Edgar Filing: GENERAL ELECTRIC CO

Form 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-00035

GENERAL ELECTRIC COMPANY

(Exact name of registrant as specified in its charter)


New York				14-0689340
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

3135 Easton Turnpike, Fairfield, CT				06828-0001
(Address of principal executive offices)				(Zip Code)

(Registrant’s telephone number, including area code) (203) 373-2211

(Former name, former address and former fiscal year,

if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ		Accelerated filer ¨

Non-accelerated filer ¨		Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

There were 10,654,718,000 shares of common stock with a par value of $0.06 per share outstanding at September 24, 2010.

General Electric Company


	Page
Part I – Financial Information

Item 1. Financial Statements
Condensed Statement of Earnings		3
Three Months Ended September 30, 2010		3
Nine Months Ended September 30, 2010		4
Condensed Statement of Financial Position		5
Condensed Statement of Cash Flows		6
Summary of Operating Segments		7
Notes to Condensed, Consolidated Financial Statements (Unaudited)		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		50
Item 3. Quantitative and Qualitative Disclosures About Market Risk		76
Item 4. Controls and Procedures		77

Part II – Other Information

Item 1. Legal Proceedings		77
Item 2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers		77
Item 6. Exhibits		78
Signatures		79

Forward-Looking Statements

This document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation’s (GECC) funding and on our ability to reduce GECC’s asset levels as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; changes in Japanese consumer behavior that may affect our estimates of liability for excess interest refund claims (Grey Zone); our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flow and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, network television, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.

(2)

Part I. Financial Information

Item 1. Financial Statements.

General Electric Company and consolidated affiliates

Condensed Statement of Earnings


	Three months ended September 30 (Unaudited)
	Consolidated				GE(a)				Financial Services (GECS)
(In millions, except share amounts)	2010		2009		2010		2009		2010		2009

Revenues
Sales of goods	$	14,525	$	14,627	$	14,485	$	14,486	$	40	$	213
Sales of services		9,076		10,516		9,108		10,639		–		–
Other income		187		438		223		476		–		–
GECS earnings from continuing operations		–		–		832		133		–		–
GECS revenues from services		12,100		12,218		–		–		12,429		12,533

Total revenues		35,888		37,799		24,648		25,734		12,469		12,746


Costs and expenses
Cost of goods sold		10,557		11,775		10,517		11,666		39		181
Cost of services sold		6,069		6,773		6,102		6,897		–		–
Interest and other financial charges		4,039		4,322		393		352		3,790		4,128
Investment contracts, insurance losses and insurance annuity benefits		741		732		–		–		796		785
Provision for losses on financing receivables		1,696		2,868		–		–		1,696		2,868
Other costs and expenses		9,146		9,354		3,632		3,714		5,680		5,781

Total costs and expenses		32,248		35,824		20,644		22,629		12,001		13,743


Earnings (loss) from continuing operations before income taxes		3,640		1,975		4,004		3,105		468		(997)
Benefit (provision) for income taxes		(318)		484		(705)		(654)		387		1,138

Earnings from continuing operations		3,322		2,459		3,299		2,451		855		141
Earnings (loss) from discontinued operations, net of taxes		(1,105)		40		(1,105)		40		(1,104)		40

Net earnings (loss)		2,217		2,499		2,194		2,491		(249)		181
Less net earnings (loss) attributable to noncontrolling interests		162		5		139		(3)		23		8

Net earnings (loss) attributable to the Company		2,055		2,494		2,055		2,494		(272)		173
Preferred stock dividends declared		(75)		(75)		(75)		(75)		–		–

Net earnings (loss) attributable to GE common shareowners	$	1,980	$	2,419	$	1,980	$	2,419	$	(272)	$	173




Amounts attributable to the Company
Earnings from continuing operations	$	3,160	$	2,454	$	3,160	$	2,454	$	832	$	133
Earnings (loss) from discontinued operations, net of taxes		(1,105)		40		(1,105)		40		(1,104)		40

Net earnings (loss) attributable to the Company	$	2,055	$	2,494	$	2,055	$	2,494	$	(272)	$	173


Per-share amounts
Earnings from continuing operations
Diluted earnings per share	$	0.29	$	0.22
Basic earnings per share	$	0.29	$	0.22

Net earnings
Diluted earnings per share	$	0.18	$	0.23
Basic earnings per share	$	0.18	$	0.23

Dividends declared per common share	$	0.12	$	0.10

(a)	Represents the adding together of all affiliated companies except General Electric Capital Services, Inc. (GECS or financial services), which is presented on a one-line basis.

See Note 3 for other-than-temporary impairment amounts.

See accompanying notes. Separate information is shown for “GE” and “Financial Services (GECS).” Transactions between GE and GECS have been eliminated from the “Consolidated” columns.

(3)

General Electric Company and consolidated affiliates

Condensed Statement of Earnings


	Nine months ended September 30 (Unaudited)
	Consolidated				GE(a)				Financial Services (GECS)
(In millions, except share amounts)	2010		2009		2010		2009		2010		2009

Revenues
Sales of goods	$	43,195	$	44,605	$	42,710	$	44,000	$	489	$	691
Sales of services		28,583		30,743		28,795		31,159		–		–
Other income		815		900		903		1,035		–		–
GECS earnings from continuing operations		–		–		2,193		1,479		–		–
GECS revenues from services		37,344		39,097		–		–		38,299		39,969

Total revenues		109,937		115,345		74,601		77,673		38,788		40,660


Costs and expenses
Cost of goods sold		32,258		35,658		31,803		35,175		458		569
Cost of services sold		19,076		19,760		19,288		20,177		–		–
Interest and other financial charges		12,371		14,302		1,166		1,076		11,598		13,717
Investment contracts, insurance losses and insurance annuity benefits		2,210		2,257		–		–		2,353		2,381
Provision for losses on financing receivables		5,968		8,021		–		–		5,968		8,021
Other costs and expenses		27,300		27,624		10,758		10,634		17,050		17,381

Total costs and expenses		99,183		107,622		63,015		67,062		37,427		42,069


Earnings (loss) from continuing operations before income taxes		10,754		7,723		11,586		10,611		1,361		(1,409)
Benefit (provision) for income taxes		(1,634)		566		(2,479)		(2,393)		845		2,959

Earnings from continuing operations		9,120		8,289		9,107		8,218		2,206		1,550
Loss from discontinued operations, net of taxes		(1,683)		(175)		(1,683)		(175)		(1,679)		(157)

Net earnings		7,437		8,114		7,424		8,043		527		1,393
Less net earnings attributable to noncontrolling interests		328		102		315		31		13		71

Net earnings attributable to the Company		7,109		8,012		7,109		8,012		514		1,322
Preferred stock dividends declared		(225)		(225)		(225)		(225)		–		–

Net earnings attributable to GE common shareowners	$	6,884	$	7,787	$	6,884	$	7,787	$	514	$	1,322




Amounts attributable to the Company
Earnings from continuing operations	$	8,792	$	8,187	$	8,792	$	8,187	$	2,193	$	1,479
Loss from discontinued operations, net of taxes		(1,683)		(175)		(1,683)		(175)		(1,679)		(157)

Net earnings attributable to the Company	$	7,109	$	8,012	$	7,109	$	8,012	$	514	$	1,322


Per-share amounts
Earnings from continuing operations
Diluted earnings per share	$	0.80	$	0.75
Basic earnings per share	$	0.80	$	0.75

Net earnings
Diluted earnings per share	$	0.64	$	0.73
Basic earnings per share	$	0.64	$	0.73

Dividends declared per common share	$	0.32	$	0.51

(a)	Represents the adding together of all affiliated companies except General Electric Capital Services, Inc. (GECS or financial services), which is presented on a one-line basis.

See Note 3 for other-than-temporary impairment amounts.

See accompanying notes. Separate information is shown for “GE” and “Financial Services (GECS).” Transactions between GE and GECS have been eliminated from the “Consolidated” columns.

(4)

General Electric Company and consolidated affiliates

Condensed Statement of Financial Position


	Consolidated				GE(a)				Financial Services (GECS)
(In millions, except share amounts)	September 30, 2010		December 31, 2009		September 30, 2010		December 31, 2009		September 30, 2010		December 31, 2009
	(Unaudited)				(Unaudited)				(Unaudited)
Assets
Cash and equivalents	$	78,392	$	72,260	$	12,999	$	8,654	$	66,016	$	64,356
Investment securities		45,690		51,941		18		30		45,674		51,913
Current receivables		17,738		16,458		9,704		9,818		–		–
Inventories		11,997		11,987		11,935		11,916		62		71
Financing receivables – net		322,294		329,232		–		–		331,343		336,926
Other GECS receivables		8,672		14,177		–		–		13,324		18,752
Property, plant and equipment – net		65,538		69,212		11,848		12,495		53,690		56,717
Investment in GECS		–		–		66,853		70,833		–		–
Goodwill		64,128		65,574		36,300		36,613		27,828		28,961
Other intangible assets – net		10,231		11,929		7,954		8,450		2,277		3,479
All other assets		98,842		103,417		17,409		17,097		82,440		87,471
Assets of businesses held for sale		33,969		34,111		33,183		33,986		786		125
Assets of discontinued operations		1,333		1,520		50		50		1,283		1,470

