geform10q1q13.htm
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549
 
FORM 10-Q
 (Mark One)
 
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2013
 
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 10,340,120,377 shares of common stock with a par value of $0.06 per share outstanding at March 31, 2013.

 

 
(1)
 
 
 

General Electric Company
 
   
Page
Part I - Financial Information
    
     
Item 1. Financial Statements
    
Condensed Statement of Earnings
    
Three Months Ended March 31, 2013
  
3
    Condensed Consolidated Statement of Comprehensive Income            
   4
    Condensed Consolidated Statement of Changes in Shareowner's Equity   4
Condensed Statement of Financial Position
  
5
Condensensed Statement of Cash Flows
  
6
Summary of Operating Segmewnts
  
7
Notes to Condensed, Consolidated Financial Statements (Unaudited)
  
8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
  
56
Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
80
Item 4. Controls and Procedures
  
80
     
Part II - Other Information
    
     
Item 1. Legal Proceedings
Item 2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  
81
82
Item 6. Exhibits
  
83
Signatures
  
84
 
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 sovereign debt situations; 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 flows and earnings and other conditions, which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; GECC’s ability to pay dividends to GE at the planned level; our ability to convert pre-order commitments into orders; 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; our capital allocation plans, as such plans may change and affect planned share repurchases and strategic actions, including acquisitions, joint ventures and dispositions; 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.
 
GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.gereports.com, as well as GE’s Facebook page and Twitter accounts, contain a significant amount of information about GE, including financial and other information for investors.  GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.
  
 

 
 
 

 
(2)
 
 
 

Part I. Financial Information
 
 
Item 1. Financial Statements.
 
General Electric Company and consolidated affiliates
 
Condensed Statement of Earnings
 
 
Three months ended March 31 (Unaudited)
 
Consolidated
    
GE(a)
  
Financial Services (GECC)
(In millions, except share amounts)
2013
  
2012
    
2013
  
2012
  
2013
  
2012
                                     
Revenues and other income
                                    
Sales of goods
$
 15,674
  
$
 17,315
    
$
 15,677
  
$
 17,357
  
$
 26
  
$
 30
Sales of services
  
 6,513
    
 6,212
      
 6,626
    
 6,330
    
– 
    
– 
Other income
  
 1,615
    
 557
      
 1,620
    
 600
    
– 
    
– 
GECC earnings from continuing operations
  
– 
    
– 
      
 1,927
    
 1,772
    
– 
    
– 
GECC revenues from services
  
 11,208
    
 10,996
      
– 
    
– 
    
 11,509
    
 11,310
   Total revenues and other income
  
 35,010
    
 35,080
      
 25,850
    
 26,059
    
 11,535
    
 11,340
                                     
Costs and expenses
                                    
Cost of goods sold
  
 12,867
    
 13,465
      
 12,874
    
 13,512
    
 21
    
 25
Cost of services sold
  
 4,449
    
 4,404
      
 4,562
    
 4,522
    
– 
    
– 
Interest and other financial charges
  
 2,621
    
 3,347
      
 324
    
 315
    
 2,400
    
 3,185
Investment contracts, insurance losses and
                                    
   insurance annuity benefits
  
 663
    
 737
      
– 
    
– 
    
 689
    
 771
Provision for losses on financing receivables
  
 1,488
    
 863
      
– 
    
– 
    
 1,488
    
 863
Other costs and expenses
  
 8,796
    
 8,330
      
 4,057
    
 4,003
    
 4,917
    
 4,497
   Total costs and expenses
  
 30,884
    
 31,146
      
 21,817
    
 22,352
    
 9,515
    
 9,341
                                     
Earnings from continuing operations
                                    
   before income taxes
  
 4,126
    
 3,934
      
 4,033
    
 3,707
    
 2,020
    
 1,999
Benefit (provision) for income taxes
  
 (506)
    
 (665)
      
 (424)
    
 (450)
    
 (82)
    
 (215)
Earnings from continuing operations
  
 3,620
    
 3,269
      
 3,609
    
 3,257
    
 1,938
    
 1,784
Earnings (loss) from discontinued operations,
                                    
   net of taxes
  
 (109)
    
 (197)
      
 (109)
    
 (197)
    
 (109)
    
 (197)
Net earnings
  
 3,511
    
 3,072
      
 3,500
    
 3,060
    
 1,829
    
 1,587
Less net earnings (loss) attributable to
                                    
   noncontrolling interests
  
 (16)
    
 38
      
 (27)
    
