ge10q1q12.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, 2012
 
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 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 10,587,317,000 shares of common stock with a par value of $0.06 per share outstanding at March 31, 2012.

 
(1)
 
 
General Electric Company
 

 
   
Page
Part I - Financial Information
    
     
Item 1. Financial Statements
    
Condensed Statement of Earnings
    
Three months Ended March 31, 2012
  
3
Condensed Consolidated Statement of Comprehensive Income
  
4
Condensed Consolidated Statement of Changes in Shareowners' Equity
  
4
Condensed Statement of Financial Position
  
5
Condensed Statement of Cash Flows
  
6
Summary of Operating Segments
  
7
Notes to Condensed, Consolidated Financial Statements (Unaudited)
  
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
  
55
Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
77
Item 4. Controls and Procedures
  
77
     
Part II - Other Information
    
     
Item 1. Legal Proceedings
Item 2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  
77
78
Item 6. Exhibits
  
79
Signatures
  
80
 
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; potential market disruptions or other impacts arising in the United States or Europe from developments in the European sovereign debt situation; 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); pending and threatened litigation against WMC, including increased activity by securitization trustees; 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; our plan to resume GECC dividends, which is subject to Federal Reserve review; 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; the impact of potential information technology or data security breaches; 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 (GECC)
(In millions, except share amounts)
2012 
  
2011 
    
2012 
  
2011 
  
2012 
  
2011 
                                     
Revenues and other income
                                    
Sales of goods
$
 17,315 
  
$
 14,489 
    
$
 17,357 
  
$
 14,489 
  
$
 30 
  
$
 42 
Sales of services
  
 6,212 
    
 7,502 
      
 6,330 
    
 7,613 
    
– 
    
– 
Other income
  
 557 
    
 3,625 
      
 600 
    
 3,665 
    
– 
    
– 
GECC earnings from continuing operations
  
– 
    
– 
      
 1,792 
    
 1,790 
    
– 
    
– 
GECC revenues from services
  
 11,098 
    
 12,713 
      
– 
    
– 
    
 11,412 
    
 12,994 
   Total revenues and other income
  
 35,182 
    
 38,329 
      
 26,079 
    
 27,557 
    
 11,442 
    
 13,036 
                                     
Costs and expenses
                                    
Cost of goods sold
  
 13,465 
    
 11,816 
      
 13,512 
    
 11,818 
    
 25 
    
 40 
Cost of services sold
  
 4,404 
    
 4,900 
      
 4,522 
    
 5,011 
    
– 
    
– 
Interest and other financial charges
  
 3,358 
    
 3,796 
      
 315 
    
 355 
    
 3,196 
    
 3,584 
Investment contracts, insurance losses and
                                    
   insurance annuity benefits
  
 737 
    
 736 
      
– 
    
– 
    
 771 
    
 769 
Provision for losses on financing receivables
  
 863 
    
 1,140 
      
– 
    
– 
    
 863 
    
 1,140 
Other costs and expenses
  
 8,429 
    
 8,507 
      
 4,003 
    
 3,399 
    
 4,596 
    
 5,253 
   Total costs and expenses
  
 31,256 
    
 30,895 
      
 22,352 
    
 20,583 
    
 9,451 
    
 10,786 
                                     
Earnings from continuing operations
                                    
   before income taxes
  
 3,926 
    
 7,434 
      
 3,727 
    
 6,974 
    
 1,991 
    
 2,250 
Benefit (provision) for income taxes
  
 (637)
    
 (3,942)
      
 (450)
    
 (3,513)
    
 (187)
    
 (429)
Earnings from continuing operations
  
 3,289 
    
 3,492 
      
 3,277 
    
 3,461 
    
 1,804 
    
 1,821 
Earnings (loss) from discontinued operations,
                                    
   net of taxes
  
 (217)
    
 35 
      
 (217)
    
 35 
    
 (217)
    
 35 
Net earnings (loss)
  
 3,072 
    
 3,527 
      
 3,060 
    
 3,496 
    
 1,587 
    
 1,856 
Less net earnings (loss) attributable to
                                    
   noncontrolling interests
  
 38 
    
 94 
      
 26 
    
 63 
    
 12 
    
 31 
Net earnings (loss) attributable to the Company
  
 3,034 
    
 3,433 
      
 3,034 
    
 3,433 
    
 1,575 
    
 1,825 
Preferred stock dividends declared
  
– 
    
 (75)
      
– 
    
 (75)
    
– 
    
– 
Net earnings (loss) attributable to GE common
                                    
   shareowners
$
 3,034 
  
$
 3,358 
    
$
 3,034 
  
$
 3,358 
  
$
 1,575 
  
$
 1,825 
                                     
                                     
Amounts attributable to the Company
                                    
   Earnings from continuing operations
$
 3,251 
  
$
 3,398 
    
$
 3,251 
  
$
 3,398 
  
$
 1,792 
  
$
 1,790 
   Earnings (loss) from discontinued operations,
                                    
      net of taxes
  
 (217)
    
 35 
      
 (217)
    
 35 
    
 (217)
    
 35 
   Net earnings (loss) attributable to the Company
$
 3,034 
  
$
 3,433 
    
$
 3,034 
  
$
 3,433 
  
$
 1,575 
  
$
 1,825 
                                     
Per-share amounts
                                    
   Earnings from continuing operations
                                    
      Diluted earnings per share
$
 0.31 
  
$
 0.31 
                          
      Basic earnings per share
$
 0.31 
  
$
 0.31 
                          
                                     
   Net earnings
                                    
      Diluted earnings per share
$
 0.29 
  
$
 0.31 
                          
      Basic earnings per share
$
 0.29 
  
$
 0.32 
                          
                                     
Dividends declared per common share
$
 0.17 
  
$
 0.14 
                          
                                     
                                     
(a)
Represents the adding together of all affiliated companies except General Electric Capital Corporation (GECC 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 (GECC)." Transactions between GE and GECC have been eliminated from the "Consolidated" columns.
 

 
 
 
(3)
 
 

General Electric Company and consolidated affiliates
                      
Condensed Consolidated Statement of Comprehensive Income
                  
                       
     
Three months ended March 31 (Unaudited)
(In millions)
              
2012 
    
2011 
                       
Net earnings
            
$
3,072 
  
$
3,527 
   Less: Net earnings attributable to noncontrolling interests
              
38 
    
94 
Net earnings attributable to GE
            
$
3,034 
  
$
3,433 
                       
Other comprehensive income, net of tax
                      
   Investment securities
            
$
337 
  
$
(189)
   Currency translation adjustments
              
332 
    
2,539 
   Cash flow hedges
              
124 
    
(74)
   Benefit plans
              
1,040 
    
593 
Other comprehensive income, net of tax
              
1,833 
    
2,869 
   Less: Other comprehensive income attributable to noncontrolling interests
          
(8)
    
15 
Other comprehensive income attributable to GE
            
$
1,841 
  
$
2,854 
                       
Comprehensive income, net of tax
            
$
4,905 
  
$
6,396 
   Less: Comprehensive income attributable to noncontrolling interests
              
30 
    
109 
Comprehensive income attributable to GE
            
$
4,875 
  
$
6,287 
                       
                       

                       
                       
                       
General Electric Company and consolidated affiliates
              
Condensed Consolidated Statement of Changes in Shareowners' Equity
            
                       
     
Three months ended March 31 (Unaudited)
(In millions)
              
2012 
    
2011 
                   
Balance at January 1
            
$
116,438 
  
$
118,936 
Dividends and other transactions with shareowners
              
(1,446)
    
(1,688)
Other comprehensive income, net of tax
              
1,841 
    
2,854 
Increases from net earnings attributable to the company
              
3,034 
    
3,433 
Balance at March 31
              
119,867 
    
123,535 
Noncontrolling interests
              
1,721 
    
2,254 
Total equity at March 31
            
$
121,588 
  
$
125,789 

 
 
(4)
 

General Electric Company and consolidated affiliates
Condensed Statement of Financial Position
 
