form10q3q.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, 2012
 
OR
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ____ to ____
 
Commission file number 001-00035
 
GENERAL ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)

 
New York
  
14-0689340
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)
     
3135 Easton Turnpike, Fairfield, CT
  
06828-0001
(Address of principal executive offices)
  
(Zip Code)
 
(Registrant’s telephone number, including area code) (203) 373-2211
 
_______________________________________________
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
 
Indicate by check mark whether the registrant 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 10,486,300,000 shares of common stock with a par value of $0.06 per share outstanding at September 30, 2012.


 
(1)
 
 

General Electric Company
 

 
   
Page
Part I - Financial Information
    
     
Item 1. Financial Statements
    
Condensed Statement of Earnings
    
   Three Months Ended September 30, 2012
  
3
Nine Months Ended September 30, 2012
  
4
 
5
 
5
 
6
 
7
 
8
 
9
 
59
 
87
 
87
     
Part II - Other Information
    
     
Item 1. Legal Proceedings
  
88
88
 
89
 
90
 
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 (GE Money Japan); pending and future mortgage securitization claims and litigation in connection with WMC, which may affect our estimates of liability, including possible loss estimates; 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; GECC’s ability to pay dividends to GE 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; the impact of potential information technology or data security breaches; 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 (GECC)
(In millions, except share amounts)
2012 
  
2011 
    
2012 
  
2011 
  
2012 
  
2011 
                                     
Revenues and other income
                                    
Sales of goods
$
 17,734 
  
$
 16,859 
    
$
 17,860 
  
$
 16,869 
  
$
 34 
  
$
 32 
Sales of services
  
 6,805 
    
 6,279 
      
 6,889 
    
 6,361 
    
– 
    
– 
Other income
  
 787 
    
 556 
      
 818 
    
 621 
    
– 
    
– 
GECC earnings from continuing operations
  
– 
    
– 
      
 1,679 
    
 1,519 
    
– 
    
– 
GECC revenues from services
  
 11,023 
    
 11,670 
      
– 
    
– 
    
 11,335 
    
 11,983 
   Total revenues and other income
  
 36,349 
    
 35,364 
      
 27,246 
    
 25,370 
    
 11,369 
    
 12,015 
                                     
Costs and expenses
                                    
Cost of goods sold
  
 14,419 
    
 13,175 
      
 14,550 
    
 13,187 
    
 27 
    
 30 
Cost of services sold
  
 4,090 
    
 3,584 
      
 4,174 
    
 3,667 
    
– 
    
– 
Interest and other financial charges
  
 2,979 
    
 3,731 
      
 294 
    
 356 
    
 2,805 
    
 3,556 
Investment contracts, insurance losses and
                                    
   insurance annuity benefits
  
 756 
    
 719 
      
– 
    
– 
    
 798 
    
 755 
Provision for losses on financing receivables
  
 1,122 
    
 961 
      
– 
    
– 
    
 1,122 
    
 961 
Other costs and expenses
  
 8,957 
    
 9,427 
      
 4,300 
    
 4,490 
    
 4,840 
    
 5,097 
   Total costs and expenses
  
 32,323 
    
 31,597 
      
 23,318 
    
 21,700 
    
 9,592 
    
 10,399 
                                     
Earnings from continuing operations
                                    
   before income taxes
  
 4,026 
    
 3,767 
      
 3,928 
    
 3,670 
    
 1,777 
    
 1,616 
Benefit (provision) for income taxes
  
 (555)
    
 (437)
      
 (477)
    
 (378)
    
 (78)
    
 (59)
Earnings from continuing operations
  
 3,471 
    
 3,330 
      
 3,451 
    
 3,292 
    
 1,699 
    
 1,557 
Earnings (loss) from discontinued operations,
                                    
   net of taxes
  
 37 
    
 (65)
      
 37 
    
 (65)
    
 (111)
    
 (64)
Net earnings (loss)
  
 3,508 
    
 3,265 
      
 3,488 
    
 3,227 
    
 1,588 
    
 1,493 
Less net earnings (loss) attributable to
                                    
   noncontrolling interests
  
 17 
    
 41 
      
 (3)
    
 3 
    
 20 
    
 38 
Net earnings (loss) attributable to the Company
  
 3,491 
    
 3,224 
      
 3,491 
    
 3,224 
    
 1,568 
    
 1,455 
Preferred stock dividends declared
  
– 
    
 (881)
      
– 
    
 (881)
    
– 
    
– 
Net earnings (loss) attributable to GE common
                                    
   shareowners
$
 3,491 
  
$
 2,343 
    
$
 3,491 
  
$
 2,343 
  
$
 1,568 
  
$
 1,455 
                                     
                                     
Amounts attributable to the Company
                                    
   Earnings from continuing operations
$
 3,454 
  
$
 3,289 
    
$
 3,454 
  
$
 3,289 
  
$
 1,679 
  
$
 1,519 
   Earnings (loss) from discontinued operations,
                                    
      net of taxes
  
 37 
    
 (65)
      
 37 
    
 (65)
    
 (111)
    
