frm10q.htm

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 March 31, 2008
 
OR
 
¨ 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 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 9,967,400,000 shares of common stock with a par value of $0.06 per share outstanding at March 31, 2008.
 

 
(1)
 

General Electric Company
 
Part I - Financial Information
  
Page
     
   
 
3
 
4
 
5
 
6
 
7
 
19
 
31
     
Part II - Other Information
    
     
 
31
 
32
 
33
 
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 often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest and exchange rates and commodity and equity prices; the commercial and consumer credit environment; the impact of regulation and regulatory, investigative and legal actions; strategic actions, including acquisitions and dispositions; future integration of acquired businesses; future financial performance of major industries which we serve, including, without limitation, the air and rail transportation, energy generation, media, real estate and healthcare industries; 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
 
Condensed Statement of Earnings
General Electric Company and consolidated affiliates
 
 
Three months ended March 31 (Unaudited)
  
 
Consolidated
  
GE
  
Financial
Services (GECS)
  
(In millions; per-share amounts in dollars)
2008
  
2007
  
2008
  
2007
  
2008
  
2007
  
                                     
Sales of goods
$
14,781
  
$
13,237
  
$
14,447
  
$
13,270
  
$
367
  
$
32
  
Sales of services
  
9,541
    
8,278
    
9,739
    
8,418
    
-
    
-
  
Other income
  
575
    
511
    
658
    
574
    
-
    
-
  
GECS earnings from continuing operations
  
-
    
-
    
2,466
    
3,424
    
-
    
-
  
GECS revenues from services
  
17,376
    
17,174
    
-
    
-
    
17,716
    
17,453
  
Total revenues
  
42,273
    
39,200
    
27,310
    
25,686
    
18,083
    
17,485
  
                                     
Cost of goods sold
  
11,908
    
10,589
    
11,623
    
10,630
    
317
    
25
  
Cost of services sold
  
6,085
    
5,257
    
6,283
    
5,398
    
-
    
-
  
Interest and other financial charges
  
6,530
    
5,578
    
602
    
533
    
6,179
    
5,245
  
Investment contracts, insurance losses and
                                    
insurance annuity benefits
  
804
    
860
    
-
    
-
    
848
    
930
  
Provision for losses on financing receivables
  
1,359
    
936
    
-
    
-
    
1,359
    
936
  
Other costs and expenses
  
10,235
    
9,597
    
3,552
    
3,427
    
6,812
    
6,240
  
Minority interest in net earnings of
                                    
consolidated affiliates
  
162
    
223
    
131
    
130
    
31
    
93
  
Total costs and expenses
  
37,083
    
33,040
    
22,191
    
20,118
    
15,546
    
13,469
  
                                     
Earnings from continuing operations
                                    
before income taxes
  
5,190
    
6,160
    
5,119
    
5,568
    
2,537
    
4,016
  
Provision for income taxes
  
(829
)
  
(1,232
)
  
(758
)
  
(640
)
  
(71
)
  
(592
)
Earnings from continuing operations
  
4,361
    
4,928
    
4,361
    
4,928
    
2,466
    
3,424
  
Loss from discontinued operations,
                                    
net of taxes
  
(57
)
  
(357
)
  
(57
)
  
(357
)
  
(71
)
  
(401
)
Net earnings
$
4,304
  
$
4,571
  
$
4,304
  
$
4,571
  
$
2,395
  
$
3,023
  
                                     
Per-share amounts
                                    
Per-share amounts - earnings from
                                    
continuing operations
                                    
Diluted earnings per share
$
0.44
  
$
0.48
                          
Basic earnings per share
$
0.44
  
$
0.48
                          
                                     
Per-share amounts - net earnings
                                    
Diluted earnings per share
$
0.43
  
$
0.44
                          
Basic earnings per share
$
0.43
  
$
0.44
                          
                                     
Dividends declared per share
$
0.31
  
$
0.28
                          

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)
 

Condensed Statement of Financial Position
General Electric Company and consolidated affiliates
 