Consolidated
    
GE(a)
  
Financial Services (GECC)
 
March 31,
  
December 31,
    
March 31,
  
December 31,
  
March 31,
  
December 31,
(In millions, except share amounts)
2012 
  
2011 
    
2012 
  
2011 
  
2012 
  
2011 
 
(Unaudited)
        
(Unaudited)
      
(Unaudited)
    
Assets
                                    
Cash and equivalents
$
 83,650 
  
$
 84,501 
    
$
 7,979 
  
$
 8,382 
  
$
 76,165 
  
$
 76,702 
Investment securities
  
 47,829 
    
 47,374 
      
 18 
    
 18 
    
 47,814 
    
 47,359 
Current receivables
  
 19,040 
    
 19,531 
      
 11,397 
    
 11,807 
    
– 
    
– 
Inventories
  
 15,212 
    
 13,792 
      
 15,170 
    
 13,741 
    
 42 
    
 51 
Financing receivables – net
  
 272,694 
    
 279,918 
      
– 
    
– 
    
 281,383 
    
 288,847 
Other GECC receivables
  
 7,870 
    
 7,561 
      
– 
    
– 
    
 14,000 
    
 13,390 
Property, plant and equipment – net
  
 66,000 
    
 65,739 
      
 14,443 
    
 14,283 
    
 51,520 
    
 51,419 
Investment in GECC
  
– 
    
– 
      
 79,192 
    
 77,110 
    
– 
    
– 
Goodwill
  
 72,959 
    
 72,625 
      
 45,633 
    
 45,395 
    
 27,326 
    
 27,230 
Other intangible assets – net
  
 11,921 
    
 12,068 
      
 10,453 
    
 10,522 
    
 1,468 
    
 1,546 
All other assets
  
 108,563 
    
 111,701 
      
 37,163 
    
 36,675 
    
 71,672 
    
 75,612 
Assets of businesses held for sale
  
 640 
    
 711 
      
– 
    
– 
    
 640 
    
 711 
Assets of discontinued operations
  
 1,341 
    
 1,721 
      
 9 
    
 52 
    
 1,332 
    
 1,669 
Total assets(b)
$
 707,719 
  
$
 717,242 
    
$
 221,457 
  
$
 217,985 
  
$
 573,362 
  
$
 584,536 
                                     
Liabilities and equity
                                    
Short-term borrowings
$
 138,659 
  
$
 137,611 
    
$
 7,313 
  
$
 2,184 
  
$
 132,028 
  
$
 136,333 
Accounts payable, principally trade accounts
  
 17,031 
    
 16,400 
      
 14,140 
    
 14,209 
    
 8,150 
    
 7,239 
Progress collections and price adjustments accrued
  
 10,673 
    
 10,402 
      
 11,448 
    
 11,349 
    
– 
    
– 
Dividends payable
  
 1,799 
    
 1,797 
      
 1,799 
    
 1,797 
    
– 
    
– 
Other GE current liabilities
  
 15,030 
    
 14,796 
      
 15,030 
    
 14,796 
    
– 
    
– 
Non-recourse borrowings of consolidated
                                    
   securitization entities
  
 29,544 
    
 29,258 
      
– 
    
– 
    
 29,544 
    
 29,258 
Bank deposits
  
 41,106 
    
 43,115 
      
– 
    
– 
    
 41,106 
    
 43,115 
Long-term borrowings
  
 233,487 
    
 243,459 
      
 4,400 
    
 9,405 
    
 229,195 
    
 234,391 
Investment contracts, insurance liabilities
                                    
   and insurance annuity benefits
  
 29,641 
    
 29,774 
      
– 
    
– 
    
 30,227 
    
 30,198 
All other liabilities
  
 67,191 
    
 70,653 
      
 53,335 
    
 53,826 
    
 14,354 
    
 17,334 
Deferred income taxes
  
 281 
    
 (131)
      
 (6,987)
    
 (7,183)
    
 7,268 
    
 7,052 
Liabilities of businesses held for sale
  
 305 
    
 345 
      
– 
    
– 
    
 305 
    
 345 
Liabilities of discontinued operations
  
 1,384 
    
 1,629 
      
 158 
    
 158 
    
 1,226 
    
 1,471 
Total liabilities(b)
  
 586,131 
    
 599,108 
      
 100,636 
    
 100,541 
    
 493,403 
    
 506,736 
                                     
Common stock (10,587,317,000 and 10,573,017,000
                                    
   shares outstanding at March 31, 2012 and
                                    
   December 31, 2011, respectively)
  
 702 
    
 702 
      
 702 
    
 702 
    
– 
    
– 
Accumulated other comprehensive income – net(c)
                                    
   Investment securities
  
 305 
    
 (30)
      
 305 
    
 (30)
    
 298 
    
 (33)
   Currency translation adjustments
  
 476 
    
 133 
      
 476 
    
 133 
    
 (274)
    
 (399)
   Cash flow hedges
  
 (1,052)
    
 (1,176)
      
 (1,052)
    
 (1,176)
    
 (1,029)
    
 (1,101)
   Benefit plans
  
 (21,862)
    
 (22,901)
      
 (21,862)
    
 (22,901)
    
 (587)
    
 (563)
Other capital
  
 33,594 
    
 33,693 
      
 33,594 
    
 33,693 
    
 27,631 
    
 27,628 
Retained earnings
  
 139,019 
    
 137,786 
      
 139,019 
    
 137,786 
    
 53,153 
    
 51,578 
Less common stock held in treasury
  
 (31,315)
    
 (31,769)
      
 (31,315)
    
 (31,769)
    
– 
    
– 
                                     
Total GE shareowners’ equity
  
 119,867 
    
 116,438 
      
 119,867 
    
 116,438 
    
 79,192 
    
 77,110 
Noncontrolling interests(d)
  
 1,721 
    
 1,696 
      
 954 
    
 1,006 
    
 767 
    
 690 
Total equity
  
 121,588 
    
 118,134 
      
 120,821 
    
 117,444 
    
 79,959 
    
 77,800 
                                     
Total liabilities and equity
$
 707,719 
  
$
 717,242 
    
$
 221,457 
  
$
 217,985 
  
$
 573,362 
  
$
 584,536 
                                     
                                     
(a)
Represents the adding together of all affiliated companies except General Electric Capital Corporation (GECC or financial services), which is presented on a one-line basis.
 
(b)
Our consolidated assets at March 31, 2012 include total assets of $46,383 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 $37,733 million and investment securities of $5,146 million. Our consolidated liabilities at March 31, 2012 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 $28,844 million. See Note 18.
 
(c)
The sum of accumulated other comprehensive income - net was $(22,133) million and $(23,974) million at March 31, 2012 and December 31, 2011, respectively.
 
(d)
Included accumulated other comprehensive income - net attributable to noncontrolling interests of $(160) million and $(168) million at March 31, 2012 and December 31, 2011, respectively.
 
See accompanying notes. Separate information is shown for "GE" and "Financial Services (GECC)." Transactions between GE and GECC have been eliminated from the "Consolidated" columns.
 

