Edgar Filing: GENERAL ELECTRIC CO

form10q.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 June 30, 2011

¨ 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 10,600,337,000 shares of common stock with a par value of $0.06 per share outstanding at July 1, 2011.

(1)

General Electric Company

		Page
Part I - Financial Information

Item 1. Financial Statements
Condensed Statement of Earnings
Three months Ended June 30, 2011		3
Six months Ended June 30, 2011		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		58
Item 3. Quantitative and Qualitative Disclosures About Market Risk		84
Item 4. Controls and Procedures		85

Part II - Other Information

Item 2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers		85
Item 6. Exhibits		86
Signatures		87

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; potential market disruptions or other impacts arising in the United States or Europe from sovereign debt issues, including developments in connection with the U.S. indebtedness cap; 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); potential financial implications from the Japanese natural disaster; 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, 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, joint ventures and dispositions and our success in completing announced transactions and 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 June 30 (Unaudited)
	Consolidated				GE(a)				Financial Services (GECS)
(In millions, except share amounts)	2011		2010		2011		2010		2011		2010

Revenues
Sales of goods	$	16,223	$	14,905	$	16,181	$	14,736	$	42	$	168
Sales of services		6,685		9,599		6,780		9,667		–		–
Other income		623		278		675		304		–		–
GECS earnings from continuing operations		–		–		1,593		734		–		–
GECS revenues from services		12,094		12,146		–		–		12,401		12,464
Total revenues		35,625		36,928		25,229		25,441		12,443		12,632

Costs and expenses
Cost of goods sold		13,095		11,128		13,057		10,974		38		154
Cost of services sold		4,405		6,067		4,500		6,134		–		–
Interest and other financial charges		3,773		3,946		321		430		3,601		3,645
Investment contracts, insurance losses and
insurance annuity benefits		746		722		–		–		790		770
Provision for losses on financing receivables		811		2,007		–		–		811		2,007
Other costs and expenses		8,284		8,886		3,204		3,589		5,246		5,464
Total costs and expenses		31,114		32,756		21,082		21,127		10,486		12,040

Earnings from continuing operations
before income taxes		4,511		4,172		4,147		4,314		1,957		592
Benefit (provision) for income taxes		(890)		(866)		(546)		(986)		(344)		120
Earnings from continuing operations		3,621		3,306		3,601		3,328		1,613		712
Earnings (loss) from discontinued operations,
net of taxes		217		(101)		217		(101)		217		(100)
Net earnings		3,838		3,205		3,818		3,227		1,830		612
Less net earnings (loss) attributable to
noncontrolling interests		74		96		54		118		20		(22)
Net earnings attributable to the Company		3,764		3,109		3,764		3,109		1,810		634
Preferred stock dividends declared		(75)		(75)		(75)		(75)		–		–
Net earnings attributable to GE common
shareowners	$	3,689	$	3,034	$	3,689	$	3,034	$	1,810	$	634


Amounts attributable to the Company
Earnings from continuing operations	$	3,547	$	3,210	$	3,547	$	3,210	$	1,593	$	734
Earnings (loss) from discontinued operations,
net of taxes		217		(101)		217		(101)		217		(100)
Net earnings attributable to the Company	$	3,764	$	3,109	$	3,764	$	3,109	$	1,810	$	634

Per-share amounts
Earnings from continuing operations
Diluted earnings per share	$	0.33	$	0.29
Basic earnings per share	$	0.33	$	0.29

Net earnings
Diluted earnings per share	$	0.35	$	0.28
Basic earnings per share	$	0.35	$	0.28

Dividends declared per common share	$	0.15	$	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

	Six months ended June 30 (Unaudited)
	Consolidated				GE(a)				Financial Services (GECS)
(In millions, except share amounts)	2011		2010		2011		2010		2011		2010

Revenues
Sales of goods	$	30,712	$	28,670	$	30,670	$	28,225	$	84	$	449
Sales of services		14,187		19,507		14,393		19,687		–		–
Other income		4,249		628		4,341		680		–		–
GECS earnings from continuing operations		–		–		3,361		1,236		–		–
GECS revenues from services		24,812		24,190		–		–		25,400		24,816
Total revenues		73,960		72,995		52,765		49,828		25,484		25,265