Total assets(b)	$	758,824	$	781,818	$	208,253	$	209,942	$	624,723	$	650,241

Liabilities and equity
Short-term borrowings	$	114,879	$	130,252	$	393	$	504	$	115,750	$	131,137
Accounts payable, principally trade accounts		14,617		19,703		10,438		10,373		8,335		13,275
Progress collections and price adjustments accrued		11,048		12,192		11,653		12,957		–		–
Other GE current liabilities		14,864		14,527		14,864		14,527		–		–
Non-recourse borrowings of consolidated securitization entities		30,497		3,883		–		–		30,497		3,883
Bank deposits		41,928		38,923		–		–		41,928		38,923
Long-term borrowings		307,517		337,134		9,962		11,681		298,277		326,391
Investment contracts, insurance liabilities and insurance annuity benefits		31,255		31,641		–		–		31,688		32,009
All other liabilities		56,602		58,861		35,075		35,232		21,646		23,756
Deferred income taxes		1,993		2,173		(3,926)		(4,620)		5,919		6,793
Liabilities of businesses held for sale		10,592		6,092		10,146		6,037		446		55
Liabilities of discontinued operations		2,422		1,301		164		163		2,258		1,138

Total liabilities(b)		638,214		656,682		88,769		86,854		556,744		577,360

Preferred stock (30,000 shares outstanding at both September 30, 2010 and December 31, 2009)		–		–		–		–		–		–
Common stock (10,654,718,000 and 10,663,075,000 shares outstanding at September 30, 2010 and December 31, 2009, respectively)		702		702		702		702		1		1
Accumulated other comprehensive income – net(c)
Investment securities		(615)		(435)		(615)		(435)		(617)		(436)
Currency translation adjustments		(963)		3,836		(963)		3,836		(1,592)		1,372
Cash flow hedges		(1,529)		(1,734)		(1,529)		(1,734)		(1,529)		(1,769)
Benefit plans		(15,657)		(16,932)		(15,657)		(16,932)		(383)		(434)
Other capital		36,982		37,729		36,982		37,729		27,583		27,591
Retained earnings		128,126		126,363		128,126		126,363		43,390		44,508
Less common stock held in treasury		(31,510)		(32,238)		(31,510)		(32,238)		–		–

Total GE shareowners’ equity		115,536		117,291		115,536		117,291		66,853		70,833
Noncontrolling interests(d)		5,074		7,845		3,948		5,797		1,126		2,048

Total equity		120,610		125,136		119,484		123,088		67,979		72,881

Total liabilities and equity	$	758,824	$	781,818	$	208,253	$	209,942	$	624,723	$	650,241

(a)	Represents the adding together of all affiliated companies except General Electric Capital Services, Inc. (GECS or financial services), which is presented on a one-line basis.

(b)

Our consolidated assets at September 30, 2010 include total assets of $49,945 million of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs. These assets include net financing receivables of $40,168 million and investment securities of $7,213 million. Our consolidated liabilities at September 30, 2010 include liabilities of certain VIEs for which the VIE creditors do not have recourse to GE. These liabilities include non-recourse borrowings of consolidated securitization entities (CSEs) of $29,833 million. See Note 16.

(c)	The sum of accumulated other comprehensive income - net was $(18,764) million and $(15,265) million at September 30, 2010 and December 31, 2009, respectively.

(d)	Included accumulated other comprehensive income - net attributable to noncontrolling interests of $(161) million and $(188) million at September 30, 2010 and December 31, 2009, respectively.

See accompanying notes. Separate information is shown for “GE” and “Financial Services (GECS).” Transactions between GE and GECS have been eliminated from the “Consolidated” columns.

(5)

General Electric Company and consolidated affiliates

Condensed Statement of Cash Flows


	Nine months ended September 30 (Unaudited)
	Consolidated				GE(a)				Financial Services (GECS)
(In millions)	2010		2009		2010		2009		2010		2009
Cash flows – operating activities
Net earnings	$	7,437	$	8,114	$	7,424	$	8,043	$	527	$	1,393
Less net earnings attributable to noncontrolling interests		328		102		315		31		13		71

Net earnings attributable to the Company		7,109		8,012		7,109		8,012		514		1,322
Loss from discontinued operations		1,683		175		1,683		175		1,679		157
Adjustments to reconcile net earnings attributable to the Company to cash provided from operating activities
Depreciation and amortization of property, plant and equipment		7,477		7,893		1,668		1,696		5,809		6,197
Earnings from continuing operations retained by GECS		–		–		(2,193)		(1,479)		–		–
Deferred income taxes		(1,735)		281		(198)		(179)		(1,537)		460
Decrease (increase) in GE current receivables		689		2,181		307		2,330		–		–
Decrease (increase) in inventories		(118)		350		(82)		412		9		(2)
Increase (decrease) in accounts payable		1,037		(1,355)		639		(869)		609		(1,288)
Increase (decrease) in GE progress collections		(1,291)		(194)		(1,366)		5		–		–
Provision for losses on GECS financing receivables		5,968		8,021		–		–		5,968		8,021
All other operating activities		5,836		(11,374)		2,575		1,339		3,464		(12,898)

Cash from (used for) operating activities – continuing operations		26,655		13,990		10,142		11,442		16,515		1,969
Cash from (used for) operating activities – discontinued operations		(179)		(62)		–		(2)		(179)		(60)

Cash from (used for) operating activities		26,476		13,928		10,142		11,440		16,336		1,909

Cash flows – investing activities
Additions to property, plant and equipment		(4,415)		(5,808)		(1,484)		(1,770)		(3,138)		(4,231)
Dispositions of property, plant and equipment		3,106		3,689		–		–		3,106		3,689
Net decrease (increase) in GECS financing receivables		25,798		37,117		–		–		26,543		36,953
Proceeds from principal business dispositions		2,787		9,676		1,712		858		905		8,818
Payments for principal businesses purchased		(576)		(5,994)		(15)		(357)		(561)		(5,637)
Capital contribution from GE to GECS		–		–		–		(9,500)		–		–
All other investing activities		7,728		(3,707)		(270)		(2)		7,842		(2,781)

Cash from (used for) investing activities – continuing operations		34,428		34,973		(57)		(10,771)		34,697		36,811
Cash from (used for) investing activities – discontinued operations		112		66		–		2		112		64

Cash from (used for) investing activities		34,540		35,039		(57)		(10,769)		34,809		36,875

Cash flows – financing activities
Net increase (decrease) in borrowings (maturities of 90 days or less)		(1,985)		(23,578)		(1,288)		(12)		(822)		(24,390)
Net increase (decrease) in bank deposits		4,159		(6,072)		–		–		4,159		(6,072)
Newly issued debt (maturities longer than 90 days)		31,424		70,270		4,133		1,825		27,075		68,623
Repayments and other reductions (maturities longer than 90 days)		(78,774)		(66,517)		(2,251)		(1,598)		(76,523)		(64,919)
Net dispositions (purchases) of GE shares for treasury		(438)		498		(438)		498		–		–
Dividends paid to shareowners		(3,434)		(7,845)		(3,434)		(7,845)		–		–
Capital contribution from GE to GECS		–		–		–		–		–		9,500
Purchase of subsidiary shares from noncontrolling interest		(2,000)		–		(2,000)		–		–		–
All other financing activities		(2,678)		(2,324)		(274)		(445)		(2,404)		(1,879)

Cash from (used for) financing activities – continuing operations		(53,726)		(35,568)		(5,552)		(7,577)		(48,515)		(19,137)
Cash from (used for) financing activities – discontinued operations		–		–		–		–		–		–

Cash from (used for) financing activities		(53,726)		(35,568)		(5,552)		(7,577)		(48,515)		(19,137)

Effect of currency exchange rate changes on cash and equivalents		(1,225)		(208)		(188)		23		(1,037)		(231)

Increase (decrease) in cash and equivalents		6,065		13,191		4,345		(6,883)		1,593		19,416
Cash and equivalents at beginning of year		72,444		48,367		8,654		12,090		64,540		37,666

Cash and equivalents at September 30		78,509		61,558		12,999		5,207		66,133		57,082
Less cash and equivalents of discontinued operations at September 30		117		184		–		–		117		184

Cash and equivalents of continuing operations at September 30	$	78,392	$	61,374	$	12,999	$	5,207	$	66,016	$	56,898

(a)	Represents the adding together of all affiliated companies except General Electric Capital Services, Inc. (GECS or financial services), which is presented on a one-line basis.

See accompanying notes. Separate information is shown for “GE” and “Financial Services (GECS).” Transactions between GE and GECS have been eliminated from the “Consolidated” columns and are discussed in Note 17.

(6)

Summary of Operating Segments

General Electric Company and consolidated affiliates


	Three months ended September 30 (Unaudited)				Nine months ended September 30 (Unaudited)
(In millions)	2010		2009		2010		2009

Revenues
Energy Infrastructure(a)	$	8,359	$	9,769	$	26,554	$	29,310
Technology Infrastructure(a)		9,210		9,306		26,930		28,466
NBC Universal		4,069		4,079		12,139		11,168
GE Capital(a)		11,616		12,005		36,244		38,516
Home & Business Solutions(a)		2,125		2,136		6,315		6,229

Total segment revenues		35,379		37,295		108,182		113,689
Corporate items and eliminations		509		504		1,755		1,656

Consolidated revenues	$	35,888	$	37,799	$	109,937	$	115,345


Segment profit(b)
Energy Infrastructure(a)	$	1,656	$	1,649	$	5,047	$	4,830
Technology Infrastructure(a)		1,474		1,645		4,431		5,090
NBC Universal		625		732		1,431		1,662
GE Capital(a)		871		141		2,308		1,601
Home & Business Solutions(a)		104		104		318		239

Total segment profit		4,730		4,271		13,535		13,422
Corporate items and eliminations		(472)		(811)		(1,098)		(1,766)
GE interest and other financial charges		(393)		(352)		(1,166)		(1,076)
GE provision for income taxes		(705)		(654)		(2,479)		(2,393)

Earnings from continuing operations attributable to the Company		3,160		2,454		8,792		8,187
Earnings (loss) from discontinued operations, net of taxes, attributable to the Company		(1,105)		40		(1,683)		(175)

Consolidated net earnings attributable to the Company	$	2,055	$	2,494	$	7,109	$	8,012

(a)	Effective January 1, 2010, we reorganized our segments. We have reclassified prior-period amounts to conform to the current-period presentation. See Note 1 for a description of the reorganization.

