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78 ge 2008 annual report
notes to consolidated financial statements
Goodwill balances increased $3,694 million in 2008 from new
acquisitions. The most significant increases related to acquisitions
of Hydril Pressure Control ($725 million) at Energy Infrastructure,
Merrill Lynch Capital ($643 million) at Capital Finance, Vital Signs
($594 million) and Whatman plc. ($592 million) at Technology
Infrastructure, Bank BPH ($470 million) at Capital Finance, CDM
Resource Management, Ltd. ($229 million) at Capital Finance and
CitiCapital ($166 million) at Capital Finance. During 2008, the
goodwill balance increased by $599 million related to purchase
accounting adjustments for prior-year acquisitions. The most
significant of these adjustments were increases of $267 million
and $171 million associated with the 2007 acquisitions of Oxygen
Media Corp. by NBC Universal and Sanyo Electric Credit Co., Ltd.
by Capital Finance, respectively. In 2008, goodwill balances
decreased $2,639 million as a result of the stronger U.S. dollar.
Goodwill balances increased $9,028 million in 2007 from new
acquisitions. The most significant increases related to acquisitions
of Smiths Aerospace Group Ltd. ($3,877 million) by Technology
Infrastructure; Vetco Gray ($1,379 million) by Energy Infrastructure;
Diskont und Kredit AG and Disko Leasing GmbH (DISKO) and ASL
Auto Service-Leasing GmbH (ASL), the leasing businesses of KG
Allgemeine Leasing GmbH & Co. ($694 million) by Capital Finance;
Oxygen Media ($604 million) by NBC Universal; and Sanyo Electric
Credit Co., Ltd. ($548 million) by Capital Finance. During 2007, the
goodwill balance declined by $269 million related to purchase
accounting adjustments for prior-year acquisitions.
Changes in goodwill balances follow.
2008 2007
Acquisitions/ Dispositions, Acquisitions/ Dispositions,
purchase currency purchase currency
Balance accounting exchange Balance Balance accounting exchange Balance
(In millions) January 1 adjustments and other December 31 January 1(a) adjustments and other December 31
Energy Infrastructure $ 9,960 $ 750 $ (767) $ 9,943 $ 7,956 $1,818 $ 186 $ 9,960
Technology Infrastructure 26,130 1,116 (562) 26,684 22,043 4,292 (205) 26,130
NBC Universal 18,733 403 (163) 18,973 18,000 733 — 18,733
Capital Finance 25,427 2,024 (2,086) 25,365 22,754 1,938 735 25,427
Consumer & Industrial 866 — (72) 794 557 (22) 331 866
Total $81,116 $4,293 $(3,650) $81,759 $71,310 $8,759 $1,047 $81,116
(a) January 1, 2007, balance decreased by $89 million related to new accounting standards. See Note 1.
Upon closing an acquisition, we estimate the fair values of
assets and liabilities acquired and consolidate the acquisition as
quickly as possible. Given the time it takes to obtain pertinent
information to finalize the acquired company’s balance sheet,
then to adjust the acquired company’s accounting policies,
procedures, and books and records to our standards, it is often
several quarters before we are able to finalize those initial fair
value estimates. Accordingly, it is not uncommon for our initial
estimates to be subsequently revised.
We test goodwill for impairment at least annually. Given the
significant changes in the business climate for financial services
and our stated strategy to reduce our Capital Finance ending
net investment, we re-tested goodwill for impairment at the
reporting units within Capital Finance during the fourth quarter
of 2008. In performing this analysis, we revised our estimated
future cash flows and discount rates, as appropriate, to reflect
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 goodwill balances at December 31,
2008 of $12,784 million, $9,081 million, $1,183 million, $2,162 mil-
lion and $155 million, respectively.