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2008 Annual Report
We are GE
Infrastructure
Finance
Media

Table of contents

  • Page 1
    Infrastructure Finance Media We are GE 2008 Annual Report

  • Page 2
    ... Governance 16 Board of Directors 17 Financial Section 108 Corporate Information 2008 COMPANY HIGHLIGHTS • Earnings were $18.1 billion, the third highest in Company history • Revenues grew 6% to a Company record of $183 billion • Global revenues grew 13% • Infrastructure and Media segments...

  • Page 3
    ..., GE and President & Chief Executive Officer, Energy Infrastructure Dear Fellow Owners, 2008 was a tough year, and we expect 2009 to be even tougher. The liquidity challenge I reported in last year's letter has become a global financial meltdown. In 2008, we worked hard to keep the Company safe...

  • Page 4
    ... economic recession across most of the world. Government actions have helped to stabilize the environment. Capital markets have improved, largely due to aggressive actions by the U.S. Federal Reserve, U.S. Federal Deposit Insurance Corporation, U.S. Department of the Treasury, and global governments...

  • Page 5
    ...the type of "outperformance" we like, but we were better than the broad market. Over time, and in an improved economy, we expect our businesses will continue to grow faster than the S&P 500. We have three priorities for 2009: expand leadership in infrastructure and media; capitalize on GE's cyclical...

  • Page 6
    ... performance and energy savings; and customer productivity through process improvements and data management. Aviation is an example of a business that can grow earnings even if the market for new aircraft declines. We have $90 billion of potential long-term aviation service revenues just on the...

  • Page 7
    ... to play an important part in solving these essential challenges. Create a More Focused GE Capital Finance Mike Neal's GE Capital Finance business earned nearly $9 billion in 2008. Against the background of the global credit crisis, his team moved quickly to improve our liquidity, strengthen our...

  • Page 8
    ... business model. We have over 10,000 global originators who understand their customers better than banks because of GE's industrial presence. We believe that our financial services can drive earnings growth over the long term. Sustaining Competitive Advantage GE is a 130-year-old growth company...

  • Page 9
    ... excellence, and leadership development. The aim of these processes is to spread best practices across the Company. We compare our progress on common metrics in industrial organic revenue growth, margins, return on total capital, and productivity as measured by revenue per employee. The chart...

  • Page 10
    .... Our trade deficit is a sign of real weakness and we must reduce our debt to the world. GE will always invest to win globally, but this should include a preeminent position in a strong U.S. GE plans to play an important role in this process. We are, first and foremost, a technology company. And...

  • Page 11
    ..., GE businesses are poised to perform with rigor and to capture new growth. Technology Infrastructure, Energy Infrastructure, GE Capital, and NBC Universal will continue to work with customers to meet their most urgent needs and take on the world's toughest challenges. GE's ability to be global...

  • Page 12
    ... Technology Infrastructure's Aviation business, other leading aerospace companies, and the state-owned Commercial Aircraft Corporation of China, LTD (COMAC). It represents a $6 billion opportunity for GE Aviation. More importantly, from R&D at our Global Research Center in Shanghai to GE Commercial...

  • Page 13
    ... of GE Energy Infrastructure's biggest global growth drivers are built right here at home. GE's Greenville, South Carolina site is the largest gas turbine manufacturing plant in the world, producing products for domestic and global export. Built in 1968, the site originally housed 250 employees and...

  • Page 14
    ... toward a smaller and more focused structure, strategic partnerships and joint ventures will play a greater role in helping GE capitalize on market-specific opportunities. GE's multifaceted partnership with Mubadala Development Company in Abu Dhabi, United Arab Emirates, is a powerful example of...

  • Page 15
    ... in film, and the development of innovative digital distribution, NBC Universal now has multiple ways to grow. NBC Universal's cable business, in particular, is driving fast growth, accounting for more than 60% of total earnings in 2008. And Universal Pictures had its best year ever at the box of...

  • Page 16
    To Our Shareowners: The Management Development and Compensation Committee of GE's Board of Directors is responsible for designing and implementing compensation programs that reward executives for leadership excellence and sustained financial and operating performance, align their interests with ...

  • Page 17
    ... 2008 earnings are based upon companies that have reported as of February 2, 2009. (3) Consists of GE Energy Infrastructure, GE Technology Infrastructure, NBC Universal and Consumer & Industrial. (4) Represents GE Capital Services. Leadership in the Challenging Times that Lie Ahead In the midst of...

