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GE REvEnuE WoRld PoPulation
GROWTH STARTS HERE.
GE  Annual Report
1892
2010

Table of contents

  • Page 1
    GE R EvE nuE GROWTH STaRTS HERE. Wo R ld P lati oPu on 1892 2010 GE Annual Report

  • Page 2
    ... Shareowners 9 Business Overview 28 Board of Directors 29 Financial Section 136 Corporate Information financial and strategic highlights CONSOLIDATED REVENUES (In $ billions) 2006 2007 172 151 2008 182 155 2009 2010 150 15% RETURN TO GROWTH Disciplined execution drove a 15% rise in GE earnings...

  • Page 3
    ... priorities for the company in an improving global economy. In 2010, growth resumed and our earnings expanded by 15%. GE Capital's earnings rebounded sharply. We raised the dividend twice, for a combined 40% increase. Our stock price responded well, up 21% for the year. Our aim in 2011 and beyond is...

  • Page 4
    ... globalization "work" for employees, customers, governments and investors. Nearly 60% of our revenue will come from sales outside the U.S. in 2011 and this will grow over time. GE is a reliable partner and global investor, with a culture of compliance. We are a leading American exporter. Last year...

  • Page 5
    ... of productivity and risk management. We constantly share ideas across GE on processes to improve performance. We have reduced our manufacturing cycle time and boosted productivity. We have been able to invest in the United States even as we have globalized. Since 2009, we have announced 6,300 new...

  • Page 6
    ... by 2015. GE has leadership franchises in Energy, Oil & Gas, Water, Healthcare, Aviation, Transportation and Consumer products. Over time, we look to sustain organic growth in excess of the global economy, with high margins and returns. Our Infrastructure businesses are capital-efficient, and...

  • Page 7
    ... positioned the company to capitalize on some of the biggest external themes of the day, like emerging-market growth, affordable healthcare and clean energy. Internally, we treat "growth as a process" by focusing on innovation, customer needs, services and best-practice integration. We are executing...

  • Page 8
    ... employees, customers and suppliers. This makes GE a leader in the economic development of the country. 4 versus banks in direct origination and asset management. This builds competitive advantage in businesses like Retail Finance. In other words, we can offer more than access to money. GE Capital...

  • Page 9
    ... will spend more time in a business or a job. In addition, jobs like chief engineer, senior account manager, chief compliance officer and global risk leader are respected and rewarded. We have modernized our leadership traits. We have built off the foundation we have had in place for several years...

  • Page 10
    ...win in global growth markets. We have grown global revenue from 36% of GE's revenue to 55% in the last decade. We have invested in sales force excellence, marketing, and customer support. Jeffrey R. Immelt Chairman of the Board and Chief Executive Officer February 25, 2011 8 GE 2010 ANNUAL REPORT

  • Page 11
    ... New Products GROW Services and Software LEAD in Growth Markets EXPAND from the Core CREATE Value in Specialty Finance SOLVE Problems for Customers and Society GE COMPETITIVE DIFFERENCE CAPITAL ALLOCATION ENTERPRISE RISK MANAGEMENT COMPETITIVENESS LEADERSHIP DEVELOPMENT GE 2010 ANNUAL...

  • Page 12
    ...four Global Research Centers and a fifth on the way, and about 6% of Infrastructure revenues spent on investment in innovation, GE has a broader and deeper pipeline of new products than ever before. And with U.S. patent filings up 14% and issuances up 21% last year, it's clear GE is investing- and...

  • Page 13
    ... helping suppliers manage demand. New Products in Lighting GE launched the industry's first ENERGY STAR® qualified A-line LED bulb. This technical wonder replaces a regular 40-watt incandescent but lasts more than 20 years and cuts energy use 77%. Excellence in Rail Once commercially available...

  • Page 14
    ... and improve quality of life. Services represent about 70% of GE's Infrastructure earnings and are slated to grow significantly in the coming years. Helping customers improve operations, cut costs and maximize profitability is an integral part of the GE business model. 12 GE 2010 ANNUAL REPORT

  • Page 15
    ...Helping Homeowners NucleusTM energy manager with GE BrillionTM technology, when used with a smart meter in conjunction with a utility, helps homeowners understand and manage their residential energy use, a great step toward saving energy and money. Conquering Disease GE Healthcare created Omnyx as...