 26
    
 11
    
 12
Net earnings attributable to the Company
$
 3,527
  
$
 3,034
    
$
 3,527
  
$
 3,034
  
$
 1,818
  
$
 1,575
                                     
                                     
Amounts attributable to the Company
                                    
   Earnings from continuing operations
$
 3,636
  
$
 3,231
    
$
 3,636
  
$
 3,231
  
$
 1,927
  
$
 1,772
   Earnings (loss) from discontinued operations,
                                    
      net of taxes
  
 (109)
    
 (197)
      
 (109)
    
 (197)
    
 (109)
    
 (197)
   Net earnings attributable to the Company
$
 3,527
  
$
 3,034
    
$
 3,527
  
$
 3,034
  
$
 1,818
  
$
 1,575
                                     
Per-share amounts
                                    
   Earnings from continuing operations
                                    
      Diluted earnings per share
$
 0.35
  
$
 0.30
                          
      Basic earnings per share
$
 0.35
  
$
 0.30
                          
                                     
   Net earnings
                                    
      Diluted earnings per share
$
 0.34
  
$
 0.29
                          
      Basic earnings per share
$
 0.34
  
$
 0.29
                          
                                     
Dividends declared per common share
$
 0.19
  
$
 0.17
                          
                                     
                                     

(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, Consolidated Statement of Comprehensive Income
          
           
 
Three months ended March 31 (Unaudited)
(In millions)
  
2013
    
2012
           
Net earnings
$
3,511
  
$
3,072
Less: net earnings (loss) attributable to
          
   noncontrolling interests
  
(16)
    
38
Net earnings attributable to GE
$
3,527
  
$
3,034
           
Other comprehensive income
          
   Investment securities
$
68
  
$
333
   Currency translation adjustments
  
(459)
    
354
   Cash flow hedges
  
102
    
124
   Benefit plans
  
853
    
1,038
Other comprehensive income
  
564
    
1,849
Less: other comprehensive income (loss) attributable to
          
   noncontrolling interests
  
(2)
    
8
Other comprehensive income attributable to GE
$
566
  
$
1,841
           
Comprehensive income
$
4,075
  
$
4,921
Less: comprehensive income (loss) attributable to
          
   noncontrolling interests
  
(18)
    
46
Comprehensive income attributable to GE
$
4,093
  
$
4,875
           
           
Amounts presented net of taxes. See Note 12 for further information about other comprehensive income and noncontrolling interests.

See accompanying notes.


General Electric Company and consolidated affiliates
          
Condensed, Consolidated Statement of Changes in Shareowners' Equity
          
           
           
 
Three months ended March 31 (Unaudited)
(In millions)
  
2013
    
2012
         
GE shareowners' equity balance at January 1
$
123,026
  
$
116,438
Increases from net earnings attributable to GE
  
3,527
    
3,034
Dividends and other transactions with shareowners
  
(1,974)
    
(1,801)
Other comprehensive income (loss) attributable to GE
  
566
    
1,841
Net sales (purchases) of shares for treasury
  
(1,422)
    
454
Changes in other capital
  
(9)
    
(99)
Ending balance at March 31
  
123,714
    
119,867
Noncontrolling interests
  
5,336
    
1,721
Total equity balance at March 31
$
129,050
  
$
121,588
           
           
See Note 12 for further information about changes in shareowners’ equity.
 
See accompanying notes.
 
 
 
 
 
 

 
(4)
 
 
 
 
 

General Electric Company and consolidated affiliates
Condensed Statement of Financial Position
 
Consolidated
    
GE(a)
  
Financial Services (GECC)
 
March 31,
  
December 31,
    
March 31,
  
December 31,
  
March 31,
  
December 31,
(In millions, except share amounts)
2013
  
2012
    
2013
  
2012
  
2013
  
2012
 
(Unaudited)
        
(Unaudited)
      
(Unaudited)
    