  • Page 18
    ... and Chief Executive Officer, General Electric Company. Director since 2000. (pictured on page 1) 1 Audit Committee 2 Management Development and Compensation Committee 3 Nominating and Corporate Governance Committee 4 Public Responsibilities Committee 5 Presiding Director 16 ge 2008 annual report

  • Page 19
    ... Data provides five years of financial information for GE and GECS. This table includes commonly used metrics that facilitate comparison with other companies. 18 19 20 44 48 49 50 Audited Financial Statements and Notes 50 Statement of Earnings 50 Consolidated Statement of Changes in...

  • Page 20
    ... and process improvement audits each year. Our Audit Committee oversees the scope and evaluates the overall results of these audits, and members of that Committee regularly attend GE Capital Services Board of Directors, Corporate Audit Staff and Controllership Council meetings. Our global integrity...

  • Page 21
    ... ï¬,ows relating to income taxes generated by leveraged lease transactions, and, in 2006, changed its methods of accounting for pension and other postretirement benefits and for share-based compensation. Our audits of GE's consolidated financial statements were made for the purpose of forming an...

  • Page 22
    ... reposition GE Capital as a diversely funded and smaller finance company. Consumer & Industrial (7% and 3% of consolidated three-year revenues and total segment profit, respectively) is particularly sensitive to changes in economic conditions. Reï¬,ective of the downturn in the U.S. housing market...

  • Page 23
    ... In 2006, we substantially completed our planned exit of the insurance businesses through the sale of the property and casualty insurance and reinsurance businesses and the European life and health operations of GE Insurance Solutions Corporation (GE Insurance Solutions) and the sale of GE Life, our...

  • Page 24
    ... will impact future pension plan costs, the Company's requirement to make future cash contributions to the Trust will depend on future market and economic conditions. On an Employee Retirement Income Security Act (ERISA) basis, the GE Pension Plan remains fully funded at January 1, 2009. We will not...

  • Page 25
    ... report from GE's General Counsel covering compliance issues. Each year, the Committee also reviews and discusses topics related to the financial reporting process, including an update on information technology, controllership, insurance, tax strategies and policies, accounting and numerous reports...

  • Page 26
    ...to develop early signals that monitor changes in risk affecting portfolio performance and actively manage the portfolio. Other corporate functions such as Controllership, Financial Planning and Analysis, Treasury, Legal and our Corporate Audit Staff support business-level risk management. Businesses...

  • Page 27
    ... primarily located in Europe, the U.K., Asia, Canada and Mexico, across a wide variety of property types including office, industrial/warehouse, and multifamily. The Australia/New Zealand mortgages are generally prime credit, and 94% of the portfolio is covered by private mortgage insurance for...

  • Page 28
    management's discussion and analsis Summary of Operating Segments General Electric Company and consolidated affiliates (In millions) 2008 2007 2006 2005 2004 REVENUES Energy Infrastructure Technology Infrastructure NBC Universal Capital Finance Consumer & Industrial Total segment revenues ...

  • Page 29
    ... and increased sales of commercial engines and services at Aviation; increased sales in the international diagnostic imaging, clinical systems and life sciences businesses of Healthcare; primarily the effects of acquisitions at Enterprise Solutions; and increased sales of equipment and services at...

  • Page 30
    ... 2008 $66,301 $12,243 2007 $56,378 $10,397 TOTAL ASSETS (In millions) $572,903 $583,965 2008 2007 2006 REVENUES Commercial Lending and Leasing (CLL) GE Money Real Estate Energy Financial Services GE Commercial Aviation Services (GECAS) SEGMENT PROFIT $26,742 25,012 6,646 3,707 4,901 $ 1,805...

  • Page 31
    ...billion of higher credit losses and $0.1 billion in charges related to mark-to-market adjustments to loans held-for-sale. Investment income included higher SES gains ($0.1 billion), offset by impairments of securitization retained interests ($0.1 billion). GE Money 2008 revenues increased 1% and net...

  • Page 32
    ...cost) reï¬,ects a $0.9 billion gain on sale of a business interest to Hitachi by the Energy business and a $0.3 billion (after-tax basis) gain on sale of Swiss Re common stock in 2007 and gains from sales of business interests of $0.4 billion in 2006, principally GE Supply. 30 ge 2008 annual report

  • Page 33
    ... taxes $(679) $(249) $1,398 Discontinued operations comprised GE Money Japan; WMC; Plastics; Advanced Materials; GE Life, our U.K.-based life insurance operation; the property and casualty insurance and reinsurance businesses and the European life and health operations of GE Insurance Solutions...