 (64)
   Net earnings (loss) attributable to the Company
$
 3,491 
  
$
 3,224 
    
$
 3,491 
  
$
 3,224 
  
$
 1,568 
  
$
 1,455 
                                     
Per-share amounts
                                    
   Earnings from continuing operations
                                    
      Diluted earnings per share
$
 0.33 
  
$
 0.23 
                          
      Basic earnings per share
$
 0.33 
  
$
 0.23 
                          
                                     
   Net earnings
                                    
      Diluted earnings per share
$
 0.33 
  
$
 0.22 
                          
      Basic earnings per share
$
 0.33 
  
$
 0.22 
                          
                                     
Dividends declared per common share
$
 0.17 
  
$
 0.15 
                          
                                     
                                     
(a)
Represents the adding together of all affiliated companies except General Electric Capital Corporation (GECC 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 (GECC)." Transactions between GE and GECC 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 (GECC)
(In millions, except share amounts)
2012 
  
2011 
    
2012 
  
2011 
  
2012 
  
2011 
                                     
Revenues and other income
                                    
Sales of goods
$
 53,234 
  
$
 47,571 
    
$
 53,432 
  
$
 47,539 
  
$
 90 
  
$
 116 
Sales of services
  
 19,835 
    
 20,466 
      
 20,142 
    
 20,754 
    
– 
    
– 
Other income
  
 1,737 
    
 4,805 
      
 1,827 
    
 4,962 
    
– 
    
– 
GECC earnings from continuing operations
  
– 
    
– 
      
 5,593 
    
 4,924 
    
– 
    
– 
GECC revenues from services
  
 33,226 
    
 36,474 
      
– 
    
– 
    
 34,179 
    
 37,375 
   Total revenues and other income
  
 108,032 
    
 109,316 
      
 80,994 
    
 78,179 
    
 34,269 
    
 37,491 
                                     
Costs and expenses
                                    
Cost of goods sold
  
 42,681 
    
 37,943 
      
 42,893 
    
 37,919 
    
 75 
    
 108 
Cost of services sold
  
 12,896 
    
 12,949 
      
 13,203 
    
 13,237 
    
– 
    
– 
Interest and other financial charges
  
 9,548 
    
 11,297 
      
 960 
    
 1,032 
    
 8,989 
    
 10,738 
Investment contracts, insurance losses and
                                    
   insurance annuity benefits
  
 2,155 
    
 2,201 
      
– 
    
– 
    
 2,271 
    
 2,314 
Provision for losses on financing receivables
  
 2,728 
    
 2,893 
      
– 
    
– 
    
 2,728 
    
 2,893 
Other costs and expenses
  
 25,887 
    
 26,296 
      
 12,214 
    
 11,177 
    
 14,200 
    
 15,591 
   Total costs and expenses
  
 95,895 
    
 93,579 
      
 69,270 
    
 63,365 
    
 28,263 
    
 31,644 
                                     
Earnings (loss) from continuing operations
                                    
   before income taxes
  
 12,137 
    
 15,737 
      
 11,724 
    
 14,814 
    
 6,006 
    
 5,847 
Benefit (provision) for income taxes
  
 (1,686)
    
 (5,271)
      
 (1,319)
    
 (4,437)
    
 (367)
    
 (834)
Earnings from continuing operations
  
 10,451 
    
 10,466 
      
 10,405 
    
 10,377 
    
 5,639 
    
 5,013 
Earnings (loss) from discontinued operations,
                                    
   net of taxes
  
 (733)
    
 164 
      
 (733)
    
 164 
    
 (881)
    
 166 
Net earnings (loss)
  
 9,718 
    
 10,630 
      
 9,672 
    
 10,541 
    
 4,758 
    
 5,179 
Less net earnings (loss) attributable to
                                    
   noncontrolling interests
  
 88 
    
 209 
      
 42 
    
 120 
    
 46 
    
 89 
Net earnings (loss) attributable to the Company
  
 9,630 
    
 10,421 
      
 9,630 
    
 10,421 
    
 4,712 
    
 5,090 
Preferred stock dividends declared
  
– 
    
 (1,031)
      
– 
    
 (1,031)
    
– 
    
– 
Net earnings (loss) attributable to GE common
                                    
   shareowners
$
 9,630 
  
$
 9,390 
    
$
 9,630 
  
$
 9,390 
  
$
 4,712 
  
$
 5,090 
                                     
                                     
Amounts attributable to the Company
                                    
   Earnings from continuing operations
$
 10,363 
  
$
 10,257 
    
$
 10,363 
  
$
 10,257 
  
$
 5,593 
  
$
 4,924 
   Earnings (loss) from discontinued operations,
                                    
      net of taxes
  
 (733)
    
 164 
      
 (733)
    
 164 
    
 (881)
    
 166 
   Net earnings (loss) attributable to the Company
$
 9,630 
  
$
 10,421 
    
$
 9,630 
  
$
 10,421 
  
$
 4,712 
  
$
 5,090 
                                     
Per-share amounts
                                    
   Earnings from continuing operations
                                    
      Diluted earnings per share
$
 0.98 
  
$
 0.87 
                          
      Basic earnings per share
$
 0.98 
  
$
 0.87 
                          
                                     
   Net earnings
                                    
      Diluted earnings per share
$
 0.91 
  
$
 0.88 
                          
      Basic earnings per share
$
 0.91 
  
$
 0.88 
                          
                                     
Dividends declared per common share
$
 0.51 
  
$
 0.44 
                          
                                     
                                     

(a)
Represents the adding together of all affiliated companies except General Electric Capital Corporation (GECC 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 (GECC).” Transactions between GE and GECC have been eliminated from the “Consolidated” columns.
 

