determined based on internal performance measures used by the Chief
Executive Officer to assess the performance of each business in a given period.
In connection with that assessment, the Chief Executive Officer may exclude
matters such as charges for restructuring; rationalization and other similar
expenses; in-process research and development and certain other
acquisition-related charges and balances; technology and product development
costs; certain gains and losses from dispositions; and litigation settlements or
other charges, responsibility for which preceded the current management
team.
Segment
profit always excludes the effects of principal pension plans, results reported
as discontinued operations and accounting changes. Segment profit excludes or
includes interest and other financial charges and income taxes according to how
a particular segment’s management is measured – excluded in determining segment
profit, which we sometimes refer to as “operating profit,” for Technology
Infrastructure, Energy Infrastructure, NBC Universal and Consumer &
Industrial; included in determining segment profit, which we sometimes refer to
as “net earnings,” for Capital Finance.
We
have reclassified certain prior-period amounts to conform to the
current-period’s presentation. In addition to providing information on segments
in their entirety, we have also provided supplemental information for certain
businesses within the segments.
Technology
Infrastructure
|
Three
months ended
September
30
|
|
Nine
months ended
September
30
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
11,450
|
|
$
|
10,549
|
|
$
|
33,761
|
|
$
|
30,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
$
|
1,900
|
|
$
|
1,869
|
|
$
|
5,657
|
|
$
|
5,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Aviation
|
$
|
4,841
|
|
$
|
4,240
|
|
$
|
14,084
|
|
$
|
11,770
|
|
Enterprise
Solutions
|
|
1,192
|
|
|
1,137
|
|
|
3,532
|
|
|
3,192
|
|
Healthcare
|
|
4,191
|
|
|
4,062
|
|
|
12,569
|
|
|
12,002
|
|
Transportation
|
|
1,256
|
|
|
1,109
|
|
|
3,606
|
|
|
3,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Aviation
|
$
|
834
|
|
$
|
736
|
|
$
|
2,523
|
|
$
|
2,263
|
|
Enterprise
Solutions
|
|
187
|
|
|
193
|
|
|
503
|
|
|
462
|
|
Healthcare
|
|
634
|
|
|
692
|
|
|
1,909
|
|
|
2,021
|
|
Transportation
|
|
255
|
|
|
253
|
|
|
750
|
|
|
684
|
|
Technology
Infrastructure revenues increased 9%, or $0.9 billion, in the third quarter of
2008 on higher volume ($0.6 billion), the weaker U.S. dollar ($0.2 billion) and
higher prices ($0.1 billion). The increase in volume reflected increased sales
of commercial and military engines at Aviation, global locomotives at
Transportation, and services at Healthcare. The effects of the weaker U.S.
dollar were primarily at Healthcare. Higher prices were primarily at Aviation,
partially offset by lower prices at Healthcare.
Segment
profit rose 2% as higher prices ($0.1 billion), higher volume ($0.1 billion) and
productivity ($0.1 billion) were partially offset by higher material and other
costs ($0.3 billion). The increase in volume, effects of productivity and higher
material and other costs primarily related to Aviation.
Technology
Infrastructure revenues rose 11% to $33.8 billion for the nine months ended
September 30, 2008, on higher volume ($2.8 billion), the weaker U.S. dollar
($0.6 billion) and higher prices ($0.1 billion). The increase in volume
reflected the effects of acquisitions and increased sales of military and
commercial engines and services at Aviation; increased sales in the
international diagnostic imaging, clinical systems and life science businesses,
as well as surgical imaging equipment at Healthcare; increased equipment sales
at Transportation; and increases at Digital Energy and Sensing and Inspection at
Enterprise Solutions. The effects of the weaker U.S. dollar were at Healthcare
and Enterprise Solutions. Higher prices were primarily at Aviation and
Transportation, partially offset by lower prices at Healthcare.
Segment
profit for the first nine months of 2008 rose 5% to $5.7 billion compared with
$5.4 billion in 2007, as higher volume ($0.5 billion), productivity ($0.4
billion) and higher prices ($0.1 billion) were partially offset by higher
material and other costs ($0.7 billion). Volume increases were primarily at
Aviation. The effects of productivity were primarily at Healthcare and
Transportation. The increase in material costs was primarily at Aviation and
Transportation, partially offset by a decrease at Healthcare. Labor and other
costs increased across all businesses of the segment.
Energy
Infrastructure
|
Three
months ended
September
30
|
|
Nine
months ended
September
30
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
9,769
|
|
$
|
7,386
|
|
$
|
27,164
|
|
$
|
21,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
$
|
1,425
|
|
$
|
1,086
|
|
$
|
4,074
|
|
$
|
3,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
$
|
7,392
|
|
$
|
5,357
|
|
$
|
20,367
|
|
$
|
15,534
|
|
Oil
& Gas
|
|
1,891
|
|
|
1,699
|
|
|
5,321
|
|
|
4,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
$
|
1,109
|
|
$
|
818
|
|
$
|
3,241
|
|
$
|
2,410
|
|
Oil
& Gas
|
|
305
|
|
|
237
|
|
|
721
|
|
|
528
|
|
Energy
Infrastructure revenues rose 32%, or $2.4 billion, in the third quarter of 2008
on higher volume ($1.7 billion), higher prices ($0.5 billion) and the weaker
U.S. dollar ($0.2 billion). The increase in volume reflected increased sales of
thermal and wind equipment at Energy, and the effects of acquisitions and
increased sales of services at Oil & Gas. The increase in price was
primarily at Energy, while the effects of the weaker U.S. dollar were primarily
at Energy and Oil & Gas.
Segment
profit rose 31%, or $0.3 billion, as higher prices ($0.5 billion) and higher
volume ($0.3 billion) more than offset the effects of productivity ($0.2
billion) and higher material and other costs ($0.2 billion). The increase in
volume primarily related to Energy. The effects of productivity and higher
material and other costs were across all businesses of the segment.
Energy
Infrastructure revenues rose 28% to $27.2 billion for the first nine months
ended September 30, 2008, on higher volume ($4.2 billion), higher prices ($1.0
billion) and the weaker U.S. dollar ($0.8 billion). The increase in volume
reflected increased sales of thermal and wind equipment at Energy and the
effects of acquisitions and increased sales of services at Oil & Gas. Higher
prices and the effects of the weaker U.S. dollar were across all businesses of
the segment.
Segment
profit for the first nine months rose 35% to $4.1 billion compared with $3.0
billion in 2007, as higher prices ($1.0 billion), higher volume ($0.8 billion)
and the weaker U.S. dollar ($0.1 billion) more than offset higher material and
other costs ($0.5 billion) and productivity ($0.3 billion). The increase in
volume, material and other cost increases and the effects of productivity were
primarily at Energy.