Assets
                                    
Cash and equivalents
$
 89,781
  
$
 77,357
    
$
 22,074
  
$
 15,509
  
$
 67,721
  
$
 61,942
Investment securities
  
 48,329
    
 48,510
      
 71
    
 74
    
 48,261
    
 48,439
Current receivables
  
 21,001
    
 21,500
      
 11,463
    
 10,872
    
– 
    
– 
Inventories
  
 16,281
    
 15,374
      
 16,201
    
 15,295
    
 80
    
 79
Financing receivables – net
  
 248,455
    
 258,028
      
– 
    
– 
    
 258,324
    
 268,951
Other GECC receivables
  
 8,664
    
 7,890
      
– 
    
– 
    
 14,400
    
 13,917
Property, plant and equipment – net
  
 68,411
    
 69,044
      
 15,918
    
 16,033
    
 52,452
    
 52,974
Investment in GECC
  
– 
    
– 
      
 79,922
    
 77,930
    
– 
    
– 
Goodwill
  
 72,737
    
 73,175
      
 45,842
    
 46,143
    
 26,895
    
 27,032
Other intangible assets – net
  
 11,818
    
 11,987
      
 10,513
    
 10,700
    
 1,311
    
 1,294
All other assets
  
 77,948
    
 100,061
      
 20,072
    
 37,936
    
 58,047
    
 62,201
Deferred income taxes
  
 5,076
    
 (42)
      
 10,598
    
 5,946
    
 (5,522)
    
 (5,988)
Assets of businesses held for sale
  
 324
    
 211
      
 153
    
– 
    
 171
    
 211
Assets of discontinued operations
  
 1,865
    
 2,308
      
 9
    
 9
    
 1,856
    
 2,299
Total assets(b)
$
 670,690
  
$
 685,403
    
$
 232,836
  
$
 236,447
  
$
 523,996
  
$
 533,351
                                     
Liabilities and equity
                                    
Short-term borrowings
$
 83,127
  
$
 101,392
    
$
 905
  
$
 6,041
  
$
 82,662
  
$
 95,940
Accounts payable, principally trade accounts
  
 16,130
    
 15,657
      
 14,071
    
 14,259
    
 7,079
    
 6,259
Progress collections and price adjustments accrued
  
 11,337
    
 10,877
      
 11,337
    
 10,877
    
– 
    
– 
Dividends payable
  
 1,971
    
 1,980
      
 1,971
    
 1,980
    
– 
    
– 
Other GE current liabilities
  
 15,943
    
 14,895
      
 15,944
    
 14,896
    
– 
    
– 
Non-recourse borrowings of consolidated
                                    
   securitization entities
  
 30,488
    
 30,123
      
– 
    
– 
    
 30,488
    
 30,123
Bank deposits
  
 49,427
    
 46,461
 
   
– 
    
– 
    
 49,427
    
 46,461
Long-term borrowings
  
 234,299
    
 236,084
      
 11,418
    
 11,428
    
 223,001
    
 224,776
Investment contracts, insurance liabilities
                                    
   and insurance annuity benefits
  
 28,093
    
 28,268
      
– 
    
– 
    
 28,681
    
 28,696
All other liabilities
  
 68,404
    
 68,588
      
 52,577
    
 53,093
    
 15,878
    
 15,961
Liabilities of businesses held for sale
  
 45
    
 157
      
 41
    
– 
    
 4
    
 157
Liabilities of discontinued operations
  
 2,376
    
 2,451
      
 69
    
 70
    
 2,307
    
 2,381
Total liabilities(b)
  
 541,640
    
 556,933
      
 108,333
    
 112,644
    
 439,527
    
 450,754
                                     
GECC preferred stock (40,000 shares outstanding at both
                                    
  March 31, 2013 and December 31, 2012)
  
– 
    
– 
      
– 
    
– 
    
– 
    
– 
Common stock (10,340,120,000 and 10,405,625,000
                                    
  shares outstanding at March 31, 2013 and
                                    
  December 31, 2012, respectively)
  
 702
    
 702
      
 702
    
 702
    
– 
    
– 
                                     
Accumulated other comprehensive income (loss) – net(c)
                                    
   Investment securities
  
 744
    
 677
      
 744
    
 677
    
 738
    
 673
   Currency translation adjustments
  
 (43)
    
 412
      
 (43)
    
 412
    
 (119)
    
 (131)
   Cash flow hedges
  
 (620)
    
 (722)
      
 (620)
    
 (722)
    
 (654)
    
 (746)
   Benefit plans
  
 (19,745)
    
 (20,597)
      
 (19,745)
    
 (20,597)
    
 (723)
    
 (736)
Other capital
  
 33,061
    
 33,070
      
 33,061
    
 33,070
    
 31,578
    
 31,586
Retained earnings
  
 145,608
    
 144,055
      
 145,608
    
 144,055
    
 53,062
    
 51,244
Less common stock held in treasury
  
 (35,993)
    
 (34,571)
      
 (35,993)
    
 (34,571)
    
