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 September 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 10,557,351,000 shares of common stock with a par value of $0.06 per share outstanding at September 30, 2011.

(1)

General Electric Company

		Page
Part I - Financial Information

Item 1. Financial Statements
Condensed Statement of Earnings
Three months Ended September 30, 2011		3
Nine months Ended September 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		63
Item 3. Quantitative and Qualitative Disclosures About Market Risk		90
Item 4. Controls and Procedures		90

Part II - Other Information

Item 1. Legal Proceedings Item 2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers Item 5. Other Information		91 92 93
Item 6. Exhibits		94
Signatures		95

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 developments in the European sovereign debt situation; 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 September 30 (Unaudited)
	Consolidated				GE(a)				Financial Services (GECS)
(In millions, except share amounts)	2011		2010		2011		2010		2011		2010

Revenues
Sales of goods	$	16,859	$	14,525	$	16,869	$	14,485	$	32	$	40
Sales of services		6,279		9,076		6,361		9,108		–		–
Other income		556		187		621		223		–		–
GECS earnings from continuing operations		–		–		1,453		780		–		–
GECS revenues from services		11,673		11,585		–		–		11,986		11,914
Total revenues		35,367		35,373		25,304		24,596		12,018		11,954

Costs and expenses
Cost of goods sold		13,003		10,558		13,015		10,518		30		39
Cost of services sold		3,612		6,069		3,695		6,102		–		–
Interest and other financial charges		3,735		3,822		356		393		3,560		3,573
Investment contracts, insurance losses and
insurance annuity benefits		719		741		–		–		755		796
Provision for losses on financing receivables		1,020		1,637		–		–		1,020		1,637
Other costs and expenses		9,579		8,963		4,634		3,632		5,105		5,497
Total costs and expenses		31,668		31,790		21,700		20,645		10,470		11,542

Earnings from continuing operations
before income taxes		3,699		3,583		3,604		3,951		1,548		412
Benefit (provision) for income taxes		(435)		(319)		(378)		(705)		(57)		386
Earnings from continuing operations		3,264		3,264		3,226		3,246		1,491		798
Earnings (loss) from discontinued operations,
net of taxes		1		(1,052)		1		(1,052)		2		(1,052)
Net earnings (loss)		3,265		2,212		3,227		2,194		1,493		(254)
Less net earnings (loss) attributable to
noncontrolling interests		41		157		3		139		38		18
Net earnings (loss) attributable to the Company		3,224		2,055		3,224		2,055		1,455		(272)
Preferred stock dividends declared		(881)		(75)		(881)		(75)		–		–
Net earnings (loss) attributable to GE common
shareowners	$	2,343	$	1,980	$	2,343	$	1,980	$	1,455	$	(272)


Amounts attributable to the Company
Earnings from continuing operations	$	3,223	$	3,107	$	3,223	$	3,107	$	1,453	$	780
Earnings (loss) from discontinued operations,
net of taxes		1		(1,052)		1		(1,052)		2		(1,052)
Net earnings (loss) attributable to the Company	$	3,224	$	2,055	$	3,224	$	2,055	$	1,455	$	(272)

Per-share amounts
Earnings from continuing operations
Diluted earnings per share	$	0.22	$	0.28
Basic earnings per share	$	0.22	$	0.28

Net earnings
Diluted earnings per share	$	0.22	$	0.18
Basic earnings per share	$	0.22	$	0.18

Dividends declared per common share	$	0.15	$	0.12

(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)	2011		2010		2011		2010		2011		2010

Revenues
Sales of goods	$	47,571	$	43,195	$	47,539	$	42,710	$	116	$	489
Sales of services		20,466		28,583		20,754		28,795		–		–
Other income		4,805		815		4,962		903		–		–
GECS earnings from continuing operations		–		–		4,814		2,016		–		–
GECS revenues from services		36,485		35,775		–		–		37,386		36,730
Total revenues		109,327		108,368		78,069		74,424		37,502		37,219

Costs and expenses
Cost of goods sold		37,914		32,258		37,890		31,803		108		458
Cost of services sold		12,901		19,076		13,189		19,288		–		–
Interest and other financial charges		11,309		11,689		1,032		1,166		10,750		10,916
Investment contracts, insurance losses and
insurance annuity benefits		2,201		2,210		–		–		2,314		2,353
Provision for losses on financing receivables		2,988		5,824		–		–		2,988		5,824
Other costs and expenses		26,392		26,766		11,254		10,758		15,610		16,516
Total costs and expenses		93,705		97,823		63,365		63,015		31,770		36,067

Earnings (loss) from continuing operations
before income taxes		15,622		10,545		14,704		11,409		5,732		1,152
Benefit (provision) for income taxes		(5,266)		(1,624)		(4,437)		(2,479)		(829)		855
Earnings from continuing operations		10,356		8,921		10,267		8,930		4,903		2,007
Earnings (loss) from discontinued operations,
net of taxes		274		(1,506)		274		(1,506)		276		(1,502)
Net earnings (loss)		10,630		7,415		10,541		7,424		5,179		505
Less net earnings (loss) attributable to
noncontrolling interests		209		306		120		315		89		(9)
Net earnings (loss) attributable to the Company		10,421		7,109		10,421		7,109		5,090		514
Preferred stock dividends declared		(1,031)		(225)		(1,031)		(225)		–		–
Net earnings (loss) attributable to GE common
shareowners	$	9,390	$	6,884	$	9,390	$	6,884	$	5,090	$	514


Amounts attributable to the Company
Earnings from continuing operations	$	10,147	$	8,615	$	10,147	$	8,615	$	4,814	$	2,016
Earnings (loss) from discontinued operations,
net of taxes		274		(1,506)		274		(1,506)		276		(1,502)
Net earnings (loss) attributable to the Company	$	10,421	$	7,109	$	10,421	$	7,109	$	5,090	$	514

Per-share amounts
Earnings from continuing operations
Diluted earnings per share	$	0.86	$	0.78
Basic earnings per share	$	0.86	$	0.78

Net earnings
Diluted earnings per share	$	0.88	$	0.64
Basic earnings per share	$	0.88	$	0.64