 
Consolidated
  
GE
  
Financial
Services (GECS)
  
(In millions; except share amounts)
3/31/08
  
12/31/07
  
3/31/08
  
12/31/07
  
3/31/08
  
12/31/07
  
                                     
Cash and equivalents
$
15,291
  
$
15,747
  
$
5,084
  
$
6,702
  
$
10,827
  
$
9,455
  
Investment securities
  
45,622
    
45,428
    
404
    
343
    
45,226
    
45,093
  
Current receivables
  
21,729
    
22,259
    
14,496
    
15,093
    
-
    
-
  
Inventories
  
14,276
    
12,897
    
14,207
    
12,834
    
69
    
63
  
Financing receivables - net
  
409,763
    
377,660
    
-
    
-
    
417,930
    
385,604
  
Other GECS receivables
  
16,642
    
16,527
    
-
    
-
    
21,919
    
22,091
  
Property, plant and equipment (including
                                    
equipment leased to others) - net
  
79,210
    
77,895
    
14,357
    
14,142
    
64,853
    
63,753
  
Investment in GECS
  
-
    
-
    
57,719
    
57,676
    
-
    
-
  
Goodwill
  
83,132
    
81,116
    
55,994
    
55,689
    
27,138
    
25,427
  
Other intangible assets - net
  
15,937
    
16,178
    
11,528
    
11,633
    
4,409
    
4,545
  
All other assets
  
124,865
    
122,861
    
42,200
    
40,608
    
84,070
    
83,405
  
Assets of discontinued operations
  
7,423
    
6,769
    
66
    
66
    
7,357
    
6,703
  
Total assets
$
833,890
  
$
795,337
  
$
216,055
  
$
214,786
  
$
683,798
  
$
646,139
  
                                     
Short-term borrowings
$
201,157
  
$
195,101
  
$
3,832
  
$
4,106
  
$
198,735
  
$
192,421
  
Accounts payable, principally trade accounts
  
21,311
    
21,398
    
10,969
    
11,120
    
14,865
    
14,774
  
Progress collections and price adjustments accrued
  
11,579
    
9,885
    
11,927
    
10,374
    
-
    
-
  
Other GE current liabilities
  
19,874
    
18,916
    
20,033
    
18,916
    
-
    
-
  
Long-term borrowings
  
346,680
    
319,015
    
10,035
    
11,656
    
337,937
    
308,504
  
Investment contracts, insurance liabilities
                                    
and insurance annuity benefits
  
34,835
    
34,068
    
-
    
-
    
35,268
    
34,359
  
All other liabilities
  
62,001
    
59,419
    
33,448
    
32,859
    
28,632
    
26,625
  
Deferred income taxes
  
9,925
    
12,144
    
3,163
    
3,391
    
6,762
    
8,753
  
Liabilities of discontinued operations
  
2,294
    
1,828
    
235
    
302
    
2,059
    
1,526
  
Total liabilities
  
709,656
    
671,774
    
93,642
    
92,724
    
624,258
    
586,962
  
                                     
Minority interest in equity of consolidated affiliates
  
8,234
    
8,004
    
6,413
    
6,503
    
1,821
    
1,501
  
Common stock (9,967,400,000 and 9,987,599,000
                                    
shares outstanding at March 31, 2008 and
                                    
December 31, 2007, respectively)
  
669
    
669
    
669
    
669
    
1
    
1
  
Accumulated gains (losses) - net
                                    
Investment securities
  
(618
)
  
124
    
(618
)
  
124
    
(619
)
  
110
  
Currency translation adjustments
  
12,884
    
10,708
    
12,884
    
10,708
    
8,621
    
7,472
  
Cash flow hedges
  
(2,285
)
  
(668
)
  
(2,285
)
  
(668
)
  
(2,386
)
  
(727
)
Benefit plans
  
(1,730
)
  
(1,840
)
  
(1,730
)
  
(1,840
)
  
(92
)
  
