Edgar Filing: GENERAL ELECTRIC CO

form10q.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 March 31, 2011

¨ 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 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 10,605,447,000 shares of common stock with a par value of $0.06 per share outstanding at April 3, 2011.

(1)

General Electric Company

			Page
Part I - Financial Information

Item 1. Financial Statements
Condensed Statement of Earnings			3
Condensed Statement of Financial Position			4
Condensed Statement of Cash Flows			5
Summary of Operating Segments			6
Notes to Condensed, Consolidated Financial Statements (Unaudited)			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			51
Item 3. Quantitative and Qualitative Disclosures About Market Risk			75
Item 4. Controls and Procedures			75

Part II - Other Information

Item 1. Legal Proceedings			75
Item 2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers			76
Item 6. Exhibits			77
Signatures			78

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 financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation’s (GECC) funding and on our ability to reduce GECC’s asset levels as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; changes in Japanese consumer behavior that may affect our estimates of liability for excess interest refund claims (Grey Zone); potential financial implications from the Japanese natural disaster; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flow and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; strategic actions, including acquisitions, joint ventures and dispositions and our success in completing announced transactions and integrating acquired businesses; 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.

(2)

Part I. Financial Information

Item 1. Financial Statements.

General Electric Company and consolidated affiliates

Condensed Statement of Earnings

	Three months ended March 31 (Unaudited)
	Consolidated				GE(a)				Financial Services (GECS)
(In millions, except share amounts)	2011		2010		2011		2010		2011		2010

Revenues
Sales of goods	$	14,489	$	13,765	$	14,489	$	13,489	$	42	$	281
Sales of services		7,502		9,908		7,613		10,020		–		–
Other income		3,626		350		3,665		376		–		–
GECS earnings from continuing operations		–		–		1,806		515		–		–
GECS revenues from services		12,831		12,181		–		–		13,112		12,489
Total revenues		38,448		36,204		27,573		24,400		13,154		12,770

Costs and expenses
Cost of goods sold		11,816		10,572		11,818		10,311		40		265
Cost of services sold		4,883		6,940		4,994		7,052		–		–
Interest and other financial charges		3,879		4,023		355		343		3,667		3,800
Investment contracts, insurance losses and
insurance annuity benefits		736		747		–		–		769		787
Provision for losses on financing receivables		1,163		2,187		–		–		1,163		2,187
Other costs and expenses		8,536		8,928		3,416		3,537		5,264		5,566
Total costs and expenses		31,013		33,397		20,583		21,243		10,903		12,605

Earnings from continuing operations
before income taxes		7,435		2,807		6,990		3,157		2,251		165
Benefit (provision) for income taxes		(3,927)		(443)		(3,513)		(788)		(414)		345
Earnings from continuing operations		3,508		2,364		3,477		2,369		1,837		510
Earnings (loss) from discontinued operations,
net of taxes		19		(366)		19		(366)		19		(363)
Net earnings		3,527		1,998		3,496		2,003		1,856		147
Less net earnings (loss) attributable to
noncontrolling interests		94		53		63		58		31		(5)
Net earnings attributable to the Company		3,433		1,945		3,433		1,945		1,825		152
Preferred stock dividends declared		(75)		(75)		(75)		(75)		–		–
Net earnings attributable to GE common
shareowners	$	3,358	$	1,870	$	3,358	$	1,870	$	1,825	$	152


Amounts attributable to the Company
Earnings from continuing operations	$	3,414	$	2,311	$	3,414	$	2,311	$	1,806	$	515
Earnings (loss) from discontinued operations,
net of taxes		19		(366)		19		(366)		19		(363)
Net earnings attributable to the Company	$	3,433	$	1,945	$	3,433	$	1,945	$	1,825	$	152

Per-share amounts
Earnings from continuing operations
Diluted earnings per share	$	0.31	$	0.21
Basic earnings per share	$	0.31	$	0.21

Net earnings
Diluted earnings per share	$	0.31	$	0.17
Basic earnings per share	$	0.32	$	0.17

Dividends declared per common share	$	0.14	$	0.10

(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 Note 3 for other-than-temporary impairment amounts.

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.

(3)

General Electric Company and consolidated affiliates

Condensed Statement of Financial Position

	Consolidated				GE(a)				Financial Services (GECS)
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
(In millions, except share amounts)	2011		2010		2011		2010		2011		2010
	(Unaudited)				(Unaudited)				(Unaudited)
Assets
Cash and equivalents	$	82,173	$	78,949	$	15,491	$	19,241	$	67,256	$	60,263
Investment securities		44,889		43,938		19		19		44,872		43,921
Current receivables		17,867		18,621		11,555		10,383		–		–
Inventories		13,327		11,526		13,264		11,460		63		66
Financing receivables – net		301,102		308,512		–		–		308,352		317,734
Other GECS receivables		8,788		8,962		–		–		14,004		14,310
Property, plant and equipment – net		67,504		66,212		13,198		12,444		54,306		53,768
Investment in GECS		–		–		72,104		68,984		–		–
Goodwill		67,920		64,388		40,161		36,880		27,759		27,508
Other intangible assets – net		11,292		9,972		9,409		8,088		1,883		1,884
All other assets		106,234		96,342		34,819		17,454		72,470		79,240
Assets of businesses held for sale		1,587		36,887		–		33,760		1,587		3,127
Assets of discontinued operations		5,154		6,912		50		50		5,104		6,862
Total assets(b)	$	727,837	$	751,221	$	210,070	$	218,763	$	597,656	$	608,683