 
(4)
 
 
 

General Electric Company and consolidated affiliates
                  
Condensed, Consolidated Statement of Comprehensive Income
                  
                         
   
Three months ended September 30 (Unaudited)
  
Nine months ended September 30 (Unaudited)
(In millions)
    
2012 
    
2011 
    
2012 
    
2011 
                         
Net earnings
  
$
3,508 
  
$
3,265 
  
$
9,718 
  
$
10,630 
Less net earnings (loss) attributable to
                        
   noncontrolling interests
    
17 
    
41 
    
88 
    
209 
Net earnings attributable to GE
  
$
3,491 
  
$
3,224 
  
$
9,630 
  
$
10,421 
                         
Other comprehensive income (loss), net of tax
                        
   Investment securities
  
$
118 
  
$
249 
  
$
624 
  
$
453 
   Currency translation adjustments
    
1,286 
    
(1,844)
    
288 
    
2,509 
   Cash flow hedges
    
67 
    
(83)
    
212 
    
(342)
   Benefit plans
    
926 
    
495 
    
2,526 
    
1,593 
Other comprehensive income (loss), net of tax
    
2,397 
    
(1,183)
    
3,650 
    
4,213 
Less other comprehensive income (loss) attributable to
                        
   noncontrolling interests
    
(5)
    
26 
    
(3)
    
22 
Other comprehensive income (loss) attributable to GE
  
$
2,402 
  
$
(1,209)
  
$
3,653 
  
$
4,191 
                         
Comprehensive income, net of tax
  
$
5,905 
  
$
2,082 
  
$
13,368 
  
$
14,843 
Less comprehensive income attributable to
                        
   noncontrolling interests
    
12 
    
67 
    
85 
    
231 
Comprehensive income attributable to GE
  
$
5,893 
  
$
2,015 
  
$
13,283 
  
$
14,612 
                         
                         

General Electric Company and consolidated affiliates
                
Condensed, Consolidated Statement of Changes in Shareowners' Equity
              
                       
                       
     
Nine months ended September 30 (Unaudited)
(In millions)
              
2012 
    
2011 
                 
Beginning balance
            
$
116,438 
  
$
118,936 
Dividends and other transactions with shareowners
              
(7,169)
    
(9,087)
Other comprehensive income (loss), net of tax
              
3,653 
    
4,191 
Increases from net earnings attributable to the Company
              
9,630 
    
10,421 
Ending balance
              
122,552 
    
124,461 
Noncontrolling interests
              
5,464 
    
2,312 
Total equity
            
$
128,016 
  
$
126,773 
 

 
(5)
 
 

General Electric Company and consolidated affiliates
Condensed Statement of Financial Position
 
Consolidated
    
GE(a)
  
Financial Services (GECC)
 
September 30,
  
December 31,
    
September 30,
  
December 31,
  
September 30,
  
December 31,
(In millions, except share amounts)
2012 
  
2011 
    
2012 
  
2011 
  
2012 
  
2011 
 
(Unaudited)
        
(Unaudited)
      
(Unaudited)
    