(105
)
Other capital
  
26,176
    
26,100
    
26,176
    
26,100
    
12,578
    
12,574
  
Retained earnings
  
118,561
    
117,362
    
118,561
    
117,362
    
39,616
    
38,351
  
Less common stock held in treasury
  
(37,657
)
  
(36,896
)
  
(37,657
)
  
(36,896
)
  
-
    
-
  
                                     
Total shareowners’ equity
  
116,000
    
115,559
    
116,000
    
115,559
    
57,719
    
57,676
  
                                     
Total liabilities and equity
$
833,890
  
$
795,337
  
$
216,055
  
$
214,786
  
$
683,798
  
$
646,139
  

The sum of accumulated gains (losses) on investment securities, currency translation adjustments, cash flow hedges and benefit plans constitutes “Accumulated nonowner changes other than earnings,” and was $8,251 million and $8,324 million at March 31, 2008, and December 31, 2007, respectively.
 
See accompanying notes. Separate information is shown for “GE” and “Financial Services (GECS).” March 31, 2008, data are unaudited. Transactions between GE and GECS have been eliminated from the “Consolidated” columns.
 

 
(4)
 

Condensed Statement of Cash Flows
General Electric Company and consolidated affiliates
 
 
Three months ended March 31 (Unaudited)
  
 
Consolidated
  
GE
  
Financial
Services (GECS)
  
(In millions)
2008
  
2007
  
2008
  
2007
  
2008
  
2007
  
                                     
Cash flows - operating activities
                                    
Net earnings
$
4,304
  
$
4,571
  
$
4,304
  
$
4,571
  
$
2,395
  
$
3,023
  
Loss from discontinued operations
  
57
    
357
    
57
    
357
    
71
    
401
  
Adjustments to reconcile net earnings to cash
                                    
provided from operating activities
                                    
Depreciation and amortization of property,
                                    
plant and equipment
  
2,682
    
2,440
    
556
    
518
    
2,126
    
1,922
  
Net earnings from continuing operations retained by GECS
  
-
    
-
    
(1,336
)
  
448
    
-
    
-
  
Deferred income taxes
  
(969)
    
89
    
(352
)
  
11
    
(617
)
  
78
  
Decrease in GE current receivables
  
787
    
1,483
    
396
    
1,463
    
-
    
-
  
Increase in inventories
  
(1,381
)
  
(1,155
)
  
(1,375
)
  
(1,149
)
  
(6
)
  
(6
)
Increase (decrease) in accounts payable
  
(422
)
  
(800
)
  
125
    
(530
)
  
(450
)
  
(110
)
Increase in GE progress collections
  
1,412
    
680
    
1,553
    
680
    
-
    
-
  
Provision for losses on GECS financing receivables
  
1,359
    
936
    
-
    
-
    
1,359
    
936
  
All other operating activities
  
(1,487
)
  
(3,906
)
  
926
    
955
    
(2,269
)
  
(4,610
)
Cash from operating activities - continuing operations
  
6,342
    
4,695
    
4,854
    
7,324
    
2,609
    
1,634
  
Cash from operating activities - discontinued operations
  
449
    
247
    
-
    
50
    
449
    
197
  
Cash from operating activities
  
6,791
    
4,942
    
4,854
    
7,374
    
3,058
    
1,831
  
                                     
Cash flows - investing activities
                                    
Additions to property, plant and equipment
  
(3,733
)
  
(4,751
)
  
(894
)
  
(767
)
  
(2,955
)
  
(4,049
)
Dispositions of property, plant and equipment
  
3,212
    
2,715
    
-
    
-
    
3,212
    
2,715
  
Net increase in GECS financing receivables
  
(11,782
)
  
(1,211
)
  
-
    
-
    
(11,712
)
  
(1,082
)
Proceeds from sale of discontinued operations
  
203
    
-
    
203
    
-
    
-
    
-
  
Proceeds from principal business dispositions
  
4,305
    
1,131
    
-
    
29
    
4,305
    
1,102
  
Payments for principal businesses purchased
  
(12,759
)
  
(5,752
)
  
(107
)
  
(2,218
)
  
(12,652
)
  
(3,534
)
All other investing activities
  
(647
)
  