(b)

Segment profit always excludes the effects of principal pension plans, results reported as discontinued operations, earnings attributable to noncontrolling interests of consolidated subsidiaries and accounting changes, and may exclude matters such as charges for restructuring; rationalization and other similar expenses; in-process research and development and certain other acquisition-related charges and balances; technology and product development costs; certain gains and losses from acquisitions or dispositions; and litigation settlements or other charges, responsibility for which preceded the current management team. Segment profit excludes or includes interest and other financial charges and income taxes according to how a particular segment’s management is measured – excluded in determining segment profit, which we sometimes refer to as “operating profit,” for Energy Infrastructure, Technology Infrastructure, NBC Universal and Home & Business Solutions; included in determining segment profit, which we sometimes refer to as “net earnings,” for GE Capital.

See accompanying notes.

(7)

Notes to Condensed, Consolidated Financial Statements (Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed, consolidated financial statements represent the consolidation of General Electric Company and all companies that we directly or indirectly control, either through majority ownership or otherwise. See Note 1 to the consolidated financial statements for the year ended December 31, 2009, included in our Form 8-K filed on May 6, 2010, which discusses our consolidation and financial statement presentation. As used in this report on Form 10-Q (Report) and in our 2009 consolidated financial statements, “GE” represents the adding together of all affiliated companies except General Electric Capital Services, Inc. (GECS or financial services), which is presented on a one-line basis; GECS consists of General Electric Capital Services, Inc. and all of its affiliates; and “Consolidated” represents the adding together of GE and GECS with the effects of transactions between the two eliminated.

Effective January 1, 2010, we reorganized our segments to better align our Consumer & Industrial and Energy businesses for growth. As a result of this reorganization, we created a new segment called Home & Business Solutions that includes the Appliances and Lighting businesses from our previous Consumer & Industrial segment and the retained portion of the GE Fanuc Intelligent Platforms business of our previous Enterprise Solutions business (formerly within our Technology Infrastructure segment). In addition, the Industrial business of our previous Consumer & Industrial segment and the Sensing & Inspection Technologies and Digital Energy businesses of our previous Enterprise Solutions business are now part of the Energy business within the Energy Infrastructure segment. The Security business of Enterprise Solutions is reported in Corporate Items and Eliminations for periods prior to its sale in the first quarter of 2010. Also, effective January 1, 2010, the Capital Finance segment was renamed GE Capital and includes all of the continuing operations of General Electric Capital Corporation (GECC). In addition, the Transportation Financial Services business, previously reported in GE Capital Aviation Services (GECAS), is now included in Commercial Lending and Leasing (CLL) and our Consumer business in Italy, previously reported in Consumer, is now included in CLL. GE includes Energy Infrastructure, Technology Infrastructure, NBC Universal (NBCU) and Home & Business Solutions. GECS includes GE Capital.

Beginning in the first quarter of 2010, we have included a separate line on the statement of cash flows for the effect of currency exchange rate changes on cash and equivalents. We had previously included the effect of currency exchange rate changes on cash and equivalents in “All other operating activities” for GE and “All other investing activities” for GECS, as the effect was insignificant.

We have reclassified certain prior-period amounts to conform to the current-period presentation. Unless otherwise indicated, information in these notes to the condensed, consolidated financial statements relates to continuing operations.

Accounting Changes

On January 1, 2010, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2009-16 and ASU 2009-17, amendments to Accounting Standards Codification (ASC) 860, Transfers and Servicing, and ASC 810, Consolidation, respectively (ASU 2009-16 & 17). ASU 2009-16 eliminates the Qualified Special Purpose Entity (QSPE) concept, and ASU 2009-17 requires that all such entities be evaluated for consolidation as Variable Interest Entities (VIEs). Adoption of these amendments resulted in the consolidation of all of our sponsored QSPEs. In addition, we consolidated assets of VIEs related to direct investments in entities that hold loans and fixed income securities, a media joint venture and a small number of companies to which we have extended loans in the ordinary course of business and subsequently were subject to a troubled debt restructuring (TDR).

(8)

We consolidated the assets and liabilities of these entities at amounts at which they would have been reported in our financial statements had we always consolidated them. We also deconsolidated certain entities where we did not meet the definition of the primary beneficiary under the revised guidance; however the effect was insignificant at January 1, 2010. The incremental effect on total assets and liabilities, net of our investment in these entities, was an increase of $31,097 million and $33,042 million, respectively, at January 1, 2010. The net reduction of total equity (including noncontrolling interests) was $1,945 million at January 1, 2010, principally related to the reversal of previously recognized securitization gains as a cumulative effect adjustment to retained earnings. See Note 16 for additional information.

The amended guidance on ASC 860 changed existing derecognition criteria in a manner that significantly narrows the types of transactions that will qualify as sales. The revised criteria apply to transfers of financial assets occurring after December 31, 2009.

Interim Period Presentation

The condensed, consolidated financial statements and notes thereto are unaudited. These statements include all adjustments (consisting of normal recurring accruals) that we considered necessary to present a fair statement of our results of operations, financial position and cash flows. The results reported in these condensed, consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. It is suggested that these condensed, consolidated financial statements be read in conjunction with the financial statements and notes thereto included in our 2009 consolidated financial statements. We label our quarterly information using a calendar convention, that is, first quarter is labeled as ending on March 31, second quarter as ending on June 30, and third quarter as ending on September 30. It is our longstanding practice to establish interim quarterly closing dates using a fiscal calendar, which requires our businesses to close their books on either a Saturday or Sunday, depending on the business. The effects of this practice are modest and only exist within a reporting year. The fiscal closing calendar from 1993 through 2013 is available on our website, www.ge.com/secreports.

2. ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS

Assets and Liabilities of Businesses Held for Sale

NBC Universal

On December 3, 2009, we entered into an agreement with Comcast Corporation (Comcast) to transfer the assets of the NBCU business to a newly formed entity, which will consist of our NBCU businesses and Comcast’s cable networks, regional sports networks, certain digital properties and certain unconsolidated investments. Pursuant to the transaction, we currently expect to receive $6,400 million in cash from Comcast ($7,100 million less certain adjustments based on various events between contract signing and closing) and will own a 49% interest in the newly formed entity, which we will account for under the equity method. The transaction is subject to receipt of various regulatory approvals and is expected to close within the next three months.

On September 26, 2010, we acquired approximately 38% of Vivendi S.A.’s (Vivendi) interest in NBCU (7.7% of NBCU’s outstanding shares) for $2,000 million. Provided the transaction described above subsequently closes, we will acquire the remaining Vivendi interest in NBCU for $3,578 million and make an additional payment of $222 million related to the previously purchased shares.

(9)

On March 19, 2010, NBCU entered into a three-year credit agreement and a 364-day bridge loan agreement. On April 30, 2010, NBCU issued $4,000 million of senior, unsecured notes with maturities ranging from 2015 to 2040 (interest rates ranging from 3.65% to 6.40%). On October 4, 2010, NBCU issued $5,100 million of senior, unsecured notes with maturities ranging from 2014 to 2041 (interest rates ranging from 2.10% to 5.95%). Subsequent to these issuances, the credit agreement and bridge loan agreement were terminated, with a $750 million revolving credit agreement remaining in effect. If the transaction described above has not closed before June 10, 2011 or such earlier date as the master agreement governing the transaction is terminated, NBCU will redeem the senior, unsecured notes at a redemption price equal to 101% of the aggregate principal amount. Proceeds from these issuances were transferred to us. Following the completion of the sale, we expect to realize approximately $7,900 million in cash after debt reduction, transaction fees and the buyout of the Vivendi interest in NBCU.

With respect to our 49% interest in the newly formed entity, we will hold redemption rights, which, if exercised, cause the entity to purchase half of our ownership interest after 3.5 years and the remaining half after 7 years subject to certain exceptions, conditions and limitations. Our interest will also be subject to call provisions, which, if exercised, allow Comcast to purchase our interest at specified times subject to certain exceptions. The redemption price for such transactions is determined pursuant to a formula specified in the agreement.

At December 31, 2009, we classified the NBCU assets and liabilities of $32,150 million and $5,751 million, respectively, as held for sale. The major classes of assets are current receivables ($2,136 million), property, plant and equipment – net ($1,805 million), goodwill and other intangible assets – net ($21,574 million) and all other assets ($6,514 million), including film and television production costs of $4,507 million. The major classes of liabilities are accounts payable ($398 million), other GE current liabilities ($4,051 million) and all other liabilities ($1,300 million).