Capital
Finance
|
Three
months ended
September
30
|
|
Nine
months ended
September
30
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
17,292
|
|
$
|
16,979
|
|
$
|
52,242
|
|
$
|
48,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
$
|
2,020
|
|
$
|
3,021
|
|
$
|
7,602
|
|
$
|
9,080
|
|
|
At
|
(In
millions)
|
September
30,
2008
|
|
September
30,
2007
|
|
December
31,
2007
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
622,135
|
|
$
|
553,959
|
|
$
|
583,965
|
|
|
|
Three
months ended
September
30
|
|
Nine
months ended
September
30
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Lending and Leasing (CLL)
|
$
|
6,547
|
|
$
|
6,862
|
|
$
|
20,525
|
|
$
|
19,859
|
|
Energy
Financial Services
|
|
1,261
|
|
|
832
|
|
|
3,020
|
|
|
1,573
|
|
GECAS
|
|
1,265
|
|
|
1,195
|
|
|
3,690
|
|
|
3,660
|
|
GE
Money
|
|
6,540
|
|
|
6,153
|
|
|
19,481
|
|
|
18,246
|
|
Real
Estate
|
|
1,679
|
|
|
1,937
|
|
|
5,526
|
|
|
5,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
CLL
|
$
|
394
|
|
$
|
905
|
|
$
|
2,005
|
|
$
|
2,633
|
|
Energy
Financial Services
|
|
306
|
|
|
255
|
|
|
606
|
|
|
501
|
|
GECAS
|
|
285
|
|
|
274
|
|
|
955
|
|
|
960
|
|
GE
Money
|
|
791
|
|
|
947
|
|
|
2,832
|
|
|
3,306
|
|
Real
Estate
|
|
244
|
|
|
640
|
|
|
1,204
|
|
|
1,680
|
|
|
At
|
(In
millions)
|
September
30,
2008
|
|
September
30,
2007
|
|
December
31,
2007
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
CLL
|
$
|
252,477
|
|
$
|
220,391
|
|
$
|
229,608
|
|
|
Energy
Financial Services
|
|
21,856
|
|
|
17,493
|
|
|
18,705
|
|
|
GECAS
|
|
49,841
|
|
|
47,038
|
|
|
47,189
|
|
|
GE
Money
|
|
209,222
|
|
|
196,840
|
|
|
209,178
|
|
|
Real
Estate
|
|
88,739
|
|
|
72,197
|
|
|
79,285
|
|
|
Capital
Finance revenues increased 2% and net earnings decreased 33% compared with the
third quarter of 2007. Revenues for the third quarters of 2008 and 2007 included
$1.4 billion and $0.3 billion of revenue from acquisitions, respectively, and in
2008 were reduced by $0.1 billion as a result of dispositions. Revenues for the
quarter also decreased $0.7 billion compared with the third quarter of 2007 as a
result of organic revenue declines, partially offset by the weaker U.S. dollar.
Net earnings decreased by $1.0 billion in the third quarter of 2008 compared
with the third quarter of 2007.
Capital
Finance revenues increased 8% and net earnings decreased 16% compared with the
first nine months of 2007. Revenues for the first nine months of 2008 and 2007
included $3.6 billion and $0.5 billion of revenue from acquisitions,
respectively, and in 2008 were increased by $0.1 billion as a result of
dispositions. Revenues for the first nine months also increased $0.7 billion
compared with the first nine months of 2007 as a result of the weaker U.S.
dollar, partially offset by organic revenue declines. Net earnings decreased by
$1.5 billion in the first nine months of 2008 compared with the first nine
months of 2007.
Additional
information about certain Capital Finance businesses follows.
CLL
revenues decreased 5% and net earnings decreased 56% compared with the third
quarter of 2007. Revenues for the third quarter of 2008 included $0.4 billion
from acquisitions. Revenues for the quarter decreased $0.7 billion compared with
the third quarter of 2007 as a result of organic revenue declines ($0.9
billion), partially offset by the weaker U.S. dollar ($0.2 billion). Net
earnings decreased by $0.5 billion in the third quarter of 2008, resulting from
core declines ($0.5 billion), partially offset by acquisitions ($0.1 billion).
Net earnings included the effects of higher mark-to-market losses and
other-than-temporary impairments ($0.3 billion) and Genpact mark-to-market
losses ($0.2 billion), and the absence of the effects of the 2007 SES
transaction ($0.1 billion).
CLL
revenues increased 3% and net earnings decreased 24% compared with the first
nine months of 2007. Revenues for the first nine months of 2008 and 2007
included $1.3 billion and $0.2 billion from acquisitions, respectively, and in
2008 were reduced by $0.2 billion as a result of dispositions. Revenues for the
first nine months decreased $0.2 billion compared with the first nine months of
2007 as a result of organic revenue declines ($1.0 billion), partially offset by
the weaker U.S. dollar ($0.8 billion). Net earnings decreased by $0.6 billion in
the first nine months of 2008, resulting from core declines ($1.0 billion),
including an increase of $0.1 billion in the provision for losses on financing
receivables and lower investment income ($0.1 billion), partially offset by
acquisitions ($0.3 billion) and higher securitization ($0.1 billion). Net
earnings included the effects of higher mark-to-market losses and
other-than-temporary impairments ($0.5 billion), and the absence of the effects
of the 2007 SES transaction ($0.6 billion), partially offset by Genpact
mark-to-market gains ($0.3 billion). These results also included a gain on sale
of a portion of our investment in Penske Truck Leasing Co., L.P. ($0.1
billion).
Energy
Financial Services revenues and net earnings increased 52% and 20%,
respectively, compared with the third quarter of 2007. Revenues for the third
quarters of 2008 and 2007 included $0.6 billion and $0.3 billion from
acquisitions. Revenues for the quarter also increased $0.1 billion compared with
the third quarter of 2007 as a result of organic revenue growth ($0.1 billion).
The increase in net earnings resulted primarily from core growth.
Energy
Financial Services revenues and net earnings increased 92% and 21%,
respectively, compared with the first nine months of 2007. Revenues for the
first nine months of 2008 and 2007 included $1.5 billion and $0.3 billion from
acquisitions. Revenues for the first nine months also increased $0.2 billion
compared with the first nine months of 2007 as a result of organic revenue
growth ($0.2 billion). The increase in net earnings resulted primarily from core
growth ($0.1 billion).
GECAS
revenues and net earnings increased 6% and 4%, respectively, compared with the
third quarter of 2007. The increase in revenues resulted primarily from organic
revenue growth ($0.1 billion). The increase in net earnings resulted primarily
from core growth.
GECAS
revenues increased 1% and net earnings decreased 1% compared with the first nine
months of 2007. The increase in revenues is primarily as a result of organic
revenue growth ($0.1 billion), partially offset by lower investment income ($0.1
billion). The decrease in net earnings resulted primarily from lower investment
income, partially offset by core growth.
GE
Money revenues increased 6% and net earnings decreased 16% compared with the
third quarter of 2007. Revenues for the third quarter of 2008 included $0.3
billion from acquisitions and were reduced by $0.1 billion as a result of
dispositions. Revenues for the quarter also increased $0.2 billion compared with
the third quarter of 2007 as a result of the weaker U.S. dollar ($0.3 billion),
partially offset by organic revenue declines ($0.2 billion). The decrease in net
earnings resulted primarily from core declines ($0.2 billion), including the
effects of higher delinquencies of $0.2 billion, and lower securitization income
($0.1 billion), partially offset by growth in lower-taxed earnings from global
operations ($0.1 billion).
GE
Money revenues increased 7% and net earnings decreased 14% compared with the
first nine months of 2007. Revenues for the first nine months of 2008 included
$0.4 billion from acquisitions and $0.4 billion from the gain on sale of our CPS
business and were reduced by $0.1 billion from dispositions. Revenues for the
first nine months also increased $0.5 billion compared with the first nine
months of 2007 as a result of the weaker U.S. dollar ($1.1 billion), partially
offset by organic revenue declines ($0.6 billion). The decrease in net earnings
resulted primarily from core declines ($0.8 billion) (including lower results
reflecting the effects of higher delinquencies of $0.5 billion) and lower
securitization income ($0.4 billion). These decreases were partially offset by
growth in lower-taxed earnings from global operations ($0.4 billion), the gain
on the sale of our CPS business ($0.2 billion), the weaker U.S. dollar ($0.1
billion) and acquisitions ($0.1 billion).
Real
Estate revenues decreased 13% and net earnings decreased 62% compared with the
third quarter of 2007. Revenues for the third quarter included $0.1 billion from
acquisitions. Revenues for the quarter decreased $0.3 billion compared with the
third quarter of 2007 as a result of organic revenue declines ($0.4 billion),
partially offset by the weaker U.S. dollar ($0.1 billion). Real Estate net
earnings decreased $0.4 billion compared with the third quarter of 2007,
primarily from a decline in net earnings from real estate equity investments
($0.5 billion), partially offset by an increase in net earnings from real estate
lending ($0.1 billion).