  • Page 16
    ... like Russia, the Middle East and Latin America, and in emerging Asian countries like China and India-where growth is double that of the developed world-GE has set a strategic course. We've localized research, technology, talent and operations to "go where the growth is." 14 GE 2010 ANNUAL REPORT

  • Page 17
    ... beyond. Our goal is to find innovative ways to unlock stranded resources to secure energy for tomorrow's world. Regional Partnerships Partnering with key global players to access new markets, technology and ideas is at the heart of GE's joint venture with AVIC Systems to supply avionics for China...

  • Page 18
    ...: diversify in markets GE knows well-make multiple, scalable bets with disciplined organic and inorganic investments, and utilize our global sales, distribution, and research capabilities to grow brand-new billion-dollar businesses. Over the past decade, GE has grown its renewable energy, oil & gas...

  • Page 19
    ... renewables, GE is partnering with PrimeStar Solar, Inc. to commercially develop a cadmium telluride thin film product. The team just achieved a world record for efficiency and plans to scale up the technology for commercial production. Healthcare at Home Together with Intel, we're developing new...

  • Page 20
    ...Linking GE's industrial and financial businesses enables us to employ our extensive industry expertise to address customer needs. We can be an essential partner for our customers-many of whom are small and medium-sized businesses-offering them not only the best products and services, but also access...

  • Page 21
    ... pay with less risk and better returns. Operating Advantage GE Capital provides private-label and dual credit card programs along with financial services to more than 40 million account holders. This year our programs will deliver more than $70 billion in retail sales throughout the United States...

  • Page 22
    .... This is the powerful premise behind our ecomagination and healthymagination strategies. They bring together imagination, investment and technology to enable GE and our customers to generate revenue, while reducing emissions and providing healthcare to more people. 20 GE 2010 ANNUAL REPORT

  • Page 23
    ... human progress vary dramatically. GE's WattStationâ„¢ makes charging electric cars fast and cost effective. And in rural India where infant care technology is scarce, GE Healthcare helps distribute $200 infant warmers, which can heat for hours with a simple pouch of wax. GE 2010 ANNUAL REPORT 21

  • Page 24
    ... our global enterprise, ge people did remarkable things in 2010. our passion, professionalism and perseverance working with customers, partners and each other returned ge to positive growth and an exceptional future outlook. With over $1 billion a year invested in employee training, development...

  • Page 25
    ...,000 GE employees who work in U.S. manufacturing. The Lynn plant produces helicopter engines for the Sikorsky Black Hawk troop transport and jet engines for the Boeing F/A-18E/F Super Hornet fighter, among other aviation products that GE sells around the world as part of our $17 billion-per-year in...

  • Page 26
    ...risk GE Capital's business model is defined by strong risk management and a conservative approach to financial services. As Chief Risk Officer at GE Capital, Ryan Zanin ensures the company and our customers stay "safe and secure." With 25 years in the financial services industry specializing in risk...

  • Page 27
    ...exPanDing access to HeaLtHcare With the healthcare needs in China growing rapidly, GE is working to provide the types of products that millions in China need. In our Beijing facilities, GE employees-including Jinlei Chen, Wayne Zhang and Zhanfeng Xing-are developing and marketing customized products...

  • Page 28
    ... new company, called Care Innovations, will develop technologies for the aging population that will reduce healthcare costs by supporting healthy, independent living at home and in senior-housing communities. ge aViation-Boeing team (from left) chip Blankenship Vice President and General Manager...

  • Page 29
    ... of internal management processes. The Board reviews the performance of senior executives each year and has succession plans in place for key positions to ensure continuity of leadership. GE has sound practices for developing management talent, developing and executing strategy, managing risk and...

  • Page 30
    ...matters. In 2010, they received briefings on a variety of issues including U.S. and global tax policy, environmental risk management and reserves, pension and healthcare plans, financial structure, liquidity, regulation and ratings, service contract performance, credit costs and real estate exposure...

  • Page 31
    ... provide information about our stock performance over the last five years. 134 Glossary ...For your convenience, we also provide a Glossary of key terms used in our financial statements. We also present our financial information electronically at www.ge.com/investor. GE 2010 ANNUAL REPORT 29

  • Page 32
    ...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 policies-"The...

  • Page 33
    ... financial statements and an opinion on GE's internal control over financial reporting based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to...

  • Page 34
    ... GE Capital Aviation Services (GECAS), is included in Commercial Lending and Leasing (CLL) and our Consumer business in Italy, previously reported in Consumer, is included in CLL. Effective January 1, 2011, we reorganized the Technology Infrastructure segment into three segments-Aviation, Healthcare...