  • Page 34
    ...stronger U.S. dollar in Europe, the Pacific Basin and the Americas, partially offset by acquisitions, primarily at GE Money and CLL. Financial results of our global activities reported in U.S. dollars are affected by currency exchange. We use a number of techniques to manage the effects of currency...

  • Page 35
    ... by pools of individual direct-mortgage loans, and do not include structured products such as collateralized debt obligations. Additionally, a majority of our exposure to residential subprime credit related to investment securities backed by mortgage loans originated in 2006 and 2005. We regularly...

  • Page 36
    ... as compared to bank cards. The remaining 58% are sales finance receivables, which provide electronics, recreation, medical and home improvement financing to customers. In 2007, we exited the U.S. mortgage business and we have no U.S. auto or student loans. Our commercial portfolio primarily...

  • Page 37
    ... 6.1 1.2 2.3 0.6 0.7 0.4 0.7 1.4% 0.7% 0.5 0.3 4.0 3.5 1.2 1.6 0.5 0.2 0.1 0.4 1.1% Non-U.S. residential mortgages Non-U.S. installment and revolving credit U.S. installment and revolving credit Non-U.S. auto Other REAL ESTATE ENERGY FINANCIAL SERVICES GECAS OTHER TOTAL ge 2008 annual report 35

  • Page 38
    ... 31, 2008, primarily from an increase in nonearning receivables in secured lending in media and communications, auto and transportation, and consumer manufacturing companies. GE MONEY - NON-U.S. RESIDENTIAL MORTGAGES. Nonearning The portfolio of financing receivables, before allowance for losses...

  • Page 39
    ...GECS RECEIVABLES totaled $18.6 billion at December 31, December 31, 2008, up $0.6 billion from 2007, primarily reï¬,ecting acquisitions and additions of commercial aircraft at the GECAS business of Capital Finance. GE property, plant and equipment consisted of investments for its own productive use...

  • Page 40
    ... access to sufficient funding at acceptable costs to meet our business needs and financial obligations throughout business cycles. We rely on cash generated through our operating activities as well as unsecured and secured funding sources, including commercial paper, term debt, bank deposits, bank...

  • Page 41
    ... U.S. and two banks in the U.S. - GE Money Bank Inc., a Federal Savings Bank (FSB), and GE Capital Financial Inc., an industrial bank (IB). The FSB and IB currently issue certificates of deposits (CDs) distributed by brokers in maturity terms from three months to ten years. Total outstanding CDs at...

  • Page 42
    ...resources to meet our capital needs. Cash for financial services businesses is primarily provided from the issuance of term debt and commercial paper in the public and private markets, as well as financing receivables collections, sales and securitizations. GE Cash Flow GE CFOA is a useful measure...

  • Page 43
    ... between related companies are eliminated and consist primarily of GECS dividends to GE; GE customer receivables sold to GECS; GECS services for trade receivables management and material procurement; buildings and equipment (including automobiles) leased by GE from GECS; information technology (IT...

  • Page 44
    ...these entities. QSPEs that we use for securitization are funded with assetbacked commercial paper and term debt. The assets we securitize include receivables secured by equipment, commercial real estate, credit card receivables, ï¬,oorplan inventory receivables, GE trade receivables and other assets...

  • Page 45
    ...competitive advantage and market conditions and position Þ Strength of management, including experience, corporate governance and strategic thinking Þ Financial reporting quality, including clarity, completeness and transparency of all financial performance communications GE Capital's ratings...

  • Page 46
    ... Note 1, Summary of Significant Accounting Policies, which discusses the significant accounting policies that we have selected from acceptable alternatives. LOSSES ON FINANCING RECEIVABLES are recognized when they Þ If the short-term credit rating of GE Capital or certain consolidated entities...

  • Page 47
    ... industry information about expected trends in rental, occupancy and capitalization rates and expected business plans, which include our estimated holding period for the asset. Our portfolio is diversified, both geographically and by asset type. However, the global real estate market is subject...

  • Page 48
    ...estimated future cash ï¬,ows and discount rates, as appropriate, to reï¬,ect current market conditions in the financial services industry. In each case, no impairment was indicated. Reporting units within Capital Finance are CLL, GE Money, Real Estate, Energy Financial Services and GECAS, which had...