Assets
                                    
Cash and equivalents
$
 85,461 
  
$
 84,501 
    
$
 8,362 
  
$
 8,382 
  
$
 77,666 
  
$
 76,702 
Investment securities
  
 48,719 
    
 47,374 
      
 27 
    
 18 
    
 48,695 
    
 47,359 
Current receivables
  
 19,347 
    
 19,531 
      
 11,665 
    
 11,807 
    
– 
    
– 
Inventories
  
 16,022 
    
 13,792 
      
 15,949 
    
 13,741 
    
 73 
    
 51 
Financing receivables – net
  
 262,564 
    
 279,918 
      
– 
    
– 
    
 271,623 
    
 288,847 
Other GECC receivables
  
 7,647 
    
 7,561 
      
– 
    
– 
    
 13,772 
    
 13,390 
Property, plant and equipment – net
  
 67,388 
    
 65,739 
      
 15,064 
    
 14,283 
    
 52,288 
    
 51,419 
Investment in GECC
  
– 
    
– 
      
 77,389 
    
 77,110 
    
– 
    
– 
Goodwill
  
 73,162 
    
 72,625 
      
 45,824 
    
 45,395 
    
 27,338 
    
 27,230 
Other intangible assets – net
  
 11,709 
    
 12,068 
      
 10,348 
    
 10,522 
    
 1,361 
    
 1,546 
All other assets
  
 102,953 
    
 111,701 
      
 38,351 
    
 36,675 
    
 64,887 
    
 75,612 
Assets of businesses held for sale
  
 2,700 
    
 711 
      
– 
    
– 
    
 2,700 
    
 711 
Assets of discontinued operations
  
 1,208 
    
 1,721 
      
 9 
    
 52 
    
 1,199 
    
 1,669 
Total assets(b)
$
 698,880 
  
$
 717,242 
    
$
 222,988 
  
$
 217,985 
  
$
 561,602 
  
$
 584,536 
                                     
Liabilities and equity
                                    
Short-term borrowings
$
 120,435 
  
$
 137,611 
    
$
 7,669 
  
$
 2,184 
  
$
 113,587 
  
$
 136,333 
Accounts payable, principally trade accounts
  
 15,851 
    
 16,400 
      
 13,996 
    
 14,209 
    
 7,007 
    
 7,239 
Progress collections and price adjustments accrued
  
 9,402 
    
 10,402 
      
 10,487 
    
 11,349 
    
– 
    
– 
Dividends payable
  
 1,785 
    
 1,797 
      
 1,785 
    
 1,797 
    
– 
    
– 
Other GE current liabilities
  
 15,250 
    
 14,796 
      
 15,250 
    
 14,796 
    
– 
    
– 
Non-recourse borrowings of consolidated
                                    
   securitization entities
  
 31,171 
    
 29,258 
      
– 
    
– 
    
 31,171 
    
 29,258 
Bank deposits
  
 45,196 
    
 43,115 
      
– 
    
– 
    
 45,196 
    
 43,115 
Long-term borrowings
  
 234,673 
    
 243,459 
      
 4,388 
    
 9,405 
    
 230,402 
    
 234,391 
Investment contracts, insurance liabilities
                                    
   and insurance annuity benefits
  
 28,322 
    
 29,774 
      
– 
    
– 
    
 28,806 
    
 30,198 
All other liabilities
  
 67,267 
    
 70,653 
      
 52,484 
    
 53,826 
    
 15,445 
    
 17,334 
Deferred income taxes
  
 (541)
    
 (131)
      
 (6,486)
    
 (7,183)
    
 5,945 
    
 7,052 
Liabilities of businesses held for sale
  
 206 
    
 345 
      
– 
    
– 
    
 206 
    
 345 
Liabilities of discontinued operations
  
 1,847 
    
 1,629 
      
 70 
    
 158 
    
 1,777 
    
 1,471 
Total liabilities(b)
  
 570,864 
    
 599,108 
      
 99,643 
    
 100,541 
    
 479,542 
    
 506,736 
                                     
GECC preferred stock (40,000 shares outstanding at
  
– 
    
– 
      
– 
    
– 
    
– 
    
– 
  September 30, 2012)
                                    
Common stock (10,486,300,000 and 10,573,017,000
                                    
  shares outstanding at September 30, 2012 and
                                    
  December 31, 2011, respectively)
  
 702 
    
 702 
      
 702 
    
 702 
    
– 
    
– 
                                     
Accumulated other comprehensive income – net(c)
                                    
   Investment securities
  
 592 
    
 (30)
      
 592 
    
 (30)
    
 602 
    
 (33)
   Currency translation adjustments
  
 430 
    
 133 
      
 430 
    
 133 
    
 (145)
    
 (399)
   Cash flow hedges
  
 (965)
    
 (1,176)
      
 (965)
    
 (1,176)
    
 (961)
    
 (1,101)
   Benefit plans
  
 (20,378)
    
 (22,901)
      
 (20,378)
    
 (22,901)
    
 (579)
    
 (563)
Other capital
  
 33,119 
    
 33,693 
      
 33,119 
    
 33,693 
    
 31,589 
    
 27,628 
Retained earnings
  
 142,026 
    
 137,786 
      
 142,026 
    
 137,786 
    
 50,843 
    
 51,578 
Less common stock held in treasury
  
 (32,974)
    
 (31,769)
      
 (32,974)
    
 (31,769)
    
– 
    
– 
                                     
Total GE shareowners’ equity
  
 122,552 
    
 116,438 
      
 122,552 
    
 116,438 
    
 81,349 
    
 77,110 
Noncontrolling interests(d)
  
 5,464 
    
 1,696 
      
 793 
    
 1,006 
    
 711 
    
 690 
Total equity
  
 128,016 
    
 118,134 
      
 123,345 
    
 117,444 
    
 82,060 
    
 77,800 
                                     
Total liabilities and equity
$
 698,880 
  
$
 717,242 
    
$
 222,988 
  
$
 217,985 
  
$
 561,602 
  
$
 584,536 
                                     
                                     
(a)
Represents the adding together of all affiliated companies except General Electric Capital Corporation (GECC or Financial Services), which is presented on a one-line basis.
 
(b)
Our consolidated assets at September 30, 2012 include total assets of $47,660 million of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs. These assets include net financing receivables of $40,422 million and investment securities of $4,797 million. Our consolidated liabilities at September 30, 2012 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 $30,270 million. See Note 18.
 
(c)
The sum of accumulated other comprehensive income - net was $(20,321) million and $(23,974) million at September 30, 2012 and December 31, 2011, respectively.
 