Costs and expenses
Cost of goods sold		24,911		21,700		24,875		21,285		78		419
Cost of services sold		9,288		13,007		9,494		13,186		–		–
Interest and other financial charges		7,574		7,867		676		773		7,190		7,343
Investment contracts, insurance losses and
insurance annuity benefits		1,482		1,469		–		–		1,559		1,557
Provision for losses on financing receivables		1,968		4,187		–		–		1,968		4,187
Other costs and expenses		16,814		17,803		6,620		7,126		10,505		11,019
Total costs and expenses		62,037		66,033		41,665		42,370		21,300		24,525

Earnings (loss) from continuing operations
before income taxes		11,923		6,962		11,100		7,458		4,184		740
Benefit (provision) for income taxes		(4,831)		(1,305)		(4,059)		(1,774)		(772)		469
Earnings from continuing operations		7,092		5,657		7,041		5,684		3,412		1,209
Earnings (loss) from discontinued operations,
net of taxes		273		(454)		273		(454)		274		(450)
Net earnings		7,365		5,203		7,314		5,230		3,686		759
Less net earnings (loss) attributable to
noncontrolling interests		168		149		117		176		51		(27)
Net earnings attributable to the Company		7,197		5,054		7,197		5,054		3,635		786
Preferred stock dividends declared		(150)		(150)		(150)		(150)		–		–
Net earnings attributable to GE common
shareowners	$	7,047	$	4,904	$	7,047	$	4,904	$	3,635	$	786


Amounts attributable to the Company
Earnings from continuing operations	$	6,924	$	5,508	$	6,924	$	5,508	$	3,361	$	1,236
Earnings (loss) from discontinued operations,
net of taxes		273		(454)		273		(454)		274		(450)
Net earnings attributable to the Company	$	7,197	$	5,054	$	7,197	$	5,054	$	3,635	$	786

Per-share amounts
Earnings from continuing operations
Diluted earnings per share	$	0.64	$	0.50
Basic earnings per share	$	0.64	$	0.50

Net earnings
Diluted earnings per share	$	0.66	$	0.45
Basic earnings per share	$	0.66	$	0.46

Dividends declared per common share	$	0.29	$	0.20

(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)
	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
(In millions, except share amounts)	2011		2010		2011		2010		2011		2010
	(Unaudited)				(Unaudited)				(Unaudited)
Assets
Cash and equivalents	$	91,053	$	78,943	$	13,589	$	19,241	$	77,983	$	60,257
Investment securities		45,340		43,938		19		19		45,331		43,921
Current receivables		18,634		18,621		11,872		10,383		–		–
Inventories		14,616		11,526		14,564		11,460		52		66
Financing receivables – net		292,917		303,012		–		–		300,749		312,234
Other GECS receivables		8,533		8,956		–		–		14,263		14,304
Property, plant and equipment – net		68,846		66,212		13,520		12,444		55,326		53,768
Investment in GECS		–		–		75,108		68,984		–		–
Goodwill		70,536		64,388		42,363		36,880		28,173		27,508
Other intangible assets – net		11,798		9,971		9,947		8,088		1,851		1,883
All other assets		109,499		96,342		35,946		17,454		74,598		79,240
Assets of businesses held for sale		895		36,887		–		33,760		895		3,127
Assets of discontinued operations		6,463		12,425		50		50		6,413		12,375
Total assets(b)	$	739,130	$	751,221	$	216,978	$	218,763	$	605,634	$	608,683

Liabilities and equity
Short-term borrowings	$	123,489	$	117,959	$	1,202	$	456	$	123,643	$	118,797
Accounts payable, principally trade accounts		15,765		14,656		12,695		11,620		7,870		7,035
Progress collections and price adjustments accrued		11,074		11,142		11,852		11,841		–		–
Other GE current liabilities		16,722		12,959		16,722		12,959		–		–
Non-recourse borrowings of consolidated
securitization entities		29,075		30,018		–		–		29,075		30,018
Bank deposits		41,548		37,298		–		–		41,548		37,298
Long-term borrowings		277,855		293,323		9,725		9,656		268,962		284,407
Investment contracts, insurance liabilities
and insurance annuity benefits		29,318		29,582		–		–		29,854		29,993
All other liabilities		61,947		58,699		38,892		37,815		23,127		20,982
Deferred income taxes		(705)		2,753		(3,464)		(4,237)		2,759		6,990
Liabilities of businesses held for sale		527		16,047		–		15,455		527		592
Liabilities of discontinued operations		2,118		2,587		158		164		1,960		2,423
Total liabilities(b)		608,733		627,023		87,782		95,729		529,325		538,535

