GECC Form 10-Q 3-31-2007
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
(Mark
One)
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þ
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
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THE
SECURITIES EXCHANGE ACT OF 1934
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For
the quarterly period ended March
31, 2007
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OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
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For
the transition period from ___________to ___________
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_____________________________
Commission
file number 1-6461
_____________________________
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GENERAL
ELECTRIC CAPITAL CORPORATION
(Exact
name of registrant as specified in its
charter)
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Delaware
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13-1500700
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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3135
Easton Turnpike, Fairfield, Connecticut
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06828-0001
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(Address
of principal executive offices)
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(Zip
Code)
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(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, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer ¨
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Accelerated
filer ¨
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Non-accelerated
filer þ
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ No þ
At
April 26, 2007, 3,985,403 shares of voting common stock, which constitute all
of
the outstanding common equity, with a par value of $14 per share were
outstanding.
REGISTRANT
MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF
FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED
DISCLOSURE FORMAT.
General
Electric Capital Corporation
Part
I - Financial Information
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Page
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Item
1. Financial Statements
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Condensed
Statement of Current and Retained Earnings
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3
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Condensed
Statement of Financial Position
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4
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Condensed
Statement of Cash Flows
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5
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Notes
to Condensed, Consolidated Financial Statements
(Unaudited)
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6
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Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
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11
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Item
4. Controls and Procedures
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19
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Part
II - Other Information
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Item
1. Legal Proceedings
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19
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Item
6. Exhibits
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20
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Signatures
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21
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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 and
commodity and equity prices; 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
General
Electric Capital Corporation and consolidated affiliates
Condensed
Statement of Current and Retained Earnings
(Unaudited)
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Three
months ended
March
31
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(In
millions)
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2007
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2006
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Revenues
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Revenues
from services (note 3)
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$
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15,594
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$
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13,248
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Sales
of goods
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32
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555
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Commercial
paper interest rate swap adjustment
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-
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180
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Total
revenues
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15,626
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13,983
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Costs
and expenses
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Interest
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5,258
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4,009
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Operating
and administrative
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4,407
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4,166
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Cost
of goods sold
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25
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513
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Investment
contracts, insurance losses and insurance annuity benefits
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166
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148
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Provision
for losses on financing receivables
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1,242
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825
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Depreciation
and amortization
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1,920
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1,486
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Minority
interest in net earnings of consolidated affiliates
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104
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94
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Total
costs and expenses
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13,122
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11,241
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Earnings
from continuing operations before income taxes
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2,504
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2,742
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Provision
for income taxes
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(23
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)
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(398
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)
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Earnings
from continuing operations
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2,481
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2,344
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Earnings
(loss) from discontinued operations, net of taxes (note 2)
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(2
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)
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128
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Net
earnings
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2,479
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2,472
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Dividends
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(2,974
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)
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(4,749
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)
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Retained
earnings at beginning of period
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37,551
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35,506
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Retained
earnings at end of period
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$
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37,056
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$
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33,229
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The
notes
to condensed, consolidated financial statements are an integral part of this
statement.
General
Electric Capital Corporation and consolidated affiliates
Condensed
Statement of Financial Position
(In
millions)
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March
31, 2007
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December
31, 2006
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(Unaudited)
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Assets
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Cash
and equivalents
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$
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10,882
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$
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9,849
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Investment
securities
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21,002
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21,345
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Inventories
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63
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54
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Financing
receivables - net (note 4)
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329,737
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329,586
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Other
receivables
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37,730
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36,059
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Buildings
and equipment, less accumulated amortization of $22,991
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and
$22,528
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61,023
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58,162
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Intangible
assets - net (note 5)
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26,805
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25,243
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Other
assets
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70,866
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63,367
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Total
assets
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$
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558,108
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$
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543,665
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Liabilities
and equity
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Short-term
borrowings (note 6)
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$
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172,993
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$
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168,896
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Accounts
payable
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15,609
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15,556
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Long-term
borrowings (note 6)
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270,281
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256,817
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Investment
contracts, insurance liabilities and insurance annuity
benefits
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12,510
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12,418
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Other
liabilities
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18,560
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20,486
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Deferred
income taxes
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10,119
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10,727
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Liabilities
of discontinued operations (note 2)
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196
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172
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Total
liabilities
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500,268
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485,072
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Minority
interest in equity of consolidated affiliates
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1,952
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2,008
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Capital
stock
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56
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56
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Accumulated
gains (losses) - net
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Investment
securities
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540
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481
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Currency
translation adjustments
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4,545
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4,809
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Cash
flow hedges
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(130
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)
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(199
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)
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Benefit
plans
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(263
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)
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(278
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)
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Additional
paid-in capital
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14,084
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14,088
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Retained
earnings
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37,056
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37,628
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Total
shareowner’s equity
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55,888
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56,585
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Total
liabilities and equity
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$
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558,108
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$
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543,665
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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 $4,692 million and $4,813 million
at March 31, 2007 and December 31, 2006, respectively.
The
notes
to condensed, consolidated financial statements are an integral part of this
statement.