  • Page 35
    ... further signs of stabilization as we enter 2011. Our focus is to reposition General Electric Capital Corporation (GECC) as a diversely funded and smaller, more focused finance company with strong positions in several mid-market, corporate and consumer financing segments. Home & Business Solutions...

  • Page 36
    ... years' investment gains and benefits from new healthcare supplier contracts. Our discount rate for our principal pension plans at December 31, 2010 was 5.28%, which reï¬,ected current interest rates. Considering the current and expected asset allocations, as well as historical and expected returns...

  • Page 37
    ... which those global earnings are indefinitely reinvested outside the United States, legislation, acquisitions, dispositions and tax characteristics of our income. Our tax returns are routinely audited and settlements of issues raised in these audits sometimes affect our tax provisions. GE and GECS...

  • Page 38
    ... risk at the customer, industry, geographic and collateral-type levels, where appropriate. Risk assessment and risk management are the responsibility of management. The GE Board of Directors (Board) has overall responsibility for risk oversight with a focus on the most 36 GE 2010 ANNUAL REPORT

  • Page 39
    ... customer or counterparty failure to meet its contractual obligations. We face credit risk in our industrial businesses, as well as in our GE Capital investing, lending and leasing activities and derivative financial instruments activities. • The Management Development and Compensation Committee...

  • Page 40
    ... GE Risk Committee. At these meetings, which occur at least four times a year, GE Capital senior management focuses on the risk strategy and financial services portfolio, including the risk oversight processes used to manage all the elements of risk managed by the ERMC. Additional information about...

  • Page 41
    ...information about our segments, see Note 28. Summary of Operating Segments General Electric Company and consolidated affiliates (In millions) 2010 2009 2008 2007 2006 REVENUES Energy Infrastructure Technology Infrastructure NBC Universal GE Capital Home & Business Solutions Total segment revenues...

  • Page 42
    ... by Aviation. Technology Infrastructure orders increased to $41.5 billion in 2010, from $37.9 billion in 2009. The $39.4 billion total backlog at year-end 2010 comprised unfilled product orders of $27.7 billion (of which 46% was scheduled for delivery in 2011) and product 40 GE 2010 ANNUAL REPORT

  • Page 43
    ... the remaining 51% interest in NBCU LLC. Our NBC Universal business was classified as held for sale at December 31, 2010 and 2009. For additional information, see Note 2. REVENUES CLL (a) Consumer (a) Real Estate Energy Financial Services GECAS (a) SEGMENT PROFIT (LOSS) $ 18,447 17,822 3,744...

  • Page 44
    ... in 2009 included $0.2 billion from acquisitions and were reduced by $1.7 billion as a result of dispositions, and the lack of a current-year counterpart to the 2008 gain on sale of our Corporate Payment Services (CPS) business ($0.4 billion). Revenues in 2009 decreased $4.7 billion compared with...

  • Page 45
    ... at Technology Infrastructure and $0.3 billion at each of Energy Infrastructure and Home & Business Solutions. Included in these amounts in 2008 were technology and product development costs of $0.2 billion at NBC Universal and $0.1 billion at Technology Infrastructure. GE 2010 ANNUAL REPORT 43

  • Page 46
    ... our Japanese mortgage and card businesses, we recorded an incremental $0.4 billion loss in 2008. In 2010, loss from discontinued operations, net of taxes, primarily reï¬,ected incremental reserves for excess interest claims related to our loss-sharing arrangement on the 2008 sale of GE Money Japan...

  • Page 47
    ..., primarily due to portfolio run-off in various businesses at Consumer and lower financing receivables and equipment leased to others at 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...

  • Page 48
    ..., direct mortgage loans (a majority of which were originated in 2006 and 2005), not other structured products such as collateralized debt obligations. Substantially all of our RMBS securities are in a senior position in the capital structure of the deals and 65% are agency bonds or insured by...

  • Page 49
    ...corporate aircraft and equipment used in many industries, including the construction, manufacturing, transportation, media, communications, entertainment and healthcare industries. The portfolios in our Real Estate, GECAS and Energy Financial Services businesses are collateralized by commercial real...

  • Page 50
    ... by the credit quality of the borrower and secured by tenant and owner-occupied commercial properties. (f) At December 31, 2010, net of credit insurance, approximately 24% of our secured Consumer non-U.S. residential mortgage portfolio comprised loans with introductory, below market rates that are...