At September 30, 2010, NBCU assets and liabilities of $33,180 million and $10,146 million, respectively, were classified as held for sale. The major classes of assets are current receivables ($2,019 million), property, plant and equipment – net ($1,976 million), goodwill and other intangible assets – net ($22,239 million) and all other assets ($6,813 million), including film and television production costs of $4,551 million. The major classes of liabilities are accounts payable ($516 million), other GE current liabilities ($3,745 million), all other liabilities ($1,207 million) and long-term borrowings ($4,810 million).

Other

On February 28, 2010, we completed the sale of our Security business for $1,787 million. Assets and liabilities of $1,780 million and $282 million, respectively, were classified as held for sale at December 31, 2009.

In June 2010, we committed to sell our GE Capital Consumer businesses in Indonesia and Argentina. In September 2010, we committed to sell our GE Capital Consumer business in Brazil. Assets of $756 million and liabilities of $396 million were classified as held for sale at September 30, 2010.

(10)

Summarized financial information for businesses held for sale is shown below.


(In millions)	September 30, 2010		December 31, 2009

Assets
Cash and equivalents	$	66	$	–
Current receivables		2,019		2,188
Financing receivables – net		590		–
Property, plant and equipment – net		2,018		1,978
Goodwill		19,601		20,086
Other intangible assets – net		2,676		2,866
All other assets		6,838		6,621
Other		161		372

Assets of businesses held for sale	$	33,969	$	34,111


Liabilities
Accounts payable	$	533	$	451
Other GE current liabilities		3,745		4,139
All other liabilities		1,193		1,447
Long-term borrowings		4,860		2
Other		261		53

Liabilities of businesses held for sale	$	10,592	$	6,092

Discontinued Operations

Discontinued operations comprised GE Money Japan (our Japanese personal loan business, Lake, and our Japanese mortgage and card businesses, excluding our investment in GE Nissen Credit Co., Ltd.), our U.S. mortgage business (WMC) and Plastics. Associated results of operations, financial position and cash flows are separately reported as discontinued operations for all periods presented.

Summarized financial information for discontinued GECS operations is shown below.


	Three months ended September 30				Nine months ended September 30
(In millions)	2010		2009		2010		2009

Total revenues	$	(1)	$	4	$	(4)	$	(4)


Earnings (loss) from discontinued operations, net of taxes
Loss from operations	$	(4)	$	(5)	$	(13)	$	(75)
Earnings (loss) on disposal		(1,100)		45		(1,666)		(82)

Total earnings (loss) from discontinued operations, net of taxes	$	(1,104)	$	40	$	(1,679)	$	(157)

Assets of GECS discontinued operations were $1,283 million and $1,470 million at September 30, 2010 and December 31, 2009, respectively, and primarily comprised a deferred tax asset for a loss carryforward, which expires in 2015, related to the sale of our GE Money Japan business. Liabilities of GECS discontinued operations were $2,258 million and $1,138 million at September 30, 2010 and December 31, 2009, respectively. During the nine months ended September 30, 2010, we recorded incremental reserves of $1,666 million for excess interest claims related to our loss-sharing arrangement on the 2008 sale of GE Money Japan. During the first quarter of 2010, we also reduced tax reserves by $325 million related to resolution of an uncertain tax position in Japan, but were required to record an offsetting valuation allowance on our deferred tax asset in Japan.

(11)

GE Money Japan

During the third quarter of 2007, we committed to a plan to sell our Japanese personal loan business, Lake, upon determining that, despite restructuring, Japanese regulatory 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 Co., Ltd. As a result, we recognized an after-tax loss of $908 million in 2007 and an incremental loss of $361 million in 2008. In connection with the sale, we reduced the proceeds on the sale for estimated interest refund claims in excess of the statutory interest rate. Proceeds from the sale were to be increased or decreased based on the actual claims experienced in accordance with loss-sharing terms specified in the sale agreement, with all claims in excess of 258 billion Japanese Yen (approximately $3,000 million) remaining our responsibility. The underlying portfolio to which this obligation relates is in runoff and interest rates were capped for all designated accounts by mid-2009. In the third quarter of 2010, we began making reimbursements under this arrangement.

We update our estimate of our share of expected excess interest refund claim losses quarterly. We recorded a reserve of $132 million in the second quarter of 2009 for our estimated share of incremental losses under the loss-sharing provisions of the agreement based on our experience at that time. In 2010, our overall claims experience has developed unfavorably. While the number of new claims continues to decline from 2009, the pace of the decline has been slower than expected and claims severity has increased. We believe that the level of excess interest refund claims has been impacted by the challenging global economic conditions, in addition to Japanese legislative and regulatory changes. During the first six months of 2010, we accrued $566 million of incremental reserves for these claims.

While our average daily claims continued to decline through August 2010, we observed an increase in claims during September 2010 and higher call and claim volume in October 2010. Additionally, a large independent personal loan company in Japan filed for bankruptcy in September 2010. Based on these factors and additional analysis completed in the third quarter, we recorded an adjustment to our reserves of $1,100 million to bring the reserve to a better estimate of our probable loss. This adjustment primarily reflects revisions in our assumptions and calculations of the number of estimated probable future incoming claims, increases in claims severity assumptions, reflecting recent trends in amounts paid per claim, and higher estimates of loss for claims in process of settlement. As of September 30, 2010, our reserve for reimbursement of claims in excess of the statutory interest rate was $1,667 million.

The amount of these reserves is based on analyses of recent and historical claims experience, pending and estimated future excess interest refund requests, the estimated percentage of customers who present valid requests, and our estimated payments related to those requests. Our estimated liability for excess interest refund claims at September 30, 2010 assumes the pace of incoming claims will decelerate (but at a lower rate than we had previously assumed), average exposure per claim remains consistent with recent experience, and we see the impact of our loss mitigation efforts. Estimating the pace of decline in incoming claims can have a significant effect on the total amount of our liability. For example, our estimate assumes incoming average daily claims will decline at a long-term average of four percent monthly. Holding all other assumptions constant, if claims declined at a rate of one percent higher or lower than assumed, our liability estimate would change by approximately $250 million.

Based on what we know today, we believe that our reserve for excess interest refund claims represents a better estimate of our probable loss. Uncertainties around the impact of laws and regulations, challenging economic conditions, the runoff status of the underlying book of business and the effects of our mitigation efforts make it difficult to develop a meaningful estimate of the aggregate possible claims exposure. Recent trends, including 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.

(12)

GE Money Japan revenues from discontinued operations were an insignificant amount in both the third quarter of 2010 and 2009 and both the nine months ended September 30, 2010 and 2009, respectively. In total, GE Money Japan losses from discontinued operations, net of taxes, were $1,101 million and $10 million in the third quarters of 2010 and 2009, respectively, and $1,672 million and $142 million for the nine months ended September 30, 2010 and 2009, respectively.

WMC

During the fourth quarter of 2007, we completed the sale of WMC, our U.S. mortgage business. WMC substantially discontinued all new loan originations by the second quarter of 2007, and is not a servicer of any loans. In connection with our sale transaction, WMC retained certain obligations related to loans sold prior to the disposal of the business, including WMC’s contractual obligations to repurchase previously sold loans as to which there was an early payment default or with respect to which certain contractual representation and warranties were not met. All claims received for early payment default have either been resolved or are no longer being pursued.

Pending claims for unmet representations and warranties have declined from approximately $800 million at December 31, 2009 to approximately $250 million at September 30, 2010. Reserves related to unmet contractual representations and warranties were $101 million at September 30, 2010, and $205 million at December 31, 2009. The amount of these reserves is based upon pending and estimated future loan repurchase requests, the estimated percentage of loans validly tendered for repurchase, and our estimated losses on loans repurchased. Based on our historical experience, we estimate that a small percentage of the total loans we originated and sold will be tendered for repurchase, and of those tendered, only a limited amount will qualify as “validly tendered,” meaning the loans sold did not satisfy specified contractual obligations.

Through September 30, 2010, WMC has not experienced a significant change in the trends related to repurchase requests and WMC’s current reserve represents our best estimate of losses with respect to WMC’s repurchase obligation. Actual losses could exceed the reserve amount if actual claim rates, valid tenders or losses WMC incurs on repurchased loans are higher than historically observed.

WMC revenues from discontinued operations were $(1) million and $4 million in the third quarters of 2010 and 2009, respectively, and $(4) million and $(5) million for the nine months ended September 30, 2010 and 2009, respectively. In total, WMC’s earnings (loss) from discontinued operations, net of taxes, were $(2) million and $3 million in the third quarters of 2010 and 2009, respectively, and $(5) million and $(8) million for the nine months ended September 30, 2010 and 2009, respectively.

GE Industrial

GE industrial losses from discontinued operations, net of taxes, were $1 million and an insignificant amount in the third quarters of 2010 and 2009, respectively, and $4 million and $18 million for the nine months ended September 30, 2010 and 2009, respectively. The sum of GE industrial earnings (loss) from discontinued operations, net of taxes, and GECS earnings (loss) from discontinued operations, net of taxes, is reported as GE industrial earnings (loss) from discontinued operations, net of taxes, on the Condensed Statement of Earnings.

Assets of GE industrial discontinued operations were $50 million at both September 30, 2010 and December 31, 2009. Liabilities of GE industrial discontinued operations were $164 million and $163 million at September 30, 2010, and December 31, 2009, respectively, and primarily represent taxes payable and pension liabilities related to the sale of our Plastics business in 2007.