  • Page 49
    ... As discussed in Note 16, we also have assets that are classified as held for sale in the ordinary course of business, primarily credit card receivables, loans and real estate properties, carried at $5.0 billion at year-end 2008, which represents the lower of carrying amount or estimated fair value...

  • Page 50
    ... government, totaled $1.3 billion, $1.1 billion and $0.7 billion in 2008, 2007 and 2006, respectively. Technology Infrastructure's Aviation business accounts for the largest share of GE's research and development expenditures with funding from both GE and customer funds. Technology Infrastructure...

  • Page 51
    ... - basic Dividends declared Stock price range Year-end closing stock price Cash and equivalents Total assets of continuing operations Total assets Long-term borrowings Common shares outstanding - average (in thousands) Common shareowner accounts - average Employees at year end United States Other...

  • Page 52
    audited financial statements Statement of Earnings General Electric Company and consolidated affiliates For the years ended December 31 (In millions; per-share amounts in dollars) 2008 2007 2006 REVENUES Sales of goods Sales of services Other income (Note 3) GECS earnings from continuing ...

  • Page 53
    ...as described in Note 1 to the consolidated financial statements; "GECS" means General Electric Capital Services, Inc. and all of its affiliates and associated companies. Separate information is shown for "GE" and "Financial Services (GECS)." Transactions between GE and GECS have been eliminated from...

  • Page 54
    ... insurance annuity benefits (Note 19) All other liabilities (Note 20) Deferred income taxes (Note 21) Liabilities of businesses held for sale (Note 17) Liabilities of discontinued operations (Note 2) Total liabilities Minority interest in equity of consolidated affiliates (Note 22) Preferred stock...

  • Page 55
    ...as described in Note 1 to the consolidated financial statements; "GECS" means General Electric Capital Services, Inc. and all of its affiliates and associated companies. Separate information is shown for "GE" and "Financial Services (GECS)." Transactions between GE and GECS have been eliminated from...

  • Page 56
    audited financial statements Statement of Cash Flows General Electric Company and consolidated affiliates For the years ended December 31 (In millions) 2008 2007 2006 CASH FLOWS - OPERATING ACTIVITIES Net earnings Loss (earnings) from discontinued operations Adjustments to reconcile net earnings ...

  • Page 57
    ...as described in Note 1 to the consolidated financial statements; "GECS" means General Electric Capital Services, Inc. and all of its affiliates and associated companies. Separate information is shown for "GE" and "Financial Services (GECS)." Transactions between GE and GECS have been eliminated from...

  • Page 58
    ... Summary of Significant Accounting Policies Accounting Principles Our financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP). Consolidation Our financial statements consolidate all of our affiliates-companies that we control and in which we hold...

  • Page 59
    ... of information technology systems in our Healthcare business, under American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts. Under SOP 81-1, we estimate total contract revenue...

  • Page 60
    ...part and scrap metal prices, discounted at an appropriate rate. We recognize operating lease income on a straight-line basis over the terms of underlying leases. Fees include commitment fees related to loans that we do not expect to fund and line-of-credit fees. We record these fees in earned income...

  • Page 61
    ... equipment programs. Cash and Equivalents Debt securities and money market instruments with original maturities of three months or less are included in cash equivalents unless designated as available-for-sale and classified as investment securities. Investment Securities We report investments...

  • Page 62
    ... accident and health insurance, we report premiums as earned income over the terms of the related agreements, generally on a pro-rata basis. For traditional long-duration insurance contracts including term, whole life and annuities payable for the life of the annuitant, we report premiums as earned...

  • Page 63
    ... Japanese mortgage and card businesses, excluding our minority ownership in GE Nissen Credit Co., Ltd. (GE Money Japan), our U.S. mortgage business (WMC), Plastics, Advanced Materials, GE Life, Genworth Financial, Inc. (Genworth) and most of GE Insurance Solutions Corporation (GE Insurance Solutions...

  • Page 64
    ... in 2006. In total, GE Life losses from discontinued operations, net of taxes, were $3 million in both 2008 and 2007, and $178 million in 2006 . GE Insurance Solutions During the second quarter of 2006, we completed the sale of the property and casualty insurance and reinsurance businesses and...

  • Page 65
    ... income taxes Income tax benefit (expense) Loss on disposal, net of taxes EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES $ (181) $ 439 Interest on loans Equipment leased to others Fees Financing leases Real estate investments Premiums earned by insurance activities Associated companies...