  • Page 51
    ... 2.3 Debt Business properties Total Real Estate CONSUMER (b) 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 (a) Reflects the effects of our adoption of ASU 2009-16 & 17 on January 1, 2010. See...

  • Page 52
    ... and hotel properties ($4.4 billion). In 2010, commercial real estate markets have continued to be under pressure, with limited market liquidity and challenging economic conditions. We have and continue to maintain an intense focus on operations and risk management. Loan loss reserves related to our...

  • Page 53
    ... without mortgage insurance and have a reindexed loan-to-value ratio equal to or greater than 100%. Loan-to-value information is updated on a quarterly basis for a majority of our loans and considers economic factors such as the housing price index. At December 31, 2010, we had in repossession stock...

  • Page 54
    ...culties in our Consumer loan portfolio. These loan modification programs are Delinquency rates on commercial loans and leases decreased from December 31, 2009 to December 31, 2010, as a result of improvements in the global economic and credit environment. We expect the global environment to show...

  • Page 55
    ..., including paying dividends, repurchasing shares, investing in research and development and acquiring industrial businesses. At GE, we rely primarily on cash generated through our operating activities and also have historically maintained a commercial paper program that we regularly use to fund...

  • Page 56
    ... net investment in GE Capital. GECS relies on cash generated through collection of principal, interest and other payments on our existing portfolio of loans and leases, sales of assets, and unsecured and secured funding sources, including commercial paper, term debt, bank borrowings, securitization...

  • Page 57
    ... assets we are originating. We apply strict policies to manage each of these risks, including prohibitions on speculative activities. Following is an analysis of the potential effects of changes in interest rates and currency exchange rates using so-called "shock" tests that model effects of shifts...

  • Page 58
    ...to a decrease in the discount rate used to value pension and postretirement benefit obligations. The decrease in 2008 primarily related to declines in the fair value of plan assets as a result of market conditions and adverse changes in the economic environment. Further information about changes in...

  • Page 59
    ... preceding Segment Operations section are the best way of understanding their customer-related CFOA. The most significant operating use of cash is to pay our suppliers, employees, tax authorities and others for a wide range of material and services. GE operating cash payments decreased in 2010 and...

  • Page 60
    ... no special dividends paid to GE in 2010, 2009 or 2008. Intercompany Eliminations Effects of transactions between related companies are eliminated and consist primarily of GECS dividends to GE or capital contributions from GE to GECS; GE customer receivables sold to GECS; GECS services for trade...

  • Page 61
    ... real estate, credit card receivables, ï¬,oorplan inventory receivables, GE trade receivables and other assets originated and underwritten by us in the ordinary course of business. The securitizations are funded with asset-backed commercial paper and term debt. Our securitization activities...

  • Page 62
    ... fair value, we use quoted market prices when available, our internal cash ï¬,ow estimates discounted at an appropriate interest rate and independent appraisals, as appropriate. Our operating lease portfolio of commercial aircraft is a significant concentration of assets in GE Capital, and is...

  • Page 63
    ... in the respective businesses and in our internally developed forecasts. Discount rates used in our reporting unit valuations ranged from 9% to 14.5%. Valuations using the market approach reï¬,ect prices and other relevant observable information generated by market transactions involving comparable...

  • Page 64
    ...debt origination volume and margins, and anticipated stabilization of the real estate market allowing for sales of real estate investments at normalized margins. Our assumed discount rate was 12% and was derived by applying a capital asset pricing model and corroborated using equity analyst research...

  • Page 65
    ... return on assets would increase pension cost in the following year by $0.2 billion. Further information on our pension plans is provided in the Operations-Overview section and in Note 12. INCOME TAXES. Our annual tax rate is based on our income, $4.4 billion and $3.6 billion at December 31, 2010...

  • Page 66
    ... and customer funds. Energy Infrastructure's Energy business and Technology Infrastructure's Healthcare business also made significant expenditures funded primarily by GE. Expenditures reported above reï¬,ect the definition of research and development required by U.S. generally accepted accounting...

  • Page 67
    ... earnings-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 68
    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) 2010 2009 2008 REVENUES Sales of goods Sales of services Other income (Note 17) GECS earnings from continuing ...

  • Page 69
    ...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 "GECS." Transactions between GE and GECS have been eliminated from the "General Electric Company and consolidated...