 
 
(5)
 

General Electric Company and consolidated affiliates
Condensed Statement of Cash Flows
 
Three months ended March 31 (Unaudited)
 
Consolidated
    
GE(a)
  
Financial Services (GECC)
(In millions)
2012 
  
2011 
    
2012 
  
2011 
  
2012 
  
2011 
                                     
Cash flows – operating activities
                                    
Net earnings
$
 3,072 
  
$
 3,527 
    
$
 3,060 
  
$
 3,496 
  
$
 1,587 
  
$
 1,856 
Less net earnings (loss) attributable to noncontrolling interests
  
 38 
    
 94 
      
 26 
    
 63 
    
 12 
    
 31 
Net earnings attributable to the Company
  
 3,034 
    
 3,433 
      
 3,034 
    
 3,433 
    
 1,575 
    
 1,825 
(Earnings) loss from discontinued operations
  
 217 
    
 (35)
      
 217 
    
 (35)
    
 217 
    
 (35)
Adjustments to reconcile net earnings attributable to the
                                    
   Company to cash provided from operating activities
                                    
      Depreciation and amortization of property,
                                    
         plant and equipment
  
 2,263 
    
 2,292 
      
 568 
    
 516 
    
 1,695 
    
 1,776 
      Earnings from continuing operations retained by GECC
  
– 
    
– 
      
 (1,792)
    
 (1,790)
    
– 
    
– 
      Deferred income taxes
  
 36 
    
 (1,400)
      
 (156)
    
 50 
    
 192 
    
 (1,450)
      Decrease (increase) in GE current receivables
  
 291 
    
 985 
      
 345 
    
 (106)
    
– 
    
– 
      Decrease (increase) in inventories
  
 (1,433)
    
 (1,288)
      
 (1,432)
    
 (1,276)
    
 9 
    
 3 
      Increase (decrease) in accounts payable
  
 854 
    
 1,230 
      
 499 
    
 668 
    
 572 
    
 1,290 
      Increase (decrease) in GE progress collections
  
 273 
    
 (1,002)
      
 101 
    
 (1,096)
    
– 
    
– 
      Provision for losses on GECC financing receivables
  
 863 
    
 1,140 
      
– 
    
– 
    
 863 
    
 1,140 
      All other operating activities
  
 131 
    
 2,124 
      
 675 
    
 1,320 
    
 (406)
    
 256 
Cash from (used for) operating activities – continuing
                                    
   operations
  
 6,529 
    
 7,479 
      
 2,059 
    
 1,684 
    
 4,717 
    
 4,805 
Cash from (used for) operating activities – discontinued
                                    
   operations
  
 (63)
    
 217 
      
– 
    
– 
    
 (63)
    
 217 
Cash from (used for) operating activities
  
 6,466 
    
 7,696 
      
 2,059 
    
 1,684 
    
 4,654 
    
 5,022 
                                     
Cash flows – investing activities
                                    
Additions to property, plant and equipment
  
 (3,295)
    
 (3,169)
      
 (1,002)
    
 (927)
    
 (2,337)
    
 (2,292)
Dispositions of property, plant and equipment
  
 1,825 
    
 1,773 
      
– 
    
– 
    
 1,825 
    
 1,773 
Net decrease (increase) in GECC financing receivables
  
 6,462 
    
 10,650 
      
– 
    
– 
    
 6,566 
    
 11,838 
Proceeds from sale of discontinued operations
  
– 
    
 1,775 
      
– 
    
– 
    
– 
    
 1,775 
Proceeds from principal business dispositions
  
 84 
    
 7,133 
      
– 
    
 5,755 
    
 84 
    
 1,378 
Payments for principal businesses purchased
  
 (190)
    
 (4,547)
      
 (190)
    
 (4,462)
    
– 
    
 (85)
All other investing activities
  
 371 
    
 3,834 
      
 232 
    
 (266)
    
 251 
    
 4,218 
Cash from (used for) investing activities – continuing
                                    
   operations
  
 5,257 
    
 17,449 
      
 (960)
    
 100 
    
 6,389 
    
 18,605 
Cash from (used for) investing activities – discontinued
                                    
   operations
  
 62 
    
 (164)
      
– 
    
– 
    
 62 
    
 (164)
Cash from (used for) investing activities
  
 5,319 
    
 17,285 
      
 (960)
    
 100 
    
 6,451 
    
 18,441 
                                     
Cash flows – financing activities
                                    
Net increase (decrease) in borrowings (maturities of
                                    
   90 days or less)
  
 (814)
    
 (979)
      
 166 
    
 731 
    
 (1,259)
    
 (2,062)
Net increase (decrease) in bank deposits
  
 (2,641)
    
 1,233 
      
– 
    
– 
    
 (2,641)
    
 1,233 
Newly issued debt (maturities longer than 90 days)
  
 17,070 
    
 15,513 
      
 74 
    
 110 
    
 16,767 
    
 15,508 
Repayments and other reductions (maturities longer
                                    
   than 90 days)
  
 (25,326)
    
 (31,610)
      
 (44)
    
 (19)
    
 (25,282)
    
 (31,591)
Net dispositions (purchases) of GE shares for treasury
  
 127 
    
 (394)
      
 127 
    
 (394)
    
– 
    
– 
Dividends paid to shareowners
  
 (1,799)
    
 (1,564)
      
 (1,799)
    
 (1,564)
    
– 
    
– 
Purchase of subsidiary shares from
                                    
   noncontrolling interest
  
– 
    
 (4,303)
      
– 
    
 (4,303)
    
– 
    
– 
All other financing activities
  
 (216)
    
 (425)
      
 (63)
    
 (119)
    
 (153)
    
 (306)
Cash from (used for) financing activities – continuing
                                    
   operations
  
 (13,599)
    
 (22,529)
      
 (1,539)
    
 (5,558)
    
 (12,568)
    
 (17,218)
Cash from (used for) financing activities – discontinued
                                    
   operations
  
– 
    
 (42)
      
– 
    
– 
    
– 
    
 (42)
Cash from (used for) financing activities
  
 (13,599)
    
 (22,571)
      
 (1,539)
    
 (5,558)
    
 (12,568)
    
 (17,260)
Effect of currency exchange rate changes on cash
                                    
   and equivalents
  
 962 
    
 828 
      
 37 
    
 24 
    
 925 
    
 804 
Increase (decrease) in cash and equivalents
  
 (852)
    
 3,238 
      
 (403)
    
 (3,750)
    
 (538)
    
 7,007 
Cash and equivalents at beginning of year
  
 84,622 
    
 79,085 
      
 8,382 
    
 19,241 
    
 76,823 
    
 60,399 
Cash and equivalents at March 31
  
 83,770 
    
 82,323 
      
 7,979 
    
 15,491 
    
 76,285 
    
 67,406 
Less cash and equivalents of discontinued operations
                                    
   at March 31
  
 120 
    
 153 
      
– 
    
– 
    
 120 
    
 153 
Cash and equivalents of continuing operations
                                    
   at March 31
$
 83,650 
  
$
 82,170 
    
$
 7,979 
  
$
 15,491 
  
$
 76,165 
  
$
 67,253 
                                     
                                     
(a)
Represents the adding together of all affiliated companies except General Electric Capital Corporation (GECC or financial services), which is presented on a one-line basis.
 
See accompanying notes. Separate information is shown for "GE" and "Financial Services (GECC)." Transactions between GE and GECC have been eliminated from the "Consolidated" columns and are discussed in Note 19.
 

 
 
(6)
 

Summary of Operating Segments
General Electric Company and consolidated affiliates
 
 
Three months ended March 31
  
 
(Unaudited)
  
(In millions)
2012 
  
2011 
  
             
Revenues(a)
            
   Energy Infrastructure
$
 11,168 
  
$
 9,449 
  
   Aviation
  
 4,891 
    
 4,368 
  
   Healthcare
  
 4,300 
    
 4,090 
  
   Transportation
  
 1,270 
    
 903 
  
   Home & Business Solutions
  
 2,091 
    
 1,989 
  
   Total industrial segment revenues
  
 23,720 
    
 20,799 
  
   GE Capital
  
 11,442 
    
 13,036 
  
      Total segment revenues
  
 35,162 
    
 33,835 
  
Corporate items and eliminations(a)
  
 20 
    
 4,494 
  
Consolidated revenues and other income
$
 35,182 
  
$
 38,329 
  
             
Segment profit(a)
            
   Energy Infrastructure
$
 1,524 
  
$
 1,381 
  
   Aviation
  
 862 
    
 841 
  
   Healthcare
  
 585 
    
 531 
  
   Transportation
  
 232 
    
 157 
  
   Home & Business Solutions
  
 66 
    
 74 
  
   Total industrial segment profit
  
 3,269 
    
 2,984 
  
   GE Capital
  
 1,792 
    
 1,790 
  
      Total segment profit
  
 5,061 
    
 4,774 
  
Corporate items and eliminations(a)
  
 (1,045)
    
 2,492 
  
GE interest and other financial charges
  
 (315)
    
 (355)
  
GE provision for income taxes
  
 (450)
    
 (3,513)
  
Earnings from continuing operations attributable
            
  to the Company
  
 3,251 
    
 3,398 
  
Earnings (loss) from discontinued operations,
            
  net of taxes, attributable to the Company
  
 (217)
    
 35 
  
Consolidated net earnings attributable to
            
   the Company
$
 3,034 
  
$
 3,433 
  
             
             
(a)  
Segment revenues includes both revenues and other income related to the segment. Segment profit excludes results reported as discontinued operations, earnings attributable to noncontrolling interests of consolidated subsidiaries 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 Energy Infrastructure, Aviation, Healthcare, Transportation and Home & Business Solutions; included in determining segment profit, which we sometimes refer to as “net earnings,” for GE Capital. Results of our run-off insurance operations previously reported in Corporate items and eliminations are now reported in GE Capital.
 
