Download GE Capital Fourth Quarter 2012

GE Capital
Fourth quarter 2012 supplement
Results are unaudited. 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 (GE Money Japan);
pending and future mortgage securitization claims and litigation in connection with WMC, which may affect our estimates of liability, including possible loss estimates; 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; GECC’s ability to pay dividends at the planned level; the level of demand and financial performance of
the major industries we serve, including, without limitation, air transportation, 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.
This document may also contain non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be
informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons.
Prior period amounts have been recasted for discontinued operations.
Fourth quarter 2012 supplemental information
Table of Contents
1.
2.
3.
4.
5.
Page #
GE Capital Structure
a) GE Capital Structure
3
Financial Statements
a) GE Capital – Condensed Statement of Earnings
b) GE Capital – Condensed Statement of Comprehensive Income
c) GE Capital – Condensed Statement of Financial Position
d) GE Capital – Continuing Operations
5
6
7
8
GE Capital Asset Quality
a) Assets by Region
b) Assets in Selected Emerging Markets
c) Portfolio Overview and Ratios
d) Nonearning and Nonaccrual Financing Receivables
e) Consumer Allowance for Losses on Financing Receivables
f) Consumer Financing Receivables by Region
g) Consumer Mortgage Portfolio by Country
h) Commercial Allowance for Losses on Financing Receivables
i) Real Estate Allowance for Losses on Financing Receivables
j) Commercial Real Estate Debt and Equity Overview
k) Equipment Leased to Others Overview
l) Commercial Aircraft Asset Details
GE Capital Other Key Areas
a) Investment Securities
b) Investments measured at Fair Value in Earnings
c) Net Interest Margin
Appendix
a) Glossary
10
11
12-19
20
21
22
23
24
25
26-27
28
29
31
32
33
35-36
GE Capital Structure
General Electric Company
General Electric Capital
Corporation (GECC) (a)
Consumer
- Private label cards
- Bank cards
- Personal loans
- Auto loans and leases
- Mortgages & home equity loans
- Debt consolidation
- Deposit & other savings products
- Small & medium enterprise lending
Commercial Lending and
Leasing (CLL)
- Mid-market loans and leases of equipment
and major capital assets
- Mid-market equity capital
Energy Financial Services
(EFS)
Real Estate
- Equity capital for acquisitions or
recapitalization of commercial real estate
- Fixed/floating rate mortgages for
commercial real estate
- Structured debt, equity, leasing,
partnership financing and project financing
to global energy and water industries
- Invests in operating assets in
these industries
GE Capital Aviation
Services (GECAS)
- Commercial aircraft leasing and financing
- Project financing for airport facilities
Corporate
- Treasury operations
- Run-off insurance operations
(a) On February 22, 2012, General Electric Company (“GE”) merged its wholly-owned subsidiary, General Electric Capital Services, Inc. (“GECS”), with and into GECS’ wholly-owned subsidiary, General Electric Capital Corporation (“GECC”). The merger
simplified GE’s financial services’ corporate structure by consolidating financial services entities and assets within our organization and simplifying Securities and Exchange Commission and regulatory reporting. Upon the merger, GECC became the surviving
corporation and assumed all of GECS’ rights and obligations and became wholly-owned directly by General Electric. GE’s 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. The directors and officers of GECC remain the same.
(3)
Financial Statements
(4)
GE Capital – Condensed Statement of Earnings (a)
(In millions)
Revenues
Revenues from services
Sales of goods
Total revenues
December 31,
2012
For the three months ended
September 30,
June 30,
March 31,
2012
2012
2012
December 31,
2011
For the twelve months ended
December 31,
December 31,
2012
2011
$
$
$
$
11,741
29
11,770
11,335
34
11,369
$
11,432
26
11,458
$
11,412
30
11,442
11,545
32
11,577
45,920
119
46,039
$
48,920
148
49,068
Cost and expenses
Interest
Operating and administrative
Cost of goods sold
Investment contracts, insurance losses and insurance annuity benefits
Provision for losses on financing receivables (see pages 21, 24-25)
Depreciation and amortization
Total cost and expenses
2,708
3,295
24
713
1,163
1,918
9,821
2,805
3,072
27
798
1,122
1,768
9,592
2,988
3,090
23
702
743
1,674
9,220
3,196
2,901
25
771
863
1,695
9,451
3,128
3,144
27
745
1,058
1,712
9,814
11,697
12,358
99
2,984
3,891
7,055
38,084
13,866
13,330
135
3,059
3,951
7,117
41,458
Earnings from continuing operations before income taxes
Benefit (provision) for income taxes
1,949
(124)
1,777
(78)
2,238
(102)
1,991
(187)
1,763
(65)
7,955
(491)
7,610
(899)
Earnings from continuing operations
Earnings (loss) from discontinued operations, net of taxes
1,825
(305)
1,699
(111)
2,136
(553)
1,804
(217)
1,698
(240)
7,464
(1,186)
6,711
(74)
Net earnings (loss)
Less: Net earnings (loss) attributable to noncontrolling interests
1,520
17
1,588
20
1,583
14
1,587
12
1,458
38
6,278
63
6,637
127
Net earnings (loss) attributable to GECC
Preferred stock dividends declared (b)
Net earnings attributable to GECC Common Shareowner
1,503
(123)
1,380
1,568
–
1,568
1,569
–
1,569
1,575
–
1,575
1,420
–
1,420
6,215
(123)
6,092
6,510
–
6,510
$
$
$
$
$
$
(a)
On February 22, 2012, our former parent GECS merged with and into GECC, in a transaction among entities under common control. Prior period results are retrospectively adjusted to furnish
comparative information.
(b)
Represents declared dividends on 40,000 shares of non-cumulative perpetual preferred stock. Dividends on the GECC preferred stock are paid semi-annually beginning in December 2012.
(5)
$
GE Capital – Condensed Statement of Comprehensive Income (a)
(In millions)
Net Earnings
Less: Net earnings attributable to noncontrolling interests
Net earnings attributable to GECC
Other comprehensive income (loss), net of tax
Investment securities
Currency translation adjustments
Cash flow hedges
Benefit plans
Other comprehensive income (loss), net of tax
Less: Other comprehensive income (loss) attributable to
noncontrolling interests
Other comprehensive income (loss) attributable to GECC
Comprehensive income, net of tax
Less: Other comprehensive income attributable to
noncontrolling interests
Comprehensive income attributable to GECC
December 31,
2012
For the three months ended
September 30,
June 30,
March 31,
2012
2012
2012
December 31,
2011
For the twelve months ended
December 31,
December 31,
2012
2011
$
1,520
17
1,503
$
1,588
20
1,568
$
1,583
14
1,569
$
1,587
12
1,575
$
1,458
38
1,420
$
6,278
63
6,215
$
6,637
127
6,510
$
70
4
215
(157)
132
$
125
526
29
(11)
669
$
180
(390)
40
19
(151)
$
330
116
72
(24)
494
$
155
(690)
476
(210)
(269)
$
705
256
356
(173)
1,144
$
606
1,040
166
(183)
1,629
$
(11)
143
(2)
671
$
1,652
$
6
1,646
$
2,257
18
2,239
$
11
(162)
$
1,432
$
25
1,407
(10)
504
$
2,081
$
2
2,079
1
(270)
$
1,189
$
39
1,150
(12)
1,156
$
7,422
$
51
7,371
14
1,615
8,266
$
141
8,125
GE Capital – Condensed Statement of Changes in Shareowners’ Equity (a)
(In millions)
December 31,
2012
For the three months ended
September 30,
June 30,
March 31,
2012
2012
2012
December 31,
2011
For the twelve months ended
December 31,
December 31,
2012
2011
Changes in GECC shareowners' equity
Balance at beginning of period
$
$
$
$
Dividends and other transactions with shareowners
Other comprehensive income (loss) - net
Increase/(decrease) from net earnings attributable to GECC
Balance at end of period
(a)
81,349
79,827
(1,105)
143
1,503
$
81,890
$
(717)
671
1,568
$
81,349
79,192
$
(772)
(162)
1,569
$
79,827
77,110
3
504
1,575
$
79,192
75,959
1
(270)
1,420
$
77,110
77,110
(2,591)
1,156
6,215
$
81,890
On February 22, 2012, our former parent GECS merged with and into GECC, in a transaction among entities under common control. Prior period results are retrospectively adjusted to furnish
comparative information.