946
    
(35
)
  
134
    
(388
)
  
739
  
Cash used for investing activities - continuing operations
  
(21,201
)
  
(6,922
)
  
(833
)
  
(2,822
)
  
(20,190
)
  
(4,109
)
Cash used for investing activities - discontinued operations
  
(437
)
  
(254
)
  
-
    
(42
)
  
(437
)
  
(212
)
Cash used for investing activities
  
(21,638
)
  
(7,176
)
  
(833
)
  
(2,864
)
  
(20,627
)
  
(4,321
)
                                     
Cash flows - financing activities
                                    
Net increase (decrease) in borrowings (maturities of
                                    
90 days or less)
  
2,296
    
(8,691
)
  
(1,658
)
  
(1,677
)
  
3,847
    
(7,227
)
Newly issued debt (maturities longer than 90 days)
  
35,833
    
34,218
    
39
    
4,654
    
35,942
    
29,551
  
Repayments and other reductions (maturities longer
                                    
than 90 days)
  
(20,250
)
  
(15,195
)
  
(46
)
  
(50
)
  
(20,204
)
  
(15,145
)
Net dispositions (purchases) of GE shares for treasury
  
(864
)
  
53
    
(864
)
  
53
    
-
    
-
  
Dividends paid to shareowners
  
(3,110
)
  
(2,886
)
  
(3,110
)
  
(2,886
)
  
(1,130
)
  
(3,872
)
All other financing activities
  
498
    
(273
)
  
-
    
-
    
498
    
(273
)
Cash from (used for) financing activities - continuing operations
  
14,403
    
7,226
    
(5,639
)
  
94
    
18,953
    
3,034
  
Cash used for financing activities - discontinued operations
  
-
    
(8
)
  
-
    
(8
)
  
-
    
-
  
Cash from (used for) financing activities
  
14,403
    
7,218
    
(5,639
)
  
86
    
18,953
    
3,034
  
Increase (decrease) in cash and equivalents
  
(444
)
  
4,984
    
(1,618
)
  
4,596
    
1,384
    
544
  
Cash and equivalents at beginning of year
  
16,031
    
14,276
    
6,702
    
4,480
    
9,739
    
12,629
  
Cash and equivalents at March 31
  
15,587
    
19,260
    
5,084
    
9,076
    
11,123
    
13,173
  
Less cash and equivalents of discontinued operations at March 31
  
296
    
162
    
-
    
-
    
296
    
162
  
Cash and equivalents of continuing operations at March 31
$
15,291
  
$
19,098
  
$
5,084
  
$
9,076
  
$
10,827
  
$
13,011
  

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)
 

Summary of Operating Segments
General Electric Company and consolidated affiliates
 
 
Three months ended
March 31 (Unaudited)
  
(In millions)
2008
  
2007
  
             
Revenues
            
Infrastructure
$
14,960
  
$
12,202
  
Commercial Finance
  
8,566
    
8,031
  
GE Money
  
6,408
    
5,958
  
Healthcare
  
3,887
    
3,895
  
NBC Universal
  
3,584
    
3,484
  
Industrial
  
4,110
    
4,089
  
Total segment revenues
  
41,515
    
37,659
  
Corporate items and eliminations
  
758
    
1,541
  
Consolidated revenues
$
42,273
  
$
39,200
  
             
Segment profit(a)
            
Infrastructure
$
2,588
  
$
2,208
  
Commercial Finance
  
1,158
    
1,440
  
GE Money
  
995
    
1,223
  
Healthcare
  
528
    
637
  
NBC Universal
  
712
    
691
  
Industrial
  
300
    
358
  
Total segment profit
  
6,281
    
6,557
  
Corporate items and eliminations
  
(560
)
  
(456
)
GE interest and other financial charges
  
(602
)
  
(533
)
GE provision for income taxes
  
(758
)
  
(640
)
Earnings from continuing operations
  
4,361
    
4,928
  
Loss from discontinued operations, net of taxes
  
(57
)
  
(357
)
Consolidated net earnings
$
4,304
  
$
4,571
  
             

(a)
 
Segment profit always excludes the effects of principal pension plans, results reported as discontinued operations 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 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 Healthcare, NBC Universal, Industrial and the industrial businesses of the Infrastructure segment; included in determining segment profit, which we sometimes refer to as “net earnings,” for Commercial Finance, GE Money, and the financial services businesses of the Infrastructure segment (Aviation Financial Services, Energy Financial Services and Transportation Finance).
 