General
Electric Capital Corporation and consolidated affiliates
Condensed
Statement of Cash Flows
(Unaudited)
(In
millions)
|
Three
months ended
March
31
|
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|
2007
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2006
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Cash
flows - operating activities
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Net
earnings
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$
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2,479
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$
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2,472
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Loss
(earnings) from discontinued operations
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2
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(128
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)
|
Adjustments
to reconcile net earnings to cash provided from operating
activities
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|
|
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Depreciation
and amortization of buildings and equipment
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1,920
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1,486
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Increase
(decrease) in accounts payable
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1,311
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(85
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)
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Provision
for losses on financing receivables
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1,242
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|
825
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All
other operating activities
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(4,574
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)
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(1,301
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)
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Cash
from operating activities - continuing operations
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2,380
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|
3,269
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Cash
from operating activities - discontinued operations
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22
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|
33
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Cash
from operating activities
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2,402
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3,302
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Cash
flows - investing activities
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Additions
to buildings and equipment
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(3,978
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)
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(2,038
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)
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Dispositions
of buildings and equipment
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2,591
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|
|
1,047
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Increase
in loans to customers
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|
(78,840
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)
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|
(70,707
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)
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Principal
collections from customers - loans
|
|
72,760
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|
|
65,213
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Investment
in equipment for financing leases
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|
(5,911
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)
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|
(5,766
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)
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Principal
collections from customers - financing leases
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|
6,392
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|
|
5,878
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Net
change in credit card receivables
|
|
5,468
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|
3,506
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Proceeds
from sale of discontinued operations
|
|
-
|
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|
2,753
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Payments
for principal businesses purchased
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|
(3,534
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)
|
|
(424
|
)
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Proceeds
from principal business dispositions
|
|
1,102
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|
|
-
|
|
All
other investing activities
|
|
(4,934
|
)
|
|
(3,920
|
)
|
Cash
used for investing activities - continuing operations
|
|
(8,884
|
)
|
|
(4,458
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)
|
Cash
from (used for) investing activities - discontinued
operations
|
|
(22
|
)
|
|
7
|
|
Cash
used for investing activities
|
|
(8,906
|
)
|
|
(4,451
|
)
|
|
|
|
|
|
|
|
Cash
flows - financing activities
|
|
|
|
|
|
|
Net
decrease in borrowings (maturities of 90 days or less)
|
|
(3,228
|
)
|
|
(2,471
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)
|
Newly
issued debt
|
|
|
|
|
|
|
Short-term
(91 to 365 days)
|
|
599
|
|
|
316
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|
Long-term
(longer than one year)
|
|
28,173
|
|
|
24,177
|
|
Non-recourse,
leveraged lease
|
|
-
|
|
|
73
|
|
Repayments
and other debt reductions
|
|
|
|
|
|
|
Short-term
(91 to 365 days)
|
|
(11,530
|
)
|
|
(14,051
|
)
|
Long-term
(longer than one year)
|
|
(3,141
|
)
|
|
(2,510
|
)
|
Non-recourse,
leveraged lease
|
|
(386
|
)
|
|
(382
|
)
|
Dividends
paid to shareowner
|
|
(2,974
|
)
|
|
(4,609
|
)
|
All
other financing activities
|
|
24
|
|
|
542
|
|
Cash
from financing activities - continuing operations
|
|
7,537
|
|
|
1,085
|
|
Cash
used for financing activities - discontinued operations
|
|
-
|
|
|
(28
|
)
|
Cash
from financing activities
|
|
7,537
|
|
|
1,057
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash and equivalents
|
|
1,033
|
|
|
(92
|
)
|
Cash
and equivalents at beginning of year
|
|
9,849
|
|
|
6,182
|
|
Cash
and equivalents at March 31
|
|
10,882
|
|
|
6,090
|
|
Less
cash and equivalents of discontinued operations at March
31
|
|
-
|
|
|
198
|
|
Cash
and equivalents of continuing operations at March
31
|
$
|
10,882
|
|
$
|
5,892
|
|
|
|
|
|
|
|
|
The
notes
to condensed, consolidated financial statements are an integral part of this
statement.
Notes
to Condensed, Consolidated Financial Statements (Unaudited)
1.
Our
financial statements are prepared in conformity with the U.S. generally accepted
accounting principles (GAAP). Preparing financial statements in conformity
with
GAAP requires us to make estimates and assumptions that affect reported amounts
and related disclosures. Actual results could differ from those estimates.
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.
See
note 1 to the consolidated financial statements included in the Annual Report
on
Form 10-K for the year ended December 31, 2006. That note discusses
consolidation and financial statement presentation. We have reclassified certain
prior-period amounts to conform to the current period presentation.
All
of
our outstanding common stock is owned by General Electric Capital Services,
Inc.
(GE Capital Services or GECS), all of whose common stock is owned, directly
or
indirectly, by General Electric Company (GE Company or GE). Our financial
statements consolidate all of our affiliates - companies that we control and
in
which we hold a majority voting interest. Details of total revenues and segment
profit by operating segment can be found on page 13 of this report.
Unless
otherwise indicated, information in these notes to condensed, consolidated
financial statements relates to continuing operations.
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.
Accounting
changes
On
January 1, 2007, we adopted Financial Accounting Standards Board Interpretation
48, Accounting
for Uncertainty in Income Taxes
(FIN
48), and FASB Staff Position (FSP) FAS 13-2, Accounting
for a Change or Projected Change in the Timing of Cash Flows Relating to Income
Taxes Generated by a Leveraged Lease Transaction.
Among
other things, FIN 48 requires application of a “more likely than not” threshold
to the recognition and derecognition of tax positions. It further requires
that
a change in judgment related to prior years’ tax positions be recognized in the
quarter of such change. FSP FAS 13-2 requires recalculation of returns on
leveraged leases when there is a change in the timing or projected timing of
cash flows relating to income taxes associated with such leases. The January
1,
2007 transition reduced our retained earnings by $77 million, all of which
was
associated with FSP FAS 13-2 and decreased financing receivables -
net.