– 
    
– 
                                     
Total GE shareowners’ equity
  
 123,714
    
 123,026
      
 123,714
    
 123,026
    
 83,882
    
 81,890
Noncontrolling interests(d)
  
 5,336
    
 5,444
      
 789
    
 777
    
 587
    
 707
Total equity
  
 129,050
    
 128,470
      
 124,503
    
 123,803
    
 84,469
    
 82,597
                                     
Total liabilities and equity
$
 670,690
  
$
 685,403
    
$
 232,836
  
$
 236,447
  
$
 523,996
  
$
 533,351
                                     
                                     
(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 March 31, 2013 include total assets of $46,976 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 $40,079 million and investment securities of $4,494 million. Our consolidated liabilities at March 31, 2013 include liabilities of certain VIEs for which the VIE creditors do not have recourse to GE. These liabilities include non-recourse borrowings of consolidated securitization entities (CSEs) of $29,187 million. See Note 18.
 
(c)
The sum of accumulated other comprehensive income (loss) attributable to GE was $(19,664) million and $(20,230) million at March 31, 2013 and December 31, 2012, respectively.
 
(d)
Included accumulated other comprehensive income (loss) attributable to noncontrolling interests of $(157) million and $(155) million at March 31, 2013 and December 31, 2012, 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.
 
 
 

 
(5)
 
 
 


General Electric Company and consolidated affiliates
Condensed Statement of Cash Flows
 
Three months ended March 31 (Unaudited)
 
Consolidated
    
GE(a)
  
Financial Services (GECC)
(In millions)
2013
  
2012
    
2013
  
2012
  
2013
  
2012
                                     
Cash flows – operating activities
                                    
Net earnings
$
 3,511
  
$
 3,072
    
$
 3,500
  
$
 3,060
  
$
 1,829
  
$
 1,587
Less net earnings (loss) attributable to noncontrolling
   interests
  
 (16)
    
 38
      
 (27)
    
 26
    
 11
    
 12
Net earnings attributable to the Company
  
 3,527
    
 3,034
      
 3,527
    
 3,034
    
 1,818
    
 1,575
(Earnings) loss from discontinued operations
  
 109
    
 197
      
 109
    
 197
    
 109
    
 197
Adjustments to reconcile net earnings attributable to the
                                    
   Company to cash provided from operating activities
                                    
      Depreciation and amortization of property,
                                    
         plant and equipment
  
 2,310
    
 2,220
      
 612
    
 568
    
 1,698
    
 1,652
      Earnings from continuing operations retained by GECC(b)
  
– 
    
– 
      
 (1,927)
    
 (1,772)
    
– 
    
– 
      Deferred income taxes
  
 (1,512)
    
 52
      
 (1,762)
    
 (156)
    
 250
    
 208
      Decrease (increase) in GE current receivables
  
 463
    
 463
      
 (734)
    
 345
    
– 
    
– 
      Decrease (increase) in inventories
  
 (977)
    
 (1,433)
      
 (963)
    
 (1,432)
    
 (1)
    
 9
      Increase (decrease) in accounts payable
  
 747
    
 856
      
 134
    
 499
    
 611
    
 574
      Increase (decrease) in GE progress collections
  
 598
    
 101
      
 598
    
 101
    
– 
    
– 
      Provision for losses on GECC financing receivables
  
 1,488
    
 863
      
– 
    
– 
    
 1,488
    
 863
      All other operating activities
  
 (2,029)
    
 140
      
 606
    
 675
    
 (2,806)
    
 (397)
Cash from (used for) operating activities – continuing
                                    
   operations
  
 4,724
    
 6,493
      
 200
    
 2,059
    
 3,167
    
 4,681
Cash from (used for) operating activities – discontinued
                                    
   operations
  
 (114)
    
 (27)
      
 (2)
    
– 
    
 (112)
    
 (27)
Cash from (used for) operating activities
  
 4,610
    
 6,466
      
 198
    
 2,059
    
 3,055
    
 4,654
                                     
Cash flows – investing activities
                                    
Additions to property, plant and equipment
  
 (3,644)
    
 (3,286)
      
 (975)
    
 (1,002)
    
 (2,696)
    
 (2,328)
Dispositions of property, plant and equipment
  
 829
    
 1,819
      
– 
    
– 
    
 829
    
 1,819
Net decrease (increase) in GECC financing receivables
  
 5,172
    
 6,462
      
– 
    
– 
    
 6,289
    
 6,566
Proceeds from principal business dispositions
  
 272
    
 84
      
 111
    
– 
    
 161
    
 84
Proceeds from sale of equity interest in NBCU LLC
  
 16,699
    
– 
      
 16,699
    
– 
    
– 
    
– 
Net cash from (payments for) principal businesses purchased
  
 6,383
    
 (190)
      