(13)

3. INVESTMENT SECURITIES

Substantially all of our investment securities are classified as available-for-sale. These comprise mainly investment-grade debt securities supporting obligations to annuitants and policyholders in our run-off insurance operations and holders of guaranteed investment contracts (GICs) in Trinity (which ceased issuing new investment contracts beginning in the first quarter of 2010), and investment securities held at our global banks. We do not have any securities classified as held to maturity.


	At
	September 30, 2010								December 31, 2009
(In millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value		Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value

GE
Debt – U.S. corporate	$	2	$	–	$	–	$	2	$	12	$	4	$	(1)	$	15
Equity – available-for-sale		16		–		–		16		14		1		–		15

		18		–		–		18		26		5		(1)		30

GECS
Debt
U.S. corporate		22,194		2,357		(199)		24,352		22,778		973		(724)		23,027
State and municipal		2,960		185		(176)		2,969		2,638		42		(278)		2,402
Residential mortgage- backed(a)		3,335		138		(460)		3,013		4,005		79		(766)		3,318
Commercial mortgage-backed		2,834		193		(182)		2,845		3,053		89		(440)		2,702
Asset-backed		3,360		99		(233)		3,226		2,994		48		(305)		2,737
Corporate – non-U.S.		2,369		91		(82)		2,378		1,831		59		(50)		1,840
Government – non-U.S.		2,482		101		(48)		2,535		2,902		63		(29)		2,936
U.S. government and federal agency		3,086		73		(9)		3,150		2,628		46		–		2,674
Retained interests(b)		56		10		(25)		41		8,479		392		(40)		8,831
Equity
Available-for-sale		550		183		(26)		707		489		242		(5)		726
Trading		458		–		–		458		720		–		–		720

		43,684		3,430		(1,440)		45,674		52,517		2,033		(2,637)		51,913

Eliminations		(2)		–		–		(2)		(2)		–		–		(2)

Total	$	43,700	$	3,430	$	(1,440)	$	45,690	$	52,541	$	2,038	$	(2,638)	$	51,941

(a)

Substantially collateralized by U.S. mortgages. Of our total residential mortgage-backed securities (RMBS) portfolio at September 30, 2010, $1,233 million relates to securities issued by government sponsored entities and $1,780 million relates to securities of private label issuers. Securities issued by private label issuers are collateralized primarily by pools of individual direct mortgage loans of individual 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 16.

The fair value of investment securities decreased to $45,690 million at September 30, 2010, from $51,941 million at December 31, 2009, primarily driven by a decrease in retained interests as a result of our adoption of ASU 2009-16 & 17 and maturities, partially offset by improved market conditions and purchases in our run-off insurance operations.

(14)

The following tables present the estimated fair values and gross unrealized losses of our available-for-sale investment securities.


	In loss position for
	Less than 12 months					12 months or more
(In millions)		Estimated fair value		Gross unrealized losses	(a)		Estimated fair value		Gross unrealized losses	(a)

September 30, 2010
Debt
U.S. corporate	$	216	$	(7)		$	2,324	$	(192)
State and municipal		165		(11)			548		(165)
Residential mortgage-backed		32		(2)			1,353		(458)
Commercial mortgage-backed		25		(1)			784		(181)
Asset-backed		81		(16)			944		(217)
Corporate – non-U.S.		333		(30)			722		(52)
Government – non-U.S.		682		(3)			137		(45)
U.S. government and federal agency		272		(9)			–		–
Retained interests		–		–			14		(25)
Equity		169		(25)			5		(1)

Total	$	1,975	$	(104)		$	6,831	$	(1,336)


December 31, 2009
Debt
U.S. corporate	$	2,818	$	(78)		$	4,802	$	(647)
State and municipal		920		(139)			614		(139)
Residential mortgage-backed		118		(14)			1,678		(752)
Commercial mortgage-backed		167		(5)			1,293		(435)
Asset-backed		126		(11)			1,342		(294)
Corporate – non-U.S.		374		(18)			481		(32)
Government – non-U.S.		399		(4)			224		(25)
U.S. government and federal agency		–		–			–		–
Retained interests		208		(16)			27		(24)
Equity		92		(2)			10		(3)

Total	$	5,222	$	(287)		$	10,471	$	(2,351)

(a)

At September 30, 2010, other-than-temporary impairments previously recognized through other comprehensive income (OCI) on securities still held amounted to $(399) million, of which $(296) million related to RMBS. Gross unrealized losses related to those securities at September 30, 2010 amounted to $(271) million, of which $(185) million related to RMBS.

We adopted amendments to ASC 320 and recorded a cumulative effect adjustment to increase retained earnings as of April 1, 2009 of $62 million.

We regularly review investment securities for impairment using both qualitative and quantitative criteria. We presently do not intend to sell our debt securities and believe that it is not more likely than not that we will be required to sell these securities that are in an unrealized loss position before recovery of our amortized cost. We believe that the unrealized loss associated with our equity securities will be recovered within the foreseeable future. The methodologies and significant inputs used to measure the amount of credit loss for our investment securities during the nine months ended September 30, 2010 have not changed from those described in our 2009 consolidated financial statements. See Note 3 in our 2009 consolidated financial statements, for additional information regarding these methodologies and inputs.

(15)

During the third quarter of 2010, we recorded pre-tax, other-than-temporary impairments of $38 million, of which $31 million was recorded through earnings ($23 million relates to equity securities) and $7 million was recorded in accumulated other comprehensive income (AOCI). At July 1, 2010, cumulative impairments recognized in earnings associated with debt securities still held were $428 million. During the third quarter, we recognized first time impairments of $2 million and incremental charges on previously impaired securities of $1 million. These amounts included $1 million related to securities that were subsequently sold.

During the nine months ended September 30, 2010, we recorded pre-tax, other-than-temporary impairments of $297 million, of which $166 million was recorded through earnings ($24 million relates to equity securities) and $131 million was recorded in AOCI. At January 1, 2010, cumulative impairments recognized in earnings associated with debt securities still held were $340 million. During the nine months ended September 30, 2010, we recognized first time impairments of $94 million and incremental charges on previously impaired securities of $37 million. These amounts included $40 million related to securities that were subsequently sold.

During the third quarter of 2009, we recorded pre-tax, other-than-temporary impairments of $325 million, of which $161 million was recorded through earnings ($26 million relates to equity securities), and $164 million was recorded in AOCI. At July 1, 2009, cumulative impairments recognized in earnings associated with debt securities still held were $499 million. During the third quarter, we recognized first time impairments of $48 million and incremental charges on previously impaired securities of $55 million. Previous credit impairments related to securities sold were $82 million.

During the nine months ended September 30, 2009, we recognized impairments of $921 million, of which $33 million was reclassified to retained earnings at April 1, 2009, as a result of the amendments to ASC 320, Investments – Debt and Equity Securities. Subsequent to April 1, 2009, first time and incremental credit impairments were $74 million and $204 million, respectively. Previous credit impairments related to securities sold were $82 million.

Contractual Maturities of GECS Investment in Available-for-Sale Debt Securities (Excluding Mortgage-

Backed and Asset-Backed Securities)


(In millions)	Amortized cost		Estimated fair value

Due in
2010	$	3,944	$	3,967
2011-2014		7,241		7,499
2015-2019		4,362		4,581
2020 and later		17,544		19,337

We expect actual maturities to differ from contractual maturities because borrowers have the right to call or prepay certain obligations.

(16)

Supplemental information about gross realized gains and losses on available-for-sale investment securities follows.


	Three months ended September 30				Nine months ended September 30
(In millions)	2010		2009		2010		2009

GE
Gains	$	–	$	–	$	–	$	–
Losses, including impairments		–		–		–		(172)

Net		–		–		–		(172)


GECS
Gains		35		55		168		114
Losses, including impairments		(46)		(186)		(191)		(534)

Net		(11)		(131)		(23)		(420)

Total	$	(11)	$	(131)	$	(23)	$	(592)

Although we generally do not have the intent to sell any specific securities at the end of the period, in the ordinary course of managing our investment securities portfolio, we may sell securities prior to their maturities for a variety of reasons, including diversification, credit quality, yield and liquidity requirements and the funding of claims and obligations to policyholders. In some of our bank subsidiaries, we maintain a certain level of purchases and sales volume principally of non-U.S. government debt securities. In these situations, fair value approximates carrying value for these securities.

Proceeds from investment securities sales and early redemptions by the issuer totaled $4,878 million and $3,786 million in the third quarters of 2010 and 2009, respectively, and $12,467 million and $7,418 million for the nine months ended September 30, 2010 and 2009, respectively, principally from the sales of short-term securities in our bank subsidiaries.

We recognized net pre-tax gains on trading securities of $33 million and $29 million in the third quarters of 2010 and 2009, respectively, and $52 million and $273 million for the nine months ended September 30, 2010 and 2009, respectively.

4. INVENTORIES

Inventories consisted of the following.


	At
(In millions)	September 30, 2010			December 31, 2009

Raw materials and work in process	$	7,262		$	7,581
Finished goods		4,806			4,176
Unbilled shipments		388			759

		12,456			12,516
Less revaluation to LIFO		(459	)		(529	)

Total	$	11,997		$	11,987

(17)

5. GECS FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES

GECS financing receivables – net, consisted of the following.