See accompanying notes to condensed, consolidated financial statements.

 

 
(6)
 

Notes to Condensed, Consolidated Financial Statements (Unaudited)
 
1.      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 included in the Annual Report on Form 10-K for the year ended December 31, 2007. That note discusses consolidation and financial statement presentation. As used in this report on Form 10-Q (Report) and in the Annual Report on Form 10-K, “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. We have reclassified certain prior-period amounts to conform to the current-period’s presentation. Unless otherwise indicated, information in these notes to condensed, consolidated financial statements relates to continuing operations.
 
Accounting changes
 
On January 1, 2008, we adopted Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) 157, Fair Value Measurements, and SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities. See note 13.
 
2.      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 latest shareowners’ Annual Report on Form 10-K. 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.
 
3.      Discontinued operations comprised our Japanese personal loan business (Lake), our U.S. mortgage business (WMC), Plastics, Advanced Materials, GE Life, Genworth Financial, Inc. (Genworth) and most of GE Insurance Solutions Corporation (GE Insurance Solutions). Associated results of operations, financial position and cash flows are separately reported as discontinued operations for all periods presented.
 
WMC
 
In December 2007, we completed the sale of our U.S. mortgage business. In connection with the transaction, certain contractual obligations and potential liabilities related to previously sold loans were retained. WMC revenues from discontinued operations were $5 million and $(453) million in the first quarters of 2008 and 2007, respectively. In total, WMC’s losses from discontinued operations, net of taxes, were $7 million and $380 million in the first quarters of 2008 and 2007, respectively.
 

 
(7)
 

Lake
 
In September 2007, we committed to a plan to sell our Lake business. We made the decision to sell this business upon determining that, despite restructuring, Japanese regulatory limits for interest charges on unsecured personal loans did not permit us to earn an acceptable return. We are actively pursuing a buyer and expect to complete the sale of this business by the end of the third quarter of 2008. Lake revenues from discontinued operations were $245 million and $302 million in the first quarters of 2008 and 2007, respectively. In total, Lake’s losses from discontinued operations, net of taxes, were $47 million and $19 million in the first quarters of 2008 and 2007, respectively.
 
Plastics and Advanced Materials
 
In August 2007, we completed the sale of our Plastics business to Saudi Basic Industries Corporation. Also, during the fourth quarter of 2006, we sold our Advanced Materials business. Plastics revenues from discontinued operations were $1,594 million in the first quarter of 2007. In total, Plastics and Advanced Materials earnings from discontinued operations, net of taxes, were $14 million and $44 million in the first quarters of 2008 and 2007, respectively.
 
Insurance
 
In total, loss from discontinued operations, net of taxes, was $17 million in the first quarter of 2008 and $2 million in the first quarter of 2007.
 
Summarized financial information for discontinued GE industrial operations is shown below.
 
 
Three months ended
March 31
  
(In millions)
2008
  
2007
  
             
Operations
            
Total revenues
$
-
  
$
1,594
  
             
Earnings from discontinued operations before income taxes
$
-
  
$
58
  
Income tax benefit
  
-
    
13
  
Earnings from discontinued operations before disposal, net of taxes
$
-
  
$
71
  
             
Disposal
            
Gain (loss) on disposal before income taxes
$
14
  
$
(35
)
Income tax benefit
  
-
    
8
  
Gain (loss) on disposal, net of taxes
$
14
  
$
(27
)
             
Earnings from discontinued operations, net of taxes(a)
$
14
  
$
44
  
             

(a)
The sum of GE industrial earnings from discontinued operations, net of taxes, and GECS loss from discontinued operations, net of taxes, on page 9 are reported as GE loss from discontinued operations, net of taxes, on the Condensed Statement of Earnings.