 (9)
    
 (190)
    
 6,392
    
– 
All other investing activities
  
 5,659
    
 404
      
 (249)
    
 232
    
 6,231
    
 284
Cash from (used for) investing activities – continuing
                                    
   operations
  
 31,370
    
 5,293
      
 15,577
    
 (960)
    
 17,206
    
 6,425
Cash from (used for) investing activities – discontinued
                                    
   operations
  
 115
    
 26
      
 2
    
– 
    
 113
    
 26
Cash from (used for) investing activities
  
 31,485
    
 5,319
      
 15,579
    
 (960)
    
 17,319
    
 6,451
                                     
Cash flows – financing activities
                                    
Net increase (decrease) in borrowings (maturities of
                                    
   90 days or less)
  
 (9,849)
    
 (814)
      
 (529)
    
 166
    
 (9,457)
    
 (1,259)
Net increase (decrease) in bank deposits
  
 (3,252)
    
 (2,641)
      
– 
    
– 
    
 (3,252)
    
 (2,641)
Newly issued debt (maturities longer than 90 days)
  
 17,521
    
 17,070
      
 92
    
 74
    
 17,430
    
 16,767
Repayments and other reductions (maturities longer
                                    
   than 90 days)
  
 (23,465)
    
 (25,326)
      
 (5,013)
    
 (44)
    
 (18,452)
    
 (25,282)
Net dispositions (purchases) of GE shares for treasury
  
 (1,733)
    
 127
      
 (1,733)
    
 127
    
– 
    
– 
Dividends paid to shareowners
  
 (1,983)
    
 (1,799)
      
 (1,983)
    
 (1,799)
    
– 
    
– 
All other financing activities
  
 (195)
    
 (216)
      
 (29)
    
 (63)
    
 (166)
    
 (153)
Cash from (used for) financing activities – continuing
                                    
   operations
  
 (22,956)
    
 (13,599)
      
 (9,195)
    
 (1,539)
    
 (13,897)
    
 (12,568)
Cash from (used for) financing activities – discontinued
                                    
   operations
  
– 
    
– 
      
– 
    
– 
    
– 
    
– 
Cash from (used for) financing activities
  
 (22,956)
    
 (13,599)
      
 (9,195)
    
 (1,539)
    
 (13,897)
    
 (12,568)
Effect of currency exchange rate changes on cash
                                    
   and equivalents
  
 (714)
    
 962
      
 (17)
    
 37
    
 (697)
    
 925
Increase (decrease) in cash and equivalents
  
 12,425
    
 (852)
      
 6,565
    
 (403)
    
 5,780
    
 (538)
Cash and equivalents at beginning of year
  
 77,459
    
 84,622
      
 15,509
    
 8,382
    
 62,044
    
 76,823
Cash and equivalents at March 31
  
 89,884
    
 83,770
      
 22,074
    
 7,979
    
 67,824
    
 76,285
Less cash and equivalents of discontinued operations
                                    
   at March 31
  
 103
    
 120
      
– 
    
– 
    
 103
    
 120
Cash and equivalents of continuing operations
                                    
   at March 31
$
 89,781
  
$
 83,650
    
$
 22,074
  
$
 7,979
  
$
 67,721
  
$
 76,165
                                     
                                     
(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.
 
 
 

 
(6)
 
 
 

 
Summary of Operating Segments
General Electric Company and consolidated affiliates
 
             
Three months ended March 31
             
(Unaudited)
(In millions)
            
2013
  
2012
                       
Revenues(a)
                      
   Power & Water
            
$
 4,825
  
$
 6,551
   Oil & Gas
              
 3,399
    
 3,406
   Energy Management
              
 1,748
    
 1,722
   Aviation
              
 5,074
    
 4,891
   Healthcare
              
 4,289
    
 4,300
   Transportation
              
 1,422
    
 1,270
   Home & Business Solutions
              
 1,917
    
 1,915
   Total industrial segment revenues
              
 22,674
    
 24,055
   GE Capital
              
 11,535
    
 11,340
      Total segment revenues
              
 34,209
    
 35,395
Corporate items and eliminations(a)
              
 801
    
 (315)
Consolidated revenues and other income
            
$
 35,010
  
$
 35,080
                       
Segment profit(a)
                      
