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)