Real
Estate assets at September 30, 2008 increased $9.5 billion, or 12%, from
December 31, 2007, including $13.2 billion, or 36%, attributable to an increase
in real estate lending, partially offset by a $3.5 billion, or 9%, decline in
real estate equity investments. During the first nine months of 2008, we sold
real estate equity investment assets with a book value totaling $5.1 billion,
which resulted in net earnings of $1.2 billion that were partially offset by
depreciation and other expenses.
Real
Estate revenue increased 8% and net earnings decreased 28% compared with the
first nine months of 2007. Revenues for the first nine months of 2008 included
$0.3 billion from acquisitions. Revenues for the first nine months increased
$0.2 billion compared with the first nine months of 2007 as a result of the
weaker U.S. dollar ($0.3 billion), partially offset by organic revenue declines
($0.1 billion).
Real
Estate net earnings decreased $0.5 billion compared with the first nine months
of 2007, primarily from a decline in net earnings from real estate equity
investments ($0.5 billion), partially offset by an increase in net earnings from
real estate lending ($0.1 billion). Net earnings from the sale of real estate
equity investments were lower as a result of increasingly difficult market
conditions experienced in the first nine months of 2008. In the normal course of
our business operations, we sell certain real estate equity investments when it
is economically advantageous for us to do so. However, as real estate values are
affected by certain forces beyond our control (e.g. market fundamentals and
demographic conditions), it is difficult to predict with certainty the level of
future sales or sales prices.
NBC Universal revenues of $5.1
billion increased 35%, or $1.3 billion, in the third quarter of 2008, on
revenues from the Olympics broadcasts ($1.0 billion) and higher revenues in film
($0.2 billion) and cable ($0.2 billion). Segment profit of $0.6 billion
increased 10% as higher earnings from cable ($0.1 billion) and film ($0.1
billion) and proceeds from insurance claims ($0.1 billion) more than offset
losses from the Olympics broadcasts.
NBC
Universal reported revenues of $12.5 billion in the first nine months of 2008,
an increase of $1.7 billion or 15% from the first nine months of 2007,
reflecting revenues from the Olympics broadcasts ($1.0 billion), higher revenues
in cable ($0.6 billion) and film ($0.3 billion), partially offset by lower
revenues in broadcast television ($0.2 billion) and lower gains from other
actions ($0.1 billion). Segment profit of $2.3 billion increased 4% as higher
earnings from cable ($0.3 billion) and proceeds from insurance claims ($0.1
billion) more than offset losses from lower earnings from broadcast television
($0.1 billion) and the Olympics broadcasts.
Consumer & Industrial
revenues of $3.0 billion decreased 6%, or $0.2 billion, in the third quarter of
2008 compared with the third quarter of 2007 as lower volume ($0.3 billion) was
partially offset by higher prices and the weaker U.S. dollar. The decrease in
volume reflected tightened spending in the U.S. domestic market. Segment profit
decreased 82%, or $0.2 billion, in the third quarter of 2008 as higher material
and other costs ($0.1 billion) and the effects of productivity ($0.1 billion)
were partially offset by higher prices.
Consumer
& Industrial revenues of $9.0 billion decreased 4%, or $0.3 billion, for the
nine months ended September 30, 2008, as lower volume ($0.6 billion) was
partially offset by the weaker U.S. dollar ($0.1 billion) and higher prices
($0.1 billion). The decrease in volume reflected tightened spending in the U.S.
domestic market. Segment profit of $0.3 billion decreased 58%, or $0.5 billion,
for the nine months ended September 30, 2008, as higher material and other costs
($0.3 billion), the effects of productivity ($0.1 billion) and lower volume
($0.1 billion) were partially offset by higher prices ($0.1
billion).
Discontinued
Operations
|
Three
months ended
September
30
|
|
Nine
months ended
September
30
|
|
(In
millions)
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) from discontinued operations,
|
|
|
|
|
|
|
|
|
|
|
|
|
net
of taxes
|
$
|
(165
|
)
|
$
|
448
|
|
$
|
(534
|
)
|
$
|
(118
|
)
|
Discontinued
operations is comprised of GE Money Japan, WMC, Plastics, Advanced Materials, GE
Insurance Solutions, GE Life, and Genworth. Results of these businesses are
reported as discontinued operations for all periods presented.
Loss
from discontinued operations, net of taxes, for the third quarter of 2008,
reflected loss from operations ($0.2 billion), primarily at GE Money
Japan.
Loss
from discontinued operations, net of taxes, for the first nine months of 2008,
primarily reflected loss from operations ($0.3 billion) and the estimated
incremental loss on disposal ($0.2 billion) at GE Money Japan.
Earnings
from discontinued operations, net of taxes, for the third quarter of 2007,
primarily reflected the estimated gain on disposal ($1.7 billion) and earnings
from operations ($0.1 billion) at Plastics, partially offset by the estimated
incremental loss on disposal ($0.9 billion) at Lake and the loss from operations
at WMC ($0.3 billion) and GE Money Japan ($0.1 billion).
Loss
from discontinued operations, net of taxes, for the first nine months of 2007,
reflected the estimated incremental loss on disposal ($0.9 billion) at Lake and
the loss from operations at WMC ($0.9 billion) and GE Money Japan ($0.2
billion), partially offset by the estimated gain on disposal ($1.6 billion) and
earnings from operations ($0.3 billion) at Plastics.
For
additional information related to discontinued operations, see Note 3 to the
condensed, consolidated financial statements.
Corporate items and
eliminations revenues in the third quarter of 2008 were flat compared
with 2007 because of an increase in gains on dispositions ($0.1 billion) and a
gain on termination of a derivative contract ($0.2 billion), offset by lower
revenues from insurance activities ($0.2 billion) and lower revenues from
guaranteed investment contracts ($0.1 billion). Corporate items and eliminations
costs decreased by $0.6 billion reflecting a decrease in restructuring,
rationalization and other charges ($0.5 billion), higher gains on dispositions
($0.1 billion), and a gain on termination of a derivative contract ($0.1
billion), partially offset by lower income from insurance activities ($0.1
billion).
Corporate
items and eliminations revenues for the first nine months of 2008 decreased $2.1
billion because of a decrease in gains on dispositions ($0.8 billion), the lack
of a current-year counterpart to the gain on sale of Swiss Re common stock ($0.6
billion), lower revenues from insurance activities ($0.4 billion) and lower
revenues from guaranteed investment contracts ($0.2 billion), partially offset
by a gain on termination of a derivative contract ($0.2 billion). Corporate
items and eliminations cost for the first nine months of 2008 decreased $0.1
billion reflecting decreases in restructuring, rationalization and other charges
($0.8 billion), lower pension costs ($0.2 billion) and a decrease in GECS taxes
($0.2 billion), partially offset by the lack of a current-year counterpart to
the gain on sale of Swiss Re common stock ($0.3 billion), lower gains on
dispositions ($0.7 billion) and lower income from insurance activities ($0.2
billion). (GECS amounts on an after-tax basis.)
Certain
amounts included in Corporate items and eliminations cost are not allocated to
GE operating segments because they are excluded from the measurement of their
operating performance for internal purposes. In the third quarter of 2008, these
included $0.1 billion at NBC Universal, primarily technology and product
development costs. For the first nine months of 2008 such amounts comprised $0.3
billion at NBC Universal, $0.2 billion at each of Technology Infrastructure and
Consumer & Industrial, and $0.1 billion at Energy Infrastructure, primarily
for restructuring, rationalization and other charges, and for technology and
product development costs.
B.
Statement of Financial Position
Overview
of Financial Position
Major
changes in our financial position resulted from the following:
·
|
During
the first nine months of 2008, we completed the acquisitions of Merrill
Lynch Capital, CitiCapital, Bank BPH, Hydril Pressure Control and Whatman
Plc.
|
·
|
The
U.S. dollar was stronger at September 30, 2008, than at December 31, 2007,
decreasing the translated levels of our non-U.S. dollar assets and
liabilities.
|
Consolidated
assets were $829.6 billion at September 30, 2008, an increase of $33.9 billion
from December 31, 2007. GE assets increased $0.1 billion, and financial services
assets increased $31.9 billion.