   Power & Water
            
$
 719
  
$
 1,188
   Oil & Gas
              
 325
    
 340
   Energy Management
              
 15
    
 21
   Aviation
              
 936
    
 862
   Healthcare
              
 595
    
 585
   Transportation
              
 267
    
 232
   Home & Business Solutions
              
 79
    
 57
   Total industrial segment profit
              
 2,936
    
 3,285
   GE Capital
              
 1,927
    
 1,772
      Total segment profit
              
 4,863
    
 5,057
Corporate items and eliminations(a)
              
 (479)
    
 (1,061)
GE interest and other financial charges
              
 (324)
    
 (315)
GE provision for income taxes
              
 (424)
    
 (450)
Earnings from continuing operations attributable
                      
  to the Company
              
 3,636
    
 3,231
Earnings (loss) from discontinued operations,
                      
  net of taxes, attributable to the Company
              
 (109)
    
 (197)
Consolidated net earnings attributable to
                      
   the Company
            
$
 3,527
  
$
 3,034
                       
                       
(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 Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation and Home & Business Solutions; included in determining segment profit, which we sometimes refer to as “net earnings,” for GE Capital.
 

See accompanying notes.
 
 
 

 

 
(7)
 
 
 
 
 
 
Notes to Condensed, Consolidated Financial Statements (Unaudited)
 
1. 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, 2012 (2012 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), whose continuing operations are 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.

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, 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 introduced a new statement, the Consolidated Statement of Comprehensive Income. 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 2012 consolidated financial statements.

See Note 1 in our 2012 consolidated financial statements for a summary of our significant accounting policies.
 
 

 
(8)
 
 
 

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 2012 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 for 2013 is available on our website, www.ge.com/secreports.

2. ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS
 
Assets and Liabilities of Businesses Held for Sale
 
In the first quarter of 2013, we committed to sell certain of our machining and fabrication businesses at Aviation and our Consumer auto and personal loan business in Portugal.

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 deconsolidated 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.

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

 
At
 
March 31,
  
December 31,
(In millions)
2013
  
2012
   
           
      
Assets
  
           
      
Cash and equivalents
$
10
  
$
74
Financing receivables – net
  
117
    
47
Property, plant and equipment – net
  
27
    
31
Other intangible assets – net
  
46
    
9
Other
  
124
    
50
Assets of businesses held for sale
$
324
  
$
211
           
Liabilities
          
Short-term borrowings
$
– 
  
$
138
Other
  
45
    
19
Liabilities of businesses held for sale
$
45
  
$
157
 
 
 

 
(9)
 
 
 


NBCU
 
On March 19, 2013, we closed a transaction to sell our remaining 49% common equity interest in NBCUniversal LLC (NBCU LLC) to Comcast Corporation (Comcast) for total consideration of $16,722 million, consisting of $11,997 million in cash, $4,000 million in Comcast guaranteed debt and $725 million in preferred stock. The $4,000 million of debt and the $725 million of preferred shares were both issued by a wholly-owned subsidiary of Comcast.  Subsequent to the closing of the transaction, both of these instruments were sold at approximately par value. In addition, Comcast is obligated to share with us potential tax savings associated with Comcast’s purchase of our NBCU LLC interest, if realized. We did not recognize these potential future payments as consideration for the sale, but will record such payments in income as they are received. GECC also sold real estate comprising certain floors located at 30 Rockefeller Center, New York and the CNBC property located in Englewood Cliffs, New Jersey to affiliates of NBCU LLC for $1,430 million in cash.

As a result of the transactions, we recognized a pre-tax gain of $1,096 million ($825 million after tax) on the sale of our 49% common equity interest in NBCU LLC and $921 million ($564 million after tax) on the sale of GECC’s real estate properties.

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 Consumer mortgage lending business in Ireland (Consumer Ireland) and our CLL trailer services business in Europe (CLL Trailer Services). 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 March 31
(In millions)
  
 2013
    
2012
           
Operations
          
Total revenues and other income (loss)
$
(13)
  
$
101
           
Earnings (loss) from discontinued operations
          
   before income taxes
$
(128)
  
$
(66)
Benefit (provision) for income taxes
  
121
    
34
Earnings (loss) from discontinued operations,
          
   net of taxes
$
(7)
  
$
(32)
           
Disposal
          
Gain (loss) on disposal before income taxes
$
(187)
  
$
(194)
Benefit (provision) for income taxes
  
85
    
29
Gain (loss) on disposal, net of taxes
$
(102)
  
$
(165)
           
Earnings (loss) from discontinued operations,
          
   net of taxes(a)
$
(109)
  
$
(197)
           
           
(a)
The sum of GE industrial earnings (loss) from discontinued operations, net of taxes, and GECC earnings (loss) from discontinued operations, net of taxes, is reported as GE earnings (loss) from discontinued operations, net of taxes, on the Condensed Statement of Earnings.
 