(d)
Included accumulated other comprehensive income - net attributable to noncontrolling interests of $(165) million and $(168) million at September 30, 2012 and December 31, 2011, respectively.
 
See accompanying notes. Separate information is shown for "GE" and "Financial Services (GECC)." Transactions between GE and GECC have been eliminated from the "Consolidated" columns.
 

 
(6)
 
 

 
General Electric Company and consolidated affiliates
Condensed Statement of Cash Flows
 
Nine months ended September 30 (Unaudited)
 
Consolidated
    
GE(a)
  
Financial Services (GECC)
(In millions)
2012 
  
2011 
    
2012 
  
2011 
  
2012 
  
2011 
                                     
Cash flows – operating activities
                                    
Net earnings
$
 9,718 
  
$
 10,630 
    
$
 9,672 
  
$
 10,541 
  
$
 4,758 
  
$
 5,179 
Less net earnings (loss) attributable to noncontrolling
   interests
  
 88 
    
 209 
      
 42 
    
 120 
    
 46 
    
 89 
Net earnings attributable to the Company
  
 9,630 
    
 10,421 
      
 9,630 
    
 10,421 
    
 4,712 
    
 5,090 
(Earnings) loss from discontinued operations
  
 733 
    
 (164)
      
 733 
    
 (164)
    
 881 
    
 (166)
Adjustments to reconcile net earnings attributable to the
                                    
   Company to cash provided from operating activities
                                    
      Depreciation and amortization of property,
                                    
         plant and equipment
  
 6,814 
    
 6,944 
      
 1,677 
    
 1,539 
    
 5,137 
    
 5,405 
      Earnings from continuing operations retained by GECC(b)
  
– 
    
– 
      
 (147)
    
 (4,924)
    
– 
    
– 
      Deferred income taxes
  
 (1,537)
    
 (2,213)
      
 (605)
    
 (61)
    
 (932)
    
 (2,152)
      Decrease (increase) in GE current receivables
  
 (62)
    
 340 
      
 31 
    
 (449)
    
– 
    
– 
      Decrease (increase) in inventories
  
 (1,949)
    
 (2,408)
      
 (1,895)
    
 (2,384)
    
 (22)
    
 22 
      Increase (decrease) in accounts payable
  
 244 
    
 1,314 
      
 299 
    
 1,459 
    
 (287)
    
 1,103 
      Increase (decrease) in GE progress collections
  
 (1,153)
    
 (679)
      
 (1,015)
    
 (588)
    
– 
    
– 
      Provision for losses on GECC financing receivables
  
 2,728 
    
 2,893 
      
– 
    
– 
    
 2,728 
    
 2,893 
      All other operating activities
  
 4,610 
    
 6,954 
      
 1,944 
    
 1,695 
    
 2,795 
    
 4,458 
Cash from (used for) operating activities – continuing
                                    
   operations
  
 20,058 
    
 23,402 
      
 10,652 
    
 6,544 
    
 15,012 
    
 16,653 
Cash from (used for) operating activities – discontinued
                                    
   operations
  
 20 
    
 821 
      
– 
    
– 
    
 20 
    
 821 
Cash from (used for) operating activities
  
 20,078 
    
 24,223 
      
 10,652 
    
 6,544 
    
 15,032 
    
 17,474 
                                     
Cash flows – investing activities
                                    
Additions to property, plant and equipment
  
 (10,498)
    
 (9,051)
      
 (2,741)
    
 (2,067)
    
 (8,096)
    
 (7,149)
Dispositions of property, plant and equipment
  
 4,848 
    
 4,637 
      
– 
    
– 
    
 4,848 
    
 4,637 
Net decrease (increase) in GECC financing receivables
  
 9,464 
    
 17,652 
      
– 
    
– 
    
 9,521 
    
 18,514 
Proceeds from sale of discontinued operations
  
 227 
    
 8,951 
      
– 
    
– 
    
 227 
    
 8,951 
Proceeds from principal business dispositions
  
 293 
    
 8,265 
      
 49 
    
 6,148 
    
 244 
    
 2,117 
Payments for principal businesses purchased
  
 (604)
    
 (10,839)
      
 (604)
    
 (10,789)
    
– 
    
 (50)
All other investing activities
  
 8,835 
    
 3,591 
      
 (334)
    
 (233)
    
 9,383 
    
 4,229 
Cash from (used for) investing activities – continuing
                                    
   operations
  
 12,565 
    
 23,206 
      
 (3,630)
    
 (6,941)
    
 16,127 
    
 31,249 
Cash from (used for) investing activities – discontinued
                                    
   operations
  
 (30)
    
 (789)
      
– 
    
– 
    
 (30)
    
 (789)
Cash from (used for) investing activities
  
 12,535 
    
 22,417 
      
 (3,630)
    
 (6,941)
    
 16,097 
    
 30,460 
                                     
Cash flows – financing activities
                                    
Net increase (decrease) in borrowings (maturities of
                                    
   90 days or less)
  
 (660)
    
 (770)
      
 661 
    
 393 
    
 (1,209)
    