GE
assets were $214.9 billion at September 30, 2008, a $0.1 billion increase from
December 31, 2007. The increase reflects a $2.9 billion increase in all other
assets, a $1.8 billion increase in inventories and a $1.1 billion increase in
goodwill, partially offset by a $3.2 billion decrease in cash and equivalents, a
$2.0 billion decrease in investment in GECS, a $0.3 billion decrease in current
receivables and a $0.2 billion decrease in other intangible assets –
net.
Financial
Services assets were $678.4 billion at September 30, 2008. The $31.9 billion
increase from December 31, 2007, was primarily attributable to increases in
financing receivables – net of $37.7 billion, cash and equivalents of $3.6
billion and property, plant and equipment (including equipment leased to others)
– net of $2.0 billion, partially offset by decreases in assets of discontinued
operations of $7.6 billion, all other assets of $1.8 billion and investment
securities of $1.8 billion.
Consolidated
liabilities of $708.2 billion at September 30, 2008, were $36.1 billion higher
than the year-end 2007 balance. GE liabilities increased $3.1 billion, while
financial services liabilities increased $33.0 billion.
GE
liabilities were $95.9 billion at September 30, 2008. During 2008, short-term
borrowings increased $0.3 billion to $4.4 billion and long-term borrowings
decreased $1.6 billion to $10.0 billion. The ratio of borrowings to total
capital invested for GE at the end of the third quarter was 10.8% compared with
11.4% at the end of last year and 9.6% at September 30, 2007.
Financial
Services liabilities increased $33.0 billion from year-end 2007 to $620.3
billion reflecting increases in total borrowings of $35.5 billion and deferred
income taxes of $1.2 billion, partially offset by decreases in all other
liabilities of $2.6 billion.
Cash
Flows
Consolidated
cash and equivalents were $16.3 billion at September 30, 2008, an increase of
$0.6 billion during the first nine months of 2008. Cash and equivalents amounted
to $19.8 billion at September 30, 2007, an increase of $5.7 billion from
December 31, 2006.
We
evaluate our cash flow performance by reviewing our industrial (non-financial
services) businesses and financial services businesses separately. Cash from
operating activities (CFOA) is the principal source of cash generation for our
industrial businesses. The industrial businesses also have liquidity available
via the public capital markets. Our financial services businesses use a variety
of financial resources to meet our capital needs. Cash for financial services
businesses is primarily provided from the issuance of term debt and commercial
paper in the public and private markets, as well as financing receivables
collections, sales and securitizations.
GE
Cash Flow
GE
cash and equivalents aggregated $3.5 billion at September 30, 2008, compared
with $7.2 billion at September 30, 2007. GE CFOA totaled $13.6 billion for the
first nine months of 2008 compared with $16.7 billion for the first nine months
of 2007. With respect to GE CFOA, we believe that it is useful to supplement our
GE Condensed Statement of Cash Flows and to examine in a broader context the
business activities that provide and require cash.
|
Nine
months ended
September
30
|
|
(In
billions)
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
Operating
cash collections
|
$
|
85.0
|
|
$
|
73.3
|
|
Operating
cash payments
|
|
(73.7
|
)
|
|
(62.5
|
)
|
Cash
dividends from GECS
|
|
2.3
|
|
|
5.9
|
|
GE
cash from operating activities (GE CFOA)
|
$
|
13.6
|
|
$
|
16.7
|
|
The
most significant source of cash in GE CFOA is customer-related activities, the
largest of which is collecting cash following a product or services sale. GE
operating cash collections increased by $11.7 billion during the first nine
months of 2008. This increase is consistent with the changes in comparable GE
operating segment revenues. Analyses of operating segment revenues discussed in
the preceding Segment Operations section are the best way of understanding their
customer-related CFOA.
The
most significant operating use of cash is to pay our suppliers, employees, tax
authorities and others for the wide range of material and services necessary in
a diversified global organization. GE operating cash payments increased in the
first nine months of 2008 by $11.2 billion, comparable to the increase in GE
total costs and expenses.
Dividends
from GECS represented the distribution of a portion of GECS retained earnings,
including special dividends from proceeds of certain business sales, and are
distinct from cash from continuing operating activities within the financial
services businesses. The amounts we show in GE CFOA are the total dividends,
including normal dividends as well as any special dividends from excess capital,
primarily resulting from GECS business sales. There were no special dividends
paid by GECS to GE in the first nine months of 2008 compared with $2.7 billion
in the first nine months of 2007. Beginning in the third quarter of 2008, GECS
decreased its normal dividend from 40% to 10% of GECS earnings.
GE
sells customer receivables to GECS in part to fund the growth of our industrial
businesses. These transactions can result in cash generation or cash use in any
given period. The incremental cash generated or used from the sale of customer
receivables (net effect) is the amount of cash received for receivables sold in
a period less the amount of cash collected on receivables previously sold. This
net effect represents the cash generated or used in the period related to this
activity. The incremental cash generated in GE CFOA from selling these
receivables to GECS increased GE CFOA by $1.3 billion for the nine months ended
September 30, 2008, compared with an increase of $0.8 billion for the nine
months ended September 30, 2007. See Note 17 to the condensed, consolidated
financial statements for additional information about the elimination of
intercompany transactions between GE and GECS.
GECS
Cash Flow
GECS
cash and equivalents aggregated $13.1 billion at September 30, 2008, compared
with $12.7 billion at September 30, 2007. GECS CFOA totaled $18.1 billion for
the first nine months of 2008 compared with $14.2 billion for the first nine
months of 2007. The increase is primarily the result of increased collections of
interest from loans and finance leases and rental income from operating leases,
resulting primarily from core growth and currency exchange; and increases in
cash collateral received from counterparties on derivative contracts and
security deposits. These increases were partially offset by increases in
interest payments resulting from increased borrowings, and taxes
paid.
GECS
principal use of cash has been investing in assets to grow its businesses. Of
the $48.8 billion that GECS invested during the first nine months of 2008, $28.4
billion was used for additions to financing receivables; $25.0 billion was used
for acquisitions of new businesses, the largest of which were Merrill Lynch
Capital, CitiCapital and Bank BPH; and $9.5 billion was used to invest in new
equipment, principally for lease to others.
GECS
paid dividends to GE through a distribution of its retained earnings, including
special dividends from proceeds of certain business sales. Dividends paid to GE
totaled $2.3 billion in the first nine months of 2008 compared with $5.9 billion
in the first nine months of 2007. There were no special dividends paid to GE in
the first nine months of 2008 compared with $2.7 billion in the first nine
months of 2007. During the first nine months of 2008, GECS borrowings with
maturities of 90 days or less have decreased by $16.9 billion. New borrowings of
$99.2 billion having maturities longer than 90 days were added during the first
nine months of 2008, while $44.9 billion of such long-term borrowings were
retired.
Intercompany
Eliminations
Effects
of transactions between related companies are eliminated and consist primarily
of GECS services for trade receivables management and material procurement; GE
customer receivables sold to GECS; buildings and equipment (including
automobiles) leased by GE from GECS; information technology (IT) and other
services sold to GECS by GE; aircraft engines manufactured by GE that are
installed on aircraft purchased by GECS from third-party producers for lease to
others; medical equipment manufactured by GE that is leased by GECS to others;
and various investments, loans and allocations of GE corporate overhead costs.
See Note 17 to the condensed, consolidated financial statements for further
information related to intercompany eliminations.
The
lack of a current-year counterpart to last year’s $2.7 billion GECS special
dividend is the primary reason for the decrease in the amount of intercompany
eliminations referred to above.
Fair
Value Measurements
Effective
January 1, 2008, we adopted Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) 157, Fair Value Measurements, for
all financial instruments and non-financial instruments accounted for at fair
value on a recurring basis. Adoption of SFAS 157 did not have a material effect
on our financial position or results of operations. During the third quarter,
our methodology remained consistent with prior quarters for measuring fair value
of financial instruments trading in volatile markets. Additional information
about our application of SFAS 157 is provided in Note 14 to the condensed,
consolidated financial statements.