Liabilities and equity
Short-term borrowings	$	110,347	$	117,959	$	686	$	456	$	110,603	$	118,797
Accounts payable, principally trade accounts		15,747		14,656		12,101		11,620		8,372		7,035
Progress collections and price adjustments accrued		10,488		11,142		11,093		11,841		–		–
Other GE current liabilities		16,531		12,959		16,531		12,959		–		–
Non-recourse borrowings of consolidated
securitization entities		29,300		30,060		–		–		29,300		30,060
Bank deposits		39,397		37,298		–		–		39,397		37,298
Long-term borrowings		287,642		293,323		9,695		9,656		278,792		284,407
Investment contracts, insurance liabilities
and insurance annuity benefits		29,768		29,582		–		–		30,363		29,993
All other liabilities		58,876		58,839		38,880		37,815		20,068		21,122
Deferred income taxes		1,297		2,845		(3,689)		(4,237)		4,986		7,082
Liabilities of businesses held for sale		550		16,047		–		15,455		550		592
Liabilities of discontinued operations		2,105		2,313		162		164		1,943		2,149
Total liabilities(b)		602,048		627,023		85,459		95,729		524,374		538,535

Preferred stock (30,000 shares outstanding at
both March 31, 2011 and December 31, 2010)		–		–		–		–		–		–
Common stock (10,605,447,000 and 10,615,376,000
shares outstanding at March 31, 2011 and
December 31, 2010, respectively)		702		702		702		702		1		1
Accumulated other comprehensive income – net(c)
Investment securities		(826)		(636)		(826)		(636)		(827)		(639)
Currency translation adjustments		2,430		(86)		2,430		(86)		142		(1,411)
Cash flow hedges		(1,352)		(1,280)		(1,352)		(1,280)		(1,351)		(1,281)
Benefit plans		(15,253)		(15,853)		(15,253)		(15,853)		(381)		(380)
Other capital		36,783		36,890		36,783		36,890		27,627		27,626
Retained earnings		133,003		131,137		133,003		131,137		46,893		45,068
Less common stock held in treasury		(31,952)		(31,938)		(31,952)		(31,938)		–		–

Total GE shareowners’ equity		123,535		118,936		123,535		118,936		72,104		68,984
Noncontrolling interests(d)		2,254		5,262		1,076		4,098		1,178		1,164
Total equity		125,789		124,198		124,611		123,034		73,282		70,148

Total liabilities and equity	$	727,837	$	751,221	$	210,070	$	218,763	$	597,656	$	608,683

(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.

(b)

Our consolidated assets at March 31, 2011 include total assets of $45,479 million of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs. These assets include net financing receivables of $35,860 million and investment securities of $6,351 million. Our consolidated liabilities at March 31, 2011 include liabilities of certain VIEs for which the VIE creditors do not have recourse to GE. These liabilities include non-recourse borrowings of consolidated securitization entities (CSEs) of $28,752 million. See Note 17.

(c)	The sum of accumulated other comprehensive income - net was $(15,001) million and $(17,855) million at March 31, 2011 and December 31, 2010, respectively.

(d)	Included accumulated other comprehensive income - net attributable to noncontrolling interests of $(168) million and $(153) million at March 31, 2011 and December 31, 2010, respectively.

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.

(4)

General Electric Company and consolidated affiliates

Condensed Statement of Cash Flows

	Three months ended March 31 (Unaudited)
	Consolidated				GE(a)				Financial Services (GECS)
(In millions)	2011		2010		2011		2010		2011		2010

Cash flows – operating activities
Net earnings	$	3,527	$	1,998	$	3,496	$	2,003	$	1,856	$	147
Less net earnings attributable to noncontrolling interests		94		53		63		58		31		(5)
Net earnings attributable to the Company		3,433		1,945		3,433		1,945		1,825		152
(Earnings) loss from discontinued operations		(19)		366		(19)		366		(19)		363
Adjustments to reconcile net earnings attributable to the
Company to cash provided from operating activities
Depreciation and amortization of property,
plant and equipment		2,292		2,465		516		550		1,776		1,915
Earnings from continuing operations retained by GECS		–		–		(1,806)		(515)		–		–
Deferred income taxes		(1,400)		329		50		40		(1,450)		289
Decrease (increase) in GE current receivables		985		514		(106)		319		–		–
Decrease (increase) in inventories		(1,288)		186		(1,276)		213		3		(6)
Increase (decrease) in accounts payable		1,269		666		668		188		1,329		309
Increase (decrease) in GE progress collections		(1,002)		(743)		(1,096)		(994)		–		–
Provision for losses on GECS financing receivables		1,163		2,187		–		–		1,163		2,187
All other operating activities		2,144		(941)		1,320		439		276		(1,243)
Cash from (used for) operating activities – continuing
operations		7,577		6,974		1,684		2,551		4,903		3,966
Cash from (used for) operating activities – discontinued
operations		119		120		–		–		119		120
Cash from (used for) operating activities		7,696		7,094		1,684		2,551		5,022		4,086