(6)
$
68,984
1
1,615
6,510
$
77,110
GE Capital – Condensed Statement of Financial Position (a)
December 31,
2012
(In millions)
Assets
Cash and equivalents
Investment securities (see page 31)
Inventories
Financing receivables - net (see pages 10 - 25)
Other receivables
Property, plant & equipment, less accumulated amortization
of $27,171, $23,866, $23,671, $23,864 and $23,615
Goodwill
Other intangible assets - net
Other assets
Assets of businesses held for sale
Assets of discontinued operations
$
61,941
48,281
79
268,951
13,988
September 30,
2012
$
53,673
27,304
1,294
62,375
211
1,126
Total assets
Liabilities and equity
Short-term borrowings
Accounts payable
Non-recourse borrowings of consolidated securitization entities
Bank deposits
Long-term borrowings
Investment contracts, insurance liabilities and insurance annuity benefits
Other liabilities
Deferred income taxes
Liabilities of businesses held for sale
Liabilities of discontinued operations
Total liabilities
77,666
48,695
73
271,623
13,772
June 30,
2012
$
52,288
27,338
1,361
64,887
2,700
1,199
March 31,
2012
66,252
47,906
60
273,984
13,701
$
51,969
27,072
1,443
71,897
3,039
1,481
December 31,
2011
76,165
47,814
42
281,383
14,000
$
76,702
47,359
51
288,847
13,390
51,520
27,326
1,468
71,672
640
1,332
51,419
27,230
1,546
75,612
711
1,669
$
539,223
$
561,602
$
558,804
$
573,362
$
584,536
$
95,940
6,277
30,123
46,461
224,776
28,696
16,050
5,871
157
2,275
$
113,587
7,007
31,171
45,196
230,402
28,806
15,445
5,945
206
1,777
$
119,796
7,700
30,696
41,942
225,539
28,328
14,759
7,392
283
1,783
$
132,028
8,150
29,544
41,106
229,195
30,227
14,354
7,268
305
1,226
$
136,333
7,239
29,258
43,115
234,391
30,198
17,334
7,052
345
1,471
$
456,626
$
479,542
$
478,218
$
493,403
$
506,736
Common stock
Preferred stock
Accumulated other comprehensive income - net
Investment securities
Currency translation adjustments
Cash flow hedges
Benefit plans
Additional paid-in capital
Retained earnings
–
–
–
–
–
–
–
–
–
–
673
(131)
(746)
(736)
31,586
51,244
602
(145)
(961)
(579)
31,589
50,843
476
(673)
(989)
(568)
29,859
51,722
298
(274)
(1,029)
(587)
27,631
53,153
(33)
(399)
(1,101)
(563)
27,628
51,578
Total GECC shareowners' equity
81,890
81,349
79,827
79,192
77,110
707
711
759
767
690
Noncontrolling interests
Total equity
82,597
Total liabilities and equity
(a)
$
539,223
82,060
$
561,602
80,586
$
558,804
79,959
$
573,362
77,800
$
584,536
On February 22, 2012, our former parent GECS merged with and into GECC, in a transaction among entities under common control. Prior period results are retrospectively adjusted to furnish
comparative information.
(7)
GE Capital – Continuing Operations (a)
(In millions)
Revenues
Less: Interest expense
Net revenues
December 31,
2012
For the three months ended
September 30,
June 30,
March 31,
2012
2012
2012
December 31,
2011
For the twelve months ended
December 31,
December 31,
2012
2011
$
$
$
$
11,770
(2,708)
9,062
11,369
(2,805)
8,564
$
11,458
(2,988)
8,470
$
11,442
(3,196)
8,246
11,577
(3,128)
8,449
46,039
(11,697)
34,342
$
49,068
(13,866)
35,202
Cost and expenses
Selling, general and administrative
Depreciation and amortization
Operating and other expenses
Total costs and expenses
2,924
1,918
1,108
5,950
2,727
1,768
1,170
5,665
2,803
1,674
1,012
5,489
2,738
1,695
959
5,392
2,877
1,712
1,039
5,628
11,192
7,055
4,249
22,496
11,221
7,117
5,303
23,641
Earnings before income taxes and provisions for losses
Less: Provision for losses on financing receivables
3,112
(1,163)
2,899
(1,122)
2,981
(743)
2,854
(863)
2,821
(1,058)
11,846
(3,891)
11,561
(3,951)
Earnings before income taxes
Benefit (provision) for income taxes
1,949
(124)
1,777
(78)
2,238
(102)
1,991
(187)
1,763
(65)
7,955
(491)
7,610
(899)
Earnings from continuing operations before noncontrolling interests
Less: Net earnings (loss) attributable to noncontrolling interests
$
1,825
17
$
1,699
20
$
2,136
14
$
1,804
12
$
1,698
38
$
7,464
63
$
6,711
127
GE Capital segment profit
$
1,808
$
1,679
$
2,122
$
1,792
$
1,660
$
7,401
$
6,584
(In millions)
December 31,
2012
For the three months ended
September 30,
June 30,
March 31,
2012
2012
2012
December 31,
2011
For the twelve months ended
December 31,
December 31,
2012
2011
$
544
755
309
107
343
2,058
(250)
$
685
829
56
71
318
1,959
(167)
$
$
1,808
$
1,792
$
Segment profit
CLL
Consumer
Real Estate
EFS
GECAS
$
GE Capital corporate items and eliminations
GE Capital segment profit
(a)
$
$
568
749
217
132
251
1,917
(238)
$
1,679
$
$
626
907
221
122
308
2,184
(62)
$
2,122
$
$
$
777
617
(153)
110
315
1,666
(6)
1,660
$
$
2,423
3,240
803
432
1,220
8,118
(717)
7,401
On February 22, 2012, our former parent GECS merged with and into GECC, in a transaction among entities under common control. Prior period results are retrospectively adjusted to furnish
comparative information.
(8)
$
$
$
2,720
3,703
(928)
440
1,150
7,085
(501)
6,584
GE Capital Asset Quality
(9)
GE Capital – Assets by Region (a)
At
Financing
December 31,
2012
Property, plant
and
equipment (net)
(In millions)
receivables (net)
U.S. (b)
Europe (c)
Western (including U.K.)
Eastern
Pacific Basin
Americas (excluding U.S.)
Other (d)
$
Total
$
268,951
$
53,673
$
538,097
Total at September 30, 2012
$
271,623
$
52,288
$
560,403
Total at June 30, 2012
$
273,984
$
51,969
$
557,323
Total at March 31, 2012
$
281,383
$
51,520
$
572,030
Total at December 31, 2011
$
288,847
$
51,419
$
582,867
132,947
$
70,041
16,779
23,729
15,967
9,488
11,207
Total assets
$
4,390
205
2,693
1,737
33,441
299,032
$
94,207
23,884
44,381
27,352
49,241
September 30,
2012
June 30,
2012
March 31,
2012
December 31,
2011
Total assets
Total assets
Total assets
Total assets
320,036
$
93,910
23,720
45,507
27,645
49,585
$
560,403
319,037
$
93,188
22,896
45,627
26,217
50,358
$
557,323
329,450
$
97,272
24,599
45,733
26,043
48,933
$
572,030
334,556
99,178
23,983
46,749
29,333
49,068
$
582,867
(a)
Excludes assets of discontinued operations.
(b)
Total assets include our global Treasury operations, including both U.S. and non U.S. cash equivalents.
(c)
Total assets include non-financing assets (cash, goodwill and other intangible assets, property, plant and equipment and allowance for losses on financing receivables) of approximately $12,496
million at December 31, 2012
(d)
Includes total assets of $45,714 million at GECAS, approximately $11,965 million of which relates to European airlines and other investments at December 31, 2012
(10)
GE Capital – Assets in Selected Emerging Markets (a)
At
Financing
(In millions)
Eastern Europe
Poland
Czech Republic
Hungary
Total Eastern Europe
receivables (net)
$
8,112
5,060
2,782
15,954
December 31,
2012
Property, plant
and
equipment (net)
$
107
45
37
189
Total assets
$
11,117
6,922
4,222
22,261
$
September 30,
2012
June 30,
2012
March 31,
2012
December 31,
2011
Total assets
Total assets
Total assets
Total assets
11,014
7,049
4,031
22,094
$
10,598
6,815
3,916
21,329
$
11,367
7,546
4,016
22,929
$
10,942
7,195
4,043
22,180
Pacific Basin and Other
India
Thailand
Total Pacific Basin and Other
861
155
1,016
13
–
13
1,446
1,477
2,923
1,418
1,831
3,249
1,475
1,737
3,212
1,501
1,699
3,200
1,495
1,619
3,114
Americas
Mexico
Total Americas
5,622
5,622
840
840
7,861
7,861
8,179
8,179
7,618
7,618
7,732
7,732
8,215
8,215
Total
$
22,592
$
1,042
$
33,045
Total at September 30, 2012
$
22,156
$
996
$
33,522
Total at June 30, 2012
$
21,692
$
996
$
32,159
Total at March 31, 2012
$
22,549
$
974
$
33,861
Total at December 31, 2011
$
22,209
$
999
$
33,509
(a)
$
33,522
$
32,159
$
33,861
We have disclosed here selected emerging markets where our total assets at December 31, 2012 exceed $1 billion. Assets of discontinued operations are excluded.
(11)
$
33,509
GE Capital – CLL Portfolio Overview (a)
(In millions)
Balances
CLL
Americas
Europe
Asia
Other
Total
December 31,
2012
$
72,517
37,035
11,401
605
$
121,558
September 30,
2012
$
74,488
34,916
11,597
659
$
121,660
Financing receivables (b)
June 30,
2012
$
77,241
$
34,722
11,313
711
$
123,987
$
March 31,
2012
79,645
35,613
11,048
382
126,688
December 31,
2011
$
80,505
36,899
11,635
436
$
129,475
CLL
Americas
Europe
Asia
Other
Total
December 31,
2012
$
1,333
1,299
193
52
$
2,877
September 30,
2012
$
1,600
1,533
206
53
$
3,392
Nonearning receivables (c)
June 30,
2012
$
1,739
$
1,390
232
9
$
3,370
$
March 31,
2012
1,664
1,354
245
9
3,272
December 31,
2011
$
1,862
1,167
269
11
$
3,309
CLL
Americas
Europe
Asia
Other
Total
December 31,
2012
$
490
445
80
6
$
1,021
September 30,
2012
$
567
574
72
2
$
1,215
March 31,
2012
802
458
112
2
1,374
December 31,
2011
$
889
400
157
4
$
1,450
CLL
Americas
Europe
Asia
Other
Total
December 31,
2012 (e)
$
111
232
14
–
$
357
Write-offs (net) - for three months ending
September 30,
June 30,
March 31,
2012
2012
2012
$
92
$
121
$
133
35
33
26
17
29
51
8
–
2
$
152
$
183
$
212
December 31,
2011
$
120
50
14
2
$
186
(a)
(b)
(c)
(d)
(e)
Allowance for losses (d)
June 30,
2012
$
662
484
87
1
$
1,234
$
$
Local currency exposure includes amounts payable to the Corporation by borrowers with a country of residence other than the one in which the credit is booked.