The
fair value of derivatives includes an adjustment for our non-performance risk.
At September 30, 2008, the adjustment for our non-performance risk was a gain of
$0.1 billion.
At
September 30, 2008, the aggregate amount of instruments requiring fair value
measurement on a recurring basis included in Level 3 represented approximately
1% of the aggregate amount of consolidated assets and liabilities. Of the
aggregate amount of total financial instruments requiring recurring fair value
measurement, approximately 27% are included in Level 3. The amount we report in
Level 3 in future periods will be directly affected by market conditions. See
Note 14 to the condensed, consolidated financial statements for further
information related to the adoption of SFAS 157.
C.
Financial Services Portfolio Quality
Investment securities comprise
mainly investment-grade debt securities supporting obligations to annuitants and
policyholders in our run-off insurance businesses and holders of guaranteed
investment contracts. Investment securities were $43.2 billion at September 30,
2008 compared with $44.9 billion at December 31, 2007. Of the amount at
September 30, 2008, we held residential mortgage-backed securities (RMBS) and
commercial mortgage-backed securities with estimated fair values of $4.9 billion
and $2.5 billion, respectively. Such amounts included unrealized losses of $0.9
billion and $0.3 billion, respectively.
At
September 30, 2008, we had approximately $1.5 billion of exposure to residential
subprime credit, primarily supporting our guaranteed investment contracts; $1.2
billion of this amount was insured by monoline insurers (Monolines). Monolines
provide credit enhancement for certain of our investment securities. At
September 30, 2008, our total investment securities insured by Monolines were
$3.1 billion. Although several of the Monolines have been downgraded by the
rating agencies, a majority of this amount was insured by investment-grade
Monolines. In addition, we had approximately $2.8 billion of exposure to
commercial, regional and foreign banks, primarily relating to corporate debt
securities, with associated unrealized losses of $0.5 billion.
We
regularly review investment securities for impairment using both quantitative
and qualitative criteria. Quantitative criteria include length of time and
amount that each security is in an unrealized loss position and, for fixed
maturities, whether the issuer is in compliance with terms and covenants of the
security. Qualitative criteria include the financial health of and specific
prospects for the issuer, as well as our intent and ability to hold the security
to maturity or until forecasted recovery. Our impairment reviews involve our
finance, risk and asset management functions as well as the portfolio management
and research capabilities of our internal and third-party asset managers. At
September 30, 2008, unrealized losses on investment securities totaled $4.1
billion, including $2.3 billion aged 12 months or more. Of the amount aged 12
months or more, $1.2 billion and $1.1 billion related to corporate debt
securities and structured securities (mortgage-backed, asset-backed and retained
interests in off-balance sheet securitization arrangements), respectively.
Other-than-temporary impairment losses were $0.6 billion for the first nine
months of 2008, primarily relating to retained interests in our off-balance
sheet securitization arrangements, RMBS and corporate debt securities of
financial institutions and media companies. Other-than-temporary impairment
losses were $0.1 billion for the first nine months of 2007.
Our
qualitative review attempts to identify issuers’ securities “at-risk” of
impairment, that is, with a possibility of other-than-temporary impairment
recognition in the following 12 months. Of securities with unrealized losses at
September 30, 2008, $0.5 billion was at risk of being charged to earnings in the
next 12 months. Continued uncertainty in the capital markets may cause increased
levels of losses.
Financing receivables is our
largest category of assets and represents one of our primary sources of
revenues. A discussion of the quality of certain elements of the financing
receivables portfolio follows. For purposes of that discussion, “delinquent”
receivables are those that are 30 days or more past due; and “nonearning”
receivables are those that are 90 days or more past due (or for which collection
has otherwise become doubtful).
Selected
financing receivables ratios follow.
|
September
30, 2008
|
|
Nonearning
receivables
as
a
percentage
of
total
financing
receivables
|
|
Allowance
for
losses
as a
percentage
of
nonearning
receivables
|
|
Allowance
for
losses
as
a
percentage
of
total
financing
receivables
|
|
|
|
|
|
|
|
|
|
|
|
CLL
|
|
|
|
|
|
|
|
|
|
|
Equipment
and leasing and other
|
|
1.0
|
%
|
|
59.7
|
%
|
|
0.6
|
%
|
|
Commercial
and industrial
|
|
1.5
|
|
|
35.0
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
Estate
|
|
0.2
|
|
|
230.8
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GE
Money
|
|
|
|
|
|
|
|
|
|
|
Non-U.S.
residential mortgages
|
|
4.6
|
|
|
8.9
|
|
|
0.4
|
|
|
Non-U.S.
installment and revolving credit
|
|
1.8
|
|
|
221.4
|
|
|
4.0
|
|
|
U.S.
installment and revolving credit
|
|
2.3
|
|
|
179.5
|
|
|
4.2
|
|
|
Non-U.S.
auto
|
|
0.4
|
|
|
280.1
|
|
|
1.1
|
|
|
Other
|
|
2.8
|
|
|
56.3
|
|
|
1.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GECAS
|
|
0.9
|
|
|
37.0
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
Financial Services
|
|
1.9
|
|
|
20.9
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
0.8
|
|
|
58.8
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
1.8
|
|
|
60.9
|
|
|
1.1
|
|
|
Delinquency
rates on managed equipment financing loans and leases and managed consumer
financing receivables follow.
|
Delinquency
rates at
|
|
September
30,
2008(a)
|
|
December
31,
2007
|
|
September
30,
2007
|
|
|
|
|
|
|
|
|
|
|
|
Equipment
Financing
|
|
1.61
|
%
|
|
1.21
|
%
|
|
1.35
|
%
|
|
Consumer
|
|
6.54
|
|
|
5.38
|
|
|
5.26
|
|
|
U.S.
|
|
6.17
|
|
|
5.52
|
|
|
5.14
|
|
|
Non-U.S.
|
|
6.69
|
|
|
5.32
|
|
|
5.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
portfolio of financing receivables, before allowance for losses, was $426.4
billion at September 30, 2008, and $388.3 billion at December 31, 2007.
Financing receivables, before allowance for losses, increased $38.1 billion from
December 31, 2007, primarily as a result of core growth ($46.3 billion) and
acquisitions ($31.8 billion), partially offset by securitization and sales
($28.2 billion), the stronger U.S. dollar ($10.7 billion) and dispositions ($3.3
billion).
Related
nonearning receivables amounted to $7.6 billion (1.8% of outstanding
receivables) at September 30, 2008, compared with $5.5 billion (1.4% of
outstanding receivables) at December 31, 2007. Nonearning receivables excludes
loans held for sale. Related nonearning receivables increased from December 31,
2007, primarily as a result of new exposures, including the effects of the Sanyo
and Bank BPH acquisitions, as well as the continued deterioration in the U.S.
and U.K. markets and certain European portfolios. At September 30, 2008, our
nonearning receivables included a higher concentration of loans secured by
mortgages and mid-market equipment, which have lower historical loss experience
than unsecured exposures.
The
allowance for losses at September 30, 2008, amounted to $4.6 billion compared
with $4.2 billion at December 31, 2007, representing our best estimate of
probable losses inherent in the portfolio and reflecting the current credit and
economic environment. Allowance for losses increased $0.4 billion from December
31, 2007, primarily as a result of overall growth in our portfolio and increased
delinquencies in the U.S. and U.K. markets and certain European portfolios. We
recorded a provision for loan losses of $1.6 billion in the third quarter of
2008 compared with $1.2 billion in the third quarter of 2007.
Delinquency
rates on equipment financing loans and leases increased from December 31, 2007,
and September 30, 2007, to September 30, 2008, primarily as a result of the
inclusion of the Sanyo acquisition in Japan, which contributed an additional 10
basis points at September 30, 2008, as well as deterioration in our U.S.
commercial middle market and certain European portfolios. The current financial
market turmoil and tight credit conditions may continue to lead to a higher
level of commercial delinquencies and provisions for financing receivables and
could adversely affect results of operations at CLL.