	At
(In millions)	September 30, 2010		January 1, 2010(a)		December 31, 2009

Loans, net of deferred income	$	293,133	$	331,710	$	290,586
Investment in financing leases, net of deferred income		47,357		55,209		54,445

		340,490		386,919		345,031
Less allowance for losses		(9,147)		(9,805)		(8,105)

Financing receivables – net(b)	$	331,343	$	377,114	$	336,926

(a)	Reflects the effects of our adoption of ASU 2009-16 & 17 on January 1, 2010.

(b)	Financing receivables at September 30, 2010 and December 31, 2009 included $1,631 million and $2,704 million, respectively, relating to loans that had been acquired in a transfer but have been subject to credit deterioration since origination per ASC 310, Receivables.

Effective January 1, 2009, loans acquired in a business acquisition are recorded at fair value, which incorporates our estimate at the acquisition date of the credit losses over the remaining life of the portfolio. As a result, the allowance for loan losses is not carried over at acquisition. This may result in lower reserve coverage ratios prospectively. Details of financing receivables – net follow.


	At
(In millions)	September 30, 2010		January 1, 2010(a)		December 31, 2009

CLL(b)
Americas	$	89,769	$	99,666	$	87,496
Europe		36,969		43,403		41,455
Asia		12,192		13,159		13,202
Other		2,651		2,836		2,836

		141,581		159,064		144,989

Consumer(b)
Non-U.S. residential mortgages		49,239		58,345		58,345
Non-U.S. installment and revolving credit		22,729		24,976		24,976
U.S. installment and revolving credit		42,782		47,171		23,190
Non-U.S. auto		10,038		13,344		13,344
Other		10,035		11,688		11,688

		134,823		155,524		131,543


Real Estate		42,481		48,673		44,841


Energy Financial Services		7,291		7,790		7,790


GECAS(b)		12,227		13,254		13,254


Other(c)		2,087		2,614		2,614

		340,490		386,919		345,031
Less allowance for losses		(9,147)		(9,805)		(8,105)

Total	$	331,343	$	377,114	$	336,926

(a)	Reflects the effects of our adoption of ASU 2009-16 & 17 on January 1, 2010.

(b)	During the first quarter of 2010, we transferred the Transportation Financial Services business from GECAS to CLL and the Consumer business in Italy from Consumer to CLL. Prior-period amounts were reclassified to conform to the current-period presentation.

(c)	Primarily consisted of loans and financing leases related to certain consolidated, liquidating securitization entities.

(18)

Individually impaired loans are defined by U.S. generally accepted accounting principles (GAAP) as larger balance or restructured loans for which it is probable that the lender will be unable to collect all amounts due according to original contractual terms of the loan agreement. The vast majority of our consumer and a portion of our CLL nonearning receivables are excluded from this definition, as they represent smaller balance homogeneous loans that we evaluate collectively by portfolio for impairment.

Further information pertaining to loans classified as impaired and specific reserves is included in the tables below.


	At
(In millions)	September 30, 2010		January 1, 2010(a)		December 31, 2009

Loans requiring allowance for losses	$	12,764	$	9,541	$	9,145
Loans expected to be fully recoverable		4,405		3,914		3,741

Total impaired loans	$	17,169	$	13,455	$	12,886


Allowance for losses (specific reserves)	$	3,175	$	2,376	$	2,331
Average investment during the period		14,956		(c)		8,493
Interest income earned while impaired(b)		339		(c)		227

(a)	Reflects the effects of our adoption of ASU 2009-16 & 17 on January 1, 2010.

(b)	Recognized principally on cash basis for the nine months ended September 30, 2010, and the year ended December 31, 2009, respectively.

(c)	Not applicable.


	At
	September 30, 2010				January 1, 2010(a)				December 31, 2009
(In millions)	Impaired Loans		Specific Reserves		Impaired Loans		Specific Reserves		Impaired Loans		Specific Reserves

Commercial(b)	$	5,662	$	1,141	$	5,084	$	1,031	$	4,985	$	1,073
Consumer		2,418		516		1,747		307		1,383		241
Real Estate		9,089		1,518		6,624		1,038		6,518		1,017

Total	$	17,169	$	3,175	$	13,455	$	2,376	$	12,886	$	2,331

(a)	Reflects the effects of our adoption of ASU 2009-16 & 17 on January 1, 2010.

(b)	Comprises CLL, GECAS and Energy Financial Services.

Impaired loans increased by $3,714 million from January 1, 2010, to September 30, 2010, primarily relating to increases at Real Estate. Impaired loans consolidated as a result of our adoption of ASU 2009-16 & 17 primarily related to our Consumer business. We regularly review our Real Estate loans for impairment using both quantitative and qualitative factors, such as debt service coverage and loan-to-value ratios. We classify Real Estate loans as impaired when the most recent valuation reflects a projected loan-to-value ratio at maturity in excess of 100%, even if the loan is currently paying in accordance with contractual terms. The increase in Real Estate impaired loans reflects deterioration in commercial real estate values, particularly in U.S. and Japanese collateral. The increase in Real Estate specific reserves is consistent with the increase in impaired loans, as well as value declines since January 1, 2010. Of our $9,089 million impaired loans at Real Estate at September 30, 2010, $6,527 million are currently paying in accordance with the contractual terms of the loan. Impaired loans at CLL primarily represent senior secured lending positions.

(19)

Our loss mitigation strategy intends to minimize economic loss and, at times, can result in rate reductions, principal forgiveness, extensions, forbearance or other actions, which may cause the related loan to be classified as a TDR. Such loans are classified as impaired, and specific reserves are determined based upon the present value of expected future cash flows discounted at the loan’s original effective interest rate, or collateral value as a practical expedient in accordance with the requirements of ASC 310-10-35. As of September 30, 2010, TDRs included in impaired loans were $7,829 million, primarily relating to Real Estate ($3,118 million), CLL ($2,463 million) and Consumer ($2,162 million). TDRs consolidated as a result of our adoption of ASU 2009-16 & 17 primarily related to our Consumer business ($364 million).

GECS Allowance for Losses on Financing Receivables


(In millions)		Balance December 31, 2009		Adoption of ASU 2009- 16 & 17	(a)		Balance January 1, 2010		Provision charged to operations		Other(b)		Gross write-offs	(d)		Recoveries	(d)		Balance September 30, 2010

CLL(c)
Americas	$	1,179	$	66		$	1,245	$	823	$	(20)	$	(787)		$	95		$	1,356
Europe		575		–			575		190		(47)		(348)			41			411
Asia		244		(10)			234		131		(10)		(118)			15			252
Other		11		–			11		(3)		–		–			–			8

Consumer(c)
Non-U.S. residential
mortgages		949		–			949		243		(57)		(281)			68			922
Non-U.S. installment
and revolving credit		1,181		–			1,181		874		(44)		(1,401)			433			1,043
U.S. installment and
revolving credit		1,698		1,602			3,300		2,405		(4)		(3,401)			372			2,672
Non-U.S. auto		308		–			308		78		(34)		(286)			142			208
Other		300		–			300		213		(24)		(298)			64			255

Real Estate		1,494		42			1,536		918		(2)		(597)			2			1,857

Energy Financial Services		28		–			28		56		1		–			–			85

GECAS(c)		104		–			104		17		–		(96)			–			25

Other		34		–			34		23		(2)		(3)			1			53

Total	$	8,105	$	1,700		$	9,805	$	5,968	$	(243)	$	(7,616)		$	1,233		$	9,147

(a)	Reflects the effects of our adoption of ASU 2009-16 & 17 on January 1, 2010.

(b)	Other primarily included the effects of currency exchange.

(c)	During the first quarter of 2010, we transferred the Transportation Financial Services business from GECAS to CLL and the Consumer business in Italy from Consumer to CLL. Prior-period amounts were reclassified to conform to the current-period presentation.

(d)

Net write-offs (write-offs less recoveries) in certain portfolios may exceed the beginning allowance for losses as our revolving credit portfolios turn over more than once per year or, in all portfolios, can reflect losses that are incurred subsequent to the beginning of the fiscal year due to information becoming available during the current year which may identify further deterioration on existing financing receivables.

(20)


(In millions)	Balance January 1, 2009		Provision charged to operations		Other(a)		Gross write-offs		Recoveries		Balance September 30, 2009

CLL(b)
Americas	$	843	$	969	$	(34)	$	(746)	$	66	$	1,098
Europe		311		458		10		(299)		53		533
Asia		163		188		8		(136)		19		242
Other		4		4		3		(5)		–		6

Consumer(b)
Non-U.S. residential mortgages		381		804		82		(423)		129		973
Non-U.S. installment and revolving credit		1,049		1,335		40		(1,691)		375		1,108
U.S. installment and revolving credit		1,700		2,631		(761)		(2,134)		132		1,568
Non-U.S. auto		203		346		45		(435)		137		296
Other		226		257		9		(273)		39		258

Real Estate		301		903		13		(190)		1		1,028

Energy Financial Services		58		42		1		–		–		101

GECAS		58		69		(1)		–		–		126

Other		28		15		–		(22)		2		23

Total	$	5,325	$	8,021	$	(585)	$	(6,354)	$	953	$	7,360

(a)	Other primarily included the effects of securitization activity and currency exchange.

(b)	During the first quarter of 2010, we transferred the Transportation Financial Services business from GECAS to CLL and the Consumer business in Italy from Consumer to CLL. Prior-period amounts were reclassified to conform to the current-period presentation.

6. Property, Plant and Equipment

Property, plant and equipment – net, consisted of the following.