  • Page 70
    audited financial statements Statement of Financial Position General Electric Company and consolidated affiliates At December 31 (In millions, except share amounts) 2010 2009 ASSETS Cash and equivalents Investment securities (Note 3) Current receivables (Note 4) Inventories (Note 5) Financing ...

  • Page 71
    ...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 "GECS." Transactions between GE and GECS have been eliminated from the "General Electric Company and consolidated...

  • Page 72
    audited financial statements Statement of Cash Flows General Electric Company and consolidated affiliates For the years ended December 31 (In millions) 2010 2009 2008 CASH FLOWS-OPERATING ACTIVITIES Net earnings Less net earnings attributable to noncontrolling interests Net earnings attributable ...

  • Page 73
    ...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 "GECS." Transactions between GE and GECS have been eliminated from the "General Electric Company and consolidated...

  • Page 74
    ... on the broad markets they serve: Energy Infrastructure, Technology Infrastructure, NBC Universal (NBCU), GE Capital and Home & Business Solutions. Prior-period information has been reclassified to be consistent with how we managed our businesses in 2010. • • Unless otherwise indicated...

  • Page 75
    ... 104, Revenue Recognition. We often sell consumer products, home videos and computer hardware and software products with a right of return. We use our accumulated experience to estimate and provide for such returns when we record the sale. In situations where arrangements include customer acceptance...

  • Page 76
    ... 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. The underlying assumptions, estimates and assessments we use...

  • Page 77
    ... that reï¬,ect current trends and conditions. We also consider overall portfolio indicators including nonearning loans, trends in loan volume and lending terms, credit policies and other observable environmental factors such as unemployment rates and home price indices. Our commercial loan and lease...

  • Page 78
    ...culties in our Consumer loan portfolio. These loan modification programs are primarily concentrated in our U.S. credit card and non-U.S. residential mortgage portfolios and include short-term (12 months or less) interest rate reductions and payment deferrals, which were not part of the terms of the...

  • Page 79
    ... drivers are observable. Level 3-Significant inputs to the valuation model are unobservable. We maintain policies and procedures to value instruments using the best and most relevant data available. In addition, we have risk management teams that review valuation, including GE 2010 ANNUAL REPORT...

  • Page 80
    ..., discount rates and expected life. DERIVATIVES. We use closing prices for derivatives included in Level 1, which are traded either on exchanges or liquid over-thecounter markets. The majority of our derivatives are valued using internal models. The models maximize the use of market observable...

  • Page 81
    ... applying these methodologies, we rely on a number of factors, including actual operating results, future business plans, economic projections, market observable pricing multiples of similar businesses and comparable transactions, and possible control premium. These investments are included in Level...

  • Page 82
    ...share in risks and rewards of these product programs. Adoption of the standard had no effect as our historical presentation had been consistent with the new requirements. We adopted amendments to ASC 320, Investments-Debt and Equity Securities, and recorded a cumulative effect adjustment to increase...

  • Page 83
    ... accounts payable ($398 million), other GE current liabilities ($4,051 million) and all other liabilities ($1,300 million). OTHER In 2010, we committed to sell GE Capital Consumer businesses in Argentina, Brazil, and Canada, a CLL business in South Korea, and our Interpark business in Real Estate...

  • Page 84
    ... limits for interest charges on unsecured personal loans did not permit us to earn an acceptable return. During the third quarter of 2008, we completed the sale of GE Money Japan, which included Lake, along with our Japanese mortgage and card businesses, excluding our investment in GE Nissen Credit...

  • Page 85
    ... the effect of governmental actions, market activity regarding other personal loan companies and consumer activity, may continue to have an adverse effect on claims development. GE Money Japan revenues from discontinued operations were an insignificant amount in both 2010 and 2009, and $763 million...

  • Page 86
    ... mortgage loans of financial institutions. (b) Included $1,918 million of retained interests at December 31, 2009 accounted for at fair value in accordance with ASC 815, Derivatives and Hedging. See Note 24. The fair value of investment securities decreased to $43,938 million at December 31, 2010...

  • Page 87
    .... We discount the cash ï¬,ows using the original effective interest rate of the security. The vast majority of our RMBS have investment grade credit ratings from the major rating agencies and are in a senior position in the capital structure of the deal. Of our total RMBS at December 31, 2010 and...