Delinquency
rates on consumer financing receivables increased from December 31, 2007, and
September 30, 2007, to September 30, 2008, primarily as a result of continued
deterioration in our U.S. portfolio, the effects of tighter credit conditions in
our secured financing business in the U.K. and the acquisition of Bank BPH. In
response, GE Money will continue to tighten underwriting standards related to
the U.S. and U.K. consumers and will continue its process of regularly reviewing
and adjusting reserve levels in response to when it is probable that losses have
been incurred in the portfolio. This environment may result in higher provisions
for loan losses and could adversely affect results of operations at GE Money.
See Notes 9 and 10 to the condensed, consolidated financial
statements.
Other assets comprise mainly
real estate investments, equity and cost method investments and assets held for
sale. Other assets totaled $81.6 billion at September 30, 2008, compared with
$83.4 billion at December 31, 2007. Of the amount at September 30, 2008, we had
cost method investments totaling $2.5 billion. Cost method investments include a
$0.1 billion investment in FGIC Corporation (FGIC), a monoline credit insurer.
During 2008, credit rating agencies downgraded FGIC; following the downgrades,
various alternatives were being considered. During the first nine months of
2008, we recognized other-than-temporary impairments on our investments in FGIC
common stock ($0.1 billion in the first quarter) and preferred stock ($0.2
billion in the third quarter). We continue to monitor our investment in FGIC
closely, including review for further impairment.
D.
Liquidity and Borrowings
We manage
our liquidity to help ensure access to sufficient funding at acceptable costs to
meet our business needs and financial obligations throughout business cycles. We
rely on cash generated through our operating
activities as well as unsecured and secured funding sources, including
commercial paper, term debt, bank deposits, bank borrowings,
securitization and other retail funding products.
The global credit markets
have recently experienced unprecedented volatility, which has affected both the
availability and cost of our funding sources. In this current volatile credit
environment, we have taken a number of initiatives to strengthen our liquidity,
maintain our dividend, and maintain the highest credit ratings. Specifically, we
have:
·
|
Reduced
the GECS dividend to GE from 40% to 10% of GECS earnings and suspended our
stock repurchase program;
|
·
|
Raised
$15 billion in cash through common and preferred stock offerings in
October 2008;
|
·
|
Reduced
our commercial paper borrowings at GECS to $88 billion at September 30,
2008;
|
·
|
Targeted
to further reduce GECS commercial paper borrowings to $80 billion by the
end of 2008 and to 10-15% of total GECS borrowings going
forward;
|
·
|
Begun
resizing GE to deliver a 60%/40% industrial-financial services earnings
split by the end of 2009;
|
·
|
Grown
our deposit funding to $33.5 billion at September 30, 2008;
and
|
·
|
Registered
to use the Federal Reserve’s Commercial Paper Funding Facility for up to
$98 billion, which is available through April 30,
2009.
|
Throughout
this period of volatility, we have been able to continue to meet our funding
needs at acceptable costs. We continue to access the commercial paper markets
without interruption, although we have been doing so at shorter average
maturities than historically. During the first nine months of 2008, GECS and its
affiliates have issued $69.2 billion of senior, unsecured long-term debt. This
debt was both fixed and floating rate and was issued to institutional and retail
investors in the U.S. and 17 other global markets. Maturities for these
issuances ranged from one to 40 years. We are not currently planning to
issue long-term debt for the remainder of 2008, but will consider it if we have
opportunities to issue debt on favorable terms as a result of more stable
markets or other developments. We maintain securitization capability in most of
the asset classes we have traditionally securitized. However, these capabilities
have been, and continue to be, more limited than in 2007. Securitization
proceeds were $0.7 billion and $4.9 billion during the three months and nine
months ended September 30, 2008, respectively. Comparable amounts for 2007 were
$5.2 billion and $16.9 billion, for three months and nine months,
respectively.
We
have successfully grown our deposits by $22.0 billion since January 1, 2008, to
$33.5 billion at September 30, 2008. We have deposit-taking capability at nine
banks outside of the U.S. and two banks in the U.S., GE Money Bank Inc., a
Federal Savings Bank (FSB), and GE Capital Financial Inc., an Industrial Loan
Corporation (ILC). The FSB and ILC currently issue certificates of deposits
(CDs) distributed by brokers in maturity terms from three months to five years.
Total outstanding CDs at these two banks at September 30, 2008 were $17.2
billion. We expect deposits to continue to grow and constitute a greater
percentage of our total funding in the future.
In
the event we cannot sufficiently access our normal sources of funding, we have a
number of alternative sources of liquidity available, including cash balances
and collections, marketable securities, credit lines and liquidity facilities
provided by governments.
We
anticipate that we will continue to generate cash from operating activities in
the future, which is available to help meet our liquidity needs. We also
generate substantial cash from the principal collections of loans and financing
leases, which historically has been invested in asset growth. We plan to slow
new asset originations and investment to the extent necessary to generate cash
from collections in excess of originations to help support liquidity
needs.
Committed,
unused credit lines totaling $62.1 billion had been extended to us by 66
financial institutions at September 30, 2008. These lines include $37.3 billion
of revolving credit agreements under which we can borrow funds for periods
exceeding one year. The remaining $24.8 billion are 364-day lines that contain a
term-out feature that allows us to extend borrowings for one year from the date
of expiration of the lending agreement. Investment securities with a fair value
of $10.0 billion at September 30, 2008 supporting obligations
to holders of guaranteed investment contracts are also available as a source of
liquidity by entering into a repurchase agreement with a counterparty. The cash
proceeds available from a repurchase agreement transaction could be
significantly less than fair value depending on existing market conditions at
the time.
We
are currently evaluating the effect on our operations and funding strategies of
recently announced actions by the governments of the United States and other
nations. The U.S. Government has enacted legislation and created several
programs to help stabilize credit markets and financial institutions and restore
liquidity, including the Emergency Economic Stabilization Act of 2008, the
Federal Reserve’s Commercial Paper Funding Facility (CPFF) and Money Market
Investor Funding Facility (MMIFF) and the Federal Deposit Insurance
Corporation’s (FDIC) Temporary Liquidity Guarantee Program. Additionally, the
governments of many nations have announced similar measures for institutions in
their respective countries.
We
believe that the Federal Reserve’s recently announced CPFF and MMIFF add an
important liquidity backstop for U.S. issuers of commercial paper and money
market commercial paper investors and will help restore confidence in the prime
commercial paper market. On October 20, 2008, we submitted our registration and
received notification of our eligibility for the Federal Reserve Bank of New
York CPFF, which began purchases of qualifying commercial paper on October 27,
2008. We plan to use the facility primarily to support our commercial paper
investors who need liquidity and to manage our maturity profile.
E.
New Accounting Standards
On
December 4, 2007, the FASB issued SFAS 141R, Business Combinations, which
we will adopt on January 1, 2009. This standard will significantly change the
accounting for business acquisitions both during the period of the acquisition
and in subsequent periods. Among the more significant changes in the accounting
for acquisitions are the following:
·
|
Transaction
costs will generally be expensed. Certain such costs are presently treated
as costs of the acquisition.
|
·
|
In-process
research and development (IPR&D) will be accounted for as an asset,
with the cost recognized as the research and development is realized or
abandoned. IPR&D is presently expensed at the time of the
acquisition.
|
·
|
Contingencies,
including contingent consideration, will generally be recorded at fair
value with subsequent adjustments recognized in operations. Contingent
consideration is presently accounted for as an adjustment of purchase
price.
|
·
|
Decreases
in valuation allowances on acquired deferred tax assets will be recognized
in operations. Such changes previously were considered to be subsequent
changes in consideration and were recorded as decreases in
goodwill.
|
Generally,
the effects of SFAS 141R will depend on future acquisitions.