 
See accompanying notes.

 
 
(7)
 


 
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 (the Company) and all companies that we directly or indirectly control, either through majority ownership or otherwise. See Note 1 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 (2011 consolidated financial statements), which discusses our consolidation and financial statement presentation. As used in this report on Form 10-Q (Report), “GE” represents the adding together of all affiliated companies except General Electric Capital Corporation (GECC or financial services), which is presented on a one-line basis; GECC consists of General Electric Capital Corporation and all of its affiliates; and “Consolidated” represents the adding together of GE and GECC with the effects of transactions between the two eliminated. Unless otherwise indicated, we refer to the caption revenues and other income simply as “revenues” throughout Item 1 of this Form 10-Q.

On February 22, 2012, we merged our wholly-owned subsidiary, General Electric Capital Services, Inc. (GECS), with and into GECS’ wholly-owned subsidiary, GECC.  The merger simplified our financial services’ corporate structure by consolidating financial services entities and assets within our organization and simplifying Securities and Exchange Commission and regulatory reporting. Upon completion of the merger, (i) all outstanding shares of GECC common stock were cancelled, (ii) all outstanding GECS common stock and all GECS preferred stock held by the Company were converted into an aggregate of 1,000 shares of GECC common stock, and (iii) all treasury shares of GECS and all outstanding preferred stock of GECS held by GECC were cancelled. As a result, GECC became the surviving corporation, assumed all of GECS’ rights and obligations and became wholly-owned directly by the Company.

Because we wholly-owned both GECS and GECC, the merger was accounted for as a transfer of assets between entities under common control. Transfers of net assets or exchanges of shares between entities under common control are accounted for at historical value, and as if the transfer occurred at the beginning of the period.

Our financial services segment, GE Capital, will continue to comprise the continuing operations of GECC, which now includes the run-off insurance operations previously held and managed in GECS. Unless otherwise indicated, references to GECC and the GE Capital segment in this Form 10-Q Report relate to the entities or segment as they exist subsequent to the February 22, 2012 merger. In addition, during the first quarter of 2012, we announced the planned disposition of the Consumer mortgage lending business in Ireland (Consumer Ireland). This disposition is reported as a discontinued operation, which requires retrospective restatement of prior periods to classify the assets, liabilities and results of operations as discontinued operations.

On January 28, 2011, we sold the assets of our NBC Universal (NBCU) business in exchange for cash and a 49% interest in a new entity, NBCUniversal LLC (see Note 2). Results of our formerly consolidated subsidiary, NBCU, and our current equity method investment in NBCUniversal LLC are reported in the Corporate items and eliminations line on the Summary of Operating Segments.

We have reclassified certain prior-period amounts to conform to the current-period presentation. Unless otherwise indicated, information in these notes to the condensed, consolidated financial statements relates to continuing operations.

 
(8)
 
Accounting Changes
 
On January 1, 2012, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2011-05, an amendment to Accounting Standards Codification (ASC) 220, Comprehensive Income. ASU 2011-05 introduces a new statement, the Consolidated Statement of Comprehensive Income, which begins with net earnings and adds or deducts other recognized changes in assets and liabilities that are not included in net earnings, but are reported directly to equity, under GAAP.  For example, unrealized changes in currency translation adjustments are included in the measure of comprehensive income but are excluded from net earnings. The amendments became effective for the first quarter 2012 financial statements.  The amendments affect only the display of those components of equity categorized as other comprehensive income and do not change existing recognition and measurement requirements that determine net earnings.

On January 1, 2012, we adopted FASB ASU 2011-04, an amendment to ASC 820, Fair Value Measurements. ASU 2011-04 clarifies or changes the application of existing fair value measurements, including: that the highest and best use valuation premise in a fair value measurement is relevant only when measuring the fair value of nonfinancial assets; that a reporting entity should measure the fair value of its own equity instrument from the perspective of a market participant that holds that instrument as an asset; to permit an entity to measure the fair value of certain financial instruments on a net basis rather than based on its gross exposure when the reporting entity manages its financial instruments on the basis of such net exposure; that in the absence of a Level 1 input, a reporting entity should apply premiums and discounts when market participants would do so when pricing the asset or liability consistent with the unit of account; and that premiums and discounts related to size as a characteristic of the reporting entity’s holding are not permitted in a fair value measurement. Adopting these amendments had no effect on the financial statements. For a description of how we estimate fair value and our process for reviewing fair value measurements classified as Level 3 in the fair value hierarchy, see Note 1 in our 2011 consolidated financial statements.

See Note 1 in our 2011 consolidated financial statements for a summary of our significant accounting policies.

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 2011 consolidated financial statements. 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.

 
 
(9)
 


 
2. ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS
 
Assets and Liabilities of Businesses Held for Sale
 
NBC Universal
 

On January 28, 2011, we transferred the assets of the NBCU business and Comcast transferred certain of its assets to a newly formed entity, NBCUniversal LLC (NBCU LLC). In connection with the transaction, we received $6,176 million in cash from Comcast (which included $49 million of transaction-related cost reimbursements) and a 49% interest in NBCU LLC. Comcast holds the remaining 51% interest in NBCU LLC.  Following the transaction, we deconsolidated NBCU and we account for our investment in NBCU LLC under the equity method.  In the first quarter of 2011, we recognized a pre-tax gain on the sale of $3,557 million ($400 million after tax) and recorded income tax expense of $3,157 million, reflecting the low tax basis in our investment in the NBCU business and the recognition of deferred tax liabilities related to our 49% investment in NBCU LLC. As our investment in NBCU LLC is structured as a partnership for U.S. tax purposes, U.S. taxes are recorded separately from the equity investment.

With respect to our 49% interest in NBCU LLC, we hold redemption rights, which, if exercised, would require NBCU LLC or Comcast to purchase (either directly or indirectly by GE transferring common stock of our holding company that owns 49% of NBCU LLC) half of our ownership interest after three and a half years and the remaining half after seven years, subject to certain exceptions, conditions and limitations. Our interest in NBCU LLC also is subject to call provisions, which, if exercised, allow Comcast to purchase our interest (either directly or indirectly) at specified times subject to certain exceptions. The redemption prices for such transactions are determined based on a contractually specified formula.

See Note 2 in our 2011 consolidated financial statements for additional information related to the NBCU transaction.

At March 31, 2012 and December 31, 2011, the carrying amount of our equity investment in NBCU LLC was $18,134 million and $17,955 million, respectively, reported in the “All other assets” caption in our Condensed Statement of Financial Position. At March 31, 2012 and December 31, 2011, deferred tax liabilities related to our NBCU LLC investment were $4,912 million and $4,880 million, respectively, and were reported in the “Deferred income taxes” caption in our Condensed Statement of Financial Position.

Other
 
In the second quarter of 2011, we committed to sell our GE Capital Consumer business banking operations in Latvia.

Summarized financial information for businesses held for sale is shown below.
 
