GE 2007 Annual Report Download - page 105

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ge 2007 annual report 103
Key assumptions used in measuring the fair value of retained
interests in securitizations and the sensitivity of the current fair
value of residual cash fl ows to changes in those assumptions
related to all outstanding retained interests as of December 31,
2007 and 2006, are noted in the following table.
Commercial Credit card Other
(Dollars in millions) Equipment real estate receivables assets
2007
Discount rate
(a)
12.8% 15.2% 14.8% 14.5%
Effect of
10% Adverse change $ (7) $(20) $ (36) $ (5)
20% Adverse change (13) (38) (72) (9)
Prepayment rate
(a)(b) 11.7% 3.4% 10.8% 16.2%
Effect of
10% Adverse change $ (2) $ (5) $ (80) $ (3)
20% Adverse change (3) (9) (148) (5)
Estimate of credit losses (a) 1.7% 1.0% 9.0% 0.5%
Effect of
10% Adverse change $ (5) $ (8) $ (110) $ (1)
20% Adverse change (8) (13) (222) (2)
Remaining weighted
average lives (in months) 22 53 8 26
Net credit losses $ 36 $ 1 $ 941 $ 19
Delinquencies 51 12 1,514 4
2006
Discount rate
(a) 8.9% 13.2% 11.2% 6.4%
Effect of
10% Adverse change $ (10) $(19) $ (15) $ (5)
20% Adverse change (21) (35) (30) (10)
Prepayment rate
(a)(b) 11.7% 3.0% 12.0% 12.7%
Effect of
10% Adverse change $ (5) $ (7) $ (59) $ (5)
20% Adverse change (9) (13) (110) (10)
Estimate of credit losses (a) 2.3% 0.8% 6.6% 0.2%
Effect of
10% Adverse change $ (7) $ (6) $ (48) $ (3)
20% Adverse change (14) (8) (95) (6)
Remaining weighted
average lives (in months) 31 47 8 18
Net credit losses $ 58 $ — $ 576 $ —
Delinquencies 121 13 741 12
(a) Based on weighted averages.
(b) Represented a payment rate on credit card receivables.
Note 28
Commitments and Guarantees
Commitments, including guarantees
In our Aviation business of Infrastructure, we had committed to
provide fi nancial assistance on $1,607 million of future customer
acquisitions of aircraft equipped with our engines, including
commitments made to airlines in 2007 for future sales under our
GE90 and GEnx engine campaigns. The Aviation Financial Services
business of Infrastructure had placed multiple-year orders for
various Boeing, Airbus and other aircraft with list prices approxi-
mating $20,046 million and secondary orders with airlines for
used aircraft of approximately $910 million at December 31, 2007.
At December 31, 2007, NBC Universal had $9,722 million of
commitments to acquire motion picture and television program-
ming, including U.S. television rights to future Olympic Games
and National Football League games, contractual commitments
under various creative talent arrangements and various other
arrangements requiring payments through 2014.
At December 31, 2007, we were committed under the follow-
ing guarantee arrangements beyond those provided on behalf of
securitization entities. See note 27.
• CREDIT SUPPORT. We have provided $8,126 million of credit
support on behalf of certain customers or associated compa-
nies, predominantly joint ventures and partnerships, using
arrangements such as standby letters of credit and performance
guarantees. These arrangements enable these customers and
associated companies to execute transactions or obtain desired
fi nancing arrangements with third parties. Should the customer
or associated company fail to perform under the terms of the
transaction or fi nancing arrangement, we would be required
to perform on their behalf. Under most such arrangements,
our guarantee is secured, usually by the asset being purchased
or fi nanced, but possibly by certain other assets of the customer
or associated company. The length of these credit support
arrangements parallels the length of the related fi nancing
arrangements or transactions. The liability for such credit
support was $57 million for December 31, 2007.
• INDEMNIFICATION AGREEMENTS. These are agreements that
require us to fund up to $608 million under residual value
guarantees on a variety of leased equipment and $1,718 million
of other indemnifi cation commitments arising primarily from
sales of businesses or assets. Under most of our residual value
guarantees, our commitment is secured by the leased asset at
termination of the lease. The liability for these indemnifi cation
agreements was $51 million at December 31, 2007.
• CONTINGENT CONSIDERATION. These are agreements to provide
additional consideration in a business combination to the seller
if contractually specifi ed conditions related to the acquired
entity are achieved. At December 31, 2007, we had total max-
imum exposure for future estimated payments of $220 million,
of which none was earned and payable.