 

 
(10)
 
 
 

 
 

 
At
 
March 31,
  
December 31,
(In millions)
2013
  
2012
           
Assets
          
Cash and equivalents
$
103
  
$
102
Property, plant and equipment - net
  
520
    
699
Other
  
1,242
    
1,507
Assets of discontinued operations
$
1,865
  
$
2,308
           
Liabilities
          
Deferred income taxes
$
372
  
$
372
Other
  
2,004
    
2,079
Liabilities of discontinued operations
$
2,376
  
$
2,451


Assets at March 31, 2013 and December 31, 2012 primarily comprised cash, property, plant and equipment - net and a deferred tax asset for a loss carryforward, which expires principally in 2017 and in part in 2019, related to the sale of our GE Money Japan business.

GE Money Japan
 
During the third quarter of 2008, we completed the sale of GE Money Japan, which included our Japanese personal loan business. Under the terms of the sale, we reduced the proceeds for estimated 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 were required to begin making reimbursements under this arrangement.

Overall, excess interest refund claims experience has been difficult to predict and subject to several adverse factors, including the challenging global economic conditions over the last few years, the financial status of other Japanese personal lenders (including the 2010 bankruptcy of a large independent personal loan company), substantial ongoing legal advertising, and consumer behavior. Our reserves declined from $700 million at December 31, 2012, to $561 million at March 31, 2013, as the effects of a strengthening U.S. dollar against the Japanese yen and claim payments were partially offset by a first quarter increase to reserves of $50 million. In determining reserve levels, we consider analyses of recent and historical claims experience, as well as pending and estimated future refund requests, adjusted for the estimated percentage of customers who present valid requests and associated estimated payments. We determined our reserve assuming the pace of incoming claims will decelerate, that average exposure per claim remains consistent with recent experience, and that we continue to see the impact of loss mitigation efforts. Since our disposition of the business, incoming claims have continued to decline, however, it is highly variable and difficult to predict the pace and pattern of that decline and such assumptions have a significant effect on the total amount of our liability. Holding all other assumptions constant, an adverse change of 20% and 50% in assumed incoming daily claim rate reduction (resulting in an extension of the claim period and higher incoming claims), would result in an increase to our reserve of approximately $75 million and $400 million, respectively. We continue to closely monitor and evaluate claims activity.

Based on the uncertainties discussed above, and considering other environmental factors in Japan, including the runoff status of the underlying book of business, challenging economic conditions, the impact of laws and regulations (including consideration of proposed legislation that could impose a framework for collective legal action proceedings), and the financial status of other local personal lending companies, it is difficult to develop a meaningful estimate of the aggregate possible claims exposure. These uncertainties and factors could have an adverse effect on claims development.

GE Money Japan earnings (loss) from discontinued operations, net of taxes, were $(51) million and $(27) million in the three months ended March 31, 2013 and 2012, respectively.
 
 

 
(11)
 
 
 

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 representation and warranty obligations related to loans sold to third parties prior to the disposal of the business and contractual obligations to repurchase previously sold loans as to which there was an early payment default. All claims received by WMC for early payment default have either been resolved or are no longer being pursued.
 
Pending repurchase claims based upon representations and warranties made in connection with loan sales were $6,210 million at March 31, 2013, $5,357 million at December 31, 2012 and $705 million at December 31, 2011. Pending claims represent those active repurchase claims that identify the specific loans tendered for repurchase and, for each loan, the alleged breach of a representation or warranty. As such, they do not include unspecified repurchase claims, such as the Litigation Claims discussed below, or claims relating to breaches of representations that were made more than six years before WMC was notified of the claim.  WMC believes that these repurchase claims do not meet the substantive and procedural requirements for tender under the governing agreements, would be barred from being enforced in legal proceedings under applicable statutes of limitations or are otherwise invalid. The amounts reported in pending claims reflect the purchase price or unpaid principal balances of the loans at the time of purchase and do not give effect to pay downs, accrued interest or fees, or potential recoveries based upon the underlying collateral. Historically, a small percentage of the total loans WMC originated and sold have qualified as “validly tendered,” meaning there was a breach of a representation and warranty that materially and adversely affects the value of the loan, and the demanding party met all other procedural and substantive requirements for repurchase.