 
(10)
 
 

 
 
At
 
March 31,
  
December 31,
(In millions)
2012
  
2011
   
           
      
Assets
  
           
      
Cash and equivalents
$
134 
  
$
149 
Financing receivables – net
  
399 
    
412 
Property, plant and equipment – net
  
62 
    
81 
Goodwill
  
20 
    
20 
Other intangible assets – net
  
1 
    
7 
All other assets
  
6 
    
8 
Other
  
18 
    
34 
Assets of businesses held for sale
$
640 
  
$
711 
         
           
Liabilities
          
Short-term borrowings
$
249 
  
$
252 
Accounts payable
  
26 
    
21 
Long-term borrowings
  
4 
    
8 
All other liabilities
  
26 
    
64 
Liabilities of businesses held for sale
$
305 
  
$
345 


Discontinued Operations
 
Discontinued operations primarily comprised GE Money Japan (our Japanese personal loan business, Lake, and our Japanese mortgage and card businesses, excluding our investment in GE Nissen Credit Co., Ltd.), our U.S. mortgage business (WMC), our U.S. recreational vehicle and marine equipment financing business (Consumer RV Marine), Consumer Mexico, Consumer Singapore, our Consumer home lending operations in Australia and New Zealand (Australian Home Lending), and Consumer Ireland. Associated results of operations, financial position and cash flows are separately reported as discontinued operations for all periods presented.

Summarized financial information for discontinued operations is shown below.
 
 
Three months ended March 31
(In millions)
  
2012
    
2011 
           
Operations
          
Total revenues
$
(1)
  
$
207 
           
Earnings (loss) from discontinued operations
          
   before income taxes
$
(58)
  
$
– 
Benefit (provision) for income taxes
  
6 
    
(4)
Earnings (loss) from discontinued operations,
          
   net of taxes
$
(52)
  
$
(4)
           
Disposal
          
Gain (loss) on disposal before income taxes
$
(194)
  
$
11 
Benefit (provision) for income taxes
  
29 
    
28 
Gain (loss) on disposal, net of taxes
$
(165)
  
$
39 
           
Earnings (loss) from discontinued operations,
          
   net of taxes(a)
$
(217)
  
$
35 
           
           
(a)
The sum of GE industrial earnings (loss) from discontinued operations, net of taxes, and GECC earnings (loss) from discontinued operations, net of taxes, is reported as GE industrial earnings (loss) from discontinued operations, net of taxes, on the Condensed Statement of Earnings.
 

 
(11)
 

 
At
 
March 31,
  
December 31,
(In millions)
2012 
  
2011 
           
Assets
          
Cash and equivalents
$
120 
  
$
121 
Financing receivables – net
  
274 
    
521 
All other assets
  
6 
    
6 
Other
  
941 
    
1,073 
Assets of discontinued operations
$
1,341 
  
$
1,721 
           
Liabilities
          
Accounts payable, principally trade accounts
$
9 
  
$
7 
Deferred income taxes
  
210 
    
205 
All other liabilities
  
1,165 
    
1,417 
Liabilities of discontinued operations
$
1,384 
  
$
1,629 


Assets at March 31, 2012 and December 31, 2011, primarily comprised cash, financing receivables and a deferred tax asset for a loss carryforward, which expires principally in 2017 and in part in 2019, related to the sale of our GE Money Japan business.

GE Money Japan
 
During the third quarter of 2007, we committed to a plan to sell our Japanese personal loan business, 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 third quarter of 2008, we completed the sale of GE Money Japan, which included Lake, along with our Japanese mortgage and card businesses, excluding our investment in GE Nissen Credit Co., Ltd. In connection with the sale, we reduced the proceeds from the sale for estimated interest refund claims in excess of the statutory interest rate. Proceeds from the sale were to be increased or decreased based on the actual claims experienced in accordance with loss-sharing terms specified in the sale agreement, with all claims in excess of 258 billion Japanese yen (approximately $3,000 million) remaining our responsibility. The underlying portfolio to which this obligation relates is in runoff and interest rates were capped for all designated accounts by mid-2009. In the third quarter of 2010, we began making reimbursements under this arrangement.

Our overall claims experience developed unfavorably through 2010. We believe that the level of excess interest refund claims was impacted by the challenging global economic conditions, in addition to Japanese legislative and regulatory changes. In September 2010, a large independent personal loan company in Japan filed for bankruptcy, which precipitated a significant amount of publicity surrounding excess interest refund claims in the Japanese marketplace, along with substantial legal advertising. We observed an increase in claims during the latter part of 2010 and the first two months of 2011. Since February and through the end of 2011, we have experienced substantial declines in the rate of incoming claims, though the overall rate of reduction was slower than we expected.  During the first quarter of 2012, we recorded an increase to our reserve of $26 million to reflect an excess of first quarter claims activity over our previous estimate. We continue to monitor claims activities and our estimates of the pace of decline in incoming claims. At March 31, 2012, our reserve for reimbursement of claims in excess of the statutory interest rate was $496 million.

The amount of these reserves is based on analyses of recent and historical claims experience, pending and estimated future excess interest refund requests, the estimated percentage of customers who present valid requests, and our estimated payments related to those requests. Our estimated liability for excess interest refund claims at March 31, 2012 assumes the pace of incoming claims will continue to decelerate, average exposure per claim remains consistent with recent experience, and we continue to see the impact of our loss mitigation efforts. Estimating the pace of decline in incoming claims has a significant effect on the total amount of our liability. While the pace of income claims continues to decline, it is highly variable and difficult to predict. Holding all other assumptions constant, for example, a 20% adverse change in assumed incoming daily claim rate reduction would result in an increase to our reserves of approximately $110 million.

 
(12)
 
Uncertainties about the likelihood of consumers to present valid claims, the runoff status of the underlying book of business, the financial status of other personal lending companies in Japan, challenging economic conditions and the impact of laws and regulations make it difficult to develop a meaningful estimate of the aggregate possible claims exposure. Additionally, the Japanese government is currently considering the introduction of proposed legislation to develop a framework for collective legal action proceedings. Recent trends, including the effect of consumer activity, market activity regarding other personal loan companies, higher claims severity and potential Japanese legislative actions, may continue to have an adverse effect on claims development.

GE Money Japan losses from discontinued operations, net of taxes, were $27 million and $1 million in the three months ended March 31, 2012 and 2011, respectively.

WMC
 
During the fourth quarter of 2007, we completed the sale of WMC, our U.S. mortgage business. WMC substantially discontinued all new loan originations by the second quarter of 2007, and is not a loan servicer. In connection with the sale, WMC retained certain representation and warranty obligations related to loans sold to third parties prior to the disposal of the business and contractual obligations to repurchase previously sold loans as to which there was an early payment default. All claims received for early payment default have either been resolved or are no longer being pursued.

Pending repurchase claims based upon representations and warranties made in connection with loan sales were $562 million at March 31, 2012, $705 million at December 31, 2011 and $347 million at December 31, 2010. Pending claims represent those active repurchase claims that identify the specific loans tendered for repurchase and, for each loan, the alleged breach of a representation or warranty. The amounts reported reflect the original principal balances of the loans and do not give effect to pay downs, accrued interest or fees, or potential recoveries based upon the underlying collateral. Reserves related to contractual representations and warranties were $140 million and $143 million at March 31, 2012 and December 31, 2011, respectively. 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 WMC’s estimated losses on loans repurchased. A ten percent adverse change in these key assumptions would result in an increase in reserves of approximately $25 million. Historically, a small percentage of the total loans WMC originated and sold has been tendered for repurchase, and of those loans tendered, only a limited amount has qualified as “validly tendered,” meaning the loans sold did not satisfy contractual obligations. In the second half of 2011, a lawsuit was filed against WMC relating to representations and warranties on certain mortgages and in the second quarter of 2012 through May 3, 2012, we have received additional repurchase claims of $689 million. Uncertainties surrounding economic conditions, the ability and propensity of mortgage holders to present valid claims, governmental actions, pending and threatened litigation against WMC, including increased activity by securitization trustees, and other activity in the mortgage industry make it difficult to develop a meaningful estimate of aggregate possible claim exposure. Actual losses could exceed the reserve amount if actual claim rates, investigative or litigation activity, valid tenders or losses WMC incurs on repurchased loans are higher than have been historically observed with respect to WMC.