Annually,
GE files over 6,500 income tax returns in over 250 global taxing jurisdictions,
a substantial portion of which include our activities. We are under examination
or engaged in tax litigation in many of these jurisdictions. The U.S. Internal
Revenue Service is currently auditing the GE consolidated income tax returns,
in
which we join in filing, in two cycles: 2000-2002 and 2003-2005. In addition,
certain other tax deficiency issues and refund claims for previous years remain
unresolved. Our largest unresolved issues relate to deductions associated with
certain leases. It is reasonably possible that one or both of these U.S. audit
cycles will be completed during 2007. We believe that there is no other tax
jurisdiction in which the outcome of unresolved issues or claims is
likely
to
be material to our financial position, cash flows or results of operations.
We
further believe that we have made adequate provision for all income tax
uncertainties.
At
January 1, 2007, our “unrecognized tax benefits” - that is, the aggregate tax
effect of differences between tax return positions and the benefits recognized
in our financial statements - amounted to $2,835 million. If recognized, $1,740
million of our unrecognized tax benefits would reduce our income tax expense
and
effective tax rate. Some portion of any such reduction might be reported as
discontinued operations. During 2007, global audit resolutions could potentially
reduce our unrecognized tax benefits, either because our tax positions are
sustained on audit or because we agree to their disallowance, by as much as
$500
million, depending on the outcomes of ongoing examinations and litigation.
Of
this amount, $300 million relates to positions that would not affect our total
tax provision or effective tax rate.
We
classify interest on tax deficiencies as interest expense; we classify income
tax penalties as income tax expense. At January 1, 2007, before any tax
benefits, our accrued interest on unrecognized tax benefits amounted to $620
million and related accrued penalties amounted to $96 million.
2.
In
2006, we substantially completed our planned exit of the insurance businesses
through the sale of GE Life, our U.K.-based life insurance operation, to Swiss
Reinsurance Company (Swiss Re). Also during 2006, we completed the sale of
our
remaining 18% investment in Genworth Financial, Inc. (Genworth), our formerly
wholly-owned subsidiary that conducted most of our consumer insurance business,
including life and mortgage insurance operations, through a secondary public
offering. Results of these businesses are reported as discontinued operations
for all periods presented.
Revenues
from discontinued operations for the first quarter of 2006 were $803 million.
Earnings from operations and disposal for the first quarter of 2006 were $3
million ($7 million pre tax) and $125 million ($306 million pre tax),
respectively. Revenues and earnings from discontinued operations for the first
quarter of 2007 were insignificant. Accrued liabilities, primarily tax related,
amounted to $196 million as of March 31, 2007, and will be settled beginning
this year.
3. Revenues
from services are summarized in the following table.
|
Three
months ended
March
31
|
|
(In
millions)
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
Interest
on loans
|
$
|
5,959
|
|
$
|
5,273
|
|
Equipment
leased to others
|
|
3,739
|
|
|
2,885
|
|
Financing
leases
|
|
1,111
|
|
|
987
|
|
Fees
|
|
1,097
|
|
|
968
|
|
Real
estate investments
|
|
1,085
|
|
|
664
|
|
Investment
income
|
|
482
|
|
|
291
|
|
Associated
companies
|
|
429
|
|
|
449
|
|
Gross
securitization gains
|
|
571
|
|
|
268
|
|
Other
items
|
|
1,121
|
|
|
1,463
|
|
Total
|
$
|
15,594
|
|
$
|
13,248
|
|
4.
Financing receivables - net, consisted of the following.
|
At
|
|
(In
millions)
|
3/31/07
|
|
12/31/06
|
|
|
|
|
|
|
|
|
Loans,
net of deferred income
|
$
|
266,484
|
|
$
|
266,290
|
|
Investment
in financing leases, net of deferred income
|
|
67,816
|
|
|
67,891
|
|
|
|
334,300
|
|
|
334,181
|
|
Less
allowance for losses
|
|
(4,563
|
)
|
|
(4,595
|
)
|
Financing
receivables - net(a)
|
$
|
329,737
|
|
$
|
329,586
|
|
|
|
|
|
|
|
|
(a)
|
Included
$10,724 million and $11,509 million related to consolidated, liquidating
securitization entities at March 31, 2007, and December 31, 2006,
respectively.
|
|
5.
Intangible assets - net, consisted of the following.
|
At
|
|
(In
millions)
|
3/31/07
|
|
12/31/06
|
|
|
|
|
|
|
|
|
Goodwill
|
$
|
23,828
|
|
$
|
22,578
|
|
Intangible
assets subject to amortization
|
|
2,977
|
|
|
2,665
|
|
Total
|
$
|
26,805
|
|
$
|
25,243
|
|
Changes
in goodwill balances follow.
|
2007
|
|
(In
millions)
|
GE
Commercial
Finance
|
|
GE
Money
|
|
GE
Industrial(a)
|
|
GE
Infrastructure(a)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
January 1
|
|
$
|
11,139
|
|
|
|
$
|
9,845
|
|
|
|
$
|
1,430
|
|
|
|
$
|
164
|
|
|
$
|
22,578
|
|
Acquisitions/purchase
accounting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustments
|
|
|
1,287
|
|
|
|
|
(24
|
)
|
|
|
|
12
|
|
|
|
|
4
|
|
|
|
1,279
|
|
Dispositions,
currency exchange
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
other
|
|
|
11
|
|
|
|
|
24
|
|
|
|
|
(64
|
)
|
|
|
|
-
|
|
|
|
(29
|
)
|
Balance
March 31
|
|
$
|
12,437
|
|
|
|
$
|
9,845
|
|
|
|
$
|
1,378
|
|
|
|
$
|
168
|
|
|
$
|
23,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Included
only portions of the segment that are financial services
businesses.
|
|
Goodwill
balances increased $1,380 million in 2007 as a result of new acquisitions.