 

 
(8)
 

Assets of GE industrial discontinued operations were $66 million at both March 31, 2008, and December 31, 2007. Liabilities of GE industrial discontinued operations were $235 million and $302 million at March 31, 2008, and December 31, 2007, respectively, and primarily represent taxes payable and pension liabilities related to the sale of our Plastics business.
 
Summarized financial information for discontinued GECS operations is shown below.
 
 
Three months ended
March 31
  
(In millions)
2008
  
2007
  
             
Operations
            
Total revenues
$
250
  
$
(151
)
             
Loss from discontinued operations before income taxes
$
(100
)
$
(676
)
Income tax benefit
  
29
    
275
  
Loss from discontinued operations, net of taxes
$
(71
)
$
(401
)

 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Assets
            
Cash and equivalents
$
296
  
$
284
  
Financing receivables - net
  
5,751
    
5,138
  
Other
  
1,310
    
1,281
  
Assets of discontinued operations
$
7,357
  
$
6,703
  

 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Liabilities
            
Liabilities of discontinued operations
$
2,059
  
$
1,526
  

 
Assets and liabilities at March 31, 2008, and December 31, 2007, were primarily at our Lake business.
 

 
(9)
 

4.      GECS revenues from services are summarized in the following table.
 
 
Three months ended
March 31
  
(In millions)
2008
  
2007
  
             
Interest on loans
$
6,542
  
$
5,646
  
Equipment leased to others
  
3,810
    
3,763
  
Fees
  
1,366
    
1,509
  
Investment income(a)
  
898
    
1,710
  
Financing leases
  
1,163
    
1,138
  
Real estate investments
  
1,161
    
1,089
  
Premiums earned by insurance activities
  
542
    
551
  
Associated companies
  
469
    
425
  
Gross securitization gains
  
325
    
571
  
Other items
  
1,440
    
1,051
  
Total
$
17,716
  
$
17,453
  
             

(a)
Included gain on sale of Swiss Reinsurance Company common stock of $566 million during first quarter of 2007.

 
5.      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
  
Other
Pension Plans
  
 
Three months ended
March 31
  
Three months ended
March 31
  
(In millions)
2008
  
2007
  
2008
  
2007
  
                         
Expected return on plan assets
$
(1,075
)
$
(986
)
$
(137
)
$
(120
)
Service cost for benefits earned
  
300
    
314
    
80
    
85
  
Interest cost on benefit obligation
  
661
    
605
    
124
    
111
  
Prior service cost amortization
  
81
    
47
    
3
    
2
  
Net actuarial loss amortization
  
54
    
176
    
19
    
41
  
Pension plans cost
$
21
  
$
156
  
$
89
  
$
119
  

 

 
(10)
 

The effect on operations of principal retiree health and life insurance plans follows.
 
 
Principal
Retiree Health and
Life Insurance Plans
  
 
Three months ended
March 31
  
(In millions)
2008
  
2007
  
             
Expected return on plan assets
$
(33
)
$
(31
)
Service cost for benefits earned
  
63
    
41
  
Interest cost on benefit obligation
  
198
    
113
  
Prior service cost amortization
  
168
    
71
  
Net actuarial loss amortization
  
9
    
2
  
Retiree benefit plans cost
$
405
  
$
196
  

 
6.      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)
3/31/08
  
12/31/07
  
             
Unrecognized tax benefits
$
6,219
  
$
6,331
  
Portion that, if recognized, would reduce tax expense and effective tax rate(a)
  
4,182
    
4,268
  
Accrued interest on unrecognized tax benefits
  
1,063
    
923
  
Accrued penalties on unrecognized tax benefits
  
94
    
77
  
Reasonably possible reduction to the balance of unrecognized tax benefits
            
in succeeding 12 months
  
0-1,500
    
0-1,500
  
Portion that, if recognized, would reduce tax expense and effective tax rate(a)
  
0-1,200
    
0-1,250
  
             

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

 
The IRS is currently auditing our consolidated income tax returns for 2003-2005. In addition, certain other U.S. tax deficiency issues and refund claims for previous years remain unresolved. It is reasonably possible that the 2003-2005 U.S. audit cycle will be completed during the next 12 months, which could result in a decrease in our balance of unrecognized tax benefits. 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.
 