 (1,893)
Net increase (decrease) in bank deposits
  
 1,195 
    
 3,746 
      
– 
    
– 
    
 1,195 
    
 3,746 
Newly issued debt (maturities longer than 90 days)
  
 43,468 
    
 34,074 
      
33 
    
 146 
    
 43,215 
    
 33,808 
Repayments and other reductions (maturities longer
                                    
   than 90 days)
  
 (70,405)
    
 (60,191)
      
 (17)
    
 57 
    
 (70,388)
    
 (60,248)
Proceeds from issuance of GECC preferred stock
  
 3,960 
    
– 
      
– 
    
– 
    
 3,960 
    
– 
Net dispositions (purchases) of GE shares for treasury
  
 (2,280)
    
 (1,581)
      
 (2,280)
    
 (1,581)
    
– 
    
– 
Dividends paid to shareowners
  
 (5,401)
    
 (4,796)
      
 (5,401)
    
 (4,796)
    
 (5,446)
    
– 
Purchase of subsidiary shares from
                                    
   noncontrolling interests
  
– 
    
 (4,298)
      
– 
    
 (4,298)
    
– 
    
– 
All other financing activities
  
 (2,783)
    
 (1,428)
      
 (54)
    
 (92)
    
 (2,729)
    
 (1,336)
Cash from (used for) financing activities – continuing
                                    
   operations
  
 (32,906)
    
 (35,244)
      
 (7,058)
    
 (10,171)
    
 (31,402)
    
 (25,923)
Cash from (used for) financing activities – discontinued
                                    
   operations
  
– 
    
 (42)
      
– 
    
– 
    
– 
    
 (42)
Cash from (used for) financing activities
  
 (32,906)
    
 (35,286)
      
 (7,058)
    
 (10,171)
    
 (31,402)
    
 (25,965)
Effect of currency exchange rate changes on cash
                                    
   and equivalents
  
 1,243 
    
 1,061 
      
 16 
    
 19 
    
 1,227 
    
 1,042 
Increase (decrease) in cash and equivalents
  
 950 
    
 12,415 
      
 (20)
    
 (10,549)
    
 954 
    
 23,011 
Cash and equivalents at beginning of year
  
 84,622 
    
 79,084 
      
 8,382 
    
 19,241 
    
 76,823 
    
 60,398 
Cash and equivalents at September 30
  
 85,572 
    
 91,499 
      
 8,362 
    
 8,692 
    
 77,777 
    
 83,409 
Less cash and equivalents of discontinued operations
                                    
   at September 30
  
 111 
    
 131 
      
– 
    
– 
    
 111 
    
 131 
Cash and equivalents of continuing operations
                                    
   at September 30
$
 85,461 
  
$
 91,368 
    
$
 8,362 
  
$
 8,692 
  
$
 77,666 
  
$
 83,278 
                                     
                                     
(a)
Represents the adding together of all affiliated companies except General Electric Capital Corporation (GECC or Financial Services), which is presented on a one-line basis.
 
(b)
Represents GECC earnings from continuing operations attributable to the Company, net of GECC dividends paid to GE.
 
See accompanying notes. Separate information is shown for "GE" and "Financial Services (GECC)." Transactions between GE and GECC have been eliminated from the "Consolidated" columns and are discussed in Note 19.
 

 
(7)
 
 

Summary of Operating Segments
General Electric Company and consolidated affiliates
 
 
Three months ended September 30
  
Nine months ended September 30
 
(Unaudited)
  
(Unaudited)
(In millions)
2012 
  
2011 
  
2012 
  
2011 
                       
Revenues(a)
                      
   Energy Infrastructure
$
 12,180 
  
$
 10,855 
  
$
 35,267 
  
$
 30,706 
   Aviation
  
 4,781 
    
 4,835 
    
 14,527 
    
 13,935 
   Healthcare
  
 4,307 
    
 4,332 
    
 13,107 
    
 12,920 
   Transportation
  
 1,409 
    
 1,287 
    
 4,244 
    
 3,421 
   Home & Business Solutions
  
 2,120 
    
 2,094 
    
 6,415 
    
 6,236 
   Total industrial segment revenues
  
 24,797 
    
 23,403 
    
 73,560 
    
 67,218 
   GE Capital
  
 11,369 
    
 12,015 
    
 34,269 
    
 37,491 
      Total segment revenues
  
 36,166 
    
 35,418 
    
 107,829 
    
 104,709 
Corporate items and eliminations(a)
  
 183 
    
 (54)
    
 203 
    
 4,607 
Consolidated revenues and other income
$
 36,349 
  
$
 35,364 
  
$
 108,032 
  
$
 109,316 
                       
Segment profit(a)
                      
   Energy Infrastructure
$
 1,695 
  
$
 1,503 
  
$
 4,974 
  
$
 4,436 
   Aviation
  
 924 
    
 862 
    
 2,708 
    
 2,662 
   Healthcare
  
 620 
    
 608 
    
 1,899 
    
 1,850 
   Transportation
  
 265 
    
 196 
    
 779 
    
 531 
   Home & Business Solutions
  
 61 
    
 38 
    
 218 
    
 218 
   Total industrial segment profit
  
 3,565 
    
 3,207 
    
 10,578 
    
 9,697 
   GE Capital
  
 1,679 
    
 1,519 
    
 5,593 
    
 4,924 
      Total segment profit
  
 5,244 
    
 4,726 
    
 16,171 
    
 14,621 
Corporate items and eliminations(a)
  