On
December 4, 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51, which we
will adopt on January 1, 2009. This standard will significantly change the
accounting and reporting related to noncontrolling interests in a consolidated
subsidiary. After adoption, noncontrolling interests ($9.0 billion and $8.0
billion at September 30, 2008, and December 31, 2007, respectively) will be
classified as shareowners’ equity, a change from its current classification
between liabilities and shareowners’ equity. Earnings attributable to minority
interests ($0.2 billion in both the third quarter of 2008 and 2007, and $0.5
billion and $0.6 billion for the first nine months of 2008 and 2007,
respectively) will be included in net earnings, although such earnings will
continue to be deducted to measure earnings per share. Purchases and sales of
minority interests will be reported in equity, deferring, perhaps permanently,
our recognition of the economic gain or loss on partial dispositions. Gains on
sales of minority interests that would not have been in net earnings under SFAS
160 amounted to an insignificant amount in both the third quarters of 2008 and
2007, and $0.2 billion and $0.7 billion for the first nine months of 2008 and
2007, respectively.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
There
have been no significant changes to our market risk since December 31, 2007. For
a discussion of our exposure to market risk, refer to Part II, Item 7A.
“Quantitative and Qualitative Disclosures about Market Risk,” contained in our
Annual Report on Form 10-K for the year ended December 31, 2007.
Item
4. Controls and Procedures
Under
the direction of our Chief Executive Officer and Chief Financial Officer, we
evaluated our disclosure controls and procedures and internal control over
financial reporting and concluded that (i) our disclosure controls and
procedures were effective as of September 30, 2008, and (ii) no change in
internal control over financial reporting occurred during the quarter ended
September 30, 2008, that has materially affected, or is reasonably likely to
materially affect, such internal control over financial reporting.
Part
II. Other Information
Item
1. Legal Proceedings
In
July and September 2008, shareholders filed two purported class actions under
the federal securities laws in the United States District Court for the District
of Connecticut naming us as defendant, as well as our chief executive officer
and chief financial officer. The complaints allege that we and our chief
executive officer made false and misleading statements that artificially
inflated our stock price between March 12, 2008 and April 10, 2008, when we
announced that our results for the first quarter of 2008 would not meet our
previous guidance and we also lowered our full year guidance for 2008. In
addition, shareholders have filed two purported derivative actions in New York
State court against our chief executive officer and chief financial officer, the
members of our board and us (as nominal defendant) for alleged breach of
fiduciary duty and other claims in connection with these events. These four
cases, which seek unspecified damages, are in their earliest stages and we
intend to defend ourselves vigorously.
In
October 2008, shareholders filed a purported class action under the federal
securities laws in the United States District Court for the Southern District of
New York naming us as defendant, as well as our chief executive officer and
chief financial officer. The complaint alleges that during a conference call
with analysts on September 25, 2008, defendants made false and misleading
statements concerning (i) the state of GE’s funding, cash flows, and liquidity
and (ii) the question of issuing additional equity, which caused economic loss
to those shareholders who purchased GE stock between September 25, 2008 and
October 2, 2008, when we announced the pricing of a common stock offering. This
case, which seeks unspecified damages, is at the earliest stage and we intend to
defend ourselves vigorously.
Certain
risks described below update the risk factors in Part 1, Item 1A. “Risk Factors”
in our Annual Report on Form 10-K for the year ended December 31, 2007 and
were included as part of the offering documents in our recently completed
offering of shares of common stock.
Risks
Relating to the Financial Services Industry and Financial Markets
Recent
government actions to stabilize credit markets and financial institutions may
not be effective and could adversely affect our competitive
position.
The
U.S. Government recently enacted legislation and created several programs to
help stabilize credit markets and financial institutions and restore liquidity,
including the Emergency Economic Stabilization Act of 2008, the Federal
Reserve’s Commercial Paper Funding Facility (CPFF) and Money Market Investor
Funding Facility and the Federal Deposit Insurance Corporation’s (FDIC)
Temporary Liquidity Guarantee Program. Additionally, the governments of many
nations have announced similar measures for institutions in their respective
countries. There is no assurance that these programs individually or
collectively will have beneficial effects in the credit markets, will address
credit or liquidity issues of companies that participate in the programs or will
reduce volatility or uncertainty in the financial markets. The failure of these
programs to have their intended effects could have a material adverse effect on
the financial markets, which in turn could materially and adversely affect our
business, financial condition and results of operations. During the period that
these programs are in place, we could temporarily benefit from the terms of the
programs or from the conditions for participation, relative to other companies
that do not participate in the programs we do. To the extent that we participate
in these programs or other programs, there is no assurance that such programs
will remain available for sufficient periods of time or on acceptable terms to
benefit us, and the expiration of such programs could have unintended adverse
effects on us.
Current
levels of market volatility are unprecedented.
The
capital and credit markets have been experiencing extreme volatility and
disruption for more than 12 months. In recent weeks, the volatility and
disruption have reached unprecedented levels. In some cases, the markets have
exerted downward pressure on stock prices and credit capacity for certain
issuers. A large portion of GE Capital’s borrowings have been issued in the
commercial paper markets and, although GE Capital has continued to issue
commercial paper, there can be no assurance that such markets will continue to
be a reliable source of short-term financing for GE Capital. If current levels
of market disruption and volatility continue or worsen, or if we cannot lower
our asset levels as planned, we would seek to repay commercial paper as it
becomes due or to meet our other liquidity needs using the Federal Reserve’s
CPFF Program, the net proceeds of our equity offering and the investment by
Berkshire Hathaway Inc., drawing upon contractually committed lending agreements
primarily provided by global banks and/or by seeking other funding sources.
However, under such extreme market conditions, there can be no assurance such
agreements and other funding sources would be available or
sufficient.
Difficult
conditions in the financial services markets have materially and adversely
affected the business and results of operations of GE Capital and we do not
expect these conditions to improve in the near future.
Dramatic
declines in the housing market during the prior year, with falling home prices
and increasing foreclosures and unemployment, have resulted in significant
write-downs of asset values by financial institutions, including
government-sponsored entities and major commercial and investment banks. These
write-downs, initially of mortgage-backed securities but spreading to credit
default swaps and other derivative securities, have caused many financial
institutions to seek additional capital, to merge with larger and stronger
institutions and, in some cases, to fail. Many lenders and institutional
investors have reduced, and in some cases, ceased to provide funding to
borrowers including other financial institutions. This market turmoil and
tightening of credit have led to an increased level of commercial and consumer
delinquencies, lack of consumer confidence, increased market volatility and
widespread reduction of business activity generally.
The
soundness of other financial institutions could adversely affect GE
Capital.
GE
Capital has exposure to many different industries and counterparties, and
routinely executes transactions with counterparties in the financial services
industry, including brokers and dealers, commercial banks, investment banks and
other institutional clients. Many of these transactions expose GE Capital to
credit risk in the event of default of its counterparty or client. In addition,
GE Capital’s credit risk may be exacerbated when the collateral held by it
cannot be realized upon or is liquidated at prices not sufficient to recover the
full amount of the loan or derivative exposure due to it. GE Capital also has
exposure to these financial institutions in the form of equity investments and
unsecured debt instruments. There can be no assurance that any such losses or
impairments to the carrying value of its financial assets would not materially
and adversely affect GE Capital’s business and results of
operations.
The
real estate markets are highly uncertain.
We
provide financing for the acquisition, refinancing and renovation of various
types of properties. We also consider opportunities to buy and sell properties,
which may result in significant outlays or proceeds of cash, either individually
or in the aggregate. The profitability of real estate investments is largely
dependent upon the specific geographic market in which they are located and the
perceived value of that market at the time of sale. We may have difficulty
optimizing that mix and such activity may vary significantly from one year to
the next. Under current market and credit conditions, there can be no assurance
as to the level of sales we will complete or the net sales proceeds we will
realize. In addition, our funding transactions expose GE Capital to credit risk
in the event of default.