  • Page 66
    ... or in the aggregate. We use a December 31 measurement date for our plans. PRINCIPAL RETIREE BENEFIT PLANS provide health and life insurance benefits to certain employees who retire under the GE Pension Plan with 10 or more years of service. Eligible retirees share in the cost of healthcare bene...

  • Page 67
    ... length of service and earnings. PENSION PLAN PARTICIPANTS Principal pension plans Other pension plans December 31, 2008 Total Funded status (a) Liability recorded in the Statement of Financial Position Retiree health plans Due within one year Due after one year Retiree life plans Net liability...

  • Page 68
    notes to consolidated financial statements COST OF PENSION PLANS Total (In millions) 2008 2007 2006 Principal pension plans 2008 2007 2006 2008 Other pension plans 2007 2006 Expected return on plan assets Service cost for benefits earned Interest cost on benefit obligation Prior service cost ...

  • Page 69
    ...Benefits paid (2,723) (2,555) Acquisitions (dispositions) - net - - Exchange rate adjustments - - Balance at December 31 PLAN ASSET ALLOCATION $ 7,411 (1,743) 627 40 (383) 565 (1,143) $ 5,374 $6,435 614 730 43 (370) (372) 331 $7,411 $ 40,730 $59,700 Equity securities Debt securities Real estate...

  • Page 70
    ...$11 million and $79 million for other pension plans. ESTIMATED FUTURE BENEFIT PAYMENTS (In millions) 2009 2010 2011 2012 2013 2014 - 2018 Note 7. Provision for Income Taxes (In millions) 2008 2007 2006 GE Current tax expense Deferred tax expense (benefit) from temporary differences GECS $ 3,844...

  • Page 71
    ... services income until that income is repatriated to the United States as a dividend. This provision is consistent with international tax norms and permits U.S. financial services companies to compete more effectively with foreign banks and other foreign financial institutions in global markets...

  • Page 72
    ... TAX RATE Consolidated 2008 2007 2006 2008 GE 2007 2006 2008 GECS 2007 2006 U.S. federal statutory income tax rate Increase (reduction) in rate resulting from Inclusion of after-tax earnings of GECS in before-tax earnings of GE Tax on global activities including exports (a) U.S. business credits...

  • Page 73
    ... (5) $ 324 19 343 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 Retained interests (b) (c) Equity Available-for-sale Trading ELIMINATIONS 22,183 1,556...

  • Page 74
    ... to residential subprime credit was investment securities with underlying loans originated in 2006 and 2005. At December 31, 2008, we had approximately $2,853 million of exposure to commercial, regional and foreign banks, primarily relating to corporate debt securities, with associated unrealized...

  • Page 75
    ... goods and services on open account to various agencies of the U.S. government, our largest single customer. About 5% of GE sales of goods and services were to the U.S. government in 2008, compared with 4% in both 2007 and 2006. $(1,408) $ 890 (a) Included gain on sale of Swiss Re common stock of...

  • Page 76
    ...railroad rolling stock, autos, other transportation equipment, data processing equipment, medical equipment, commercial real estate and other manufacturing, power generation, and commercial equipment and facilities. For federal income tax purposes, the leveraged leases and the majority of the direct...

  • Page 77
    ... revolving credit U.S. installment and revolving credit Non-U.S. auto Other REAL ESTATE ENERGY FINANCIAL SERVICES GECAS OTHER TOTAL $1,731 (a) Other primarily included the effects of acquisitions, dispositions, reclassifications to held for sale and securitization activity. ge 2008 annual report...

  • Page 78
    ... credit Non-U.S. auto Other REAL ESTATE ENERGY FINANCIAL SERVICES GECAS OTHER TOTAL (a) Other primarily included the effects of acquisitions and securitization activity. Provision charged to operations Balance December 31, 2006 (In millions) Balance January 1, 2006 Currency exchange Other...

  • Page 79
    ... to consolidated financial statements Note 14. Property, Plant and Equipment December 31 (Dollars in millions) Depreciable lives-new (in years) 2008 2007 ORIGINAL COST GE Amortization of GECS equipment leased to others was $8,173 million, $7,222 million and $5,839 million in 2008, 2007 and 2006...

  • Page 80
    ...estimated future cash ï¬,ows and discount rates, as appropriate, to reï¬,ect current market conditions in the financial services industry. In each case, no impairment was indicated. Reporting units within Capital Finance are CLL, GE Money, Real Estate, Energy Financial Services and GECAS, which had...