Cash flows – investing activities
Additions to property, plant and equipment		(3,169)		(1,276)		(927)		(522)		(2,292)		(831)
Dispositions of property, plant and equipment		1,773		1,588		–		–		1,773		1,588
Net decrease (increase) in GECS financing receivables		11,118		10,675		–		–		12,306		11,135
Proceeds from sale of discontinued operations		1,775		–		–		–		1,775		–
Proceeds from principal business dispositions		7,133		1,842		5,755		1,672		1,378		–
Payments for principal businesses purchased		(4,547)		(18)		(4,462)		(18)		(85)		–
Capital contribution from GE to GECS		–		–		–		–		–		–
All other investing activities		3,307		6,400		(266)		(20)		3,691		6,580
Cash from (used for) investing activities – continuing
operations		17,390		19,211		100		1,112		18,546		18,472
Cash from (used for) investing activities – discontinued
operations		(105)		(202)		–		–		(105)		(202)
Cash from (used for) investing activities		17,285		19,009		100		1,112		18,441		18,270

Cash flows – financing activities
Net increase (decrease) in borrowings (maturities of
90 days or less)		(979)		(1,760)		731		(151)		(2,062)		(1,573)
Net increase (decrease) in bank deposits		1,233		(613)		–		–		1,233		(613)
Newly issued debt (maturities longer than 90 days)		15,513		16,011		110		120		15,508		15,838
Repayments and other reductions (maturities longer
than 90 days)		(31,652)		(39,982)		(19)		(523)		(31,633)		(39,459)
Net dispositions (purchases) of GE shares for treasury		(394)		80		(394)		80		–		–
Dividends paid to shareowners		(1,564)		(1,143)		(1,564)		(1,143)		–		–
Capital contribution from GE to GECS		–		–		–		–		–		–
Purchase of subsidiary shares from
noncontrolling interest		(4,303)		–		(4,303)		–		–		–
All other financing activities		(425)		(594)		(119)		(203)		(306)		(391)
Cash from (used for) financing activities – continuing
operations		(22,571)		(28,001)		(5,558)		(1,820)		(17,260)		(26,198)
Cash from (used for) financing activities – discontinued
operations		–		(38)		–		–		–		(38)
Cash from (used for) financing activities		(22,571)		(28,039)		(5,558)		(1,820)		(17,260)		(26,236)
Effect of currency exchange rate changes on cash
and equivalents		828		(756)		24		(259)		804		(497)
Increase (decrease) in cash and equivalents		3,238		(2,692)		(3,750)		1,584		7,007		(4,377)
Cash and equivalents at beginning of year		79,084		72,443		19,241		8,654		60,398		64,539
Cash and equivalents at March 31		82,322		69,751		15,491		10,238		67,405		60,162
Less cash and equivalents of discontinued operations
at March 31		149		1,843		–		–		149		1,843
Cash and equivalents of continuing operations
at March 31	$	82,173	$	67,908	$	15,491	$	10,238	$	67,256	$	58,319

(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 19.

(5)

Summary of Operating Segments

General Electric Company and consolidated affiliates

	Three months ended March 31
	(Unaudited)
(In millions)	2011		2010

Revenues
Energy Infrastructure	$	9,449	$	8,655
Aviation(a)		4,368		4,165
Healthcare(a)		4,090		3,733
Transportation(a)		903		766
Home & Business Solutions		1,989		1,940
GE Capital		12,324		11,931
Total segment revenues		33,123		31,190
Corporate items and eliminations(a)		5,325		5,014
Consolidated revenues	$	38,448	$	36,204

Segment profit(a)
Energy Infrastructure	$	1,381	$	1,481
Aviation(a)		841		799
Healthcare(a)		531		497
Transportation(a)		157		115
Home & Business Solutions		74		71
GE Capital		1,842		583
Total segment profit		4,826		3,546
Corporate items and eliminations(a)		2,456		(104)
GE interest and other financial charges		(355)		(343)
GE provision for income taxes		(3,513)		(788)
Earnings from continuing operations attributable
to the Company		3,414		2,311
Earnings (loss) from discontinued operations,
net of taxes, attributable to the Company		19		(366)
Consolidated net earnings attributable to
the Company	$	3,433	$	1,945

(a)