 
(11)
 

7.      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 March 31
  
 
2008
  
2007
  
(In millions; per-share amounts in dollars)
Diluted
  
Basic
  
Diluted
  
Basic
  
                         
Consolidated
                        
Earnings from continuing operations for
                        
per-share calculation(a)
$
4,361
  
$
4,361
  
$
4,928
  
$
4,928
  
Loss from discontinued operations
                        
for per-share calculation
$
(57
)
$
(57
)
$
(357
)
$
(357
)
Net earnings available for per-share calculation
$
4,304
  
$
4,304
  
$
4,571
  
$
4,571
  
                         
Average equivalent shares
                        
Shares of GE common stock outstanding
  
9,978
    
9,978
    
10,284
    
10,284
  
Employee compensation-related shares,
                        
including stock options
  
28
    
-
    
33
    
-
  
Total average equivalent shares
  
10,006
    
9,978
    
10,317
    
10,284
  
                         
Per-share amounts
                        
Earnings from continuing operations
$
0.44
  
$
0.44
  
$
0.48
  
$
0.48
  
Loss from discontinued operations
$
(0.01
)
$
(0.01
)
$
(0.03
)
$
(0.03
)
Net earnings
$
0.43
  
$
0.43
  
$
0.44
  
$
0.44
  
                         

(a)
Including dividend equivalents.

 
Earnings-per-share amounts are computed independently for earnings from continuing operations, loss from discontinued operations and net earnings. As a result, the sum of per-share amounts from continuing operations and discontinued operations may not equal the total per-share amounts for net earnings.
 
8.      Inventories consisted of the following.
 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Raw materials and work in process
$
8,971
  
$
7,893
  
Finished goods
  
5,379
    
5,088
  
Unbilled shipments
  
544
    
539
  
   
14,894
    
13,520
  
Less revaluation to LIFO
  
(618
)
  
(623
)
Total
$
14,276
  
$
12,897
  

 

 
(12)
 

9.      GECS financing receivables - net, consisted of the following.
 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Loans, net of deferred income
$
346,803
  
$
314,918
  
Investment in financing leases, net of deferred income
  
75,568
    
75,015
  
   
422,371
    
389,933
  
Less allowance for losses
  
(4,441
)
  
(4,329
)
Financing receivables - net(a)
$
417,930
  
$
385,604
  
             

(a)
Included $9,365 million and $9,708 million related to consolidated, liquidating securitization entities at March 31, 2008, and December 31, 2007, respectively.

 
10.    Property, plant and equipment (including equipment leased to others) - net, consisted of the following.
 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Original cost
$
122,680
  
$
119,603
  
Less accumulated depreciation and amortization
  
(43,470
)
  
(41,708
)
Property, plant and equipment (including equipment leased to others) - net
$
79,210
  
$
77,895
  

 
11.    Goodwill and other intangible assets - net, consisted of the following.
 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Goodwill
$
83,132
  
$
81,116
  
             
Other intangible assets
            
Intangible assets subject to amortization
$
13,542
  
$
13,823
  
Indefinite-lived intangible assets(a)
  
2,395
    
2,355
  
Total
$
15,937
  
$
16,178
  
             

(a)
Indefinite-lived intangible assets principally comprised trademarks, tradenames and U.S. Federal Communications Commission licenses.

 

 
(13)
 

Changes in goodwill balances follow.
 