Financing receivables include impaired loans of $5,041 million at December 31, 2012.
Nonearning receivables are those that are 90 days or more past due (or for which collection has otherwise become doubtful). Nonearning receivables exclude loans purchased at a discount (unless they have deteriorated
post acquisition). Under ASC 310, Receivables, these loans are initially recorded at fair value and accrete interest income over the estimated life of the loan based on reasonably estimable cash flows even if the underlying
loans are contractually delinquent at acquisition. In addition, nonearning receivables exclude loans which are paying on a cash accounting basis, but classified as impaired. Recently restructured financing receivables are
not considered delinquent when payments are brought current according to restructured terms but may remain classified as nonearning until there has been a period of satisfactory payment performance by the
borrower and future payments are reasonably assured of collection.
Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses inherent in the portfolio. Such estimate requires consideration of historical loss
experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of specific customers
and market sectors, collateral values (including housing price indices as applicable), and the present and expected future levels of interest rates. Our risk management process includes standards and policies for reviewing
major risk exposures and concentrations, and evaluates relevant data either for individual loans or financing leases, on a portfolio basis, as appropriate. Effective January 1, 2009, loans acquired in a business acquisition
are recorded at fair value, which incorporates our estimate at the acquisition date of the credit losses over the remaining life of the portfolio. As a result, the allowance for loan losses is not carried over at acquisition. This
may result in lower reserve coverage ratios prospectively.
Includes write-offs resulting from the modification to our write-off policy in line with regulatory guidance, where we now write off a portion of the loans against specific reserves carried for more than 12 months.
(12)
GE Capital – CLL Portfolio Overview
Ratios
CLL
Americas
Europe
Asia
Other
Total
December 31,
2012
1.8 %
3.5
1.7
8.6
2.4
Nonearning receivables as a percent of financing receivables (a)
September 30,
June 30,
March 31,
2012
2012
2012
2.1 %
2.3 %
4.4
4.0
1.8
2.1
8.0
1.3
2.8
2.7
2.1 %
3.8
2.2
2.4
2.6
December 31,
2011
2.3 %
3.2
2.3
2.5
2.6
CLL
Americas
Europe
Asia
Other
Total
December 31,
2012
36.8 %
34.3
41.5
11.5
35.5
Allowance for losses as a percent of nonearning receivables (b)
September 30,
June 30,
March 31,
2012
2012
2012
35.4 %
38.1 %
48.2 %
37.4
34.8
33.8
35.0
37.5
45.7
3.8
11.1
22.2
35.8
36.6
42.0
December 31,
2011
47.7 %
34.3
58.4
36.4
43.8
CLL
Americas
Europe
Asia
Other
Total
December 31,
2012
0.7 %
1.2
0.7
1.0
0.8
Allowance for losses as a percent of total financing receivables (b)
September 30,
June 30,
March 31,
2012
2012
2012
0.8 %
0.9 %
1.0 %
1.6
1.4
1.3
0.6
0.8
1.0
0.3
0.1
0.5
1.0
1.0
1.1
December 31,
2011
1.1 %
1.1
1.3
0.9
1.1
CLL
Americas
Europe
Asia
Other
Total
December 31,
2012
0.6 %
2.6
0.5
–
1.2
Write-offs (net) as a percent of financing receivables (c)
September 30,
June 30,
March 31,
2012
2012
2012
0.5 %
0.6 %
0.4
0.4
0.6
1.0
4.7
–
0.5
0.6
0.7 %
0.3
1.8
2.0
0.7
December 31,
2011
0.6 %
0.5
0.5
1.8
0.6
CLL
Delinquency
December 31,
2012
1.87 %
September 30,
2012
2.01 %
2.05 %
December 31,
2011
1.99 %
(a)
(b)
(c)
CLL
June 30,
2012
March 31,
2012
1.90 %
Nonearning receivables are those that are 90 days or more past due (or for which collection has otherwise become doubtful). Nonearning receivables exclude loans purchased at a discount (unless they have deteriorated
post acquisition). Under ASC 310, Receivables, these loans are initially recorded at fair value and accrete interest income over the estimated life of the loan based on reasonably estimable cash flows even if the underlying
loans are contractually delinquent at acquisition. In addition, nonearning receivables exclude loans which are paying on a cash accounting basis, but classified as impaired. Recently restructured financing receivables are
not considered delinquent when payments are brought current according to restructured terms but may remain classified as nonearning until there has been a period of satisfactory payment performance by the
borrower and future payments are reasonably assured of collection.
Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses inherent in the portfolio. Such estimate requires consideration of historical loss
experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of specific customers
and market sectors, collateral values (including housing price indices as applicable), and the present and expected future levels of interest rates. Our risk management process includes standards and policies for reviewing
major risk exposures and concentrations, and evaluates relevant data either for individual loans or financing leases, on a portfolio basis, as appropriate. Effective January 1, 2009, loans acquired in a business acquisition
are recorded at fair value, which incorporates our estimate at the acquisition date of the credit losses over the remaining life of the portfolio. As a result, the allowance for loan losses is not carried over at acquisition. This
may result in lower reserve coverage ratios prospectively.
Write-offs percent is calculated as the ratio of annualized write-offs for the quarter divided by average of financing receivables at the beginning and end of the period.
(13)
GE Capital – EFS, GECAS and Commercial Other Portfolio Overview
(In millions)
Balances
December 31,
2012
EFS
GECAS
Other
$
September 30,
2012
4,851
10,915
486
$
December 31,
2012
EFS
GECAS
Other
$
September 30,
2012
–
–
13
$
December 31,
2012
EFS
GECAS
Other
$
(a)
(b)
(c)
$
2
50
16
September 30,
2012
9
8
3
$
13
12
9
$
5,159
12,046
587
March 31,
2012
$
Nonearning receivables (b)
June 30,
2012
$
2
56
22
12
32
12
5,287
11,721
681
$
March 31,
2012
$
Allowance for losses (c)
June 30,
2012
$
December 31,
2011
29
17
42
$
March 31,
2012
$
–
2
3
$
(3)
–
2
$
24
11
10
$
5,912
11,901
1,282
December 31,
2011
22
55
65
December 31,
2011
25
14
20
$
Write-offs (net) - for three months ending
September 30,
June 30,
March 31,
2012
2012
2012
December 31,
2012
EFS
GECAS
Other
4,989
11,628
537
Financing receivables (a)
June 30,
2012
26
17
37
December 31,
2011
–
–
–
$
(1)
1
16
Financing receivables include zero, $3 million, and $25 million of impaired loans at EFS, GECAS, and Other, respectively, at December 31, 2012.
Nonearning receivables are those that are 90 days or more past due (or for which collection has otherwise become doubtful). Nonearning receivables exclude loans purchased at a discount
(unless they have deteriorated post acquisition). Under FASB ASC 310, Receivables, these loans are initially recorded at fair value and accrete interest income over the estimated life of the loan
based on reasonably estimable cash flows even if the underlying loans are contractually delinquent at acquisition. In addition, nonearning receivables exclude loans which are paying on a cash
accounting basis, but classified as impaired. Recently restructured financing receivables are not considered delinquent when payments are brought current according to restructured terms but
may remain classified as nonearning until there has been a period of satisfactory payment performance by the borrower and future payments are reasonably assured of collection.
Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses inherent in the portfolio. Such estimate requires
consideration of historical loss experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as
delinquency rates, financial health of specific customers and market sectors, collateral values (including housing price indices as applicable), and the present and expected future levels of
interest rates. Our risk management process includes standards and policies for reviewing major risk exposures and concentrations, and evaluates relevant data either for individual loans or
financing leases, on a portfolio basis, as appropriate. Effective January 1, 2009, loans acquired in a business acquisition are recorded at fair value, which incorporates our estimate at the
acquisition date of the credit losses over the remaining life of the portfolio. As a result, the allowance for loan losses is not carried over at acquisition. This may result in lower reserve coverage
ratios prospectively.
