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management’s discussion and analsis
ge 2008 annual report 29
dollar ($0.6 billion). The decrease in net earnings resulted primarily
from core declines ($0.5 billion) and lower securitization income
($0.5 billion). The decreases were partially offset by the gain on
the sale of our CPS business ($0.2 billion), the weaker U.S. dollar
($0.1 billion) and acquisitions ($0.1 billion). Core declines primarily
resulted from lower results in the U.S., reflecting the effects of
higher delinquencies ($1.2 billion), partially offset by growth in
lower-taxed earnings from global operations ($1.0 billion), including
the decision to indefinitely reinvest, outside the U.S., prior-year
earnings.
GE Money 2007 revenues and net earnings increased 27%
and 32%, respectively, compared with 2006. Revenues in 2007
included $0.4 billion from acquisitions. Revenues in 2007 also
increased $4.8 billion as a result of organic revenue growth
($3.5 billion) and the weaker U.S. dollar ($1.4 billion). The increase
in net earnings resulted primarily from core growth ($0.3 billion),
higher securitization income ($0.4 billion), the sale of part of our
Garanti investment ($0.2 billion) and the weaker U.S. dollar
($0.2 billion). Core growth included growth in lower-taxed earn-
ings from global operations ($0.3 billion), partially offset by lower
results in the U.S., reflecting the effects of higher delinquencies
($0.4 billion).
Real Estate 2008 revenues decreased 5% and net earnings
decreased 50% compared with 2007. Revenues for 2008 included
$0.3 billion from acquisitions. Revenues in 2008 also decreased
$0.7 billion compared with 2007 as a result of organic revenue
declines ($0.8 billion), partially offset by the weaker U.S. dollar
($0.2 billion). Real Estate net earnings decreased $1.1 billion
compared with 2007, primarily from a decline in net earnings
from real estate equity investments ($1.2 billion), partially offset
by an increase in net earnings from real estate lending. Net
earnings from the sale of real estate equity investments in 2008
were lower as a result of increasingly difficult market conditions.
In the normal course of our business operations, we sell certain
real estate equity investments when it is economically advanta-
geous for us to do so. However, as a result of deterioration in
current and expected real estate market liquidity and macro-
economic trends, it is difficult to predict with certainty the level
of future sales or sales prices.
Real Estate assets at December 31, 2008, increased $6.0 billion,
or 8%, from December 31, 2007, including $12.1 billion, or 34%,
attributable to an increase in real estate lending, partially offset
by a $6.4 billion, or 16%, decline in real estate equity investments.
During 2008, we sold real estate equity investment assets with a
book value totaling $5.8 billion, which resulted in net earnings of
$1.3 billion that were partially offset by losses, impairments and
depreciation.
Real Estate 2007 revenues and net earnings increased 40%
and 24%, respectively, compared with 2006. Revenues in 2007
included $0.3 billion from acquisitions. Revenues in 2007 also
increased $1.8 billion as a result of organic revenue growth
($1.5 billion) and the weaker U.S. dollar ($0.2 billion). Real Estate
net earnings increased 24% compared with 2006, primarily as a
result of a $0.5 billion increase in net earnings from sales of real
estate investments.
Capital Finance 2007 revenues and net earnings both
increased 18%, compared with 2006. Revenues in 2007 included
$3.5 billion from acquisitions and were reduced by $2.7 billion as a
result of dispositions. Revenues in 2007 also increased $9.1 billion
as a result of organic revenue growth ($6.8 billion) and the weaker
U.S. dollar ($2.3 billion). The increase in net earnings resulted
primarily from core growth ($1.0 billion), higher securitization
income ($0.4 billion) and the weaker U.S. dollar ($0.3 billion). Core
growth included $0.5 billion representing the total year’s tax
benefit on the disposition of our investment in SES, growth in
lower-taxed earnings from global operations ($0.4 billion) and the
sale of part of our Garanti investment ($0.2 billion), partially offset
by declines in fair value of retained interests in securitizations
($0.2 billion). See Corporate Items and Eliminations for a discussion
of items not allocated to this segment.
Additional information about certain Capital Finance businesses
follows.
CLL 2008 revenues decreased 2% and net earnings decreased
53% compared with 2007. Revenues in 2008 and 2007 included
$1.8 billion and $0.2 billion, respectively, from acquisitions, and in
2008 were reduced by $0.3 billion as a result of dispositions.
Revenues in 2008 decreased $1.9 billion compared with 2007 as
a result of organic revenue declines ($2.3 billion), partially offset
by the weaker U.S. dollar ($0.5 billion). Net earnings decreased by
$2.0 billion in 2008, resulting from core declines ($2.2 billion),
including an increase of $0.5 billion in the provision for losses on
financing receivables and lower investment income ($0.3 billion),
partially offset by acquisitions ($0.4 billion) and the effect of the
weaker U.S. dollar ($0.1 billion). Net earnings included mark-to-
market losses and impairments ($0.8 billion), the absence of the
effects of the 2007 tax benefit on the disposition of our investment
in SES ($0.5 billion) and SES gains ($0.1 billion), partially offset by
Genpact mark-to-market gains ($0.2 billion).
CLL 2007 revenues and net earnings increased 6% and 9%,
respectively, compared with 2006. Revenues in 2007 and 2006
included $2.1 billion and $0.1 billion, respectively, from acquisi-
tions, and in 2007 were reduced by $2.7 billion as a result of
dispositions. Revenues in 2007 also increased $1.9 billion as a
result of organic revenue growth ($1.2 billion) and the weaker
U.S. dollar ($0.7 billion). The increase in net earnings resulted
from acquisitions ($0.2 billion), core growth ($0.1 billion) and the
weaker U.S. dollar ($0.1 billion), partially offset by dispositions
($0.1 billion). Core growth included $0.5 billion representing the
total year’s tax benefit on the disposition of our investment in
SES, partially offset by $0.2 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 earnings
decreased 14% compared with 2007. Revenues for 2008 included
$0.7 billion from acquisitions and $0.4 billion from the gain on
sale of our Corporate Payment Services (CPS) business and were
reduced by $0.2 billion from dispositions. Revenues in 2008 also
decreased $0.6 billion compared with 2007 as a result of organic
revenue declines ($1.2 billion), partially offset by the weaker U.S.