  • Page 81
    ... the date a decision was made to dispose of them through sale, securitization or other means. Such assets consisted primarily of credit card receivables, loans and real estate properties, and were accounted for at the lower of carrying amount or estimated fair value less costs to sell. These amounts...

  • Page 82
    ... to consolidated financial statements Note 17. Note 18. Assets and Liabilities of Businesses Held for Sale On January 7, 2009, we exchanged our GE Money businesses in Austria and Finland, the credit card and auto businesses in the U.K., and the credit card business in Ireland for a 100% ownership...

  • Page 83
    ... to consolidated financial statements LONG-TERM BORROWINGS 2008 Average rate (a) December 31 (Dollars in millions) Maturities 2008 2007 GE Senior notes Industrial development/ pollution control bonds Payable to banks, principally U.S. Other (b) GECS 5.11% 2013-2017 $ 1.10 6.93 2011-2027 2010...

  • Page 84
    ... expenses Unearned premiums Universal life benefits Total $ 4,212 10,828 15,040 16,259 2,145 623 302 $34,369 $ 4,536 11,705 16,241 15,416 1,726 656 320 $34,359 (a) Life insurance benefits are accounted for mainly by a net-level-premium method using estimated yields generally ranging from 3.0% to...

  • Page 85
    ... shares of consolidated affiliates. (b) The preferred stock pays cumulative dividends at an average rate of 6.81%. GE Intangible assets Contract costs and estimated earnings Depreciation Investment in global subsidiaries Pension asset -principal plans Provision for expenses (a) Retiree insurance...

  • Page 86
    notes to consolidated financial statements Note 23. Shareowners' Equity (In millions) 2008 2007 2006 PREFERRED STOCK ISSUED (a) (b) COMMON STOCK ISSUED (a) (b) ACCUMULATED OTHER COMPREHENSIVE INCOME $ $ $ - 702 8,324 (3,813) (10,890) (2,781) (13,288) 595 (117) 117 - $ $ $ - 669 3,254 (972) 4,...

  • Page 87
    .... SHARES OF GE COMMON STOCK All grants of GE options under all plans must be approved by the Management Development and Compensation Committee, which consists entirely of independent directors. STOCK COMPENSATION PLANS Securities to be issued upon exercise Weighted average exercise price Securities...

  • Page 88
    notes to consolidated financial statements STOCK OPTION ACTIVITY Weighted average grant date fair value Weighted average remaining contractual term (In years) OTHER STOCK-BASED COMPENSATION Weighted average grant date fair value Weighted average remaining contractual term (In years) Shares (In ...

  • Page 89
    ... in 2007. In 2006, we had a significant noncash transaction in connection with our sale of GE Insurance Solutions: Swiss Re assumed $1,700 million of debt, and GE received $2,238 million of newly issued Swiss Re common stock. See Note 2. Certain supplemental information related to GE and GECS cash...

  • Page 90
    ... between related companies are eliminated and consist primarily of GECS dividend to GE; GE customer receivables sold to GECS; GECS services for trade receivables management and material procurement; buildings and equipment (including automobiles) leased by GE from GECS; information technology (IT...

  • Page 91
    .... GE Money offers a range of financial products including privatelabel credit cards; personal loans; bank cards; auto loans and leases; mortgages; debt consolidation; home equity loans; deposits and other savings products; and small and medium enterprise lending on a global basis. Capital Finance...

  • Page 92
    ... net earnings totaling $3,583 million. (c) Additions to property, plant and equipment include amounts relating to principal businesses purchased. Interest and other financial charges (In millions) 2008 2007 2006 Provision (benefit) for income taxes 2008 2007 2006 Capital Finance Corporate items and...

  • Page 93
    ... include publicly-traded equity securities. When quoted market prices are unobservable, we use quotes from independent pricing vendors based on recent trading activity and other relevant information including market interest rate curves, referenced credit spreads and estimated prepayment rates where...

  • Page 94
    .... (d) Primarily represented the liability associated with certain of our deferred incentive compensation plans accounted for in accordance with EITF Issue 97-14, Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested. 92 ge 2008 annual report

  • Page 95
    notes to consolidated financial statements The following table presents the changes in Level 3 instruments measured on a recurring basis for the year ended December 31, 2008. The majority of our Level 3 balances consist of investment securities classified as available-for-sale with changes in fair...