The
largest goodwill balance increases arose from acquisitions of Trustreet
Properties, Inc. ($815 million at GE Commercial Finance), 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. ($486 million at GE
Commercial Finance). During 2007, we decreased goodwill associated with previous
acquisitions by $101 million. The largest such adjustment was the decrease
of
$54 million associated with the 2006 acquisition of Banque Artesia Nederland
N.V. by GE Commercial Finance.
Intangible
assets subject to amortization
|
At
|
|
3/31/07
|
|
12/31/06
|
(In
millions)
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents,
licenses and trademarks
|
$
|
520
|
|
$
|
(316
|
)
|
$
|
204
|
|
$
|
466
|
|
$
|
(302
|
)
|
$
|
164
|
Capitalized
software
|
|
1,734
|
|
|
(1,017
|
)
|
|
717
|
|
|
1,659
|
|
|
(965
|
)
|
|
694
|
All
other
|
|
3,084
|
|
|
(1,028
|
)
|
|
2,056
|
|
|
2,744
|
|
|
(937
|
)
|
|
1,807
|
Total
|
$
|
5,338
|
|
$
|
(2,361
|
)
|
$
|
2,977
|
|
$
|
4,869
|
|
$
|
(2,204
|
)
|
$
|
2,665
|
Amortization
expense related to intangible assets subject to amortization was $156 million
and $111 million for the quarters ended March 31, 2007 and 2006, respectively.
6.
Borrowings are summarized in the following table.
|
At
|
|
(In
millions)
|
3/31/07
|
|
12/31/06
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
paper
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
Unsecured
|
$
|
58,010
|
|
$
|
60,141
|
|
Asset-backed(a)
|
|
5,912
|
|
|
6,430
|
|
Non-U.S.
|
|
25,733
|
|
|
26,329
|
|
Current
portion of long-term debt
|
|
51,773
|
|
|
44,518
|
|
GE
Interest Plus notes(b)
|
|
9,772
|
|
|
9,161
|
|
Other
|
|
21,793
|
|
|
22,317
|
|
Total
|
|
172,993
|
|
|
168,896
|
|
|
|
|
|
|
|
|
Long-term
borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior
notes
|
|
|
|
|
|
|
Unsecured
|
|
253,922
|
|
|
240,105
|
|
Asset-backed(c)
|
|
5,459
|
|
|
5,810
|
|
Extendible
notes
|
|
6,000
|
|
|
6,000
|
|
Subordinated
notes(d)
|
|
4,900
|
|
|
4,902
|
|
Total
|
|
270,281
|
|
|
256,817
|
|
Total
borrowings
|
$
|
443,274
|
|
$
|
425,713
|
|
|
|
|
|
|
|
|
(a)
|
Entirely
obligations of consolidated, liquidating securitization entities.
See note
8.
|
(b)
|
Entirely
variable denomination floating rate demand notes.
|
(c)
|
Included
$4,325 million and $4,684 million of asset-backed senior notes, issued
by
consolidated, liquidating securitization entities at March 31, 2007,
and
December 31, 2006, respectively. See note 8.
|
(d)
|
Included
$450 million of subordinated notes guaranteed by GE at March 31,
2007, and
December 31, 2006.
|
7. A
summary of increases (decreases) in shareowner’s equity that did not result
directly from transactions with the shareowner, net of income taxes, follows.
|
Three
months ended
March
31
|
|
(In
millions)
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
2,479
|
|
$
|
2,472
|
|
Investment
securities - net
|
|
59
|
|
|
(163
|
)
|
Currency
translation adjustments - net
|
|
(264
|
)
|
|
(299
|
)
|
Cash
flow hedges - net
|
|
69
|
|
|
214
|
|
Benefit
plans - net
|
|
15
|
|
|
(10
|
)
|
Total
|
$
|
2,358
|
|
$
|
2,214
|
|
8.
The
following table represents assets in securitization entities, both consolidated
and off-balance sheet.
|
At
|
|
(In
millions)
|
3/31/07
|
|
12/31/06
|
|
|
|
|
|
|
|
|
Receivables
secured by
|
|
|
|
|
|
|
Equipment
|
$
|
8,409
|
|
$
|
9,590
|
|
Commercial
real estate
|
|
9,654
|
|
|
9,765
|
|
Residential
real estate
|
|
7,027
|
|
|
7,329
|
|
Other
assets
|
|
14,413
|
|
|
14,743
|
|
Credit
card receivables
|
|
17,293
|
|
|
12,947
|
|
Trade
receivables
|
|
405
|
|
|
176
|
|
Total
securitized assets
|
$
|
57,201
|
|
$
|
54,550
|
|
|
At
|
|
(In
millions)
|
3/31/07
|
|
12/31/06
|
|
|
|
|
|
|
|
|
Off-balance
sheet(a)(b)
|
$
|
46,354
|
|
$
|
42,903
|
|
On-balance
sheet(c)(d)
|
|
10,847
|
|
|
11,647
|
|
Total
securitized assets
|
$
|
57,201
|
|
$
|
54,550
|
|
|
|
|
|
|
|
|
(a)
|
At
March 31, 2007, and December 31, 2006, liquidity support amounted
to $201
million and $276 million, respectively. These amounts are net of
$1,781
million and $1,936 million, respectively, deferred beyond one year.