Dividends declared per common share	$	0.44	$	0.32

(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)
	September 30,		December 31,		September 30,		December 31,		September 30,		December 31,
(In millions, except share amounts)	2011		2010		2011		2010		2011		2010
	(Unaudited)				(Unaudited)				(Unaudited)
Assets
Cash and equivalents	$	91,368	$	78,943	$	8,692	$	19,241	$	83,278	$	60,257
Investment securities		46,458		43,938		18		19		46,442		43,921
Current receivables		18,689		18,621		11,893		10,383		–		–
Inventories		15,021		11,526		14,977		11,460		44		66
Financing receivables – net		285,844		303,012		–		–		293,737		312,234
Other GECS receivables		8,492		8,956		–		–		13,689		14,304
Property, plant and equipment – net		66,094		66,212		13,728		12,444		52,328		53,768
Investment in GECS		–		–		75,959		68,984		–		–
Goodwill		73,291		64,388		45,565		36,880		27,726		27,508
Other intangible assets – net		12,433		9,971		10,723		8,088		1,710		1,883
All other assets		115,271		96,342		36,589		17,454		79,542		79,240
Assets of businesses held for sale		3,173		36,887		123		33,760		3,050		3,127
Assets of discontinued operations		1,566		12,425		50		50		1,516		12,375
Total assets(b)	$	737,700	$	751,221	$	218,317	$	218,763	$	603,062	$	608,683

Liabilities and equity
Short-term borrowings	$	127,327	$	117,959	$	1,179	$	456	$	126,866	$	118,797
Accounts payable, principally trade accounts		16,150		14,656		13,204		11,620		7,995		7,035
Progress collections and price adjustments accrued		11,114		11,142		11,903		11,841		–		–
Other GE current liabilities		19,997		12,959		19,997		12,959		–		–
Non-recourse borrowings of consolidated
securitization entities		29,022		30,018		–		–		29,022		30,018
Bank deposits		41,515		37,298		–		–		41,515		37,298
Long-term borrowings		268,270		293,323		9,485		9,656		259,404		284,407
Investment contracts, insurance liabilities
and insurance annuity benefits		29,925		29,582		–		–		30,405		29,993
All other liabilities		62,057		58,699		39,241		37,815		22,881		20,982
Deferred income taxes		1,980		2,753		(2,460)		(4,237)		4,440		6,990
Liabilities of businesses held for sale		1,855		16,047		42		15,455		1,813		592
Liabilities of discontinued operations		1,715		2,587		158		164		1,557		2,423
Total liabilities(b)		610,927		627,023		92,749		95,729		525,898		538,535

Preferred stock (30,000 shares outstanding at
both September 30, 2011 and December 31, 2010)		–		–		–		–		–		–
Common stock (10,557,351,000 and 10,615,376,000
shares outstanding at September 30, 2011 and
December 31, 2010, respectively)		702		702		702		702		1		1
Accumulated other comprehensive income – net(c)
Investment securities		(182)		(636)		(182)		(636)		(188)		(639)
Currency translation adjustments		2,390		(86)		2,390		(86)		303		(1,411)
Cash flow hedges		(1,619)		(1,280)		(1,619)		(1,280)		(1,588)		(1,281)
Benefit plans		(14,253)		(15,853)		(14,253)		(15,853)		(353)		(380)
Other capital		33,830		36,890		33,830		36,890		27,626		27,626
Retained earnings		135,857		131,137		135,857		131,137		50,158		45,068
Less common stock held in treasury		(32,264)		(31,938)		(32,264)		(31,938)		–		–

Total GE shareowners’ equity		124,461		118,936		124,461		118,936		75,959		68,984
Noncontrolling interests(d)		2,312		5,262		1,107		4,098		1,205		1,164
Total equity		126,773		124,198		125,568		123,034		77,164		70,148

Total liabilities and equity	$	737,700	$	751,221	$	218,317	$	218,763	$	603,062	$	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 September 30, 2011 include total assets of $45,038 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 $36,170 million and investment securities of $5,638 million. Our consolidated liabilities at September 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 $28,522 million. See Note 18.

(c)	The sum of accumulated other comprehensive income - net was $(13,664) million and $(17,855) million at September 30, 2011 and December 31, 2010, respectively.

(d)	Included accumulated other comprehensive income - net attributable to noncontrolling interests of $(175) million and $(153) million at September 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

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

Cash flows – operating activities
Net earnings	$	10,630	$	7,415	$	10,541	$	7,424	$	5,179	$	505
Less net earnings (loss) attributable to noncontrolling interests		209		306		120		315		89		(9)
Net earnings attributable to the Company		10,421		7,109		10,421		7,109		5,090		514
(Earnings) loss from discontinued operations		(274)		1,506		(274)		1,506		(276)		1,502
Adjustments to reconcile net earnings attributable to the
Company to cash provided from operating activities
Depreciation and amortization of property,
plant and equipment		6,944		7,449		1,539		1,668		5,405		5,781
Earnings from continuing operations retained by GECS		–		–		(4,814)		(2,016)		–		–
Deferred income taxes		(2,213)		(1,825)		(61)		(198)		(2,152)		(1,627)
Decrease (increase) in GE current receivables		340		689		(449)		307		–		–
Decrease (increase) in inventories		(2,408)		(118)		(2,384)		(82)		22		9
Increase (decrease) in accounts payable		1,314		1,092		1,459		639		1,103		664
Increase (decrease) in GE progress collections		(679)		(1,291)		(588)		(1,366)		–		–
Provision for losses on GECS financing receivables		2,988		5,824		–		–		2,988		5,824
All other operating activities		6,956		5,190		1,695		2,575		4,460		2,818
Cash from (used for) operating activities – continuing
operations		23,389		25,625		6,544		10,142		16,640		15,485
Cash from (used for) operating activities – discontinued
operations		834		850		–		–		834		850
Cash from (used for) operating activities		24,223		26,475		6,544		10,142		17,474		16,335

Cash flows – investing activities
Additions to property, plant and equipment		(9,051)		(4,390)		(2,067)		(1,484)		(7,149)		(3,113)
Dispositions of property, plant and equipment		4,637		3,097		–		–		4,637		3,097
Net decrease (increase) in GECS financing receivables		17,668		22,888		–		–		18,530		23,633
Proceeds from sale of discontinued operations		8,951		–		–		–		8,951		–
Proceeds from principal business dispositions		8,265		2,787		6,148		1,712		2,117		905
Payments for principal businesses purchased		(10,839)		(576)		(10,789)		(15)		(50)		(561)
Capital contribution from GE to GECS		–		–		–		–		–		–
All other investing activities		3,588		10,970		(233)		(270)		4,226		11,084
Cash from (used for) investing activities – continuing
operations		23,219		34,776		(6,941)		(57)		31,262		35,045
Cash from (used for) investing activities – discontinued
operations		(802)		(234)		–		–		(802)		(234)
Cash from (used for) investing activities		22,417		34,542		(6,941)		(57)		30,460		34,811