  • Page 88
    ... but have been subject to credit deterioration since origination per ASC 310, Receivables. Note 4. Current Receivables Consolidated (a) December 31 (In millions) 2010 2009 2010 GE 2009 Technology Infrastructure Energy Infrastructure Home & Business Solutions Corporate items and eliminations Less...

  • Page 89
    ...and related activity in the allowance for losses for our Commercial, Real Estate and Consumer portfolios. Debt Business properties Total Real Estate financing receivables CONSUMER (b) Non-U.S. residential mortgages Non-U.S. installment and revolving credit U.S. installment and revolving credit Non...

  • Page 90
    ... Debt Business properties Total Real Estate CONSUMER (c) 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 (a) Other primarily included the effects of securitization activity and currency exchange...

  • Page 91
    ... Debt Business properties Total Real Estate CONSUMER (c) 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 (a) Other primarily included the effects of securitization activity and currency exchange...

  • Page 92
    .... (c) The GECAS business of GE Capital recognized impairment losses of $438 million in 2010 and $127 million in 2009 recorded in the caption "Other costs and expenses" in the Statement of Earnings to reflect adjustments to fair value based on an evaluation of average current market values (obtained...

  • Page 93
    ... Dispositions, currency exchange and other (In millions) Balance at January 1 Acquisitions Balance at December 31 Balance at January 1 Acquisitions Balance at December 31 Energy Infrastructure Technology Infrastructure NBC Universal GE Capital Home & Business Solutions Corporate Items and...

  • Page 94
    ...debt origination volume and margins, and anticipated stabilization of the real estate market allowing for sales of real estate investments at normalized margins. Our assumed discount rate was 12% and was derived by applying a capital asset pricing model and corroborated using equity analyst research...

  • Page 95
    ... (e) Assets were classified as held for sale on the date a decision was made to dispose of them through sale or other means. At December 31, 2010 and 2009, such assets consisted primarily of loans, aircraft, equipment and real estate properties, and were accounted for at the lower of carrying amount...

  • Page 96
    ...(a) Based on year-end balances and year-end local currency interest rates. Current portion of long-term debt included the effects of related fair value interest rate and currency hedges, if any, directly associated with the original debt issuance. (b) GECC had issued and outstanding $53,495 million...

  • Page 97
    ...310 12,250 16,847 2,102 532 278 $32,009 (a) Life insurance benefits are accounted for mainly by a net-level-premium method using estimated yields generally ranging from 3.0% to 8.5% in both 2010 and 2009. When insurance affiliates cede insurance to third parties, such as reinsurers, they are not...

  • Page 98
    ...at December 31 are used to measure the year-end benefit obligations and the pension costs for the subsequent year. Principal pension plans December 31 2010 2009 2008 2007 2010 Other pension plans (weighted average) 2009 2008 2007 Discount rate Compensation increases Expected return on assets 5.28...

  • Page 99
    ... common stock) and qualifying employer real property may not exceed 10% of the fair value of trust assets at the time of purchase. GE securities represented 3.6% and 3.3% of trust assets at year-end 2010 and 2009, respectively. The GE Pension Plan has a broadly diversified portfolio of investments...

  • Page 100
    ... the changes in Level 3 investments for the GE Pension Plan. CHANGES IN LEVEL 3 INVESTMENTS FOR THE YEAR ENDED DECEMBER 31, 2010 Net change in unrealized gains (losses) relating to investments still held at December 31, 2010 (b) (In millions) January 1, 2010 Net realized/ unrealized gains (losses...

  • Page 101
    ... and $14 million and $210 million for other pension plans. ESTIMATED FUTURE BENEFIT PAYMENTS (In millions) 2011 2012 2013 2014 2015 2016- 2020 Discount rate Compensation increases Expected return on assets Initial healthcare trend rate (b) 5.15 % 4.25 8.00 7.00 5.67 % 4.20 8.50 7.40 6.15 % 4.20...

  • Page 102
    ... 31 (In millions) 2010 2009 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 recognized Amounts recorded in shareowners' equity (unamortized) Prior service cost Net actuarial...

  • Page 103
    ... to use GECS tax deductions and credits to reduce the tax that otherwise would have been payable by GE. The GECS effective tax rate for each period reï¬,ects the benefit of these tax reductions in the consolidated return. GE makes cash payments to GECS for these tax reductions at the time GE's tax...

  • Page 104
    ... 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. This provision, which expires at the end of 2011, has...