Credit
support amounted to $2,010 million and $2,240 million at March 31,
2007,
and December 31, 2006, respectively.
|
(b)
|
Liabilities
for recourse obligations related to off-balance sheet assets were
$14
million and $27 million at March 31, 2007, and December 31, 2006,
respectively.
|
(c)
|
At
March 31, 2007, and December 31, 2006, liquidity support amounted
to
$6,055 million and $6,585 million, respectively. Credit support amounted
to $2,874 million and $2,926 million at March 31, 2007, and December
31,
2006, respectively.
|
(d)
|
Included
$10,724 million and $11,509 million of financing receivables - net
related
to consolidated, liquidating securitization entities at March 31,
2007,
and December 31, 2006,
respectively.
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
A.
Results of Operations
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 consolidated financial statements relates to continuing operations unless
otherwise indicated.
Overview
Revenues
for the first quarter of 2007 were $15.6 billion, a $1.6 billion (12%) increase
over the first quarter of 2006. Revenues for the first quarter of 2007 included
$0.7 billion of revenue from acquisitions and were reduced by $0.4 billion
as a
result of dispositions. Revenues also increased $1.4 billion compared with
the
first quarter of 2006 as a result of organic revenue growth, the weakening
U.S.
dollar and the second quarter 2006 consolidation of GE SeaCo, an entity
previously accounted for using the equity method. Organic revenue growth
excludes the effects of acquisitions, business dispositions (other than
dispositions of businesses acquired for investment) and currency exchange rates.
Earnings were $2.5 billion, up 6% from $2.3 billion in the first quarter of
2006.
Overall,
acquisitions contributed $0.7 billion and $0.4 billion to total revenues in
the
first quarters of 2007 and 2006, respectively. Acquired businesses had an
insignificant effect on our total net earnings in the first quarter of 2007
compared with $0.1 billion in the first quarter of 2006. 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 $0.4 billion and $0.3 billion in the first quarters of 2007
and 2006, respectively. The effect of dispositions on earnings was insignificant
in each of the first quarters of 2007 and 2006.
The
most
significant acquisitions affecting first quarter 2007 results were the custom
fleet business of National Australia Bank Ltd.; 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.; and Banque Artesia Nederland
N.V. at GE Commercial Finance.
The
provision for income taxes was insignificant for the first quarter of 2007
(effective tax rate of 0.9%), compared with $0.4 billion for the first quarter
of 2006 (effective tax rate of 14.5%). The tax rate decreased primarily as
a
result of tax benefits related to the disposition of the SES Global investment
at GE Commercial Finance and growth in lower-taxed earnings from global
operations.
Segment
Operations
Operating
segments comprise our four businesses focused on the broad markets they serve:
GE Commercial Finance, GE Money, GE Industrial and GE Infrastructure. For
segment reporting purposes, certain financial services businesses are included
in the industrial operating segments that actively manage such businesses and
report their results for internal performance measurement purposes. These
include Aviation Financial Services, Energy
Financial
Services and Transportation Finance reported in the GE Infrastructure segment,
and Equipment Services reported in the GE Industrial segment.
GECC
corporate items and eliminations include the effects of eliminating transactions
between operating segments; results of our insurance activities remaining in
continuing operations; results of liquidating businesses such as consolidated,
liquidating securitization entities; underabsorbed corporate overhead; certain
non-allocated amounts determined by the Chief Executive Officer; and a variety
of sundry items. GECC corporate items and eliminations is not an operating
segment. Rather, it is added to operating segment totals to reconcile to
consolidated totals on the financial statements.
The
Chief
Executive Officer allocates resources to, and assesses the performance of
operations at the consolidated GE-level. GECC operations are a portion of those
segments. We present below in their entirety the four GE segments that include
financial services operations. We also provide a one-line reconciliation to
GECC-only results, the most significant component of which is the elimination
of
GE businesses that are not financial services businesses. In addition to
providing information on GE segments in their entirety, we have also provided
supplemental information for certain businesses within the GE segments. Our
Chief Executive Officer does not separately assess the performance of, or
allocate resources among, these product lines.
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 refer to as “operating profit,” for GE Healthcare, GE NBC
Universal and the industrial businesses of the GE Industrial and GE
Infrastructure segments; included in determining segment profit, which we refer
to as “net earnings,” for GE Commercial Finance, GE Money, and the financial
services businesses of the GE Industrial segment (Equipment Services) and the
GE
Infrastructure segment (Aviation Financial Services, Energy Financial Services
and Transportation Finance).
We
have
reclassified certain prior-period amounts to conform to the current period
presentation.