Cash flows – financing activities
Net increase (decrease) in borrowings (maturities of
90 days or less)		(770)		(1,986)		393		(1,288)		(1,893)		(823)
Net increase (decrease) in bank deposits		3,746		3,982		–		–		3,746		3,982
Newly issued debt (maturities longer than 90 days)		34,074		31,349		146		4,133		33,808		27,000
Repayments and other reductions (maturities longer
than 90 days)		(60,191)		(77,802)		57		(2,251)		(60,248)		(75,551)
Net dispositions (purchases) of GE shares for treasury		(1,581)		(438)		(1,581)		(438)		–		–
Dividends paid to shareowners		(4,796)		(3,434)		(4,796)		(3,434)		–		–
Purchase of subsidiary shares from
noncontrolling interest		(4,298)		(2,000)		(4,298)		(2,000)		–		–
All other financing activities		(1,428)		(2,678)		(92)		(274)		(1,336)		(2,404)
Cash from (used for) financing activities – continuing
operations		(35,244)		(53,007)		(10,171)		(5,552)		(25,923)		(47,796)
Cash from (used for) financing activities – discontinued
operations		(42)		(719)		–		–		(42)		(719)
Cash from (used for) financing activities		(35,286)		(53,726)		(10,171)		(5,552)		(25,965)		(48,515)
Effect of currency exchange rate changes on cash
and equivalents		1,061		(1,225)		19		(188)		1,042		(1,037)
Increase (decrease) in cash and equivalents		12,415		6,066		(10,549)		4,345		23,011		1,594
Cash and equivalents at beginning of year		79,084		72,444		19,241		8,654		60,398		64,540
Cash and equivalents at September 30		91,499		78,510		8,692		12,999		83,409		66,134
Less cash and equivalents of discontinued operations
at September 30		131		1,865		–		–		131		1,865
Cash and equivalents of continuing operations
at September 30	$	91,368	$	76,645	$	8,692	$	12,999	$	83,278	$	64,269

(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 19.

(6)

Summary of Operating Segments

General Electric Company and consolidated affiliates

	Three months ended September 30				Nine months ended September 30
	(Unaudited)				(Unaudited)
(In millions)	2011		2010		2011		2010

Revenues
Energy Infrastructure	$	10,855	$	8,359	$	30,706	$	26,554
Aviation(a)		4,835		4,391		13,935		12,815
Healthcare(a)		4,332		3,958		12,920		11,793
Transportation(a)		1,287		869		3,421		2,344
Home & Business Solutions		2,094		2,125		6,236		6,315
GE Capital		11,148		11,101		34,985		34,676
Total segment revenues		34,551		30,803		102,203		94,497
Corporate items and eliminations(a)		816		4,570		7,124		13,871
Consolidated revenues	$	35,367	$	35,373	$	109,327	$	108,368

Segment profit(a)
Energy Infrastructure	$	1,503	$	1,656	$	4,436	$	5,047
Aviation(a)		862		805		2,662		2,483
Healthcare(a)		608		581		1,850		1,739
Transportation(a)		196		101		531		242
Home & Business Solutions		38		104		218		318
GE Capital		1,467		818		4,927		2,131
Total segment profit		4,674		4,065		14,624		11,960
Corporate items and eliminations(a)		(717)		140		992		300
GE interest and other financial charges		(356)		(393)		(1,032)		(1,166)
GE provision for income taxes		(378)		(705)		(4,437)		(2,479)
Earnings from continuing operations attributable
to the Company		3,223		3,107		10,147		8,615
Earnings (loss) from discontinued operations,
net of taxes, attributable to the Company		1		(1,052)		274		(1,506)
Consolidated net earnings attributable to
the Company	$	3,224	$	2,055	$	10,421	$	7,109

(a)

Effective January 1, 2011, 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. Segment profit excludes results reported as discontinued operations, earnings attributable to noncontrolling interests of consolidated subsidiaries and accounting changes. 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, Aviation, Healthcare, Transportation and Home & Business Solutions; included in determining segment profit, which we sometimes refer to as “net earnings,” for GE Capital. Results of our formerly consolidated subsidiary, NBC Universal, are reported in the Corporate items and eliminations line. See Note 2. Prior to January 1, 2011, segment profit excluded the effects of principal pension plans. Beginning January 1, 2011, we allocate service costs related to our principal pension plans and we no longer allocate the retiree costs of our postretirement healthcare benefits to our segments. This revised allocation methodology better aligns segment operating costs to the active employee costs, which are managed by the segments.

See accompanying notes.

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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 in our Annual Report on Form 10-K for the year ended December 31, 2010 (2010 consolidated financial statements), which discusses our consolidation and financial statement presentation. As used in this report on Form 10-Q (Report) and in our 2010 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, 2011, we reorganized the Technology Infrastructure segment into three segments – Aviation, Healthcare and Transportation. The prior-period results of the Aviation, Healthcare and Transportation businesses are unaffected by this reorganization. Also, beginning January 1, 2011, we allocate service costs related to our principal pension plans and we no longer allocate the retiree costs of our postretirement healthcare benefits to our segments. This revised allocation methodology better aligns segment operating costs to active employee costs that are managed by the segments. This change did not significantly affect our reported segment results.

On January 28, 2011, we sold the assets of our NBC Universal (NBCU) business in exchange for cash and a 49% interest in a new entity, NBCUniversal LLC (see Note 2). Results of our formerly consolidated subsidiary, NBCU, and our current equity method investment in NBCUniversal LLC are reported in the Corporate items and eliminations line on the Summary of Operating Segments.

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, 2011, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2009-13 and ASU 2009-14, amendments to Accounting Standards Codification (ASC) 605, Revenue Recognition and ASC 985, Software, respectively, (ASU 2009-13 &14). ASU 2009-13 requires the allocation of consideration to separate components of an arrangement based on the relative selling price of each component. ASU 2009-14 requires certain software-enabled products to be accounted for under the general accounting standards for multiple component arrangements. These amendments are effective for new revenue arrangements entered into or materially modified on or subsequent to January 1, 2011.

Although the adoption of these amendments eliminated the allocation of consideration using residual values, which was applied primarily in our Healthcare segment, the overall impact of adoption was insignificant to our financial statements. In addition, there are no significant changes to the number of components or the pattern and timing of revenue recognition following adoption.