  • Page 96
    ... are comparable to market quotes adjusted for our nonperformance risk. Certain insurance affiliates, primarily in GE Money, issue credit life insurance designed to pay the balance due on a loan if the borrower dies before the loan is repaid. As part of our overall risk management process, we cede...

  • Page 97
    ... rates and currency exchange rates. We manage such risks using various techniques including issuing debt whose terms correspond to terms of the funded assets, as well as combinations of debt and derivatives that achieve our objectives. We also are exposed to various commodity price risks and address...

  • Page 98
    ... sheet securitization transactions funded in the commercial paper and term markets. Investors in these entities only have recourse to the assets owned by the entity and not to our general credit, unless noted below. We did not provide non-contractual support to consolidated or unconsolidated VIEs...

  • Page 99
    ... of these entities have no claim on the other assets of GE. If the short-term credit rating of GE Capital or these entities were reduced below A-1/P-1, we would be required to provide substitute liquidity for those entities or provide funds to retire the outstanding commercial paper. The maximum net...

  • Page 100
    notes to consolidated financial statements We transfer assets to QSPEs in the ordinary course of business as part of our ongoing securitization activities. In our securitization transactions, we transfer assets to a QSPE in exchange for cash, which is funded by beneficial interests issued by the ...

  • Page 101
    ... real estate Credit card receivables Other assets Activity related to retained interests classified as investment securities in our consolidated financial statements follows. (In millions) 2008 2007 2006 CASH FLOWS ON TRANSFERS Proceeds from new transfers Proceeds from collections reinvested...

  • Page 102
    ... customer acquisitions of aircraft equipped with our engines, including commitments made to airlines in 2008 for future sales under our GE90 and GEnx engine campaigns. The GECAS business of Capital Finance had placed multiple-year orders for various Boeing, Airbus and other aircraft with list prices...

  • Page 103
    ...114 8,229 15,786 534 $29,149 7,757 19,291 3,375 Total revenues Earnings from continuing operations For GE, gross profit from sales is sales of goods and services less costs of goods and services sold. Earnings-per-share amounts are computed independently each quarter for earnings from continuing...

  • Page 104
    ... Securities and Exchange Commission rules. Specifically, we have referred, in various sections of this Annual Report, to: Þ Average total shareowners' equity, excluding effects of discontinued operations Þ Cash generated by our industrial businesses Þ Ratio of debt to equity at GE Capital...

  • Page 105
    ... separately for our industrial businesses provides management and investors with useful information about the trends of our industrial businesses and enables a more direct comparison to other non-financial businesses and companies. Management recognizes that the term "organic revenue growth" may be...

  • Page 106
    ... of Debt to Equity at GE Capital, Net of Cash and Equivalents and with Classification of Hybrid Debt as Equity December 31 (Dollars in millions) 2008 U.S. federal statutory income tax rate 35.0% Reduction in rate resulting from Tax on global activities including exports (8.2) U.S. business credits...

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    ... reinvested. The total cumulative dollar returns shown on the graph represent the value that such investments would have had on December 31, 2008. FIVE-YEAR FINANCIAL PERFORMANCE (In dollars) 130 121 100 119 2003 2004 2005 2006 2007 134 2008 Delinquency rates on on-book and off-book equipment...

  • Page 108
    ...or "tax rate." EQUIPMENT LEASED TO OTHERS Rental equipment we own that is continue to perform billing and collection activities, including receivables that have been sold with and without credit recourse and are no longer reported on our Statement of Financial Position. MATCH FUNDING A risk control...

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    ... multiple-year terms, to provide specified services for products in our Energy Infrastructure and Technology Infrastructure installed base - for example, monitoring, maintenance, service and spare parts for a gas turbine/generator set installed in a customer's power plant. PRODUCTIVITY The rate of...

  • Page 110
    ... reporting, internal controls and procedures, auditing matters or other concerns to the Board of Directors or the Audit Committee, write to GE Board of Directors, General Electric Company (W2E), 3135 Easton Turnpike, Fairfield, CT 06828; or call (800) 417-0575 or (203) 373-2652; or send an e-mail...

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    Printing: Cenveo Visit our interactive online annual report at www.ge.com/annualreport Thanks to the customers, partners, and GE employees who appear in this annual report for contributing their time and support. The paper used in this report was supplied by participants of the Sustainable ...

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    General Electric Company Fairfield, Connecticut 06828 www.ge.com