 (1,019)
    
 (703)
    
 (3,529)
    
 1,105 
GE interest and other financial charges
  
 (294)
    
 (356)
    
 (960)
    
 (1,032)
GE provision for income taxes
  
 (477)
    
 (378)
    
 (1,319)
    
 (4,437)
Earnings from continuing operations attributable
                      
  to the Company
  
 3,454 
    
 3,289 
    
 10,363 
    
 10,257 
Earnings (loss) from discontinued operations,
                      
  net of taxes, attributable to the Company
  
 37 
    
 (65)
    
 (733)
    
 164 
Consolidated net earnings attributable to
                      
   the Company
$
 3,491 
  
$
 3,224 
  
$
 9,630 
  
$
 10,421 
                       
                       
(a)  
Segment revenues includes both revenues and other income related to the segment. Segment profit excludes results reported as discontinued operations, earnings attributable to noncontrolling interests of consolidated subsidiaries, GECC preferred stock dividends declared 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 run-off insurance operations previously reported in Corporate items and eliminations are now reported in GE Capital.
 

 
See accompanying notes.
 

 
(8)
 
 


Notes to Condensed, Consolidated Financial Statements (Unaudited)
 
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
The accompanying condensed, consolidated financial statements represent the consolidation of General Electric Company (the 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 fiscal year ended December 31, 2011 (2011 consolidated financial statements), which discusses our consolidation and financial statement presentation. As used in this report on Form 10-Q (Report), “GE” represents the adding together of all affiliated companies except General Electric Capital Corporation (GECC or Financial Services), which is presented on a one-line basis; GECC consists of General Electric Capital Corporation and all of its affiliates; and “Consolidated” represents the adding together of GE and GECC with the effects of transactions between the two eliminated. Unless otherwise indicated, we refer to the caption revenues and other income simply as “revenues” throughout Item 1 of this Form 10-Q.

On February 22, 2012, we merged our wholly-owned subsidiary, General Electric Capital Services, Inc. (GECS), with and into GECS’ wholly-owned subsidiary, GECC.  The merger simplified our financial services’ corporate structure by consolidating financial services entities and assets within our organization and simplifying Securities and Exchange Commission and regulatory reporting. Upon completion of the merger, (i) all outstanding shares of GECC common stock were cancelled, (ii) all outstanding GECS common stock and all GECS preferred stock held by the Company were converted into an aggregate of 1,000 shares of GECC common stock, and (iii) all treasury shares of GECS and all outstanding preferred stock of GECS held by GECC were cancelled. As a result, GECC became the surviving corporation, assumed all of GECS’ rights and obligations and became wholly-owned directly by the Company.

Because we wholly-owned both GECS and GECC, the merger was accounted for as a transfer of assets between entities under common control. Transfers of net assets or exchanges of shares between entities under common control are accounted for at historical value, and as if the transfer occurred at the beginning of the period.

Our financial services segment, GE Capital, comprises the continuing operations of GECC, which includes the run-off insurance operations previously held and managed in GECS. Unless otherwise indicated, references to GECC and the GE Capital segment in this Form 10-Q Report relate to the entity or segment as they exist subsequent to the February 22, 2012 merger. In addition, during the first quarter of 2012, we announced the planned disposition of the Consumer mortgage lending business in Ireland (Consumer Ireland). This disposition is reported as a discontinued operation, which requires retrospective restatement of prior periods to classify the assets, liabilities and results of operations as discontinued operations.

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 (NBCU LLC) are reported in the Corporate items and eliminations line on the Summary of Operating Segments.

As previously announced, we reorganized our Energy Infrastructure segment into three stand-alone businesses, effective October 1, 2012. We will report these businesses on the new basis beginning with the fourth quarter of 2012.

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.
 
 

 
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Accounting Changes
 
On January 1, 2012, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2011-05, an amendment to Accounting Standards Codification (ASC) 220, Comprehensive Income. ASU 2011-05 introduces a new statement, the Consolidated Statement of Comprehensive Income, which begins with net earnings and adds or deducts other recognized changes in assets and liabilities that are not included in net earnings, but are reported directly to equity, under U.S. generally accepted accounting principles (GAAP). For example, unrealized changes in currency translation adjustments are included in the measure of comprehensive income but are excluded from net earnings. The amendments became effective for the first quarter 2012 financial statements.  The amendments affect only the display of those components of equity categorized as other comprehensive income and do not change existing recognition and measurement requirements that determine net earnings.