Our accounting policy for sales of goods and services is included below and has been updated for the additional disclosure requirements of these amendments.

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On July 1, 2011, we adopted FASB ASU 2011-02, an amendment to ASC 310, Receivables. ASU 2011-02 provides guidance for determining whether a restructuring of a debt constitutes a troubled debt restructuring (TDR). ASU 2011-02 requires that a restructuring be classified as a TDR when it is both a concession and the debtor is experiencing financial difficulties. The amendment also clarifies the guidance on a creditor’s evaluation of whether it has granted a concession. The amendment applies to restructurings that have occurred subsequent to January 1, 2011. As a result of adopting these amendments on July 1, 2011, we have classified an additional $271 million of financing receivables as TDRs and have recorded an increase of $77 million to our allowance for losses on financing receivables. See Note 17.

See Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2010 for a summary of the remainder of our significant accounting policies.

Sales of Goods and Services

We record all sales of goods and services only when a firm sales agreement is in place, delivery has occurred or services have been rendered and collectibility of the fixed or determinable sales price is reasonably assured.

Arrangements for the sale of goods and services sometimes include multiple components. Most of our multiple component arrangements involve the sale of goods and services in the Healthcare segment. Our arrangements with multiple components usually involve an upfront deliverable of large machinery or equipment and future service deliverables such as installation, commissioning, training or the future delivery of ancillary products. In most cases, the relative values of the undelivered components are not significant to the overall arrangement and are typically delivered within three to six months after the core product has been delivered. In such agreements, selling price is determined for each component and any difference between the total of the separate selling prices and total contract consideration (i.e. discount) is allocated pro rata across each of the components in the arrangement. The value assigned to each component is objectively determined and obtained primarily from sources such as the separate selling price for that or a similar item or from competitor prices for similar items. If such evidence is not available, we use our best estimate of selling price, which is established consistent with the pricing strategy of the business and considers product configuration, geography, customer type, and other market specific factors.

Except for goods sold under long-term agreements, we recognize sales of goods under the provisions of U.S. Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 104, Revenue Recognition. We often sell consumer products and computer hardware and software products with a right of return. We use our accumulated experience to estimate and provide for such returns when we record the sale. In situations where arrangements include customer acceptance provisions based on seller or customer-specified objective criteria, we recognize revenue when we have reliably demonstrated that all specified acceptance criteria have been met or when formal acceptance occurs, respectively. In arrangements where we provide goods for trial and evaluation purposes, we only recognize revenue after customer acceptance occurs. Unless otherwise noted, we do not provide for anticipated losses before we record sales.

We recognize revenue on agreements for sales of goods and services under power generation unit and uprate contracts; nuclear fuel assemblies; larger oil drilling equipment projects; aeroderivative unit contracts; military development contracts; and long-term construction projects, using long-term construction and production contract accounting. We estimate total long-term contract revenue net of price concessions as well as total contract costs. For goods sold under power generation unit and uprate contracts, nuclear fuel assemblies, aeroderivative unit contracts and military development contracts, we recognize sales as we complete major contract-specified deliverables, most often when customers receive title to the goods or accept the services as performed. For larger oil drilling equipment projects and long-term construction projects, we recognize sales based on our progress towards contract completion measured by actual costs incurred in relation to our estimate of total expected costs. We measure long-term contract revenues by applying our contract-specific estimated margin rates to incurred costs. We routinely update our estimates of future costs for agreements in process and report any cumulative effects of such adjustments in current operations. We provide for any loss that we expect to incur on these agreements when that loss is probable.

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We recognize revenue upon delivery for sales of aircraft engines, military propulsion equipment and related spare parts not sold under long-term product services agreements. Delivery of commercial engines, non-U.S. military equipment and all related spare parts occurs on shipment; delivery of military propulsion equipment sold to the U.S. Government or agencies thereof occurs upon receipt of a Material Inspection and Receiving Report, DD Form 250 or Memorandum of Shipment. Commercial aircraft engines are complex aerospace equipment manufactured to customer order under a variety of sometimes complex, long-term agreements. We measure sales of commercial aircraft engines by applying our contract-specific estimated margin rates to incurred costs. We routinely update our estimates of future revenues and costs for commercial aircraft engine agreements in process and report any cumulative effects of such adjustments in current operations. Significant components of our revenue and cost estimates include price concessions, performance-related guarantees as well as material, labor and overhead costs. We measure revenue for military propulsion equipment and spare parts not subject to long-term product services agreements based on the specific contract on a specifically measured output basis. We provide for any loss that we expect to incur on these agreements when that loss is probable; consistent with industry practice, for commercial aircraft engines, we make such provision only if such losses are not recoverable from future highly probable sales of spare parts for those engines.

We sell product services under long-term product maintenance or extended warranty agreements in our Aviation, Transportation and Energy Infrastructure segments, where costs of performing services are incurred on other than a straight-line basis. We also sell product services in our Healthcare segment, where such costs generally are expected to be on a straight-line basis. For the Aviation, Energy and Transportation agreements, we recognize related sales based on the extent of our progress towards completion measured by actual costs incurred in relation to total expected costs. We routinely update our estimates of future costs for agreements in process and report any cumulative effects of such adjustments in current operations. For the Healthcare agreements, we recognize revenues on a straight-line basis and expense related costs as incurred. We provide for any loss that we expect to incur on any of these agreements when that loss is probable.

NBC Universal, which we deconsolidated on January 28, 2011, records broadcast and cable television and Internet advertising sales when advertisements are aired, net of provision for any viewer shortfalls (make goods). Sales from theatrical distribution of films are recorded as the films are exhibited; sales of home videos, net of a return provision, when the videos are delivered to and available for sale by retailers; fees from cable/satellite operators when services are provided; and licensing of film and television programming when the material is available for airing.

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 2010 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.

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

Assets and Liabilities of Businesses Held for Sale

NBC Universal

In December 2009, we entered into an agreement with Comcast Corporation (Comcast) to transfer the assets of the NBCU business to a newly formed entity, comprising our NBCU business and Comcast’s cable networks, regional sports networks, certain digital properties and certain unconsolidated investments, in exchange for cash and a 49% interest in the newly-formed entity.

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 agreements were terminated, with a $750 million revolving credit agreement remaining in effect. Proceeds from these issuances were used to repay $1,678 million of existing debt and pay a dividend of $7,394 million to GE.