	At
(In millions)	September 30, 2010		December 31, 2009

Original cost	$	110,234	$	113,315
Less accumulated depreciation and amortization		(44,696)		(44,103)

Property, plant and equipment – net	$	65,538	$	69,212

Consolidated depreciation and amortization related to property, plant and equipment was $2,622 million and $2,658 million for the third quarters of 2010 and 2009, respectively, and $7,477 million and $7,893 million for the nine months ended September 30, 2010 and 2009, respectively.

(21)

7. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets – net, consisted of the following.


	At
(In millions)	September 30, 2010		December 31, 2009

Goodwill	$	64,128	$	65,574


Other intangible assets
Intangible assets subject to amortization	$	10,127	$	11,824
Indefinite-lived intangible assets(a)		104		105

Total	$	10,231	$	11,929

(a)	Indefinite-lived intangible assets principally comprised trademarks and tradenames.

Changes in goodwill balances follow.


(In millions)	Balance January 1, 2010		Acquisitions		Dispositions, currency exchange and other		Balance September 30, 2010

Energy Infrastructure	$	12,777	$	36	$	(84)	$	12,729
Technology Infrastructure		22,648		10		(104)		22,554
GE Capital		28,961		21		(1,154)		27,828
Home & Business Solutions		1,188		–		(171)		1,017

Total	$	65,574	$	67	$	(1,513)	$	64,128

Goodwill balances decreased $1,446 million during the nine months ended September 30, 2010, primarily as a result of the stronger U.S. dollar ($802 million) and the deconsolidation of Regency Energy Partners L.P. (Regency) at GE Capital ($557 million).

On May 26, 2010, we sold our general partnership interest in Regency, a midstream natural gas services provider, and retained a 21% limited partnership interest. This resulted in the deconsolidation of Regency and the remeasurement of our limited partnership interest to fair value. We recorded a pre-tax gain of $119 million, which is reported in GECS revenues from services.

We test goodwill for impairment annually and more frequently if circumstances warrant. We determine fair values for each of the reporting units using an income approach. When available and appropriate, we use comparative market multiples to corroborate discounted cash flow results. For purposes of the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for each business. Actual results may differ from those assumed in our forecasts. We derive our discount rates using the capital asset pricing model and analyzing published rates for industries relevant to our reporting units to estimate the cost of equity financing. We use discount rates that are commensurate with the risks and uncertainty inherent 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 reflect prices and other relevant observable information generated by market transactions involving comparable businesses.

(22)

Compared to the market approach, the income approach more closely aligns each reporting unit valuation to our business profile, including geographic markets served and product offerings. Required rates of return, along with uncertainty inherent in the forecasts of future cash flows are reflected in the selection of the discount rate. Equally important, under this approach, reasonably likely scenarios and associated sensitivities can be developed for alternative future states that may not be reflected in an observable market price. A market approach allows for comparison to actual market transactions and multiples. It can be somewhat more limited in its application because the population of potential comparables is often limited to publicly-traded companies where the characteristics of the comparative business and ours can be significantly different, market data is usually not available for divisions within larger conglomerates or non-public subsidiaries that could otherwise qualify as comparable, and the specific circumstances surrounding a market transaction (e.g., synergies between the parties, terms and conditions of the transaction, etc.) may be different or irrelevant with respect to our business. It can also be difficult, under current market conditions, to identify orderly transactions between market participants in similar businesses. We assess the valuation methodology based upon the relevance and availability of the data at the time we perform the valuation and weight the methodologies appropriately.

We performed our annual impairment test of goodwill for all of our reporting units in the third quarter using data as of July 1, 2010. The impairment test consists of two steps: in step one, the carrying value of the reporting unit is compared with its fair value; in step two, which is applied when the carrying value is more than its fair value, the amount of goodwill impairment, if any, is derived by deducting the fair value of the reporting unit’s assets and liabilities from the fair value of its equity, and comparing that amount with the carrying amount of goodwill. In performing the valuations, we used cash flows that reflected management’s forecasts and discount rates that included risk adjustments consistent with the current market conditions. Based on the results of our step one testing, the fair values of each of the GE Industrial reporting units and the CLL, Consumer, Energy Financial Services and GECAS reporting units exceeded their carrying values; therefore, the second step of the impairment test was not required to be performed and no goodwill impairment was recognized.

Our Real Estate reporting unit had a goodwill balance of $1,099 million at September 30, 2010. As the carrying amount exceeded the fair value of our Real Estate reporting unit by about $3 billion as of July 1, 2010, we performed step two of the goodwill impairment test. Based on the results of the step two analysis for Real Estate, the implied fair value of goodwill exceeded the carrying value of goodwill by about $3 billion, and accordingly, no goodwill impairment was required. The performance of the step one and two tests for evaluating our Real Estate goodwill is dependent upon several assumptions related to this business, including loss estimates for our portfolio, new origination volume and margins, anticipated stabilization of the commercial real estate market, discount rates and fair values of the business’ assets and liabilities. Relatively minor changes to these assumptions could adversely affect the results of the impairment test.

Estimating the fair value of reporting units involves the use of estimates and significant judgments that are based on a number of factors including actual operating results. If current conditions persist longer or deteriorate further than expected, it is reasonably possible that the judgments and estimates described above could change in future periods.

(23)

Intangible Assets Subject to Amortization


	At
	September 30, 2010						December 31, 2009
(In millions)	Gross carrying amount		Accumulated amortization		Net		Gross carrying amount		Accumulated amortization		Net

Customer-related	$	5,645	$	(1,545)	$	4,100	$	6,044	$	(1,392)	$	4,652
Patents, licenses and trademarks		5,393		(2,529)		2,864		5,198		(2,177)		3,021
Capitalized software		6,712		(4,404)		2,308		6,549		(4,127)		2,422
Lease valuations		1,660		(883)		777		1,754		(793)		961
Present value of future profits(a)		474		(474)		–		921		(470)		451
All other		393		(315)		78		745		(428)		317

Total	$	20,277	$	(10,150)	$	10,127	$	21,211	$	(9,387)	$	11,824

(a)

Balance at September 30, 2010 reflects a third quarter 2010 adjustment to the present value of future profits in our run-off insurance operation to reflect the effects that would have been recognized had the related unrealized investment securities holding gains and losses actually been realized in accordance with ASC 320-10-S99-2.

Consolidated amortization related to intangible assets subject to amortization was $435 million and $616 million for the three months ended September 30, 2010 and 2009, respectively. Consolidated amortization related to intangible assets subject to amortization for the nine months ended September 30, 2010 and 2009, was $1,294 million and $1,629 million, respectively.

(24)

8. GECS BORROWINGS AND BANK DEPOSITS

GECS borrowings are summarized in the following table.


	At
(In millions)	September 30, 2010		December 31, 2009

Short-term borrowings
Commercial paper
U.S.	$	31,129	$	37,775
Non-U.S.		10,191		9,525
Current portion of long-term borrowings(a)(b)(c)		62,777		69,883
GE Interest Plus notes(d)		8,824		7,541
Other(c)		2,829		6,413

GECS short-term borrowings	$	115,750	$	131,137


Long-term borrowings
Senior unsecured notes(a)(b)	$	277,076	$	305,306
Subordinated notes(e)		2,523		2,686
Subordinated debentures(f)		7,204		7,647
Other(c)(g)		11,474		10,752

GECS long-term borrowings	$	298,277	$	326,391


Non-recourse borrowings of consolidated securitization entities(h)	$	30,497	$	3,883


Bank deposits(i)	$	41,928	$	38,923


Total borrowings and bank deposits	$	486,452	$	500,334

(a)

GECC had issued and outstanding $54,795 million and $59,336 million of senior, unsecured debt that was guaranteed by the Federal Deposit Insurance Corporation (FDIC) under the Temporary Liquidity Guarantee Program at September 30, 2010 and December 31, 2009, respectively. Of the above amounts $9,750 million and $5,841 million is included in current portion of long-term borrowings at September 30, 2010 and December 31, 2009, respectively.

(b)

Included in total long-term borrowings were $2,535 million and $3,138 million of obligations to holders of guaranteed investment contracts at September 30, 2010 and December 31, 2009, respectively. GECC could be required to repay up to approximately $2,500 million if its long-term credit rating were to fall below AA–/Aa3 or its short-term credit rating were to fall below A–1+/P–1.

(c)	Included $11,002 million and $10,604 million of secured funding at September 30, 2010 and December 31, 2009, respectively, of which $3,991 million and $5,667 million is non-recourse to GECS at September 30, 2010 and December 31, 2009, respectively.

(d)	Entirely variable denomination floating rate demand notes.

(e)	Included $417 million of subordinated notes guaranteed by GE at both September 30, 2010 and December 31, 2009.

(f)	Subordinated debentures receive rating agency equity credit and were hedged at issuance to the U.S. dollar equivalent of $7,725 million.

(g)	Included $1,839 million and $1,649 million of covered bonds at September 30, 2010 and December 31, 2009, respectively. If the short-term credit rating of GECC were reduced below A–1/P–1, GECC would be required to partially cash collateralize these bonds in an amount up to $767 million.

(h)

Included at September 30, 2010 was $1,935 million of commercial paper, $9,316 million of current portion of long-term borrowings and $19,246 million of long-term borrowings related to former QSPEs consolidated on January 1, 2010 upon our adoption of ASU 2009-16 & 17, previously consolidated liquidating securitization entities and other on-book securitization borrowings. Included at December 31, 2009, was $2,424 million of commercial paper, $378 million of current portion of long-term borrowings and $1,081 million of long-term borrowings issued by consolidated liquidating securitization entities. See Note 16.