Summary
of Operating Segments
|
Three
months ended
March
31 (Unaudited)
|
|
(In
millions)
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
GE
Commercial Finance
|
$
|
6,283
|
|
$
|
5,484
|
|
GE
Money
|
|
5,807
|
|
|
5,090
|
|
GE
Industrial
|
|
7,428
|
|
|
8,140
|
|
GE
Infrastructure
|
|
11,983
|
|
|
10,152
|
|
Total
segment revenues
|
|
31,501
|
|
|
28,866
|
|
GECC
corporate items and eliminations
|
|
451
|
|
|
654
|
|
Total
revenues
|
|
31,952
|
|
|
29,520
|
|
Less
portion of GE revenues not included in GECC
|
|
(16,326
|
)
|
|
(15,537
|
)
|
Total
revenues in GECC
|
$
|
15,626
|
|
$
|
13,983
|
|
|
|
|
|
|
|
|
Segment
profit
|
|
|
|
|
|
|
GE
Commercial Finance
|
$
|
1,421
|
|
$
|
1,174
|
|
GE
Money
|
|
851
|
|
|
836
|
|
GE
Industrial
|
|
481
|
|
|
600
|
|
GE
Infrastructure
|
|
2,183
|
|
|
1,703
|
|
Total
segment profit
|
|
4,936
|
|
|
4,313
|
|
GECC
corporate items and eliminations(a)
|
|
(106
|
)
|
|
72
|
|
Less
portion of GE segment profit not included in GECC
|
|
(2,349
|
)
|
|
(2,041
|
)
|
Earnings
in GECC from continuing operations
|
|
2,481
|
|
|
2,344
|
|
Earnings
(loss) in GECC from discontinued operations, net of taxes
|
|
(2
|
)
|
|
128
|
|
Total
net earnings in GECC
|
$
|
2,479
|
|
$
|
2,472
|
|
|
|
|
|
|
|
|
(a)
|
Included
restructuring charges of $0.1 billion, primarily related to GE Commercial
Finance and GE Money.
|
|
GE
Commercial Finance
|
Three
months ended
March
31
|
|
|
|
(In
millions)
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
6,283
|
|
$
|
5,484
|
|
|
|
|
Less
portion of GE Commercial Finance not included in GECC
|
|
(301
|
)
|
|
(179
|
)
|
|
|
|
Total
revenues in GECC
|
$
|
5,982
|
|
$
|
5,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
$
|
1,421
|
|
$
|
1,174
|
|
|
|
|
Less
portion of GE Commercial Finance not included in GECC
|
|
(187
|
)
|
|
(81
|
)
|
|
|
|
Total
segment profit in GECC
|
$
|
1,234
|
|
$
|
1,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
|
|
(In
millions)
|
3/31/07
|
|
3/31/06
|
|
12/31/06
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
246,095
|
|
$
|
195,209
|
|
$
|
233,536
|
|
Less
portion of GE Commercial Finance not included in GECC
|
|
7,151
|
|
|
(1,880
|
)
|
|
3,689
|
|
Total
assets in GECC
|
$
|
253,246
|
|
$
|
193,329
|
|
$
|
237,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended
March
31
|
|
|
|
|
(In
millions)
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
in GE
|
|
|
|
|
|
|
|
|
|
Capital
Solutions
|
$
|
2,893
|
|
$
|
2,820
|
|
|
|
|
Real
Estate
|
|
1,615
|
|
|
1,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit in GE
|
|
|
|
|
|
|
|
|
|
Capital
Solutions
|
$
|
380
|
|
$
|
339
|
|
|
|
|
Real
Estate
|
|
564
|
|
|
441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
|
|
(In
millions)
|
3/31/07
|
|
3/31/06
|
|
12/31/06
|
|
|
|
|
|
|
|
|
|
|
|
Assets
in GE
|
|
|
|
|
|
|
|
|
|
Capital
Solutions
|
$
|
103,112
|
|
$
|
88,661
|
|
$
|
94,523
|
|
Real
Estate
|
|
59,405
|
|
|
37,566
|
|
|
53,786
|
|
GE
Commercial Finance revenues and net earnings increased 15% and 21%,
respectively, compared with the first quarter of 2006. Revenues for the first
quarter of 2007 included $0.5 billion from acquisitions and were reduced by
$0.5
billion as a result of dispositions. Revenues for the quarter also increased
$0.8 billion compared with the first quarter of 2006 as a result of organic
revenue growth ($0.6 billion) and the weakening U.S. dollar ($0.2 billion).
Net
earnings increased by $0.2 billion in the first quarter of 2007, with $0.3
billion from core growth before losses and investment income, which included
higher SES Global gains ($0.1 billion). Core growth included $0.1 billion
representing one quarter of the total year’s tax benefit on the disposition of
SES Global. These items were partially offset by $0.1 billion of higher losses,
which were in part caused by lower recoveries.
|
Three
months ended
March
31
|
|
|
|
(In
millions)
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
5,807
|
|
$
|
5,090
|
|
|
|
|
Less
portion of GE Money not included in GECC
|
|
-
|
|
|
-
|
|
|
|
|
Total
revenues in GECC
|
$
|
5,807
|
|
$
|
5,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
$
|
851
|
|
$
|
836
|
|
|
|
|
Less
portion of GE Money not included in GECC
|
|
(22
|
)
|
|
(23
|
)
|
|
|
|
Total
segment profit in GECC
|
$
|
829
|
|
$
|
813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
|
|
(In
millions)
|
3/31/07
|
|
3/31/06
|
|
12/31/06
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
190,472
|
|
$
|
158,508
|
|
$
|
190,403
|
|
Less
portion of GE Money not included in GECC
|
|
955
|
|
|
749
|
|
|
955
|
|
Total
assets in GECC
|
$
|
191,427
|
|
$
|
159,257
|
|
$
|
191,358
|
|
GE
Money
revenues and net earnings increased 14% and 2%, respectively, in the first
quarter of 2007. Revenues for the first quarter of 2007 included $0.1 billion
from acquisitions. Revenues for the quarter also increased $0.6 billion compared
with the first quarter of 2006 as a result of organic revenue growth ($0.4
billion) and the weakening U.S. dollar ($0.2 billion). The increase in net
earnings resulted primarily from core growth ($0.3 billion), including growth
in
lower-taxed earnings from global operations, and higher securitizations ($0.2
billion). These increases were substantially offset by reduced earnings from
our
U.S. mortgage business, WMC, ($0.4 billion) and our Japanese business ($0.1
billion).