On September 26, 2010, we acquired approximately 38% of Vivendi S.A.’s (Vivendi) 20% interest in NBCU (7.7% of NBCU’s outstanding shares) for $2,000 million. In January 2011 and prior to the transaction with Comcast, we acquired the remaining Vivendi interest in NBCU (12.3% of NBCU’s outstanding shares) for $3,673 million and made an additional payment of $222 million related to the previously purchased shares.

On January 28, 2011, we transferred the assets of the NBCU business and Comcast transferred certain of its assets to a newly formed entity, NBCUniversal LLC (NBCU LLC). In connection with the transaction, we received $6,176 million in cash from Comcast (which included $49 million of transaction-related cost reimbursements) and a 49% interest in NBCU LLC. Comcast holds the remaining 51% interest in NBCU LLC.

With respect to our 49% interest in NBCU LLC, we hold redemption rights, which, if exercised, would require NBCU LLC or Comcast to purchase (either directly or indirectly by GE transferring common stock of our holding company that owns 49% of NBCU LLC) half of our ownership interest after three and a half years and the remaining half after seven years, subject to certain exceptions, conditions and limitations. Our interest in NBCU LLC also is subject to call provisions, which, if exercised, allow Comcast to purchase our interest (either directly or indirectly) at specified times subject to certain exceptions. The redemption prices for such transactions are determined based on a contractually specified formula.

In connection with the transaction, we also entered into a number of agreements with Comcast governing the operation of the venture and transitional services, employee, tax and other matters. Under the operating agreement, excess cash generated by the operations of NBCU LLC will be used to reduce borrowings, except for distributions in amounts necessary to pay taxes on NBCU LLC’s profits. In addition, Comcast is obligated to share with us potential tax savings associated with Comcast’s purchase of its NBCU LLC member interest, if realized. We have not recognized these potential future payments as consideration for the sale, but will record such payments in income as they are received.

As part of the transfer, we provided guarantees and indemnifications related to certain pre-existing contractual arrangements entered into by NBCU. We have provided guarantees, on behalf of NBCU LLC, for the acquisition of sports programming in the amount of $3,258 million, triggered only in the event NBCU LLC fails to meet its payment commitments. We also have agreed to indemnify Comcast against any loss (after giving consideration to underlying collateral) related to pre-existing debt plus accrued interest owed by a joint venture of NBCU LLC and have recorded a liability of $446 million for this guarantee.

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Following the transaction, we deconsolidated NBCU and we account for our investment in NBCU LLC under the equity method. We recognized a pre-tax gain on the sale of $3,557 million ($400 million after tax). In the third quarter of 2011, we recorded an adjustment to the pre-tax gain of $157 million ($131 million after tax) related to the finalization of the estimated fair value of our initial equity investment. In connection with the sale, we recorded income tax expense of $3,181 million, reflecting the low tax basis in our investment in the NBCU business and the recognition of deferred tax liabilities related to our 49% investment in NBCU LLC. As our investment in NBCU LLC is structured as a partnership for U.S. tax purposes, U.S. taxes are recorded separately from the equity investment.

At September 30, 2011, the carrying amount of our equity investment in NBCU LLC was $17,674 million, reported in the “All other assets” caption in our Condensed Statement of Financial Position. Deferred tax liabilities related to our NBCU LLC investment were $4,933 million at September 30, 2011 and were reported in the “Deferred income taxes” caption in our Condensed Statement of Financial Position.

We valued the initial carrying value of our investment in NBCU LLC based on a combination of income and market approaches. An income approach was used to determine the fair values of NBCU LLC’s underlying businesses and, when available and appropriate, an analysis of comparative market multiples was also undertaken. The resulting fair values were weighted equally between the two approaches. For purposes of the income approach, fair value was determined based on the present values of estimated future cash flows discounted at appropriate risk-adjusted rates. We used NBCU LLC management projections to estimate future cash flows and included an estimate of long-term future growth rates based on management’s most recent views of the long-term outlook for its businesses. We believe that these assumptions are consistent with market participant assumptions. We derived discount rates using a weighted average cost of capital. The cost of equity was determined using the capital asset pricing model and the cost of debt financing was based on published rates for industries relevant to NBCU LLC. Under the market approach, the most significant assumption was the price multiple, which was selected based on the operating performance and financial condition of comparable publicly traded companies in industries similar to those of the NBCU LLC businesses. As NBCU LLC is a partnership, the fair value of our investment in NBCU LLC was determined based upon the amount a market participant would pay for the partnership interest taking into consideration the tax benefit associated with such a purchase. The value of our investment also incorporates the fair value of the redemption features described above, which was determined based on an option pricing framework that incorporates the specific contractual terms of the redemption features.

At December 31, 2010, we classified the NBCU assets and liabilities of $33,758 million and $15,455 million, respectively, as held for sale. The major classes of assets at December 31, 2010 were current receivables ($2,572 million), property, plant and equipment – net ($2,082 million), goodwill and other intangible assets – net ($22,263 million) and all other assets ($6,841 million), including film and television production costs of $4,423 million. The major classes of liabilities at December 31, 2010 were accounts payable ($492 million), other GE current liabilities ($3,983 million), long-term debt ($9,906 million) and all other liabilities ($1,073 million).

Other

In the third quarter of 2011, we committed to sell our GE Capital Commercial Lending and Leasing (CLL) marine container leasing business, which consists of our controlling interests in the GE SeaCo joint venture along with other owned marine container assets, and our CLL trailer fleet services business in Mexico.

In the second quarter of 2011, we committed to sell our GE Capital Consumer business banking operations in Latvia.

In 2010, we committed to sell our GE Capital Consumer businesses in Argentina, Brazil, and Canada, a CLL business in South Korea, and our Interpark business in Real Estate. The GE Capital Consumer Canada disposition was completed during the first quarter of 2011. The GE Capital Consumer Brazil and our Interpark business in Real Estate dispositions were completed during the second quarter of 2011 for proceeds of $22 million and $704 million, respectively. The GE Capital Consumer Argentina disposition was completed during the third quarter of 2011 for proceeds of $41 million.