(14)
GE Capital – EFS, GECAS and Commercial Other Portfolio Overview
Ratios
December 31,
2012
EFS
GECAS
Other
–%
–
2.7
Nonearning receivables as a percent of financing receivables (a)
September 30,
June 30,
March 31,
2012
2012
2012
–%
–%
0.5 %
0.4
0.5
0.1
3.0
3.7
6.2
December 31,
2011
0.4 %
0.5
5.1
December 31,
2011
118.2 %
30.9
56.9
December 31,
2011
0.4 %
0.1
2.9
EFS
GECAS
Other
–%
–
23.1
Allowance for losses as a percent of nonearning receivables (b)
September 30,
June 30,
March 31,
2012
2012
2012
650.0 %
600.0 %
86.2 %
24.0
57.1
82.4
56.3
54.5
47.6
EFS
GECAS
Other
December 31,
2012
0.2 %
0.1
0.6
Allowance for losses as a percent of total financing receivables (b)
September 30,
June 30,
March 31,
2012
2012
2012
0.3 %
0.2 %
0.5 %
0.1
0.3
0.1
1.7
2.0
2.9
December 31,
2012
December 31,
2012
EFS
GECAS
Other
(a)
(b)
(c)
–%
0.1
2.3
Write-offs (net) as a percent of financing receivables (c)
September 30,
June 30,
March 31,
2012
2012
2012
(0.2)%
1.8 %
–
0.4
1.4
6.3
–%
–
–
December 31,
2011
(0.1)%
–
4.8
Nonearning receivables are those that are 90 days or more past due (or for which collection has otherwise become doubtful). Nonearning receivables exclude loans purchased at a discount (unless they have deteriorated
post acquisition). Under FASB ASC 310, Receivables, these loans are initially recorded at fair value and accrete interest income over the estimated life of the loan based on reasonably estimable cash flows even if the
underlying loans are contractually delinquent at acquisition. In addition, nonearning receivables exclude loans which are paying currently under a cash accounting basis, but classified as impaired. Recently restructured
financing receivables are not considered delinquent when payments are brought current according to restructured terms but may remain classified as nonearning until there has been a period of satisfactory payment
performance by the borrower and future payments are reasonably assured of collection.
Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses inherent in the portfolio. Such estimate requires consideration of historical loss
experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of specific customers
and market sectors, collateral values (including housing price indices as applicable), and the present and expected future levels of interest rates. Our risk management process includes standards and policies for reviewing
major risk exposures and concentrations, and evaluates relevant data either for individual loans or financing leases, on a portfolio basis, as appropriate. Effective January 1, 2009, loans acquired in a business acquisition
are recorded at fair value, which incorporates our estimate at the acquisition date of the credit losses over the remaining life of the portfolio. As a result, the allowance for loan losses is not carried over at acquisition. This
may result in lower reserve coverage ratios prospectively.
Write-offs percent is calculated as the ratio of annualized write-offs for the quarter divided by average of financing receivables at the beginning and end of the period.
(15)
GE Capital – Real Estate Portfolio Overview
(In millions, unless otherwise noted)
Balances
December 31,
2012
Real Estate
Debt (b)
Business Properties (e)
Total
$
$
19,746
1,200
20,946
September 30,
2012
$
$
December 31,
2012
Real Estate
Debt
Business Properties (e)
Total
$
$
321
123
444
September 30,
2012
$
$
$
279
41
320
September 30,
2012
$
(a)
(b)
(c)
(d)
(e)
(f)
$
$
314
36
350
631
105
736
$
$
$
22,409
5,301
27,710
March 31,
2012
$
$
Nonearning receivables (c)
June 30,
2012
$
$
403
227
630
$
682
105
787
$
$
March 31,
2012
$
$
Allowance for losses (d)
June 30,
2012
$
23,518
8,013
31,531
December 31,
2011
522
239
761
$
$
March 31,
2012
$
$
812
117
929
$
103
12
115
$
$
$
123
23
146
$
$
153
33
186
24,501
8,248
32,749
December 31,
2011
541
249
790
December 31,
2011
$
$
Write-offs (net) - for three months ending
September 30,
June 30,
March 31,
2012
2012
2012
December 31,
2012 (f)
Real Estate
Debt
Business Properties (e)
Total
454
228
682
$
December 31,
2012
Debt
Business Properties (e)
Total
21,225
5,069
26,294
Financing receivables (a)
June 30,
2012
949
140
1,089
December 31,
2011
$
$
105
35
140
Financing receivables include $5,693 million of impaired loans at Real Estate at December 31, 2012.
Financing receivables include zero construction loans at December 31, 2012.
Nonearning receivables are those that are 90 days or more past due (or for which collection has otherwise become doubtful). Nonearning receivables exclude loans purchased at a discount (unless they have deteriorated
post acquisition). Under FASB ASC 310, Receivables, these loans are initially recorded at fair value and accrete interest income over the estimated life of the loan based on reasonably estimable cash flows even if the
underlying loans are contractually delinquent at acquisition. In addition, nonearning receivables exclude loans which are paying on a cash accounting basis, but classified as impaired. Recently restructured financing
receivables are not considered delinquent when payments are brought current according to restructured terms but may remain classified as nonearning until there has been a period of satisfactory payment performance
by the borrower and future payments are reasonably assured of collection.
Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses inherent in the portfolio. Such estimate requires consideration of historical loss
experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of specific customers
and market sectors, collateral values (including housing price indices as applicable), and the present and expected future levels of interest rates. Our risk management process includes standards and policies for reviewing
major risk exposures and concentrations, and evaluates relevant data either for individual loans or financing leases, on a portfolio basis, as appropriate. Effective January 1, 2009, loans acquired in a business acquisition
are recorded at fair value, which incorporates our estimate at the acquisition date of the credit losses over the remaining life of the portfolio. As a result, the allowance for loan losses is not carried over at acquisition. This
may result in lower reserve coverage ratios prospectively.
On October 1, 2012, we sold a significant portion of our Business Properties Portfolio.
Includes write-offs resulting from the modification to our write-off policy in line with regulatory guidance, where we now write off a portion of the loans against specific reserves carried for more than 12 months.
(16)
GE Capital – Real Estate Portfolio Overview
Ratios
Real Estate
Debt
Business Properties (d)
Total
December 31,
2012
1.6 %
10.3
2.1
Nonearning receivables as a percent of financing receivables (a)
September 30,
June 30,
March 31,
2012
2012
2012
2.1 %
1.8 %
2.2 %
4.5
4.3
3.0
2.6
2.3
2.4
December 31,
2011
2.2 %
3.0
2.4
Real Estate
Debt
Business Properties (d)
Total
December 31,
2012
86.9 %
33.3
72.1
Allowance for losses as a percent of nonearning receivables (b)
September 30,
June 30,
March 31,
2012
2012
2012
139.0 %
169.2 %
155.6 %
46.1
46.3
49.0
107.9
124.9
122.1
December 31,
2011
175.4 %
56.2
137.8
Real Estate
Debt
Business Properties (d)
Total
December 31,
2012
1.4 %
3.4
1.5
Allowance for losses as a percent of total financing receivables (b)
September 30,
June 30,
March 31,
2012
2012
2012
3.0 %
3.0 %
3.5 %
2.1
2.0
1.5
2.8
2.8
2.9
December 31,
2011
3.9 %
1.7
3.3
Real Estate
Debt
Business Properties (d)
Total
December 31,
2012
6.1 %
4.6
5.9
Write-offs (net) as a percent of financing receivables (c)
September 30,
June 30,
March 31,
2012
2012
2012
1.9 %
2.1 %
2.5 %
0.9
1.4
1.6
1.7
2.0
2.3
December 31,
2011
1.7 %
1.7
1.7
Delinquency
December 31,
2012
2.27 %
September 30,
2012
2.84 %
(a)
(b)
(c)
(d)
Real Estate
June 30,
2012
2.81 %
March 31,
2012
3.08 %
December 31,
2011
2.76 %
Nonearning receivables are those that are 90 days or more past due (or for which collection has otherwise become doubtful). Nonearning receivables exclude loans purchased at a discount (unless they have deteriorated
post acquisition). Under FASB ASC 310, Receivables, these loans are initially recorded at fair value and accrete interest income over the estimated life of the loan based on reasonably estimable cash flows even if the
underlying loans are contractually delinquent at acquisition. In addition, nonearning receivables exclude loans which are paying on a cash accounting basis, but classified as impaired. Recently restructured financing
receivables are not considered delinquent when payments are brought current according to restructured terms but may remain classified as nonearning until there has been a period of satisfactory payment performance
by the borrower and future payments are reasonably assured of collection.
Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses inherent in the portfolio. Such estimate requires consideration of historical loss
experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of specific customers
and market sectors, collateral values (including housing price indices as applicable), and the present and expected future levels of interest rates. Our risk management process includes standards and policies for reviewing
major risk exposures and concentrations, and evaluates relevant data either for individual loans or financing leases, on a portfolio basis, as appropriate. Effective January 1, 2009, loans acquired in a business acquisition
are recorded at fair value, which incorporates our estimate at the acquisition date of the credit losses over the remaining life of the portfolio. As a result, the allowance for loan losses is not carried over at acquisition. This
may result in lower reserve coverage ratios prospectively.
Write-offs percent is calculated as the ratio of annualized write-offs for the quarter divided by average of financing receivables at the beginning and end of the period.
On October 1, 2012, we sold a significant portion of our Business Properties Portfolio.