(In millions)
Balance
1/1/08
  
Acquisitions/
purchase
accounting
adjustments
  
Dispositions, currency
exchange
and other
  
Balance
3/31/08
  
                                 
Infrastructure
$
17,117
    
$
258
      
$
190
    
$
17,565
  
Commercial Finance
  
14,621
      
650
        
338
      
15,609
  
GE Money
  
10,273
      
-
        
417
      
10,690
  
Healthcare
  
14,827
      
50
        
39
      
14,916
  
NBC Universal
  
18,733
      
15
        
1
      
18,749
  
Industrial
  
5,545
      
22
        
36
      
5,603
  
Total
$
81,116
    
$
995
      
$
1,021
    
$
83,132
  

 
Goodwill balances increased $1,240 million as a result of the weaker U.S. dollar and $823 million from new acquisitions in 2008. The largest goodwill balance increases from acquisitions arose from the purchase of Merrill Lynch Capital ($520 million at Commercial Finance) and CDM Resource Management, Ltd. ($211 million at Infrastructure). During 2008, the goodwill balance increased by $172 million related to purchase accounting adjustments to prior-year acquisitions. The largest such adjustments were increases of $79 million and $60 million associated with the 2007 acquisitions of Regency Energy Partners LP by Infrastructure and Trustreet Properties, Inc. by Commercial Finance, respectively.
 
Intangible assets subject to amortization
 
 
At
  
 
3/31/08
  
12/31/07
  
(In millions)
Gross
carrying
amount
  
Accumulated
amortization
  
Net
  
Gross
carrying
amount
  
Accumulated
amortization
  
Net
  
                                             
Customer-related
$
6,563
    
$
(1,587
)
  
$
4,976
  
$
6,711
    
$
(1,565
)
  
$
5,146
  
Patents, licenses and trademarks
  
5,583
      
(2,010
)
    
3,573
    
5,163
      
(1,684
)
    
3,479
  
Capitalized software
  
6,609
      
(3,867
)
    
2,742
    
6,430
      
(3,694
)
    
2,736
  
Lease valuations
  
1,789
      
(396
)
    
1,393
    
1,909
      
(376
)
    
1,533
  
Present value of future profits
  
826
      
(379
)
    
447
    
818
      
(364
)
    
454
  
All other
  
704
      
(293
)
    
411
    
786
      
(311
)
    
475
  
Total
$
22,074
    
$
(8,532
)
  
$
13,542
  
$
21,817
    
$
(7,994
)
  
$
13,823
  

 
Consolidated amortization related to intangible assets subject to amortization was $530 million and $439 million for the quarters ended March 31, 2008 and 2007, respectively.
 
During the first quarter of 2008, we recorded additions to intangible assets subject to amortization of $211 million. The components of finite-lived intangible assets acquired during the period and their respective weighted-average useful lives are: $26 million - Customer-related (17.2 years); $36 million - Patents, licenses and trademarks (10.5 years); $109 million - Capitalized software (4.3 years); and $40 million - All other (7.1 years).
 

 
(14)
 

12.    GECS borrowings are summarized in the following table.
 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Short-term borrowings
            
             
Commercial paper
            
U.S.
            
Unsecured
$
76,605
  
$
72,392
  
Asset-backed(a)
  
4,400
    
4,775
  
Non-U.S.
  
25,328
    
28,711
  
Current portion of long-term debt(b)
  
56,935
    
56,302
  
Bank deposits(c)
  
14,272
    
11,486
  
GE Interest Plus notes(d)
  
10,193
    
9,590
  
Other
  
11,002
    
9,165
  
Total
  
198,735
    
192,421
  
             
Long-term borrowings
            
             
Senior notes
            
Unsecured
  
313,409
    
283,099
  
Asset-backed(e)
  
5,468
    
5,528
  
Extendible notes
  
7,330
    
8,500
  
Subordinated notes(f)(g)
  
11,730
    
11,377
  
Total
  
337,937
    
308,504
  
Total borrowings
$
536,672
  
$
500,925
  
             

(a)
 
Entirely obligations of consolidated, liquidating securitization entities. See note 9.
 
(b)
 
Included $814 million and $1,106 million of asset-backed senior notes, issued by consolidated, liquidating securitization entities at March 31, 2008, and December 31, 2007, respectively.
 
(c)