WMC’s
portfolio of U.S. wholesale mortgage loans, originated with the intent to sell,
totaled $5.0 billion at March 31, 2007. Recent pressures in the U.S. subprime
mortgage industry have resulted in limited liquidity and a higher number of
loans being put back to the originators. For GE Money this resulted in a $0.3
billion after-tax charge that, along with the changes made to our underwriting
guidelines, rightsizing the organization and lower production volume are
intended to reduce our ongoing exposure.
In
Japan,
we continue to face pressures as a result of the December 2006 lending law,
as
well as customer claims for partial interest refunds. In response, we announced
restructuring actions to allow us to operate more efficiently in the current
environment, including consolidating our branch network. We continue to monitor
the business closely and to assess further strategic actions.
GE
Industrial
|
Three
months ended
March
31
|
|
|
|
(In
millions)
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
7,428
|
|
$
|
8,140
|
|
|
|
|
Less
portion of GE Industrial not included in GECC
|
|
(5,680
|
)
|
|
(6,506
|
)
|
|
|
|
Total
revenues in GECC
|
$
|
1,748
|
|
$
|
1,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
$
|
481
|
|
$
|
600
|
|
|
|
|
Less
portion of GE Industrial not included in GECC
|
|
(462
|
)
|
|
(584
|
)
|
|
|
|
Total
segment profit in GECC
|
$
|
19
|
|
$
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
in GE
|
|
|
|
|
|
|
|
|
|
Consumer
& Industrial
|
$
|
3,233
|
|
$
|
3,534
|
|
|
|
|
Equipment
Services
|
|
1,748
|
|
|
1,634
|
|
|
|
|
Plastics
|
|
1,598
|
|
|
1,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit in GE
|
|
|
|
|
|
|
|
|
|
Consumer
& Industrial
|
$
|
267
|
|
$
|
220
|
|
|
|
|
Equipment
Services
|
|
19
|
|
|
16
|
|
|
|
|
Plastics
|
|
121
|
|
|
225
|
|
|
|
|
GE
Industrial revenues fell 9%, or $0.7 billion, in the first quarter of 2007
as
lower volume ($0.9 billion) was partially offset by the weakening U.S. dollar
($0.1 billion) at the industrial businesses in the segment. The decrease in
volume reflects the sale of GE Supply in the third quarter of 2006 and Advanced
Materials in the fourth quarter of 2006. Revenues increased $0.1 billion at
Equipment Services, primarily as a result of the second quarter 2006
consolidation of GE SeaCo, an entity previously accounted for using the equity
method.
Segment
profit decreased 20%, or $0.1 billion, in the first quarter of 2007 as higher
material and other costs ($0.2 billion) and lower volume ($0.1 billion) were
partially offset by higher productivity ($0.2 billion) at the industrial
businesses in the segment. Higher material and other costs and improved
productivity were primarily at Consumer & Industrial and
Plastics.
GE
Infrastructure
|
Three
months ended
March
31
|
|
|
|
(In
millions)
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
11,983
|
|
$
|
10,152
|
|
|
|
|
Less
portion of GE Infrastructure not included in GECC
|
|
(10,345
|
)
|
|
(8,852
|
)
|
|
|
|
Total
revenues in GECC
|
$
|
1,638
|
|
$
|
1,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
$
|
2,183
|
|
$
|
1,703
|
|
|
|
|
Less
portion of GE Infrastructure not included in GECC
|
|
(1,678
|
)
|
|
(1,353
|
)
|
|
|
|
Total
segment profit in GECC
|
$
|
505
|
|
$
|
350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
in GE
|
|
|
|
|
|
|
|
|
|
Aviation
|
$
|
3,514
|
|
$
|
3,041
|
|
|
|
|
Aviation
Financial Services
|
|
1,249
|
|
|
934
|
|
|
|
|
Energy
|
|
4,393
|
|
|
3,835
|
|
|
|
|
Energy
Financial Services
|
|
324
|
|
|
301
|
|
|
|
|
Oil
& Gas
|
|
1,146
|
|
|
772
|
|
|
|
|
Transportation
|
|
1,122
|
|
|
1,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit in GE
|
|
|
|
|
|
|
|
|
|
Aviation
|
$
|
755
|
|
$
|
645
|
|
|
|
|
Aviation
Financial Services
|
|
388
|
|
|
206
|
|
|
|
|
Energy
|
|
613
|
|
|
436
|
|
|
|
|
Energy
Financial Services
|
|
101
|
|
|
117
|
|
|
|
|
Oil
& Gas
|
|
101
|
|
|
55
|
|
|
|
|
Transportation
|
|
210
|
|
|
204
|
|
|
|
|
GE
Infrastructure revenues increased 18%, or $1.8 billion, in the first quarter
of
2007 on higher volume ($1.2 billion), higher prices ($0.2 billion) and the
weakening U.S. dollar ($0.1 billion) at the industrial businesses of the
segment. The increase in volume reflects shipments of more large, heavy-duty
gas
turbines at Energy, increased sales of commercial services and engines at
Aviation, the Vetco Gray acquisition and increased equipment and services sales
at Oil & Gas, and increased locomotive sales at Transportation. Higher
prices were primarily at Energy and Aviation while the effect of currency
exchange rates was principally at Oil & Gas. Revenues also increased as a
result of organic revenue growth at Aviation Financial Services ($0.3 billion),
primarily related to the sale of aircraft.