In
addition, we are a residential mortgage lender in certain geographic markets
that have been and may continue to be adversely affected by declines in real
estate values and home sale volumes, job losses and other factors that may
negatively impact the credit performance of our mortgage loans. Our allowance
for loan losses on these mortgage loans is based on our analysis of current and
historical delinquency and loan performance, as well as other management
assumptions that may be inaccurate predictions of credit performance in this
environment.
Failure
to maintain our “Triple-A” credit ratings could adversely affect our cost of
funds and related margins, liquidity, competitive position and access to capital
markets.
The
major debt agencies routinely evaluate our debt and have given their highest
credit ratings to us. This evaluation is based on a number of factors, which
include financial strength as well as transparency with rating agencies and
timeliness of financial reporting. On September 25, 2008, we reaffirmed our
longstanding commitment to maintaining our “Triple A” ratings and announced that
we are taking certain steps to strengthen our capital and liquidity position,
including reducing the level of dividends we receive from GE Capital from 40% to
10% of GE Capital’s earnings, suspending the repurchase of our common stock,
reducing GE Capital’s commercial paper debt to a level of 10 to 15% of GE
Capital’s total debt and reducing the size of our financial services business so
that it contributes only approximately 40% of our total earnings by the end of
2009. We also announced that GE Capital’s long-term funding plan for 2008 has
been completed. Following our announcement, Standard & Poor’s Ratings
Services affirmed our and GE Capital’s “AAA” long-term and “A-1+” short-term
corporate credit ratings with a stable outlook and Moody’s Investor Services
commented that our revised operational and financial strategies for GE Capital
“are supportive of” our and GE Capital’s “Aaa” long-term and “Prime-1”
short-term ratings with a stable outlook. In light of the difficulties in the
financial services industry and the difficult financial markets, however, there
can be no assurance that we will successfully complete these steps or, in the
event of further deterioration in the financial markets, that completion of
these steps and any others we might take in response, will be sufficient to
allow us to maintain our “Triple A” ratings. Failure to do so could adversely
affect our cost of funds and related margins, liquidity, competitive position
and access to capital markets.
Other
Business Risks
Our
global growth is subject to a number of economic and political
risks.
We
conduct our operations in virtually every part of the world. Global economic
developments affect businesses such as ours in many ways. For example, although
infrastructure orders remain strong, the current tightening of credit in the
financial markets may make it more difficult for customers to obtain financing
for large projects and, depending on the degree to which this occurs, there may
be a material decrease in orders for our infrastructure projects. Operations are
also subject to the effects of global competition. Our global business is
affected by local economic environments, including inflation, recession and
currency volatility. Political changes, some of which may be disruptive, can
interfere with our supply chain, our customers and all of our activities in a
particular location. While some of these risks can be hedged using derivatives
or other financial instruments and some are insurable, such attempts to mitigate
these risks are costly and not always successful, and our ability to engage in
such mitigation has decreased or become even more costly as a result of recent
market developments.
The
success of our business depends on achieving our objectives for strategic
acquisitions and dispositions.
With
respect to acquisitions and mergers, we may not be able to identify suitable
candidates at terms acceptable to us, or may not achieve expected returns and
other benefits as a result of integration challenges, such as personnel and
technology. We will continue to evaluate the potential disposition of assets and
businesses that may no longer help us meet our objectives. When we decide to
sell assets or a business, we may encounter difficulty in finding buyers or
alternative exit strategies on acceptable terms in a timely manner, which could
delay the accomplishment of our strategic objectives, or we may dispose of a
business at a price or on terms that are less than we had anticipated. These
difficulties have been exacerbated in the current credit environment because
buyers have difficulty obtaining the necessary financing. In addition, there is
a risk that we may sell a business whose subsequent performance exceeds our
expectations, in which case our decision would have potentially sacrificed
enterprise value. We also may be too optimistic about a particular business’s
prospects, in which case we may be unable to find a buyer at a price acceptable
to us and therefore may have potentially sacrificed enterprise
value.
We
are subject to a wide variety of laws and regulations.
Our
businesses are subject to regulation by U.S. federal and state laws and foreign
laws, regulations and policies. Changes to laws or regulations may require us to
modify our business objectives or affect our returns on investment if existing
practices become more restricted, subject to escalating costs or prohibited
outright. Particular risks include regulatory risks arising from local laws,
such as laws that reduce the allowable lending rate or limit consumer borrowing,
from local liquidity regulations that may increase the risks of not being able
to retrieve assets, and changes to tax law that may affect our return on
investments. For example, GE’s effective tax rate is reduced because active
business income earned and indefinitely reinvested outside the United States is
taxed at less than the U.S. rate. A significant portion of this reduction
depends upon a provision of U.S. tax law that defers the imposition of U.S. tax
on certain active financial services income until that income is repatriated to
the United States as a dividend. This provision is consistent with international
tax norms and permits U.S. financial services companies to compete more
effectively with foreign banks and other foreign financial institutions in
global markets. This provision, currently scheduled to expire at the end of
2009, has been scheduled to expire and has been extended by Congress on five
previous occasions, including in October of 2008, but there can be no assurance
that it will continue to be extended. In the event this provision is not
extended after 2009, the current U.S. tax imposed on active financial services
income earned outside the United States would increase, making it more difficult
for U.S. financial services companies to compete in global markets. If this
provision is not extended, we expect our effective tax rate to increase
significantly after 2011.
Item
2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Period(a)
|
|
Total
number
of
shares
purchased(b)
|
|
Average
price
paid
per
share
|
|
Total
number of
shares
purchased as
part
of our share
repurchase
program(c)
|
|
Approximate
dollar
value
of shares that
may
yet be purchased
under
our share
repurchase
program
|
|
(Shares
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July
|
|
|
8,248
|
|
|
|
$27.75
|
|
|
|
8,127
|
|
|
|
|
|
August
|
|
|
7,180
|
|
|
|
$28.86
|
|
|
|
6,728
|
|
|
|
|
|
September
|
|
|
10,455
|
|
|
|
$26.57
|
|
|
|
10,350
|
|
|
|
|
|
Total
|
|
|
25,883
|
|
|
|
$27.58
|
|
|
|
25,205
|
|
|
|
$11.8
billion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Information
is presented on a fiscal calendar basis, consistent with our quarterly
financial reporting.
|
(b)
|
This
category includes 678 thousand shares repurchased from our various benefit
plans, primarily the GE Savings and Security Program (the S&SP).
Through the S&SP, a defined contribution plan with Internal Revenue
Service Code 401(k) features, we repurchase shares resulting from changes
in investment options by plan participants.
|
(c)
|
This
balance represents the number of shares that were repurchased through the
2007 GE Share Repurchase Program (the Program) under which we are
authorized to repurchase up to $15 billion of our common stock through
2010. The Program is flexible and shares are acquired with a combination
of borrowings and free cash flow from the public markets and other
sources, including GE Stock Direct, a stock purchase plan that is
available to the public. As major acquisitions or other circumstances
warrant, we modify the frequency and amount of share repurchases under the
Program. This category also includes 12,742 thousand shares acquired in
connection with the disposition of the Sundance Channel by NBC
Universal.
|
Exhibit
11
|
Computation
of Per Share Earnings*.
|
Exhibit
12
|
Computation
of Ratio of Earnings to Fixed Charges.
|
Exhibit
31(a)
|
Certification
Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange
Act of 1934, as Amended.
|
Exhibit
31(b)
|
Certification
Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange
Act of 1934, as Amended.
|
Exhibit
32
|
Certification
Pursuant to 18 U.S.C. Section 1350.
|
Exhibit
99
|
Financial
Measures That Supplement Generally Accepted Accounting
Principles.
|
|
*
|
Data
required by Statement of Financial Accounting Standards 128, Earnings per Share, is
provided in Note 7 to the condensed, consolidated financial
statements in this report.
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
|
General
Electric Company
(Registrant)
|
|
October
30, 2008
|
|
/s/
Jamie S. Miller
|
|
Date
|
|
Jamie
S. Miller
Vice
President and Controller
Duly
Authorized Officer and Principal Accounting Officer
|
|