  • Page 105
    ... as employee compensation and benefits, pension plan liabilities, interest on tax liabilities, product warranties and other sundry items that are not currently deductible. (b) Net of valuation allowances of $902 million and $835 million for GE and $419 million and $344 million for GECS, for 2010 and...

  • Page 106
    ... 31, 2010 to deferred acquisition costs, present value of future profits, and investment contracts, insurance liabilities and insurance annuity benefits in our run-off insurance operation to reflect the effects that would have been recognized had the related unrealized investment securities holding...

  • Page 107
    ... issued and outstanding are summarized in the following table. December 31 (In thousands) 2010 2009 2008 Other Stock-Related Information We grant stock options, restricted stock units (RSUs) and performance share units (PSUs) to employees under the 2007 Long-Term Incentive Plan. This plan replaced...

  • Page 108
    notes to consolideted finenciel stetements STOCK COMPENSATION PLANS Securities to be issued upon exercise Weighted average exercise price Securities available for future issuance December 31, 2010 (Shares in thousands) APPROVED BY SHAREOWNERS Options RSUs PSUs NOT APPROVED BY SHAREOWNERS (...

  • Page 109
    ...of our outstanding option and restricted stock grants. Note 18. GECS Revenues from Services (In millions) 2010 2009 2008 Interest on loans (a) Equipment leased to others Fees (a) Financing leases (a) Investment income (a)(b) Associated companies Premiums earned by insurance activities Real estate...

  • Page 110
    ... 31, 2010 and 2009, respectively, supporting obligations to holders of GICs in Trinity (which ceased issuing new investment contracts beginning in the first quarter of 2010), and investment securities held at our global banks. Such securities are mainly investment grade. 108 GE 2010 ANNUAL REPORT

  • Page 111
    ... 31, 2010 ASSETS Investment securities 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 Retained interests (d) Equity Available-for-sale Trading Derivatives (e) Other...

  • Page 112
    ...December 31, 2010 Investment securities 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 Retained interests Equity Available-for-sale Trading Derivatives(e)(f) Other...

  • Page 113
    ... of impairments related to real estate equity properties and investments recorded in other costs and expenses during 2010. Financing receivables and loans held for sale $ 54 Cost and equity method investments(a) - Long-lived assets, including real estate 1,025 Retained investments in formerly...

  • Page 114
    ... information about certain categories in the table above follows. INSURANCE-CREDIT LIFE Certain insurance affiliates, primarily in Consumer, 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...

  • Page 115
    ... in our financial services businesses. The remaining derivative activities primarily relate to hedging against adverse changes in currency exchange rates and commodity prices related to anticipated sales and purchases and contracts containing certain clauses which meet the accounting definition of...

  • Page 116
    ... entered into as economic hedges of changes in interest rates, currency exchange rates, commodity prices and other risks. Gains or losses related to the derivative are typically recorded in GECS revenues from services or other income, based on our accounting policy. In general, the earnings effects...

  • Page 117
    ... 31, 2010, we provide further detailed information about the credit quality of our Commercial, Real Estate and Consumer financing receivables portfolios. For each portfolio, we describe the characteristics of the financing receivables and provide information about collateral, payment performance...

  • Page 118
    ...are secured by customer accounts receivable, inventory, and/or machinery and equipment. The portfolios in our Energy Financial Services and GECAS businesses are primarily collateralized by energy generating assets and commercial aircraft, respectively. Our senior secured position and risk management...

  • Page 119
    ... B and C. Our process starts by developing an internal risk rating for our borrowers, which is based upon our proprietary models using data derived from borrower financial statements, agency ratings, payment history information, equity prices and other commercial borrower characteristics. We then...

  • Page 120
    ... economic loss. Secured financing receivables within risk Category C are predominantly in our CLL businesses and primarily comprises senior term lending facilities and factoring programs secured by various asset types including inventory, accounts receivable, cash, equipment and related business...

  • Page 121
    ...quality of the Business properties portfolio is primarily inï¬,uenced by the strength of the borrower's general credit quality, which is reï¬,ected in our internal risk rating process, consistent with the process we use for our Commercial portfolio. Loan-to-value ratio December 31, 2010 (In millions...

  • Page 122
    ...these cards are not for general use and are limited to the products and services sold by the retailer. The private-label portfolio is diverse, with no metropolitan area accounting for more than 6% of the related portfolio. (a) Included $268 million and $236 million of loans at December 31, 2010 and...