Preferred stock (30,000 shares outstanding at
both June 30, 2011 and December 31, 2010)		–		–		–		–		–		–
Common stock (10,600,337,000 and 10,615,376,000
shares outstanding at June 30, 2011 and
December 31, 2010, respectively)		702		702		702		702		1		1
Accumulated other comprehensive income – net(c)
Investment securities		(430)		(636)		(430)		(636)		(436)		(639)
Currency translation adjustments		4,260		(86)		4,260		(86)		1,135		(1,411)
Cash flow hedges		(1,537)		(1,280)		(1,537)		(1,280)		(1,541)		(1,281)
Benefit plans		(14,748)		(15,853)		(14,748)		(15,853)		(381)		(380)
Other capital		36,600		36,890		36,600		36,890		27,627		27,626
Retained earnings		135,098		131,137		135,098		131,137		48,703		45,068
Less common stock held in treasury		(31,871)		(31,938)		(31,871)		(31,938)		–		–

Total GE shareowners’ equity		128,074		118,936		128,074		118,936		75,108		68,984
Noncontrolling interests(d)		2,323		5,262		1,122		4,098		1,201		1,164
Total equity		130,397		124,198		129,196		123,034		76,309		70,148

Total liabilities and equity	$	739,130	$	751,221	$	216,978	$	218,763	$	605,634	$	608,683

(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 June 30, 2011 include total assets of $45,587 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 $36,387 million and investment securities of $5,960 million. Our consolidated liabilities at June 30, 2011 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 $28,556 million. See Note 18.

(c)	The sum of accumulated other comprehensive income - net was $(12,455) million and $(17,855) million at June 30, 2011 and December 31, 2010, respectively.

(d)	Included accumulated other comprehensive income - net attributable to noncontrolling interests of $(149) million and $(153) million at June 30, 2011 and December 31, 2010, 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

	Six months ended June 30 (Unaudited)
	Consolidated				GE(a)				Financial Services (GECS)
(In millions)	2011		2010		2011		2010		2011		2010

Cash flows – operating activities
Net earnings	$	7,365	$	5,203	$	7,314	$	5,230	$	3,686	$	759
Less net earnings attributable to noncontrolling interests		168		149		117		176		51		(27)
Net earnings attributable to the Company		7,197		5,054		7,197		5,054		3,635		786
(Earnings) loss from discontinued operations		(273)		454		(273)		454		(274)		450
Adjustments to reconcile net earnings attributable to the
Company to cash provided from operating activities
Depreciation and amortization of property,
plant and equipment		4,594		4,838		1,026		1,075		3,568		3,763
Earnings from continuing operations retained by GECS		–		–		(3,361)		(1,236)		–		–
Deferred income taxes		(3,170)		(1,650)		(97)		(422)		(3,073)		(1,228)
Decrease (increase) in GE current receivables		43		892		(726)		559		–		–
Decrease (increase) in inventories		(2,212)		522		(2,196)		559		14		–
Increase (decrease) in accounts payable		1,179		477		1,176		201		887		386
Increase (decrease) in GE progress collections		(435)		(1,452)		(356)		(1,486)		–		–
Provision for losses on GECS financing receivables		1,968		4,187		–		–		1,968		4,187
All other operating activities		5,569		2,890		1,990		1,556		2,976		1,536
Cash from (used for) operating activities – continuing
operations		14,460		16,212		4,380		6,314		9,701		9,880
Cash from (used for) operating activities – discontinued
operations		680		315		–		–		680		315
Cash from (used for) operating activities		15,140		16,527		4,380		6,314		10,381		10,195

Cash flows – investing activities
Additions to property, plant and equipment		(6,538)		(2,991)		(1,544)		(937)		(5,118)		(2,176)
Dispositions of property, plant and equipment		3,505