On January 1, 2012, we adopted FASB ASU 2011-04, an amendment to ASC 820, Fair Value Measurements. ASU 2011-04 clarifies or changes the application of existing fair value measurements, including: that the highest and best use valuation premise in a fair value measurement is relevant only when measuring the fair value of nonfinancial assets; that a reporting entity should measure the fair value of its own equity instrument from the perspective of a market participant that holds that instrument as an asset; to permit an entity to measure the fair value of certain financial instruments on a net basis rather than based on its gross exposure when the reporting entity manages its financial instruments on the basis of such net exposure; that in the absence of a Level 1 input, a reporting entity should apply premiums and discounts when market participants would do so when pricing the asset or liability consistent with the unit of account; and that premiums and discounts related to size as a characteristic of the reporting entity’s holding are not permitted in a fair value measurement. Adopting these amendments had no effect on the financial statements. For a description of how we estimate fair value and our process for reviewing fair value measurements classified as Level 3 in the fair value hierarchy, see Note 1 in our 2011 consolidated financial statements.

See Note 1 in our 2011 consolidated financial statements for a summary of our significant accounting policies.

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 2011 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
 
In the third quarter of 2012, we completed the sale of our CLL business in South Korea for proceeds of $168 million. We also committed to sell a plant located in the United Kingdom and recognized a $178 million pre-tax loss ($103 million, net of tax) in the third quarter of 2012. We completed this sale on October 18, 2012.

In the second quarter of 2012, we committed to sell a portion of our Business Properties portfolio (Business Property) in Real Estate, including certain commercial loans, the origination and servicing platforms and the servicing rights on loans previously securitized by GECC. We completed the sale of Business Property on October 1, 2012 for proceeds of $2,406 million. We will deconsolidate substantially all Real Estate securitization entities in the fourth quarter of 2012 as servicing rights related to these entities were transferred to the buyer at closing.

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

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

 
At
 
September 30,
  
December 31,
(In millions)
2012
  
2011
   
           
      
Assets
  
           
      
Cash and equivalents
$
99 
  
$
149 
Financing receivables – net
  
2,406 
    
412 
Property, plant and equipment – net
  
38 
    
81 
Other
  
157 
    
69 
Assets of businesses held for sale
$
2,700 
  
$
711 
         
           
Liabilities
          
Short-term borrowings
$
186 
  
$
252 
Other
  
20 
    
93 
Liabilities of businesses held for sale
$
206 
  
$
345 

NBCU
 
On January 28, 2011, we sold the assets of our NBCU business in exchange for cash and a 49% interest in a new entity, NBCU LLC. With respect to our 49% interest in NBCU LLC, we hold redemption rights, which, if exercised, would require NBCU LLC or Comcast Corporation (Comcast) to purchase (either directly or indirectly) 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 based on a contractually specified formula, the determination of which involves valuations from two or more independent appraisers separately selected by GE and Comcast. As an input to the formula, the appraisers will determine the aggregate common equity market value of NBCU LLC following the completion of a hypothetical IPO, which is then adjusted for a control premium and a value-sharing adjustment with Comcast based on specified formulas. Differences in valuation methodologies, market comparables and various other assumptions made by the appraisers can have a significant impact on any final transaction value. See Note 2 in our 2011 consolidated financial statements for additional information related to the NBCU transaction.

At September 30, 2012 and December 31, 2011, the carrying amount of our equity investment in NBCU LLC was $18,799 million and $17,955 million, respectively, reported in the “All other assets” caption in our Condensed Statement of Financial Position. At September 30, 2012 and December 31, 2011, deferred tax liabilities related to our NBCU LLC investment were $5,019 million and $4,880 million, respectively, and were reported in the “Deferred income taxes” caption in our Condensed Statement of Financial Position.


 
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Discontinued Operations
 
Discontinued operations primarily comprised GE Money Japan (our Japanese personal loan business, Lake, and our Japanese mortgage and card businesses, excluding our investment in GE Nissen Credit Co., Ltd.), our U.S. mortgage business (WMC), our U.S. recreational vehicle and marine equipment financing business (Consumer RV Marine), Consumer Mexico, Consumer Singapore, our Consumer home lending operations in Australia and New Zealand (Australian Home Lending) and Consumer Ireland. Associated results of operations, financial position and cash flows are separately reported as discontinued operations for all periods presented.

Summarized financial information for discontinued operations is shown below.
 
 
Three months ended September 30
  
Nine months ended September 30
(In millions)
  
2012
    
2011 
    
2012
    
2011 
                       
Operations
                      
Total revenues and other income (expense)
$
(112)
  
$
17 
  
$
(461)
  
$
348 
                       
Earnings (loss) from discontinued operations
                      
   before income taxes
$
(141)
  
$
(74)
  
$
(579)
  
$
(113)
Benefit (provision) for income taxes
  
28 
    
21 
    
155 
    
54 
Earnings (loss) from discontinued operations,
                      
   net of taxes
$
(113)
  
$
(53)
  
$
(424)
  
$
(59)
                       
Disposal
                      
Gain (loss) on disposal before income taxes
$
(4)
  
$
(45)
  
$
(506)
  
$
(86)
Benefit (provision) for income taxes
  
154 
    
33 
    
197 
    
309 
Gain (loss) on disposal, net of taxes
$
150 
  
$
(12)
  
$
(309)
  
$
223 
                       
Earnings (loss) from discontinued operations,
                      
   net of taxes(a)
$
37 
  
$
(65)
  
$
(733)
  
$
164