WMC revenues (loss) from discontinued operations were $(7) million and an insignificant amount in the three months ended March 31, 2012 and 2011, respectively. In total, WMC’s losses from discontinued operations, net of taxes, were $9 million and $2 million in the three months ended March 31, 2012 and 2011, respectively.

Other Financial Services
 
In the first quarter of 2012, we announced the planned disposition of Consumer Ireland and classified the business as discontinued operations.  Consumer Ireland revenues from discontinued operations were $4 million in both the three months ended March 31, 2012 and 2011. Consumer Ireland loss from discontinued operations, net of taxes, were $188 million (including a $147 million loss on disposal) and $21 million in the three months ended March 31, 2012 and 2011, respectively.

 
(13)
 
In the second quarter of 2011, we entered into an agreement to sell our Australian Home Lending operations and classified it as discontinued operations.  As a result, we recognized an after-tax loss of $148 million in 2011.  We completed the sale in the third quarter of 2011 for proceeds of approximately $4,577 million.  Australian Home Lending revenues from discontinued operations were $1 million and $114 million in the three months ended March 31, 2012 and 2011, respectively. Australian Home Lending earnings from discontinued operations, net of taxes, were $2 million and $37 million in the three months ended March 31, 2012 and 2011, respectively.

In the first quarter of 2011, we entered into an agreement to sell our Consumer Singapore business for $692 million. The sale was completed in the second quarter of 2011 and resulted in the recognition of a gain on disposal, net of taxes, of $319 million. Consumer Singapore revenues from discontinued operations were an insignificant amount and $29 million in the three months ended March 31, 2012 and 2011, respectively. Consumer Singapore earnings from discontinued operations, net of taxes, were an insignificant amount and $7 million in the three months ended March 31, 2012 and 2011, respectively.

In the fourth quarter of 2010, we entered into agreements to sell our Consumer RV Marine portfolio and Consumer Mexico business. The Consumer RV Marine and Consumer Mexico dispositions were completed during the first quarter and the second quarter of 2011, respectively, for proceeds of $2,365 million and $1,943 million, respectively. Consumer RV Marine revenues from discontinued operations were an insignificant amount and $5 million in the three months ended March 31, 2012 and 2011, respectively. Consumer RV Marine earnings (loss) from discontinued operations, net of taxes, were $(1) million and an insignificant amount in the three months ended March 31, 2012 and 2011, respectively. Consumer Mexico revenues from discontinued operations were $1 million and $55 million in the three months ended March 31, 2012 and 2011, respectively. Consumer Mexico earnings (loss) from discontinued operations, net of taxes, were $(2) million and $16 million in the three months ended March 31, 2012 and 2011, respectively.

GE Industrial
 
GE industrial earnings (loss) from discontinued operations, net of taxes, were insignificant amounts in both the three months ended March 31, 2012 and 2011. The sum of GE industrial earnings (loss) from discontinued operations, net of taxes, and GECC earnings (loss) from discontinued operations, net of taxes, is 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 $9 million and $52 million at March 31, 2012 and December 31, 2011, respectively. Liabilities of GE industrial discontinued operations were $158 million at both March 31, 2012 and December 31, 2011, and primarily represent taxes payable and pension liabilities related to the sale of our Plastics business in 2007.

 
(14)
 

3. INVESTMENT SECURITIES
 
Substantially all of our investment securities are classified as available-for-sale. These comprise mainly investment grade debt securities supporting obligations to annuitants, policyholders and holders of guaranteed investment contracts (GICs) in our run-off insurance operations and Trinity, investment securities at our treasury operations and investments held in our Commercial Lending and Leasing (CLL) business collateralized by senior secured loans of high-quality, middle-market companies in a variety of industries. We do not have any securities classified as held to maturity.
 
 
At
 
March 31, 2012
  
December 31, 2011
     
Gross
  
Gross
          
Gross
  
Gross
    
 
Amortized
  
unrealized
  
unrealized
  
Estimated
  
Amortized
  
unrealized
  
unrealized
  
Estimated
(In millions)
cost
  
gains
  
losses
  
fair value
  
cost
  
gains
  
losses
  
fair value
                                               
GE
                                              
   Debt – U.S. corporate
$
1 
  
$
– 
  
$
– 
  
$
1 
  
$
– 
  
$
– 
  
$
– 
  
$
– 
   Equity – available-for-sale
  
17 
    
– 
    
– 
    
17 
    
18 
    
– 
    
– 
    
18 
   
18 
    
– 
    
– 
    
18 
    
18 
    
– 
    
– 
    
18 
GECC
                                              
Debt
                                              
      U.S. corporate
  
20,758 
    
3,236 
    
(279)
    
23,715 
    
20,748 
    
3,432 
    
(410)
    
23,770 
      State and municipal
  
3,179 
    
385 
    
(120)
    
3,444 
    
3,027 
    
350 
    
(143)
    
3,234 
      Residential mortgage-
                                              
         backed(a)
  
2,555 
    
175 
    
(220)
    
2,510 
    
2,711 
    
184 
    
(286)
    
2,609 
      Commercial mortgage-backed
  
2,989 
    
169 
    
(177)
    
2,981 
    
2,913 
    
162 
    
(247)
    
2,828 
      Asset-backed
  
5,376 
    
76 
    
(133)
    
5,319 
    
5,102 
    
32 
    
(164)
    
4,970 
      Corporate – non-U.S.
  
2,514 
    
142 
    
(136)
    
2,520 
    
2,414 
    
126 
    
(207)
    
2,333 
      Government – non-U.S.
  
2,171 
    
125 
    
(23)
    
2,273 
    
2,488 
    
129 
    
(86)
    
2,531 
      U.S. government and federal
                                              
         agency
  
4,073 
    
77 
    
(1)
    
4,149 
    
3,974 
    
84 
    
– 
    
4,058 
   Retained interests
  
28 
    
6 
    
– 
    
34 
    
25 
    
10 
    
– 
    
35 
   Equity
                                              
      Available-for-sale
  
530 
    
105 
    
(16)
    
619 
    
713 
    
75 
    
(38)
    
750 
      Trading
  
250 
    
– 
    
– 
    
250 
    
241 
    
– 
    
– 
    
241 
   
44,423 
    
4,496 
    
(1,105)
    
47,814 
    
44,356 
    
4,584 
    
(1,581)
    
47,359 
Eliminations
  
(3)
    
– 
    
– 
    
(3)
    
(3)
    
– 
    
– 
    
(3)
Total
$
44,438 
  
$
4,496 
  
$
(1,105)
  
$
47,829 
  
$
44,371 
  
$
4,584 
  
$
(1,581)
  
$
47,374 
                                               
                                               
(a)
Substantially collateralized by U.S. mortgages. Of our total residential mortgage-backed securities (RMBS) portfolio at March 31, 2012, $1,607 million relates to securities issued by government-sponsored entities and $903 million relates to securities of private label issuers. Securities issued by private label issuers are collateralized primarily by pools of individual direct mortgage loans of financial institutions.
 


The fair value of investment securities increased to $47,829 million at March 31, 2012, from $47,374 million at December 31, 2011, primarily due to the impact of lower interest rates and additional purchases in our CLL business of investments collateralized by senior secured loans of high-quality, middle-market companies in a variety of industries.

 
(15)
 
The following tables present the estimated fair values and gross unrealized losses of our available-for-sale investment securities.
 