(17)
GE Capital – Consumer Portfolio Overview
(In millions)
Balances
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Non-U.S. auto
Other
Total
December 31,
2012
$
33,451
18,546
50,853
4,260
8,070
$
115,180
September 30,
2012
$
33,855
18,504
46,939
4,601
7,996
$
111,895
Financing receivables (a)
June 30,
2012
$
33,826
$
17,960
45,531
4,740
7,643
$
109,700
$
March 31,
2012
35,257
18,963
44,283
5,166
7,520
111,189
December 31,
2011
$
35,550
18,544
46,689
5,691
7,244
$
113,718
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Non-U.S. auto
Other
Total
December 31,
2012
$
2,569
224
1,026
24
351
$
4,194
September 30,
2012
$
2,659
234
896
27
339
$
4,155
Nonearning receivables (b)
June 30,
2012
$
2,720
$
243
773
28
380
$
4,144
$
March 31,
2012
2,863
253
876
30
381
4,403
December 31,
2011
$
2,870
263
990
43
419
$
4,585
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Non-U.S. auto
Other
Total
December 31,
2012
$
480
623
2,282
67
172
$
3,624
September 30,
2012
$
467
654
2,030
73
171
$
3,395
March 31,
2012
498
726
1,845
88
195
3,352
December 31,
2011
$
546
717
2,008
101
199
$
3,571
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Non-U.S. auto
Other
Total
December 31,
2012
$
35
115
601
9
46
$
806
Write-offs (net) - for three months ending
September 30,
June 30,
March 31,
2012
2012
2012
$
22
$
43
$
85
91
121
143
551
575
641
11
11
17
48
37
46
$
723
$
787
$
932
December 31,
2011
$
116
130
601
15
33
$
895
(a)
(b)
(c)
Allowance for losses (c)
June 30,
2012
$
481
665
1,724
79
179
$
3,128
$
$
Financing receivables include impaired loans of $3,220 million at December 31, 2012.
Nonearning receivables are those that are 90 days or more past due (or for which collection has otherwise become doubtful). Nonearning receivables exclude loans purchased at a discount (unless they have deteriorated
post acquisition). Under ASC 310, Receivables, these loans are initially recorded at fair value and accrete interest income over the estimated life of the loan based on reasonably estimable cash flows even if the underlying
loans are contractually delinquent at acquisition. In addition, nonearning receivables exclude loans which are paying on a cash accounting basis, but classified as impaired. Recently restructured financing receivables are
not considered delinquent when payments are brought current according to restructured terms but may remain classified as nonearning until there has been a period of satisfactory payment performance by the
borrower and future payments are reasonably assured of collection.
Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses inherent in the portfolio. Such estimate requires consideration of historical loss
experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of specific customers
and market sectors, collateral values (including housing price indices as applicable), and the present and expected future levels of interest rates. Our risk management process includes standards and policies for reviewing
major risk exposures and concentrations, and evaluates relevant data either for individual loans or financing leases, on a portfolio basis, as appropriate. Effective January 1, 2009, loans acquired in a business acquisition
are recorded at fair value, which incorporates our estimate at the acquisition date of the credit losses over the remaining life of the portfolio. As a result, the allowance for loan losses is not carried over at acquisition. This
may result in lower reserve coverage ratios prospectively.
(18)
GE Capital – Consumer Portfolio Overview
Ratios
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Non-U.S. auto
Other
Total
December 31,
2012
7.7 %
1.2
2.0
0.6
4.3
3.6
Nonearning receivables as a percent of financing receivables (a)
September 30,
June 30,
March 31,
2012
2012
2012
7.9 %
8.0 %
1.3
1.4
1.9
1.7
0.6
0.6
4.2
5.0
3.7
3.8
8.1 %
1.3
2.0
0.6
5.1
4.0
December 31,
2011
8.1 %
1.4
2.1
0.8
5.8
4.0
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Non-U.S. auto
Other
Total
December 31,
2012
18.7 %
278.1
222.4
279.2
49.0
86.4
Allowance for losses as a percent of nonearning receivables (b)
September 30,
June 30,
March 31,
2012
2012
2012
17.6 %
17.7 %
17.4 %
279.5
273.7
287.0
226.6
223.0
210.6
270.4
282.1
293.3
50.4
47.1
51.2
81.7
75.5
76.1
December 31,
2011
19.0 %
272.6
202.8
234.9
47.5
77.9
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Non-U.S. auto
Other
Total
December 31,
2012
1.4 %
3.4
4.5
1.6
2.1
3.1
Allowance for losses as a percent of total financing receivables (b)
September 30,
June 30,
March 31,
2012
2012
2012
1.4 %
1.4 %
1.4 %
3.5
3.7
3.8
4.3
3.8
4.2
1.6
1.7
1.7
2.1
2.3
2.6
3.0
2.9
3.0
December 31,
2011
1.5 %
3.9
4.3
1.8
2.7
3.1
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Non-U.S. auto
Other
Total
December 31,
2012
0.4 %
2.5
4.9
0.8
2.3
2.8
Write-offs (net) as a percent of financing receivables (c)
September 30,
June 30,
March 31,
2012
2012
2012
0.3 %
0.5 %
2.0
2.6
4.8
5.1
0.9
0.9
2.5
2.0
2.6
2.9
1.0 %
3.1
5.6
1.3
2.5
3.3
December 31,
2011
1.3 %
2.7
5.3
1.0
1.7
3.1
Delinquency
December 31,
2012
6.46 %
September 30,
2012
6.69 %
6.67 %
December 31,
2011
6.93 %
(a)
(b)
(c)
Consumer
June 30,
2012
March 31,
2012
6.74 %
Nonearning receivables are those that are 90 days or more past due (or for which collection has otherwise become doubtful). Nonearning receivables exclude loans purchased at a discount (unless they have deteriorated
post acquisition). Under ASC 310, Receivables, these loans are initially recorded at fair value and accrete interest income over the estimated life of the loan based on reasonably estimable cash flows even if the underlying
loans are contractually delinquent at acquisition. In addition, nonearning receivables exclude loans which are paying on a cash accounting basis, but classified as impaired. Recently restructured financing receivables are
not considered delinquent when payments are brought current according to restructured terms but may remain classified as nonearning until there has been a period of satisfactory payment performance by the
borrower and future payments are reasonably assured of collection.
Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses inherent in the portfolio. Such estimate requires consideration of historical loss
experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of specific customers
and market sectors, collateral values (including housing price indices as applicable), and the present and expected future levels of interest rates. Our risk management process includes standards and policies for reviewing
major risk exposures and concentrations, and evaluates relevant data either for individual loans or financing leases, on a portfolio basis, as appropriate. Effective January 1, 2009, loans acquired in a business acquisition
are recorded at fair value, which incorporates our estimate at the acquisition date of the credit losses over the remaining life of the portfolio. As a result, the allowance for loan losses is not carried over at acquisition. This
may result in lower reserve coverage ratios prospectively.
Write-offs percent is calculated as the ratio of annualized write-offs for the quarter divided by average of financing receivables at the beginning and end of the period.
(19)
GE Capital – Nonearning and Nonaccrual Financing Receivables
($ millions, unless otherwise noted)
Nonearning
financing
receivables (a)
December 31, 2012
Commercial
CLL
EFS
GECAS
Other
Total Commercial
$
Real Estate
Consumer
Total
$
2,877
–
–
13
2,890
Nonaccrual
financing
receivables (b)
$
4,138
–
3
25
4,166
444
4,885
4,194
4,301
7,528
$
13,352
(a)
Nonearning financing receivables are those that are 90 days or more past due (or for which collection has otherwise become doubtful). Nonearning financing receivables exclude loans
purchased at a discount (unless they have deteriorated post acquisition). Under FASB ASC 310, Receivables, these loans are initially recorded at fair value and accrete interest income over the
estimated life of the loan based on reasonably estimable cash flows even if the underlying loans are contractually delinquent at acquisition. In addition, nonearning financing receivables
exclude loans which are paying on a cash accounting basis, but classified as impaired. Recently restructured financing receivables are not considered delinquent when payments are brought
current according to restructured terms but may remain classified as nonearning until there has been a period of satisfactory payment performance by the borrower and future payments are
reasonably assured of collection.
(b)
Nonaccrual financing receivables are those on which we have stopped accruing interest. We stop accruing interest at the earlier of the time at which collection of an account becomes doubtful
or the account becomes 90 days past due. Total nonaccrual financing receivables of $13.4 billion includes $7.5 billion classified as nonearning financing receivables. Substantially all of this
difference relates to loans which are classified as nonaccrual financing receivables but are paying on a cash accounting basis, and therefore are excluded from nonearning financing
receivables.
(20)
GE Capital – Consumer Allowance for Losses on Financing Receivables
Balance
January 1,
2012
(In millions)
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Non-U.S. auto
Other
Total Consumer
Total Consumer
Gross
write-offs (b)
Other (a)
Balance
December 31,
2012
Recoveries (b)
$
546
717
2,008
101
199
$
111
350
2,666
18
132
$
8
26
(24)
(4)
18
$
(261)
(1,046)
(2,906)
(146)
(257)
$
76
576
538
98
80
$
480
623
2,282
67
172
$
3,571
$
3,277
$
24
$
(4,616)
$
1,368
$
3,624
Balance
January 1,
2011
(In millions)
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Non-U.S. auto
Other
Provision
charged
to operations
Provision
charged
to operations (c)
Gross
write-offs (b)
Other (a)
Balance
December 31,
2011
Recoveries (b)
$
689
937
2,333
168
259
$
117
490
2,241
30
142
$
(13)
(30)
1
(4)
(20)
$
(296)
(1,257)
(3,095)
(216)
(272)
$
49
577
528
123
90
$
546
717
2,008
101
199
$
4,386
$
3,020
$
(66)
$
(5,136)
$
1,367
$
3,571
(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.
(c)
Included a provision of $77 million related to the July 1, 2011 adoption of ASU 2011-02.
(21)
GE Capital – Consumer Financing Receivables by Region
(In millions)
December 31, 2012
Mortgages
Installment and
revolving credit
U.S.