Segment
profit rose 28%, or $0.5 billion, as higher prices ($0.2 billion), higher volume
($0.2 billion) and productivity ($0.1 billion) were partially offset by higher
material and other costs ($0.2 billion) at the industrial businesses of the
segment. The effects of higher prices were primarily at Energy and Aviation.
Volume increases were primarily at Aviation and Energy, while productivity
improvements were primarily at Aviation. Segment profit from the financial
services businesses increased as a result of core growth at Aviation Financial
Services ($0.2 billion).
B.
Statement of Financial Position
Overview
of Financial Position
Major
changes in our financial position resulted from the following:
·
|
During
the first quarter of 2007, we completed the acquisitions of Trustreet
Properties, Inc., DISKO and ASL, the leasing businesses of KG Allgemeine
Leasing GmbH & Co. and Crow
Holdings.
|
·
|
The
U.S. dollar was weaker at March 31, 2007, than at December 31, 2006,
increasing the translated levels of our non-U.S. dollar assets and
liabilities.
|
Investment
securities
comprise
mainly investment-grade debt securities supporting obligations to annuitants
and
policyholders. We regularly review investment securities for impairment based
on
criteria that include the extent to which cost exceeds market value, the
duration of that market decline, our intent and ability to hold to recovery
and
the financial health and specific prospects for the issuer. Of securities with
unrealized losses at March 31, 2007, an insignificant amount was at risk of
being charged to earnings in the next 12 months. Impairment losses were
insignificant for each of the first quarters of 2007 and 2006.
Financing
receivables is
our
largest category of assets and represents one of our primary sources of
revenues. The portfolio of financing receivables, before allowance for losses,
was $334.3 billion at March 31, 2007, and $334.2 billion at December 31, 2006.
The related allowance for losses amounted to $4.6 billion at March 31, 2007,
and
December 31, 2006, representing our best estimate of probable losses inherent
in
the portfolio. 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).
Financing
receivables, before allowance for losses, increased $0.1 billion from December
31, 2006, primarily as a result of core growth ($6.9 billion), acquisitions
($4.2 billion) and the weakening U.S. dollar ($0.5 billion), partially offset
by
securitization and sales ($10.2 billion) and loans transferred to assets held
for sale ($0.5 billion). Related nonearning receivables were $5.0 billion at
March 31, 2007, compared with $4.9 billion at year-end 2006, both representing
1.5% of outstanding receivables, respectively. Nonearning receivables excludes
loans held for sale.
Delinquency
rates on managed GE Commercial Finance equipment loans and leases and managed
GE
Money financing receivables follow.
|
Delinquency
rates at
|
|
|
3/31/07(a)
|
|
12/31/06
|
|
3/31/06
|
|
|
|
|
|
|
|
|
GE
Commercial Finance
|
1.26
|
%
|
1.22
|
%
|
1.31
|
%
|
GE
Money
|
5.48
|
|
5.05
|
|
5.14
|
|
GE
Money excluding WMC
|
5.15
|
|
5.15
|
|
5.25
|
|
|
|
|
|
|
|
|
Stable
delinquency rates at GE Commercial Finance over the periods reflected continued
stable portfolio quality.
Delinquency
rates at GE Money increased from December 31, 2006, and March 31, 2006, to
March
31, 2007, as a result of higher delinquencies in WMC associated with increased
early payment defaults. Delinquency rates excluding WMC decreased from March
31,
2006, to March 31, 2007, primarily resulting from improvements in our European
secured financing business.
C.
Debt Instruments
During
the first quarter of 2007, GECC and GECC affiliates issued $29 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 10 other global
markets. Maturities for these issuances ranged from two to 40 years. We used
the
proceeds primarily for repayment of maturing long-term debt, but also to fund
acquisitions and organic growth. We anticipate that we will issue approximately
$45 billion of additional long-term debt during the remainder of 2007, mostly
to
repay maturing long-term debt. The ultimate amount we issue will depend on
our
needs and on the markets.
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 March 31, 2007, and (ii) no change in internal
control over financial reporting occurred during the quarter ended March 31,
2007, 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
As
previously reported, since January 2005, the U.S. Securities and Exchange
Commission (SEC) staff has been conducting an investigation of the use of
hedge
accounting for derivatives by General Electric Company (GE) and General Electric
Capital Corporation (GE Capital). In August 2005 the SEC staff advised us
that
the SEC had issued a formal order of investigation in the matter. The SEC
has
continued to subpoena documents, take testimony and request other information
in
this matter. In connection with this investigation, the SEC has asked for
information about other GE accounting policies and practices, including items
related to certain pre-2004 transactions in GE's Rail business. GE and GE
Capital continue to cooperate fully with the investigation and to discuss
matters with the SEC staff as they arise.
The
Antitrust
Division of the Department of Justice (DOJ) and the SEC are conducting an
industry-wide investigation of marketing and sales of guaranteed investment
contracts, and other financial instruments, to municipalities. In connection
with this investigation, two subsidiaries of GE Capital have received subpoenas:
GE Funding CMS (Trinity Funding Co.) received a subpoena requesting documents
from DOJ and GE Funding Capital Market Services, Inc. received a subpoena from
the SEC that requests similar information about Trinity Funding Company, LLC.
The Company is cooperating fully with the SEC and DOJ in this
matter.
|
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.*
|
|
|
*
Filed electronically herewith.
|
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 Capital Corporation
(Registrant)
|
April
27, 2007
|
|
/s/
Philip D. Ameen
|
|
Date
|
|
Philip
D. Ameen
Senior
Vice President and Controller
Duly
Authorized Officer and Principal Accounting
Officer
|