 
In loss position for
  
 
Less than 12 months
  
12 months or more
  
     
Gross
      
Gross
  
 
Estimated
  
unrealized
  
Estimated
  
unrealized
  
(In millions)
fair value
  
losses
(a)
fair value
  
losses
(a)
                         
March 31, 2012
                        
Debt
                        
   U.S. corporate
$
922 
  
$
(155)
  
$
732 
  
$
(124)
  
   State and municipal
  
136 
    
(2)
    
252 
    
(118)
  
   Residential mortgage-backed
  
68 
    
– 
    
804 
    
(220)
  
   Commercial mortgage-backed
  
165 
    
(11)
    
1,111 
    
(166)
  
   Asset-backed
  
70 
    
(2)
    
795 
    
(131)
  
   Corporate – non-U.S.
  
255 
    
(10)
    
621 
    
(126)
  
   Government – non-U.S.
  
508 
    
(2)
    
184 
    
(21)
  
   U.S. government and federal agency
  
231 
    
(1)
    
– 
    
– 
  
Retained interests
  
5 
    
– 
    
– 
    
– 
  
Equity
  
87 
    
(15)
    
7 
    
(1)
  
Total
$
2,447 
  
$
(198)
  
$
4,506 
  
$
(907)
  
                         
December 31, 2011
                        
Debt
                        
   U.S. corporate
$
1,435 
  
$
(241)
  
$
836 
  
$
(169)
  
   State and municipal
  
87 
    
(1)
    
307 
    
(142)
  
   Residential mortgage-backed
  
219 
    
(9)
    
825 
    
(277)
  
   Commercial mortgage-backed
  
244 
    
(23)
    
1,320 
    
(224)
  
   Asset-backed
  
100 
    
(7)
    
850 
    
(157)
  
   Corporate – non-U.S.
  
330 
    
(28)
    
607 
    
(179)
  
   Government – non-U.S.
  
906 
    
(5)
    
203 
    
(81)
  
   U.S. government and federal agency
  
502 
    
– 
    
– 
    
– 
  
Retained interests
  
– 
    
– 
    
– 
    
– 
  
Equity
  
440 
    
(38)
    
– 
    
– 
  
Total
$
4,263 
  
$
(352)
  
$
4,948 
  
$
(1,229)
  
                         
                         
(a)  
Includes gross unrealized losses at March 31, 2012 of $(195) million related to securities that had other-than-temporary impairments recognized in a prior period.
 

 
We regularly review investment securities for impairment using both qualitative and quantitative criteria. We presently do not intend to sell the vast majority of our debt securities and believe that it is not more likely than not that we will be required to sell these securities that are in an unrealized loss position before recovery of our amortized cost. We believe that the unrealized loss associated with our equity securities will be recovered within the foreseeable future. The methodologies and significant inputs used to measure the amount of credit loss for our investment securities during the three months ended March 31, 2012 have not changed from those described in our 2011 consolidated financial statements. See Note 3 in our 2011 consolidated financial statements for additional information regarding these methodologies and inputs.
 
 
During the first quarter of 2012, we recorded pre-tax, other-than-temporary impairments of $32 million, which were recorded through earnings ($7 million relates to equity securities). At January 1, 2012, cumulative impairments recognized in earnings associated with debt securities still held were $726 million. During the first quarter, we recognized first-time impairments of $7 million and incremental charges on previously impaired securities of $5 million. These amounts included $136 million related to securities that were subsequently sold.

 
(16)
 
During the first quarter of 2011, we recorded pre-tax, other-than-temporary impairments of $71 million, of which $64 million was recorded through earnings ($5 million relates to equity securities) and $7 million was recorded in accumulated other comprehensive income (AOCI). At January 1, 2011, cumulative impairments recognized in earnings associated with debt securities still held were $500 million. During the first quarter of 2011, we recognized first-time impairments of $1 million and incremental charges on previously impaired securities of $58 million. These amounts included $23 million related to securities that were subsequently sold.

Contractual Maturities of GECC Investment in Available-for-Sale Debt Securities (Excluding Mortgage-
Backed and Asset-Backed Securities)
 
Amortized
  
Estimated
(In millions)
cost
  
fair value
           
Due in
          
   2012
$
 2,717 
  
$
 2,748 
   2013-2016
  
 7,832 
    
 7,925 
   2017-2021
  
 4,373 
    
 4,730 
   2022 and later
  
 17,766 
    
 20,691 
           


We expect actual maturities to differ from contractual maturities because borrowers have the right to call or prepay certain obligations.

Supplemental information about gross realized gains and losses on available-for-sale investment securities follows.
 
 
Three months ended March 31
(In millions)
2012 
  
2011 
           
GE
          
Gains
$
– 
  
$
– 
Losses, including impairments
  
– 
    
– 
Net
  
– 
    
– 
           
GECC
          
Gains
  
 38 
    
 116 
Losses, including impairments
  
 (70)
  
$
 (71)
Net
  
 (32)
    
 45 
Total
$
 (32)
  
$
 45 


Although we generally do not have the intent to sell any specific securities at the end of the period, in the ordinary course of managing our investment securities portfolio, we may sell securities prior to their maturities for a variety of reasons, including diversification, credit quality, yield and liquidity requirements and the funding of claims and obligations to policyholders. In some of our bank subsidiaries, we maintain a certain level of purchases and sales volume principally of non-U.S. government debt securities. In these situations, fair value approximates carrying value for these securities.

Proceeds from investment securities sales and early redemptions by issuers totaled $3,762 million and $5,139 million in the first quarters of 2012 and 2011, respectively, principally from the sales of short-term securities in our bank subsidiaries and treasury operations.

We recognized pre-tax gains (losses) on trading securities of $(23) million and $3 million in the first quarters of 2012 and 2011, respectively.

 
(17)
 

4. INVENTORIES
 
Inventories consisted of the following.
 
 
At
 
March 31,
  
December 31,
(In millions)
2012 
  
2011 
           
Raw materials and work in process
$
9,387 
  
$
8,735 
Finished goods
  
5,642 
    
5,022 
Unbilled shipments
  
640 
    
485 
   
15,669 
    
14,242 
Less revaluation to LIFO
  
(457)
    
(450)
Total
$
15,212 
  
$
13,792 


5. GECC FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES
 
 
At
 
March 31,
  
December 31,
(In millions)
2012
  
2011 
           
Loans, net of deferred income(a)
$
250,890 
  
$
256,895 
Investment in financing leases, net of deferred income
  
36,207 
    
38,142 
   
287,097 
    
295,037 
Less allowance for losses
  
(5,714)
    
(6,190)
Financing receivables – net(b)
$
281,383 
  
$
288,847 
           
           
(a)  
Deferred income was $2,192 million and $2,329 million at March 31, 2012 and December 31, 2011, respectively.
 
(b)  
Financing receivables at March 31, 2012 and December 31, 2011 included $968 million and $1,062 million, respectively, relating to loans that had been acquired in a transfer but have been subject to credit deterioration since origination per ASC 310, Receivables.
 

 
(18)
 

The following tables provide additional information about our financing receivables and related activity in the allowance for losses for our Commercial, Real Estate and Consumer portfolios.

Financing Receivables – net
 
The following table displays our financing receivables balances.
 
 
At
 
March 31,
  
December 31,
(In millions)
2012
  
2011 
           
Commercial
          
CLL
          
Americas
$
79,645 
  
$
80,505 
Europe
  
35,613 
    
36,899 
Asia
  
11,048 
    
11,635 
Other
  
382 
    
436 
Total CLL
  
126,688 
    
129,475 
           
Energy Financial Services
  
5,287 
    
5,912 
           
GE Capital Aviation Services (GECAS)
  
11,721 
    
11,901 
           
Other
  
681 
    
1,282 
Total Commercial financing receivables
  
144,377 
    
148,570 
           
Real Estate
          
Debt
  
23,518 
    
24,501 
Business Properties
  
8,013 
    
8,248 
Total Real Estate financing receivables
  
31,531 
    
32,749 
           
Consumer
          
Non-U.S. residential mortgages
  
35,257 
    
35,550 
Non-U.S. installment and revolving credit
  
18,963 
    
18,544 
U.S. installment and revolving credit
  
44,283 
    
46,689 
Non-U.S. auto
  
5,166 
    
5,691 
Other
  
7,520 
    
7,244 
Total Consumer financing receivables
  
111,189 
    
113,718 
           
Total financing receivables
  
287,097 
    
295,037 
           
Less allowance for losses
  
(5,714)
    
(6,190)
Total financing receivables – net
$
281,383 
  
$
288,847 
           
           

 
 
(19)
 

Allowance for Losses on Financing Receivables
 
The following tables provide a roll-forward of our allowance for losses on financing receivables.
 