Europe
Western
Eastern
Pacific Basin
Americas
Other
$
$
Total at December 31, 2012
26,150
7,122
179
-
$
33,451
50,853
$
69,399
Mortgages
Installment and
revolving credit
U.S.
Europe
Western
Eastern
Pacific Basin
Americas
Other
$
$
Total at June 30, 2012
26,270
7,094
190
–
272
$
33,826
45,531
$
63,491
Mortgages
Installment and
revolving credit
U.S.
Europe
Western
Eastern
Pacific Basin
Americas
Other
$
$
Total at December 31, 2011
(a)
27,539
7,497
205
–
309
$
35,550
46,689
$
65,233
-
$
4,260
$
$
-
$
4,740
$
$
1,363
7,643
-
$
5,691
838
$
7,244
46,894
38,004
16,461
7,939
129
273
$
109,700
Total
$
2,111
4,137
155
3
$
115,180
Total
Other (a)
3,759
997
935
–
$
8,070
52,198
37,617
17,174
8,077
114
–
1,870
4,301
104
5
-
Auto
$
$
Other (a)
3,364
630
746
$
1,345
Total
1,704
4,845
171
5
-
Auto
6,850
4,658
6,884
149
3
$
Other (a)
3,189
585
486
-
6,500
4,436
6,899
124
1
December 31, 2011
-
$
6,574
4,622
7,241
109
–
June 30, 2012
-
Auto
47,527
40,259
17,289
8,179
152
312
$
113,718
Represents mainly small and medium enterprise loans.
(22)
September 30, 2012
Mortgages
Installment and
revolving credit
U.S.
Europe
Western
Eastern
Pacific Basin
Americas
Other
$
$
Total at September 30, 2012
26,494
7,172
189
–
$
33,855
46,939
$
65,443
Mortgages
Installment and
revolving credit
U.S.
Europe
Western
Eastern
Pacific Basin
Americas
Other
$
$
Total at March 31, 2012
27,242
7,493
208
–
314
$
35,257
$
6,623
4,699
7,060
121
1
March 31, 2012
-
Auto
44,283
63,246
-
$
3,278
623
700
$
4,601
$
$
$
7,996
-
$
5,166
828
$
7,520
111,895
Total
$
2,044
4,493
151
4
$
48,312
38,258
17,145
8,053
126
1
Other (a)
3,592
696
878
$
1,373
Total
1,863
4,651
104
5
-
Auto
6,769
4,803
7,253
137
1
$
Other (a)
45,111
39,647
17,485
8,490
141
315
$
111,189
GE Capital – Consumer Mortgage Portfolio by Country (a)
($ in millions)
Financing
receivables
December 31, 2012
U.K. (b) (d)
France (d)
Poland
Czech Republic
Netherlands
Hungary
Spain
All other
Total at December 31, 2012 (c)
$
$
Financing
receivables
June 30, 2012
U.K.
France
Poland
Czech Republic
Netherlands
Hungary
Spain
All other
Total at June 30, 2012
$
$
(a)
(b)
(c)
(d)
16,344
8,025
5,162
1,042
839
781
833
800
33,826
Financing
receivables
December 31, 2011
U.K.
France
Poland
Czech Republic
Netherlands
Hungary
Spain
All other
Total at December 31, 2011
16,245
8,046
5,174
1,029
824
818
810
505
33,451
$
$
16,898
8,520
5,396
1,095
945
883
920
893
35,550
As a % of total
48.6 %
24.1
15.5
3.1
2.5
2.4
2.4
1.5
100.0 %
As a % of total
48.3 %
23.7
15.3
3.1
2.5
2.3
2.5
2.4
100.0 %
As a % of total
47.5 %
24.0
15.2
3.1
2.7
2.5
2.6
2.5
100.0 %
Nonearning
receivables
11.4 %
3.5
1.3
2.6
1.3
20.3
12.9
13.3
7.7 %
Nonearning
receivables
12.2 %
3.4
1.3
2.5
1.6
17.8
14.2
9.4
8.0 %
Nonearning
receivables
12.5 %
3.4
1.2
2.1
1.5
13.5
17.1
11.1
8.1 %
Delinquent
more than
30 days
18.8 %
3.8
2.9
3.4
1.6
24.7
23.0
13.4
12.0 %
Delinquent
more than
30 days
19.9 %
3.8
2.6
3.2
2.0
22.4
26.6
11.2
12.5 %
Financing
receivables
September 30, 2012
U.K.
France
Poland
Czech Republic
Netherlands
Hungary
Spain
All other
Total at September 30, 2012
$
$
Financing
receivables
March 31, 2012
U.K.
France
Poland
Czech Republic
Netherlands
Hungary
Spain
All other
Total at March 31, 2012
16,517
8,086
5,182
1,080
834
806
829
521
33,855
$
$
16,768
8,418
5,423
1,126
916
827
894
885
35,257
As a % of total
48.8 %
23.9
15.3
3.2
2.5
2.4
2.4
1.5
100.0 %
As a % of total
47.6 %
23.9
15.4
3.2
2.6
2.3
2.5
2.5
100.0 %
Nonearning
receivables
Delinquent
more than
30 days
11.8 %
3.5
1.3
2.6
1.6
18.3
13.8
13.8
7.9 %
Nonearning
receivables
19.2 %
3.8
2.5
3.3
1.8
23.3
24.2
16.0
12.2 %
Delinquent
more than
30 days
12.7 %
3.3
1.2
2.4
1.5
16.6
14.7
8.4
8.1 %
Delinquent
more than
30 days
20.0 %
3.6
2.5
3.0
1.7
18.4
27.3
10.0
12.3 %
Consumer loans secured by residential real estate (both revolving and closed-end loans) are written down to the fair value of collateral, less costs to sell, no later than when they become 360
days past due.
At December 31, 2012, we had in repossession stock 490 houses in the U.K., which had a value of approximately $0.1 billion.
At December 31, 2012, net of credit insurance, approximately 37% of this portfolio comprised loans with introductory, below market rates that are scheduled to adjust at future dates; with high
loan-to-value ratios at inception (greater than 90%); whose terms permitted interest-only payments; or whose terms resulted in negative amortization. At origination, we underwrite loans with
an adjustable rate to the reset value. 88% of these loans are in our U.K. and France portfolios, which comprise mainly loans with interest-only payments, high loan-to-value ratios at inception
and introductory below market rates, have a delinquency rate of 15% and have a loan-to-value ratio at origination of 82%. At December 31, 2012, 10% (based on dollar values) of these loans in
our U.K. and France portfolios have been restructured.
Our U.K. and France portfolios have reindexed loan-to-value ratios of 83% and 56%, respectively.
(23)
19.1 %
3.7
2.5
3.1
1.8
21.3
27.0
12.7
12.0 %
GE Capital – Commercial Allowance for Losses on Financing Receivables
Balance
January 1,
2012
(In millions)
CLL
Americas
Europe
Asia
Other
$
Provision
charged
to operations
889
400
157
4
$
Gross
write-offs (b)
Other (a)
109
374
37
13
$
(51)
(3)
(3)
(1)
$
Balance
December 31,
2012
Recoveries (b)
(568)
(390)
(134)
(10)
$
111
64
23
–
$
490
445
80
6
EFS
26
4
–
(24)
3
9
GECAS
17
4
–
(13)
–
8
Other
37
1
(20)
(17)
2
3
Total Commercial
$
$
Balance
January 1,
2011
(In millions)
CLL
Americas
Europe
Asia
Other
1,530
$
542
$
Provision
charged
to operations
1,288
429
222
6
$
(78)
$
$
$
Gross
write-offs (b)
Other (a)
281
195
105
3
(1,156)
(96)
(5)
13
(3)
$
203
$
Balance
December 31,
2011
Recoveries (b)
(700)
(286)
(214)
(2)
$
1,041
116
67
31
–
$
889
400
157
4
EFS
22
–
(1)
(4)
9
26
GECAS
20
–
–
(3)
–
17
Other
58
23
–
(47)
3
37
Total Commercial
$
2,045
$
607
$
(92)
$
(1,256)
$
226
$
1,530
(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.
(24)
GE Capital – Real Estate Allowance for Losses on Financing Receivables
Balance
January 1,
2012
(In millions)
Provision
charged
to operations
Gross
write-offs
Other (a)
Balance
December 31,
2012
Recoveries
Real Estate
Debt
Business Properties (b)
$
949
140
$
29
43
$
(6)
(38)
$
(703)
(107)
$
10
3
$
279
41
Total Commercial
$
1,089
$
72
$
(44)
$
(810)
$
13
$
320
Balance
January 1,
2011
(In millions)
Provision
charged
to operations
Gross
write-offs
Other (a)
Balance
December 31,
2011
Recoveries
Real Estate
Debt
Business Properties (b)
$
1,292
196
$
242
82
$
2
-
$
(603)
(144)
$
16
6
$
949
140
Total Commercial
$
1,488
$
324
$
2
$
(747)
$
22
$
1,089
(a)
Other primarily included transfers to held for sale and the effects of currency exchange.
(b)
On October 1, 2012, we sold a significant portion of our Business Properties Portfolio.
(25)
GE Capital – Real Estate Debt Overview
(In millions)
December 31,
2012
Region
September 30,
2012
Financing receivables
June 30,
2012
March 31,
2012
December 31,
2011
U.S.