  • Page 123
    ...lending in Consumer-Other comprises loans to small and medium-sized enterprises predominantly secured by auto and equipment, inventory finance, and cash ï¬,ow loans. We develop our internal risk ratings for this portfolio in a manner consistent with the process used to develop our Commercial credit...

  • Page 124
    ... entities to fund commercial real estate, middle-market and equipment loans; we are the collateral manager for these entities; (2) joint ventures that lease light industrial equipment and that hold a limited partnership interest in certain media properties; (3) entities that have executed on-balance...

  • Page 125
    ...is substantially all non-recourse, in Securitization QSPEs at December 31, 2010 and December 31, 2009 is provided below. (In millions) Credit card receivables Real estate Equipment (a) Other (b) Total DECEMBER 31, 2010 Asset amount outstanding Outstanding debt DECEMBER 31, 2009 $21,636 12,824 $25...

  • Page 126
    .... As part of our strategy to reduce our investment in the equipment management market, we reduced our partnership interest in PTL from 79% at December 31, 2005 to 50.9% at December 31, 2008 through a series of dispositions to Penske Truck Leasing Corporation (PTLC), the general partner of PTL...

  • Page 127
    ...the acquisition or disposition are achieved. Adjustments to the proceeds from our sale of GE Money Japan are further discussed in Note 2. All other potential payments related to contingent consideration are insignificant. (a) Primarily related to Technology Infrastructure and Energy Infrastructure...

  • Page 128
    ... and maturities of securities by insurance activities Other assets-investments Change in other receivables Other NEWLY ISSUED DEBT (MATURITIES LONGER THAN 90 DAYS) $ (1,712) 3,136 2,690 482 2,805 7,401 2,496 35,474 - $ Short-term (91 to 365 days) Long-term (longer than one year) Proceeds-non...

  • Page 129
    ... business of our previous Consumer & Industrial segment and the Sensing & Inspection Technologies and Digital Energy businesses of Enterprise Solutions are now part of the Energy business within the Energy Infrastructure segment. The Security business of Enterprise Solutions is reported in Corporate...

  • Page 130
    ...; mortgages; debt consolidation; home equity loans; deposits and other savings products; and small and medium enterprise lending on a global basis. Real Estate offers a comprehensive range of capital and investment solutions and finances, with both equity and loan structures, the acquisition, re...

  • Page 131
    ... to segment pre-tax income of Energy Infrastructure, Technology Infrastructure, NBC Universal, GE Capital and Home & Business Solutions operating segments, respectively, for the year ended December 31, 2010. Aggregate summarized financial information for significant associated companies assuming...

  • Page 132
    ... 1,036 $28,298 7,886 13,112 73 Total revenues Earnings from continuing operations attributable to the Company 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...

  • Page 133
    ... information about the amounts of dividends paid by our financial services business and the separate presentation in our financial statements of the Financial Services (GECS) cash ï¬,ows. We believe that our measure of Industrial CFOA provides management and investors with a useful measure...

  • Page 134
    ... reduce outstanding debt, and it may not be advantageous or practical to replace certain long-term debt with equity. In the first quarter of 2009, GE made a $9.5 billion payment to GECS (of which $8.8 billion was further contributed to GECC through capital contribution and share issuance). Despite...

  • Page 135
    ... measure provides investors with useful information as it presents the GE effective tax rate that can be used in comparing the GE results to other non-financial services businesses. Five-Year Financial Performance Graph: 2006 - 2010 We use ENI to measure the size of our GE Capital segment. We...

  • Page 136
    ... 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...

  • Page 137
    ... ratings of individual consumer creditworthiness, the internally modeled scores are more reï¬,ective of the behavior and default risks in the portfolio compared to stand-alone generic bureau scores. TURNOVER Broadly based on the number of times that working capital is replaced during a year. Current...

  • Page 138
    ..., CT 06828 (203) 373-2211 ANNUAL MEETING GE's 2011 Annual Meeting of Shareowners will be held on Wednesday, April 27, 2011, at the Salt Palace Convention Center in Salt Lake City, Utah. SHAREOWNER INFORMATION To transfer securities, write to GE Share Owner Services, c/o The Bank of New York Mellon...

  • Page 139
    ... annual report at www.ge.com/annualreport For daily news updates on GE and a closer look at our technologies and innovations, please check www.gereports.com. Thanks to the customers, partners and GE employees who appear in this annual report for contributing their time and support. The paper used...

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