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

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	At
	September 30,		December 31,
(In millions)	2011		2010

Assets
Cash and equivalents	$	218	$	63
Current receivables		–		2,572
Financing receivables – net		483		1,917
Property, plant and equipment – net		2,054		2,185
Goodwill		135		19,606
Other intangible assets – net		37		2,844
All other assets		153		7,560
Other		93		140
Assets of businesses held for sale	$	3,173	$	36,887

Liabilities
Short-term borrowings	$	474	$	146
Accounts payable		82		538
Other GE current liabilities		–		3,994
Long-term borrowings		1,144		10,134
All other liabilities		155		1,235
Liabilities of businesses held for sale	$	1,855	$	16,047

Discontinued Operations

Discontinued operations primarily comprised BAC Credomatic GECF Inc. (BAC) (our Central American bank and card business), 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), our U.S. recreational vehicle and marine equipment financing business (Consumer RV Marine), Consumer Mexico, Consumer Singapore and our Consumer home lending operations in Australia and New Zealand (Australian Home Lending). Associated results of operations, financial position and cash flows are separately reported as discontinued operations for all periods presented.

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Summarized financial information for discontinued operations is shown below.

	Three months ended September 30				Nine months ended September 30
(In millions)		2011		2010		2011		2010

Operations
Total revenues	$	12	$	515	$	336	$	1,565

Earnings (loss) from discontinued operations
before income taxes	$	(8)	$	45	$	–	$	163
Benefit (provision) for income taxes		21		3		51		(3)
Earnings (loss) from discontinued operations,
net of taxes	$	13	$	48	$	51	$	160

Disposal
Gain (loss) on disposal before income taxes	$	(45)	$	(1,100)	$	(86)	$	(1,666)
Benefit (provision) for income taxes		33		–		309		–
Gain (loss) on disposal, net of taxes	$	(12)	$	(1,100)	$	223	$	(1,666)

Earnings (loss) from discontinued operations,
net of taxes(a)	$	1	$	(1,052)	$	274	$	(1,506)

(a)	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.

	At
	September 30,		December 31,
(In millions)	2011		2010

Assets
Cash and equivalents	$	131	$	142
Financing receivables – net		98		10,589
All other assets		1		168
Other		1,336		1,526
Assets of discontinued operations	$	1,566	$	12,425

Liabilities
Accounts payable, principally trade accounts	$	8	$	110
Deferred income taxes		204		230
All other liabilities		1,502		2,205
Other		1		42
Liabilities of discontinued operations	$	1,715	$	2,587

Assets at September 30, 2011 and December 31, 2010, primarily comprised cash, financing receivables and a deferred tax asset for a loss carryforward, which expires principally in 2015 and in part in 2017, related to the sale of our GE Money Japan business.

BAC Credomatic GECF Inc. (BAC)

During the fourth quarter of 2010, we classified BAC as discontinued operations and completed the sale of BAC for $1,920 million. Immediately prior to the sale, and in accordance with terms of a previous agreement, we increased our ownership interest in BAC from 75% to 100% for a purchase price of $633 million. As a result of the sale of our interest in BAC, we recognized an after-tax gain of $780 million in 2010.

BAC revenues from discontinued operations were $264 million and $772 million in the three and nine months ended September 30, 2010, respectively. In total, BAC earnings from discontinued operations, net of taxes, were $19 million and $56 million in the three and nine months ended September 30, 2010, respectively.

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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. In connection with the sale, we reduced the proceeds from 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.

Our overall claims experience developed unfavorably through 2010. 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. In September 2010, a large independent personal loan company in Japan filed for bankruptcy, which precipitated a significant amount of publicity surrounding excess interest refund claims in the Japanese marketplace, along with substantial legal advertising. We observed an increase in claims during September 2010 and higher average daily claims in the fourth quarter of 2010 and the first two months of 2011. Since February and through August 2011, we have experienced substantial declines in the rate of incoming claims, though claims severity has been higher than expected and we experienced an increase in claims in September 2011. As of September 30, 2011, our reserve for reimbursement of claims in excess of the statutory interest rate was $739 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, 2011 assumes the pace of incoming claims will continue to decelerate, although at a lower pace than recently experienced, average exposure per claim remains consistent with historical experience, and we continue to 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. Holding all other assumptions constant, if claims declined at a rate of one percent higher or lower than our assumed long-term average, our liability estimate would change by approximately $250 million.

Uncertainties around the impact of laws and regulations, challenging economic conditions, the runoff status of the underlying book of business, the financial status of other personal lending companies in Japan 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, higher claims severity and consumer activity, may continue to have an adverse effect on claims development.

GE Money Japan earnings (loss) from discontinued operations, net of taxes, were $2 million and $(1,101) million in the three months ended September 30, 2011 and 2010, respectively, and $2 million and $(1,673) million in the nine months ended September 30, 2011 and 2010, 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 loan servicer. In connection with the sale, 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 representations and warranties were not met. All claims received for early payment default have either been resolved or are no longer being pursued.

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Pending claims for unmet representations and warranties were $783 million at December 31, 2009, $347 million at December 31, 2010 and $568 million at September 30, 2011. Reserves related to these contractual representations and warranties were $122 million and $101 million at September 30, 2011 and December 31, 2010, respectively. We recorded an adjustment to our reserve of $21 million in the third quarter of 2011 to reflect the higher amount of pending claims and an increase in our reserve for unidentified claims. 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. A ten percent adverse change in these key assumptions would result in an increase to our reserves of approximately $35 million. Based on our historical experience, we estimate that a small percentage of the total loans WMC 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. Uncertainties surrounding economic conditions, the ability and propensity of mortgage holders to present valid claims and governmental actions make it difficult to develop a meaningful estimate of aggregate possible claim exposure. Actual losses could exceed the reserve amount if actual claim rates, investigative or litigation activity, valid tenders or losses WMC incurs on repurchased loans are higher than we have historically observed with respect to WMC.

WMC revenues (loss) from discontinued operations were $(21) million and $(1) million in the three months ended September 30, 2011 and 2010, respectively, and $(21) million and $(4) million in the nine months ended September 30, 2011 and 2010, respectively. In total, WMC’s earnings (loss) from discontinued operations, net of taxes, were $(15) million and $(2) million in the three months ended September 30, 2011 and 2010, respectively, and $(18) million and $(5) million in the nine months ended September 30, 2011 and 2010, respectively.

Other Financial Services

In the second quarter of 2011, we entered into an agreement to sell our Australian Home Lending operations and classified it as discontinued operations. As a result, we recognized an after-tax loss of $148 million in 2011. We completed the sale in the third quarter of 2011 for proceeds of approximately $4,577 million. Australian Home Lending revenues from discontinued operations were $33 million and $118 million in the three months ended September 30, 2011 and 2010, respectively, and $248 million and $386 million in the nine months ended September 30, 2011 and 2010, respectively. Australian Home Lending earnings (loss) from discontinued operations, net of taxes, were $15 million and $14 million in the three months ended September 30, 2011 and 2010, respectively, and $(65) million and $51 million in the nine months ended September 30, 2011 and 2010, respectively.