Europe
Pacific Basin
Americas
$
10,434
3,483
1,683
5,346
$
15,486
3,798
1,873
5,137
$
16,687
3,802
2,117
5,104
$
19,779
3,973
2,441
5,338
$
20,622
4,073
2,686
5,368
Total (a)
$
20,946
$
26,294
$
27,710
$
31,531
$
32,749
December 31,
2012
Property type
September 30,
2012
Financing receivables
June 30,
2012
March 31,
2012
December 31,
2011
Office buildings
Owner occupied
Apartment buildings
Hotel properties
Warehouse properties
Retail facilities
Mixed use
Parking facilities
Other
$
5,217
1,200
3,410
3,244
2,899
2,938
624
25
1,389
$
5,966
5,069
3,680
3,389
2,736
3,174
672
69
1,539
$
6,043
5,301
3,828
3,490
3,393
3,112
738
71
1,734
$
6,659
8,020
4,315
3,603
3,091
3,247
850
134
1,612
$
7,152
8,248
4,466
3,752
3,156
3,246
940
139
1,650
Total (a)
$
20,946
$
26,294
$
27,710
$
31,531
$
32,749
December 31,
2012
Vintage profile
Originated in
pre-2009
2009
2010
2011
2012
Total
December 31,
2012
Contractual maturities
$
15,699
29
161
1,704
3,353
Originated in
2012 and prior (b)
2013
2014
2015
2016 and later
$
20,946
Total
(a)
Represents total gross financing receivables for Real Estate only.
(b)
Includes $404 million relating to loans with contractual maturities prior to December 31, 2012.
(26)
$
552
5,391
4,476
3,787
6,740
$
20,946
GE Capital – Real Estate Equity Overview (a)
($ in millions)
December 31,
2012
Region
U.S.
Europe
Pacific Basin
Americas
Total
$
$
$
$
12,267
3,012
1,846
2,048
998
6
407
254
725
21,563
$
Net operating income (annualized)
Net operating income yield (c)
18,126
6,562
7,500
7,134
2,068
23,264
$
$
$
$
12,703
3,205
2,700
2,113
1,029
6
495
255
758
23,264
$
$
$
September 30,
2012
$
19,733
March 31,
2012
6,849
7,278
7,196
2,624
23,947
$
$
$
March 31,
2012
12,943
3,463
2,823
2,036
1,092
8
579
306
697
23,947
$
$
$
March 31,
2012
20,384
$
7,268
7,553
6,955
2,635
24,411
December 31,
2011
13,154
3,428
2,929
2,066
953
13
613
315
672
24,143
$
June 30,
2012
$
December 31,
2011
7,060
7,532
6,842
2,709
24,143
$
Equity
June 30,
2012
September 30,
2012
December 31,
2012
Key metrics
Owned real estate (b)
$
December 31,
2012
Property type
Office buildings
Apartment buildings
Warehouse properties
Retail facilities
Mixed use
Parking facilities
Owner occupied
Hotel properties
Other
Total
6,237
7,226
6,797
1,303
21,563
Equity
June 30,
2012
September 30,
2012
13,117
3,644
2,949
2,110
997
13
601
333
647
24,411
December 31,
2011
20,664
$
21,007
1,077
5.7 %
1,194
6.0 %
1,239
6.0 %
1,212
5.8 %
1,238
5.7 %
End of period vacancies (d)
18.2 %
17.6 %
18.0 %
19.0 %
18.9 %
Foreclosed properties (e)
893
954
966
734
692
December 31,
2012
Vintage profile (f)
Originated in
pre-2009
2009
2010
2011
2012
Total
(a)
(b)
(c)
(d)
(e)
(f)
$
$
20,103
91
98
536
735
21,563
Includes real estate investments related to Real Estate only.
Excludes joint ventures, equity investment securities, and foreclosed properties.
Net operating income yield is calculated as annualized net operating income for the relevant quarter as a percentage of the average owned real estate.
Excludes hotel properties, apartment buildings and parking facilities.
Excludes foreclosed properties related to loans acquired at a discount with an expectation to foreclose.
Includes foreclosed properties based on date of foreclosure.
(27)
GE Capital – Equipment Leased to Others (ELTO), Net of Depreciation and Amortization Overview
(In millions)
December 31, 2012
Collateral type
CLL
Aircraft
Vehicles
Railroad rolling stock
Construction and manufacturing
All other
$
2,809 $
9,262
2,746
2,069
1,492
Total at December 31, 2012
$
18,378 $
June 30, 2012
Collateral type
CLL
Aircraft
Vehicles
Railroad rolling stock
Construction and manufacturing
All other
$
3,033 $
8,222
2,796
1,829
1,663
Total at June 30, 2012
$
17,543 $
December 31, 2011
Collateral type
CLL
Aircraft
Vehicles
Railroad rolling stock
Construction and manufacturing
All other
$
3,125 $
8,769
2,853
1,669
1,492
Total at December 31, 2011
$
17,908 $
GECAS
33,422
–
–
–
–
EFS
$
33,422 $
GECAS
32,387
–
–
–
–
–
–
–
–
795
31,146 $
CLL
$
36,231
9,263
2,746
2,069
2,290
Aircraft
Vehicles
Railroad rolling stock
Construction and manufacturing
All other
$
795 $
4
$
52,599
Total at September 30, 2012
$
Consumer
–
–
–
–
825
Total
March 31, 2012
Collateral type
3,150
8,389
2,755
1,893
1,499
GECAS
EFS
Consumer
Total
$
32,689 $
–
–
–
–
–
–
–
–
802
$
–
2
–
–
3
$
35,839
8,391
2,755
1,893
2,304
17,686 $
32,689 $
802 $
5
$
51,182
CLL
GECAS
EFS
Consumer
Total
$
–
2
–
–
4
$
35,420
8,224
2,796
1,829
2,492
Aircraft
Vehicles
Railroad rolling stock
Construction and manufacturing
All other
$
2,935
8,656
2,822
1,688
1,768
$
31,557 $
–
–
–
–
–
–
–
–
851
$
–
2
–
–
5
$
34,492
8,658
2,822
1,688
2,624
825 $
6
$
50,761
Total at March 31, 2012
$
17,869
$
31,557 $
851 $
7
$
50,284
EFS
$
September 30, 2012
Collateral type
–
1
–
–
3
$
GECAS
Total
$
EFS
32,387 $
31,146
–
–
–
–
Consumer
Consumer
–
–
–
–
857
Total
$
–
3
–
1
5
$
34,271
8,772
2,853
1,670
2,354
857 $
9
$
49,920
(28)
GE Capital – Commercial Aircraft Asset Details
December 31,
2012
Collateral type (in millions)
September 30,
2012
Loans and leases
June 30,
2012
March 31,
2012
December 31,
2011
Narrow-body aircraft
Wide-body aircraft
Cargo
Regional jets
Engines
$
25,570
8,949
3,012
4,585
2,107
$
25,394
8,716
3,457
4,560
2,076
$
25,141
8,989
3,422
4,695
2,074
$
24,336
8,497
3,561
4,802
1,970
$
24,030
8,375
3,599
4,889
2,042
Total (a)
$
44,223
$
44,203
$
44,321
$
43,166
$
42,935
December 31,
2012
Airline regions (in millions)
September 30,
2012
Loans and leases
June 30,
2012
March 31,
2012
December 31,
2011
U.S.
Europe
Pacific Basin
Americas
Other
$
13,360
10,629
7,904
5,279
7,051
$
13,499
10,813
8,010
5,060
6,821
$
13,992
10,789
7,830
5,083
6,627
$
13,917
9,893
7,988
5,043
6,325
$
13,760
9,665
7,945
5,072
6,493
Total (a)
$
44,223
$
44,203
$
44,321
$
43,166
$
42,935
December 31,
2012
Aircraft vintage profile (in millions)
0 - 5 years
6 - 10 years
11 - 15 years
15+ years
$
18,674
12,260
8,295
2,887
Total (b)
$
42,116
(a)
Includes loans and financing leases of $10,915 million, $11,628 million, $12,046 million, $11,721 million and, $11,901 million, (less non-aircraft loans and financing leases of $114 million, $114
million, $112 million, $112 million and $112 million) and ELTO of $33,422 million, $32,689 million, $32,387 million, $31,557 million and $31,146 million at December 31, 2012, September 30, 2012,
June 30, 2012, March 31, 2012, and December 31, 2011, respectively, related to commercial aircraft at GECAS.
(b)
Excludes aircraft engine loans and leases of $2,107 million.
(29)
GE Capital Other Key Areas
(30)
GE Capital – Investment Securities
(In millions)
Debt
U.S. corporate
State and municipal
Residential mortgage-backed (a)
Commercial mortgage-backed
Asset-backed
Corporate - non-U.S.
Government - non-U.S.
U.S. government and federal agency
At December 31, 2012
Gross
Gross
unrealized
unrealized
gains
losses
Amortized
cost
$
20,233
4,084
2,198
2,930
5,784
2,391
1,617
3,462
$
4,201
575
183
259
31
150
149
103
$
Estimated
fair value
(302)
(113)
(119)
(95)
(77)
(126)
(3)
–
$
At December 31, 2011
Gross
Gross
unrealized
unrealized
gains
losses
Amortized
cost
24,132
4,546
2,262
3,094
5,738
2,415
1,763
3,565
$
20,748
3,027
2,711
2,913
5,102
2,414
2,488
3,974
$
3,432
350
184
162
32
126
129
84
$
Estimated
fair value
(410)
(143)
(286)
(247)
(164)
(207)
(86)
–
$
23,770
3,234
2,609
2,828
4,970
2,333
2,531
4,058
Retained interests
76
7
–
83
25
10
–
35
Equity
Available-for-sale
Trading
355
245
86
–
(3)
–
438
245
713
241
75
–
(38)
–
750
241
Total
$
(In millions)
Debt
U.S. corporate
State and municipal
Residential mortgage-backed
Commercial mortgage-backed
Asset-backed
Corporate - non-U.S.