 
Balance at
  
Provision
              
Balance at
 
January 1,
  
charged to
      
Gross
      
March 31,
(In millions)
2012 
  
operations
  
Other
(a)
write-offs
(b)
Recoveries
(b)
2012 
                                   
Commercial
                                  
CLL
                                  
Americas
$
889 
  
$
66 
  
$
(20)
  
$
(156)
  
$
23 
  
$
802 
Europe
  
400 
    
83 
    
1 
    
(45)
    
19 
    
458 
Asia
  
157 
    
11 
    
(5)
    
(56)
    
5 
    
112 
Other
  
4 
    
– 
    
– 
    
(2)
    
– 
    
2 
Total CLL
  
1,450 
    
160 
    
(24)
    
(259)
    
47 
    
1,374 
                                   
                                   
Energy Financial
                                  
    Services
  
26 
    
(1)
    
– 
    
– 
    
– 
    
25 
                                   
GECAS
  
17 
    
(3)
    
– 
    
– 
    
– 
    
14 
                                   
Other
  
37 
    
2 
    
(19)
    
– 
    
– 
    
20 
Total Commercial
  
1,530 
    
158 
    
(43)
    
(259)
    
47 
    
1,433 
                                   
Real Estate
                                  
Debt
  
949 
    
28 
    
(12)
    
(154)
    
1 
    
812 
Business Properties
  
140 
    
10 
    
– 
    
(34)
    
1 
    
117 
Total Real Estate
  
1,089 
    
38 
    
(12)
    
(188)
    
2 
    
929 
                                   
Consumer
                                  
Non-U.S. residential
                                  
   mortgages
  
546 
    
29 
    
8 
    
(103)
    
18 
    
498 
Non-U.S. installment
                                  
   and revolving
                                  
   credit
  
717 
    
124 
    
28 
    
(273)
    
130 
    
726 
U.S. installment and
                                  
   revolving credit
  
2,008 
    
478 
    
– 
    
(772)
    
131 
    
1,845 
Non-U.S. auto
  
101 
    
10 
    
(6)
    
(41)
    
24 
    
88 
Other
  
199 
    
26 
    
16 
    
(66)
    
20 
    
195 
Total Consumer
  
3,571 
    
667 
    
46 
    
(1,255)
    
323 
    
3,352 
Total
$
6,190 
  
$
863 
  
$
(9)
  
$
(1,702)
  
$
372 
  
$
5,714 
                                   
                                   
(a)  
Other primarily included transfers to held for sale and the effects of currency exchange.
(b)  
Net write-offs (write-offs less recoveries) in certain portfolios may exceed the beginning allowance for losses as our revolving credit portfolios turn over more than once per year or, in all portfolios, can reflect losses that are incurred subsequent to the beginning of the fiscal year due to information becoming available during the current year, which may identify further deterioration on existing financing receivables.
 
 
(20)
 

   
Balance at
  
Provision
              
Balance at
   
January 1,
  
charged to
      
Gross
      
March 31,
(In millions)
  
2011
  
operations
  
Other(a)
  
write-offs(b)
  
Recoveries(b)
  
2011
                                     
Commercial
                                    
CLL
                                    
Americas
  
$
1,288 
  
$
139 
  
$
(1)
  
$
(194)
  
$
22 
  
$
1,254 
Europe
    
429 
    
30 
    
19 
    
(51)
    
16 
    
443 
Asia
    
222 
    
60 
    
4 
    
(69)
    
11 
    
228 
Other
    
6 
    
– 
    
– 
    
– 
    
– 
    
6 
Total CLL
    
1,945 
    
229 
    
22 
    
(314)
    
49 
    
1,931 
                                     
                                     
Energy Financial
                                    
    Services
    
22 
    
19 
    
(1)
    
(4)
    
– 
    
36 
                                     
GECAS
    
20 
    
(8)
    
– 
    
– 
    
– 
    
12 
                                     
Other
    
58 
    
4 
    
1 
    
(8)
    
– 
    
55 
Total Commercial
    
2,045 
    
244 
    
22 
    
(326)
    
49 
    
2,034 
                                     
Real Estate
                                    
Debt
    
1,292 
    
59 
    
7 
    
(243)
    
3 
    
1,118 
Business Properties
    
196 
    
26 
    
(1)
    
(42)
    
2 
    
181 
Total Real Estate
    
1,488 
    
85 
    
6 
    
(285)
    
5 
    
1,299 
                                     
Consumer
                                    
Non-U.S. residential
                                    
   mortgages
    
689 
    
21 
    
21 
    
(54)
    
15 
    
692 
Non-U.S. installment
                                    
   and revolving credit
    
937 
    
153 
    
23 
    
(327)
    
144 
    
930 
U.S. installment and
                                    
   revolving credit
    
2,333 
    
585 
    
– 
    
(913)
    
136 
    
2,141 
Non-U.S. auto
    
168 
    
15 
    
5 
    
(68)
    
32 
    
152 
Other
    
259 
    
37 
    
4 
    
(86)
    
25 
    
239 
Total Consumer
    
4,386 
    
811 
    
53 
    
(1,448)
    
352 
    
4,154 
Total
  
$
7,919 
  
$
1,140 
  
$
81 
  
$
(2,059)
  
$
406 
  
$
7,487 
                                     
                                     
(a)  
Other primarily included the effects of currency exchange.
 
(b)  
Net write-offs (write-offs less recoveries) in certain portfolios may exceed the beginning allowance for losses as our revolving credit portfolios turn over more than once per year or, in all portfolios, can reflect losses that are incurred subsequent to the beginning of the fiscal year due to information becoming available during the current year, which may identify further deterioration on existing financing receivables.
 

See Note 17 for supplemental information about the credit quality of financing receivables and allowance for losses on financing receivables.

 
(21)
 

6. PROPERTY, PLANT AND EQUIPMENT
 
Property, plant and equipment – net, consisted of the following.
 
 
At
 
March 31,
  
December 31,
(In millions)
2012 
  
2011 
           
Original cost
$
 108,970 
  
$
 108,117 
Less accumulated depreciation and amortization
  
 (42,970)
    
 (42,378)
Property, plant and equipment – net
$
 66,000 
  
$
 65,739 


Consolidated depreciation and amortization related to property, plant and equipment was $2,263 million and $2,292 million in the three months ended March 31, 2012 and 2011, respectively.


7. GOODWILL AND OTHER INTANGIBLE ASSETS
 
Goodwill and other intangible assets – net, consisted of the following.
 
 
At
 
March 31,
  
December 31,
(In millions)
2012 
  
2011 
           
Goodwill
$
 72,959 
  
$
 72,625 
           
Other intangible assets
          
   Intangible assets subject to amortization
$
 11,716 
  
$
 11,863 
   Indefinite-lived intangible assets(a)
  
 205 
    
 205 
Total
$
 11,921 
  
$
 12,068 
           
           
(a)
Indefinite-lived intangible assets principally comprised in-process research and development, trademarks and tradenames.
 

Changes in goodwill balances follow.
 
           
Dispositions,
    
 
Balance at
      
currency
  
Balance at
 
January 1,
      
exchange
  
March 31,
(In millions)
2012 
  
Acquisitions
  
and other
  
2012 
                       
Energy Infrastructure
$
21,090 
  
$
– 
  
$
139 
  
$
21,229 
Aviation
  
5,996 
    
– 
    
(52)
    
5,944 
Healthcare
  
16,631 
    
– 
    
7 
    
16,638 
Transportation
  
551 
    
138 
    
– 
    
689 
Home & Business Solutions
  
1,127