In the first quarter of 2011, we entered into an agreement to sell our Consumer Singapore business for $692 million. The sale was completed in the second quarter of 2011 and resulted in the recognition of a gain on disposal, net of taxes, of $319 million. Consumer Singapore revenues from discontinued operations were $(1) million and $27 million in the three months ended September 30, 2011 and 2010, respectively, and $30 million and $79 million in the nine months ended September 30, 2011 and 2010, respectively. Consumer Singapore earnings from discontinued operations, net of taxes, were $7 million and $11 million in the three months ended September 30, 2011 and 2010, respectively, and $333 million and $27 million in the nine months ended September 30, 2011 and 2010, respectively.

In the fourth quarter of 2010, we entered into agreements to sell our Consumer RV Marine portfolio and Consumer Mexico business. The Consumer RV Marine and Consumer Mexico dispositions were completed during the first quarter and the second quarter of 2011, respectively, for proceeds of $2,365 million and $1,943 million, respectively. Consumer RV Marine revenues from discontinued operations were $0 million and $52 million in the three months ended September 30, 2011 and 2010, respectively, and $11 million and $160 million in the nine months ended September 30, 2011 and 2010, respectively. Consumer RV Marine earnings (loss) from discontinued operations, net of taxes, were $(1) million and $(8) million in the three months ended September 30, 2011 and 2010, respectively, and $1 million and $(9) million in the nine months ended September 30, 2011 and 2010, respectively. Consumer Mexico revenues from discontinued operations were $1 million and $55 million in the three months ended September 30, 2011 and 2010, respectively, and $68 million and $172 million in the nine months ended September 30, 2011 and 2010, respectively. Consumer Mexico earnings from discontinued operations, net of taxes, were $1 million and $18 million in the three months ended September 30, 2011 and 2010, respectively, and $34 million and $53 million in the nine months ended September 30, 2011 and 2010, respectively.

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GE Industrial

GE industrial earnings (loss) from discontinued operations, net of taxes, were $(1) million and $0 million in the three months ended September 30, 2011 and 2010, respectively, and $(2) million and $(4) million in the nine months ended September 30, 2011 and 2010, 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, 2011 and December 31, 2010. Liabilities of GE industrial discontinued operations were $158 million and $164 million at September 30, 2011, and December 31, 2010, respectively, and primarily represent taxes payable and pension liabilities related to the sale of our Plastics business in 2007.

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, policyholders and holders of guaranteed investment contracts (GICs) in our run-off insurance operations and Trinity, and investment securities at our treasury operations. We do not have any securities classified as held to maturity.

	At
	September 30, 2011								December 31, 2010
			Gross		Gross						Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Amortized		unrealized		unrealized		Estimated
(In millions)	cost		gains		losses		fair value		cost		gains		losses		fair value

GE
Debt – U.S. corporate	$	1	$	–	$	–	$	1	$	1	$	–	$	–	$	1
Equity – available-for-sale		17		–		–		17		18		–		–		18
		18		–		–		18		19		–		–		19
GECS
Debt
U.S. corporate		21,633		3,076		(276)		24,433		21,233		1,576		(237)		22,572
State and municipal		2,970		317		(144)		3,143		2,961		45		(282)		2,724
Residential mortgage-
backed(a)		2,794		191		(303)		2,682		3,092		95		(378)		2,809
Commercial mortgage-backed		2,887		137		(269)		2,755		3,009		145		(230)		2,924
Asset-backed		4,060		10		(216)		3,854		3,407		16		(193)		3,230
Corporate – non-U.S.		2,703		135		(142)		2,696		2,883		116		(132)		2,867
Government – non-U.S.		2,282		116		(133)		2,265		2,242		82		(58)		2,266
U.S. government and federal
agency		3,220		91		–		3,311		3,358		57		(47)		3,368
Retained interests		29		14		(6)		37		55		10		(26)		39
Equity
Available-for-sale		828		134		(83)		879		500		213		(8)		705
Trading		387		–		–		387		417		–		–		417
		43,793		4,221		(1,572)		46,442		43,157		2,355		(1,591)		43,921
Eliminations		(2)		–		–		(2)		(2)		–		–		(2)
Total	$	43,809	$	4,221	$	(1,572)	$	46,458	$	43,174	$	2,355	$	(1,591)	$	43,938

(a)

Substantially collateralized by U.S. mortgages. Of our total residential mortgage-backed securities (RMBS) portfolio at September 30, 2011, $1,696 million relates to securities issued by government sponsored entities and $986 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.

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The fair value of investment securities increased to $46,458 million at September 30, 2011, from $43,938 million at December 31, 2010, primarily due to the impact of lower interest rates and purchases in our financial services businesses.

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
			Gross					Gross
	Estimated		unrealized			Estimated		unrealized
(In millions)	fair value		losses		(a)	fair value		losses		(a)

September 30, 2011
Debt
U.S. corporate	$	1,387	$	(104)		$	961	$	(172)
State and municipal		62		(29)			321		(115)
Residential mortgage-backed		179		(6)			970		(297)
Commercial mortgage-backed		366		(36)			1,382		(233)
Asset-backed		2,836		(48)			856		(168)
Corporate – non-U.S.		284		(8)			773		(134)
Government – non-U.S.		597		(25)			161		(108)
U.S. government and federal agency		–		–			2		–
Retained interests		–		–			3		(6)
Equity		187		(83)			–		–
Total	$	5,898	$	(339)		$	5,429	$	(1,233)

December 31, 2010
Debt
U.S. corporate	$	2,375	$	(81)		$	1,519	$	(156)
State and municipal		949		(43)			570		(239)
Residential mortgage-backed		188		(4)			1,024		(374)
Commercial mortgage-backed		831		(104)			817		(126)
Asset-backed		113		(5)			910		(188)
Corporate – non-U.S.		448		(12)			804		(120)
Government – non-U.S.		661		(6)			107		(52)
U.S. government and federal agency		1,822		(47)			–		–
Retained interests		–		–			34		(26)
Equity		49		(8)			–		–
Total	$	7,436	$	(310)		$	5,785	$	(1,281)

(a)

At September 30, 2011, other-than-temporary impairments previously recognized through other comprehensive income (OCI) on securities still held amounted to $(500) million, of which $(385) million related to RMBS. Gross unrealized losses related to those securities at September 30, 2011 amounted to $(617) million, of which $(497) million related to RMBS.