(i)

Included $23,884 million and $21,252 million of deposits in non-U.S. banks at September 30, 2010 and December 31, 2009, respectively, and $11,787 million and $10,476 million of certificates of deposits distributed by brokers with maturities greater than one year at September 30, 2010 and December 31, 2009, respectively.

(25)

9. POSTRETIREMENT BENEFIT PLANS

We sponsor a number of pension and retiree health and life insurance benefit plans. Principal pension plans include the GE Pension Plan and the GE Supplementary Pension Plan. Principal retiree benefit plans generally provide health and life insurance benefits to employees who retire under the GE Pension Plan with 10 or more years of service. Other pension plans include the U.S. and non-U.S. pension plans with pension assets or obligations greater than $50 million. Smaller pension plans and other retiree benefit plans are not material individually or in the aggregate. The effect on operations of the pension plans follows.


	Principal Pension Plans
	Three months ended September 30				Nine months ended September 30
(In millions)	2010		2009		2010		2009

Expected return on plan assets	$	(1,084)	$	(1,125)	$	(3,254)	$	(3,378)
Service cost for benefits earned		275		522		844		1,211
Interest cost on benefit obligation		678		667		2,020		2,001
Prior service cost amortization		59		81		178		242
Net actuarial loss amortization		331		86		993		259

Pension plans cost	$	259	$	231	$	781	$	335


	Other Pension Plans
	Three months ended September 30				Nine months ended September 30
(In millions)	2010		2009		2010		2009

Expected return on plan assets	$	(126)	$	(110)	$	(380)	$	(321)
Service cost for benefits earned		65		84		209		249
Interest cost on benefit obligation		116		117		360		338
Prior service cost amortization		3		3		11		8
Net actuarial loss amortization		48		37		159		93

Pension plans cost	$	106	$	131	$	359	$	367


The effect on operations of principal retiree health and life insurance plans follows.

	Principal Retiree Health and Life Insurance Plans
	Three months ended September 30				Nine months ended September 30
(In millions)	2010		2009		2010		2009

Expected return on plan assets	$	(29)	$	(32)	$	(87)	$	(96)
Service cost for benefits earned		50		177		162		336
Interest cost on benefit obligation		175		177		525		531
Prior service cost amortization		158		168		474		504
Net actuarial gain amortization		(6)		(27)		(18)		(81)

Retiree benefit plans cost	$	348	$	463	$	1,056	$	1,194

(26)

10. INCOME TAXES

The balance of “unrecognized tax benefits,” the amount of related interest and penalties we have provided and what we believe to be the range of reasonably possible changes in the next 12 months, were:


	At
(In millions)	September 30, 2010		December 31, 2009

Unrecognized tax benefits	$	7,112	$	7,251
Portion that, if recognized, would reduce tax expense and effective tax rate(a)		4,675		4,918
Accrued interest on unrecognized tax benefits		1,572		1,369
Accrued penalties on unrecognized tax benefits		106		99
Reasonably possible reduction to the balance of unrecognized tax benefits in succeeding 12 months		0-1,500		0-1,800
Portion that, if recognized, would reduce tax expense and effective tax rate(a)		0-1,000		0-1,400

(a)	Some portion of such reduction may be reported as discontinued operations.

The IRS is currently auditing our consolidated income tax returns for 2003-2007. We expect the 2003-2005 audit to be completed during the fourth quarter of 2010, with the exception of certain items including the disallowance by the IRS of the loss on our 2003 disposition of shares of ERC Life Reinsurance Corporation. We expect to contest the disallowance of this loss. In addition, certain other U.S. tax deficiency issues and refund claims for previous years remain unresolved. The conclusion of the 2003-2005 audit could result in a decrease in our balance of “unrecognized tax benefits” – that is, the aggregate tax effect of differences between tax return positions and the benefits recognized in our financial statements. We believe that there are no other jurisdictions in which the outcome of unresolved issues or claims is likely to be material to our results of operations, financial position or cash flows. We further believe that we have made adequate provision for all income tax uncertainties.

GE and GECS file a consolidated U.S. federal income tax return. The GECS provision for current tax expense includes its effect on the consolidated return. The effect of GECS on the consolidated liability is generally settled in cash as GE tax payments are due. The effect of GECS on the amount of the consolidated tax liability from the formation of the NBCU joint venture will be settled in cash when it otherwise would have reduced the liability of the group absent the tax on formation.

During the first quarter of 2009, following the change in our external credit ratings, funding actions taken and review of our operations, liquidity and funding, we determined that undistributed prior-year earnings of non-U.S. subsidiaries of GECS, on which we had previously provided deferred U.S. taxes, would be indefinitely reinvested outside the U.S. This change increased the amount of prior-year earnings indefinitely reinvested outside the U.S. by approximately $2 billion, resulting in an income tax benefit of $700 million in the first quarter of 2009.

(27)

11. SHAREOWNERS’ EQUITY

A summary of increases (decreases) in GE shareowners’ equity that did not result directly from transactions with shareowners, net of income taxes, follows.


	Three months ended September 30				Nine months ended September 30
(In millions)	2010		2009		2010		2009

Net earnings attributable to the Company	$	2,055	$	2,494	$	7,109	$	8,012
Investment securities – net(a)		(906)		1,697		(180)		2,615
Currency translation adjustments – net		2,356		1,857		(4,799)		4,342
Cash flow hedges – net		(239)		71		205		1,476
Benefit plans – net		351		180		1,275		659

Total	$	3,617	$	6,299	$	3,610	$	17,104

(a)

Includes adjustments as of September 30, 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 gains and losses actually been realized in accordance with ASC 320-10-S99-2.

On January 1, 2010, we adopted ASU 2009-16 & 17. This resulted in a reduction of GE shareowners’ equity primarily related to the reversal of a portion of previously recognized securitization gains. This adjustment is reflected as a cumulative effect adjustment of the opening balances of retained earnings ($1,708 million) and accumulated other comprehensive income ($265 million). See Notes 1 and 16 for additional information.

Changes to noncontrolling interests are as follows.


	Three months ended September 30				Nine months ended September 30
(In millions)	2010		2009		2010		2009

Beginning balance	$	6,791	$	8,340	$	7,845	$	8,947
Net earnings		162		5		328		102
Dividends		(18)		(152)		(277)		(444)
NBCU share purchase(a)		(1,876)		–		(1,876)		–
Dispositions(b)		–		–		(979)		(331)
AOCI and other(c)		15		87		33		6

Ending balance	$	5,074	$	8,280	$	5,074	$	8,280

(a)

On September 26, 2010, we acquired 7.7% of NBCU’s outstanding shares from Vivendi for $2,000 million, of which $1,876 million was recorded as a reduction in noncontrolling interest and $124 million was recorded as a reduction in additional paid in capital reflecting the amount paid in excess of the carrying value of the noncontrolling interest.

(b)	Includes the effects of deconsolidating both Regency $(979) million during the second quarter of 2010 and Penske Truck Leasing Co., L.P. (PTL) $(331) million during the first quarter of 2009.

(c)	Changes to the individual components of AOCI attributable to noncontrolling interests were insignificant.

(28)

12. GECS REVENUES FROM SERVICES

GECS revenues from services are summarized in the following table.


	Three months ended September 30				Nine months ended September 30
(In millions)	2010		2009		2010		2009

Interest on loans(a)	$	5,363	$	4,933	$	16,693	$	15,113
Equipment leased to others		2,799		2,902		8,329		9,314
Fees(a)		1,236		1,160		3,725		3,419
Investment income(a)(b)		600		755		1,686		2,413
Financing leases(a)		694		795		2,153		2,533
Premiums earned by insurance activities		511		515		1,490		1,525
Net securitization gains(a)		–		449		–		1,169
Real estate investments		330		410		961		1,128
Associated companies		491		277		1,548		751
Other items(c)(d)		405		337		1,714		2,604

Total	$	12,429	$	12,533	$	38,299	$	39,969

(a)

On January 1, 2010, we adopted ASU 2009-16 & 17 which required us to consolidate substantially all of our former QSPEs. As a result, 2010 GECS revenues from services include interest and fee income from these entities, which were not presented on a consolidated basis in 2009. Also beginning in 2010, we no longer record gains for substantially all of our securitizations as they are recorded as on-book financings. See Note 16.

(b)	Included net other-than-temporary impairments on investment securities of $31 million and $161 million in the third quarters of 2010 and 2009, respectively, and $166 million and $251 million for the nine months ended September 30, 2010 and 2009, respectively. See Note 3.

(c)	Included a gain on the sale of a limited partnership interest in PTL and a related gain on the remeasurement of the retained investment to fair value totaling $296 million in the first quarter of 2009.

(d)	Included a gain of $343 million on the remeasurement to fair value of our equity method investment in BAC Credomatic GECF Inc. (BAC), following our acquisition of a controlling interest in the second quarter of 2009.

(29)

13. EARNINGS PER SHARE INFORMATION

GE’s authorized common stock consists of 13,200,000,000 shares having a par value of $0.06 each. Information related to the calculation of earnings per share follows.

Three months ended September 30

2010

2009

(In millions; per-share amounts in dollars)

Diluted

Basic

Diluted

Basic

Amounts attributable to the Company:

Consolidated

Earnings from continuing operations for per-share calculation(a)

3,148

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