Government - non-U.S.
U.S. government and federal agency
$
5,744
$
(838)
$
48,281
At December 31, 2012 - in loss position for
Less than 12 months
12 months or more
Gross
Gross
Estimated
unrealized
Estimated
unrealized
fair value
losses
(b)
fair value
losses
$
Retained interests
Equity
Total
43,375
$
434
146
98
37
18
167
201
–
$
(7)
(2)
(1)
–
(1)
(8)
(1)
–
$
813
326
691
979
658
602
37
–
$
$
$
4,584
$
(1,581)
$
47,359
At December 31, 2011 - in loss position for
Less than 12 months
12 months or more
Gross
Gross
Estimated
unrealized
Estimated
unrealized
fair value
losses
(b)
fair value
losses
(b)
(295)
(111)
(118)
(95)
(76)
(118)
(2)
–
44,356
$
1,435
87
219
244
100
330
906
502
$
(241)
(1)
(9)
(23)
(7)
(28)
(5)
–
$
836
307
825
1,320
850
607
203
–
$
(b)
(169)
(142)
(277)
(224)
(157)
(179)
(81)
–
3
–
–
–
–
–
–
–
26
(3)
–
–
440
(38)
–
–
1,130
$
(23)
$
4,106
$
(815)
$
4,263
$
(352)
$
4,948
$
(1,229)
(a)
Substantially collateralized by U.S. mortgages. Of our total residential mortgage-backed securities (RMBS) portfolio at December 31, 2012, $1,441 million relates to securities issued by
government sponsored entities and $821 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.
(b)
Includes gross unrealized losses at December 31, 2012 of $(157) million related to securities that had other-than-temporary impairments previously recognized.
(31)
GE Capital – Investments Measured at Fair Value in Earnings (a)
Asset balances at
December 31,
2012
Investment type (in millions)
Earnings impact for
twelve months ending
December 31, 2012 (b)
December 31,
2011
Equities - trading
Assets held for sale (LOCOM)
Assets of businesses held for sale (LOCOM)
Other (investment companies and loans)
$
245
4,205
211
432
$
241
4,525
711
388
$
18
(174)
(6)
2
Total
$
5,093
$
5,865
$
(161)
(a)
Excludes derivatives portfolio.
(b)
All numbers are pre-tax.
(32)
GE Capital – Net Interest Margin (a)
For twelve
months ending
December 31,
2012
($ in billions)
For nine
months ending
September 30,
2012
December 31,
2011
Interest income from Loans and Leases
6.0%
6.0%
6.0%
Yield Adjustors (Fees, Tax equivalency adjustment) (b)
0.8%
0.8%
0.8%
Investment Income (c)
0.2%
0.0%
0.2%
Operating Lease Income (net of depreciation)
1.3%
1.4%
1.3%
Total Interest Income
8.3%
8.1%
8.3%
Total Interest Expense (d)
3.3%
3.7%
3.4%
Net Interest Margin (e)
4.9%
4.4%
4.9%
Average Gross Financing Receivables
$
282
$
306
$
285
Average Investment Securities (f)
16
17
16
Average ELTO (net of depreciation)
51
52
51
Average Earning Assets (AEA) (g)
$
350
$
375
$
352
Average Total Assets (f)
$
525
$
559
$
532
AEA/Average Total Assets
67%
67%
66%
(a)
YTD net interest margin % annualized (annualized net interest margin $ = 1Q * 4, 2Q YTD * 2, 3Q YTD * 4/3, 4Q YTD * 1); average asset balances calculated using average of
quarter end balances (1Q = 2-point average, 2Q = 3-point average, 3Q = 4-point average, 4Q = 5-point average) %s calculated based on average earning assets (AEA) total.
(b)
Excludes non-yield fees
(c)
Excludes legacy insurance business, income on cash, realized gains and losses on sale of investment securities.
(d)
Includes total GECC interest expense.
(e)
Excludes items in footnotes (b) and (c) and income from associated companies, Real Estate investment income, sale of goods, intercompany income with GE and other income.
(f)
Excludes legacy insurance business.
(g)
Excludes Real Estate Owned, investments in associated companies, cash, goodwill and other assets.
(33)
Appendix
(34)
Glossary
Term
Definition
Borrowing
Financial liability (short or long-term) that obligates us to repay cash or another financial asset to another entity.
Cash and equivalents
Highly liquid debt instruments with original maturities of three months or less, such as commercial paper. Typically included with cash for reporting
purposes, unless designated as available-for-sale and included with investment securities.
Commercial paper
Unsecured, unregistered promise to repay borrowed funds in a specified period ranging from overnight to 270 days.
Derivative instrument
A financial instrument or contract with another party (counterparty) that is designed to meet any of a variety of risk management objectives,
including those related to fluctuations in interest rates, currency exchange rates or commodity prices. Options, forwards and swaps are the most
common derivative instruments we employ. See "Hedge."
Discontinued operations
Certain businesses we have sold or committed to sell within the next year and therefore will no longer be part of our ongoing operations. The net
earnings, assets and liabilities, and cash flows of such businesses are separately classified on our Statement of Earnings, Statement of Financial
Position and Statement of Cash Flows, respectively, for all periods presented.
Ending Net Investment (ENI)
The total capital we have invested in the financial services business. It is the sum of short-term borrowings, long-term borrowings and equity
(excluding noncontrolling interests) adjusted for unrealized gains and losses on investment securities and hedging instruments. Alternatively, it is the
amount of assets of continuing operations less the amount of non-interest bearing liabilities.
Equipment leased to others
Rental equipment we own that is available to rent and is stated at cost less accumulated depreciation.
Fair value hedge
Qualifying derivative instruments that we use to reduce the risk of changes in the fair value of assets, liabilities or certain types of firm commitments.
Changes in the fair values of derivative instruments that are designated and effective as fair value hedges are recorded in earnings, but are offset by
corresponding changes in the fair values of the hedged items. See "Hedge."
Financing receivables
Investment in contractual loans and leases due from customers (not investment securities).
Goodwill
The premium paid for acquisition of a business. Calculated as the purchase price less the fair value of net assets acquired (net assets are identified
tangible and intangible assets, less liabilities assumed).
Hedge
A technique designed to eliminate risk. Often refers to the use of derivative financial instruments to offset changes in interest rates, currency
exchange rates or commodity prices, although many business positions are "naturally hedged" - for example, funding a U.S. fixed-rate investment
with U.S. fixed-rate borrowings is a natural interest rate hedge.
(35)
Glossary
Term
Definition
Intangible asset
A non-financial asset lacking physical substance, such as goodwill, patents, licenses, trademarks and customer relationships.
Interest rate swap
Agreement under which two counterparties agree to exchange one type of interest rate cash flow for another. In a typical arrangement, one party
periodically will pay a fixed amount of interest, in exchange for which that party will receive variable payments computed using a published index. See
"Hedge."
Investment securities
Generally, an instrument that provides an ownership position in a corporation (a stock), a creditor relationship with a corporation or governmental
body (a bond), rights to contractual cash flows backed by pools of financial assets or rights to ownership such as those represented by options,
subscription rights and subscription warrants.
Net interest margin
A measure of the yield on interest earning assets relative to total interest expense. It is the amount of interest income less interest expense, divided
by average interest earning assets.
Net operating income
Represents operating income less operating expenses for owned real estate properties.
Other comprehensive income
Changes in assets and liabilities that do not result from transactions with shareowners and are not included in net income but are recognized in a
separate component of shareowners' equity. Other comprehensive income includes the following components:
- Investment securities - unrealized gains and losses on securities classified as available for sale
- Currency translation adjustments - the result of translating into U.S. dollars those amounts denominated or measured in a different currency
- Cash flow hedges - the effective portion of the fair value of cash flow hedges. Such hedges relate to an exposure to variability in the cash flows of
recognized assets, liabilities or forecasted transactions that are attributable to a specific risk
- Benefit plans - unamortized prior service costs and net actuarial losses (gains) related to pension and retiree health and life benefits
Retained interest
A portion of a transferred financial asset retained by the transferor that provides rights to receive portions of the cash inflows from that asset.
Securitization
A process whereby loans or other receivables are packaged, underwritten and sold to investors. In a typical transaction, assets are sold to a special
purpose entity, which purchases the assets with cash raised through issuance of beneficial interests (usually debt instruments) to third-party
investors. Whether or not credit risk associated with the securitized assets is retained by the seller depends on the structure of the securitization. See
"Variable interest entity."
Variable interest entity (VIE)
An entity that must be consolidated by its primary beneficiary, the party that holds a controlling financial interest. A variable interest entity has one or
both of the following characteristics: (1) its equity at risk is not sufficient to permit the entity to finance its activities without additional subordinated
financial support from other parties, or (2) as a group, the equity investors lack one or more of the following characteristics: (a) the power to direct the
activities that most significantly affect the economic performance of the entity, (b) obligation to absorb expected losses, or (c) right to receive
expected residual returns.
(36)
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