We regularly review investment securities for impairment using both qualitative and quantitative criteria. We presently do not intend to sell the vast majority of 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 three and nine months ended September 30, 2011 have not changed from those described in our 2010 consolidated financial statements. See Note 3 in our 2010 consolidated financial statements for additional information regarding these methodologies and inputs.

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During the third quarter of 2011, we recorded other-than-temporary impairments of $86 million, of which $68 million was recorded through earnings ($6 million relates to equity securities) and $18 million was recorded in accumulated other comprehensive income (AOCI). At July 1, 2011, cumulative impairments recognized in earnings associated with debt securities still held were $561 million. During the third quarter, we recognized first time impairments of $37 million and incremental charges on previously impaired securities of $23 million. These amounts included $1 million related to securities that were subsequently sold.

During the third quarter of 2010, we recorded 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 AOCI. At July 1, 2010, cumulative impairments recognized in earnings associated with debt securities still held were $428 million. During the third quarter of 2010, 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, 2011, we recorded other-than-temporary impairments of $270 million, of which $186 million was recorded through earnings ($16 million relates to equity securities) and $84 million was recorded in AOCI. At January 1, 2011, cumulative impairments recognized in earnings associated with debt securities still held were $500 million. During the nine months ended September 30, 2011, we recognized first time impairments of $57 million and incremental charges on previously impaired securities of $104 million. These amounts included $42 million related to securities that were subsequently sold.

During the nine months ended September 30, 2010, we recorded 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.

Contractual Maturities of GECS Investment in Available-for-Sale Debt Securities (Excluding Mortgage-
Backed and Asset-Backed Securities)
	Amortized		Estimated
(In millions)	cost		fair value

Due in
2011	$	2,865	$	2,887
2012-2015		7,327		7,537
2016-2020		4,759		4,972
2021 and later		17,843		20,439

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

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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)	2011		2010		2011		2010

GE
Gains	$	–	$	–	$	–	$	–
Losses, including impairments		–		–		–		–
Net		–		–		–		–

GECS
Gains		28		34		189		160
Losses, including impairments		(70)		(46)		(197)		(191)
Net		(42)		(12)		(8)		(31)
Total	$	(42)	$	(12)	$	(8)	$	(31)

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 $3,466 million and $4,754 million in the three months ended September 30, 2011 and 2010, respectively, and $13,438 million and $12,070 million in the nine months ended September 30, 2011 and 2010, respectively, principally from the sales of short-term securities in our bank subsidiaries and treasury operations.

We recognized net pre-tax gains (losses) on trading securities of $(29) million and $33 million in the three months ended September 30, 2011 and 2010, respectively, and $26 million and $52 million in the nine months ended September 30, 2011 and 2010, respectively.

4. INVENTORIES

Inventories consisted of the following.

	At
	September 30,		December 31,
(In millions)	2011		2010

Raw materials and work in process	$	9,200	$	6,973
Finished goods		5,571		4,501
Unbilled shipments		644		456
		15,415		11,930
Less revaluation to LIFO		(394)		(404)
Total	$	15,021	$	11,526

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

GECS financing receivables – net, consisted of the following.

	At
	September 30,		December 31,
(In millions)	2011		2010

Loans, net of deferred income(a)	$	260,552	$	275,877
Investment in financing leases, net of deferred income		39,854		44,390
		300,406		320,267
Less allowance for losses		(6,669)		(8,033)
Financing receivables – net(b)	$	293,737	$	312,234

(a)	Deferred income was $2,313 million and $2,351 million at September 30, 2011 and December 31, 2010, respectively.

(b)

Financing receivables at September 30, 2011 and December 31, 2010 included $1,221 million and $1,503 million, respectively, relating to loans that had been acquired in a transfer but have been subject to credit deterioration since origination per Accounting Standards Codification (ASC) 310, Receivables.

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The following tables provide additional information about our financing receivables and related activity in the allowance for losses for our Commercial, Real Estate and Consumer portfolios.

Financing Receivables – net

The following table displays our financing receivables balances.

	At
	September 30,		December 31,
(In millions)	2011		2010

Commercial
CLL
Americas(a)	$	81,072	$	88,558
Europe		37,130		37,498
Asia		11,914		11,943
Other(a)		469		664
Total CLL		130,585		138,663

Energy Financial Services		5,977		7,011

GECAS		11,841		12,615

Other		1,388		1,788
Total Commercial financing receivables		149,791		160,077

Real Estate
Debt		25,748		30,249
Business Properties		8,630		9,962
Total Real Estate financing receivables		34,378		40,211

Consumer
Non-U.S. residential mortgages		38,708		40,011
Non-U.S. installment and revolving credit		19,801		20,132
U.S. installment and revolving credit		43,249		43,974
Non-U.S. auto		6,462		7,558
Other		8,017		8,304
Total Consumer financing receivables		116,237		119,979

Total financing receivables		300,406		320,267

Less allowance for losses		(6,669)		(8,033)
Total financing receivables – net	$	293,737	$	312,234

(a)	During the third quarter of 2011, we transferred our Railcar lending and leasing portfolio from CLL Other to CLL Americas. Prior-period amounts were reclassified to conform to the current-period presentation.

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Allowance for Losses on Financing Receivables

The following tables provide a roll-forward of our allowance for losses on financing receivables.

	Balance at		Provision												Balance at
	January 1,		charged to						Gross						September 30,
(In millions)	2011		operations		(a)	Other		(b)	write-offs		(c)	Recoveries		(c)	2011

Commercial
CLL
Americas	$	1,288	$	250		$	(79)		$	(544)		$	80		$	995
Europe		429		126			17			(218)			49			403
Asia		222		81			16			(194)			25			150
Other		6		3			(4)			–			–			5
Total CLL		1,945		460			(50)			(956)			154			1,553


Energy Financial
Services		22		10			–			(4)			8			36

GECAS		20		(4)			–			(2)			–			14

Other		58		13			–			(31)			3			43
Total Commercial		2,045		479			(50)			(993)			165			1,646

Real Estate
Debt		1,292		155			13			(494)			12			978
Business Properties		196		70			–			(107)			4			163
Total Real Estate		1,488		225			13			(601)			16			1,141