Reserves related to WMC pending and estimated future loan repurchase claims were $740 million at March 31, 2013, reflecting an increase to reserves in the first quarter of 2013 of $107 million due to incremental claim activity and updates to WMC’s estimate of future losses. The amount of these reserves is based upon pending and estimated future loan repurchase requests and WMC’s historical loss experience and evaluation of claim activity on loans tendered for repurchase. 

The following table provides a roll forward of the reserve and pending claims for WMC representation and warranty obligations.


 
Reserve at
    
Pending claims at
(In millions)
March 31, 2013
  
(In millions)
March 31, 2013
             
Reserve, beginning of period
$
633
  
Pending claims, beginning of period
$
5,357
Provision
  
107
  
New claims
  
853
Claim resolutions
  
– 
  
Claim resolutions
  
– 
Reserve, end of period
$
740
  
Pending claims, end of period
$
6,210
             

Given the significant recent activity in pending claims and related litigation filed in connection with such claims, it is difficult to assess whether future losses will be consistent with WMC’s past experience. Adverse changes to WMC’s assumptions supporting the reserve for pending and estimated future loan repurchase claims may result in an increase to these reserves. For example, a 50% increase to the estimate of future loan repurchase requests and a 100% increase to the estimated loss rate on loans tendered, would result in an increase to the reserves of approximately $700 million.

There are 16 lawsuits involving pending repurchase claims on loans included in 13 securitizations.  WMC initiated four of the cases as the plaintiff; in the other cases WMC is a defendant.  The adverse parties in these cases are securitization trustees or parties claiming to act on their behalf.  In nine of these lawsuits, the adverse parties seek relief for mortgage loans beyond those included in WMC’s previously discussed pending claims at March 31, 2013 (Litigation Claims). These Litigation Claims consist of sampling-based claims in two cases on approximately $900 million of mortgage loans and, in the other seven cases, claims for repurchase or damages based on the alleged
 
 
 
(12)
 
 
 

failure to provide notice of defective loans, breach of a corporate representation and warranty, and/or non-specific claims for rescissionary damages on approximately $3,100 million of mortgage loans. These claims reflect the purchase price or unpaid principal balances of the loans at the time of purchase and do not give effect to pay downs, accrued interest or fees, or potential recoveries based upon the underlying collateral. As noted above, WMC believes that the Litigation Claims are disallowed by the governing agreements and applicable law. As a result, WMC has not included the Litigation Claims in its pending claims or in its estimates of future loan repurchase requests and holds no related reserve as of March 31, 2013.

At this point, WMC is unable to develop a meaningful estimate of reasonably possible loss in connection with the Litigation Claims described above due to a number of factors, including the extent to which courts will agree with the theories supporting the Litigation Claims. Specifically, while several courts in cases not involving WMC have supported some of those theories, other courts have rejected them. In addition, WMC lacks experience resolving such claims, and there are few public industry settlements that may serve as benchmarks to estimate a reasonably possible loss. An adverse court decision on any of the theories supporting the Litigation Claims could increase WMC’s exposure in some or all of the 16 lawsuits and result in additional claims and lawsuits. However, WMC believes that it has defenses to all the claims asserted in litigation, including, for example, causation and materiality requirements, limitations on remedies for breach of representations and warranties, and the applicable statutes of limitations. To the extent WMC is required to repurchase loans, WMC’s loss also would be affected by several factors, including pay downs, accrued interest and fees, and the value of the underlying collateral.  It is not possible to predict the outcome or impact of these defenses and other factors, any one of which could materially affect the amount of any loss ultimately incurred by WMC on these claims.

WMC has received claims on approximately $900 million of mortgage loans after the expiration of the six-year statute of limitations as of March 31, 2013. WMC has also received unspecified indemnification demands from depositors/underwriters/sponsors of residential mortgage-backed securities (RMBS) in connection with lawsuits brought by RMBS investors concerning alleged misrepresentations in the securitization offering documents to which WMC is not a party. WMC believes that it has defenses to these demands.

The reserve estimates reflect judgment, based on currently available information, and a number of assumptions, including economic conditions, claim activity, pending and threatened litigation, indemnification demands, estimated repurchase rates, and other activity in the mortgage industry. Actual losses arising from claims against WMC could exceed the reserve amount if actual claim rates, governmental actions, litigation and indemnification activity, adverse court decisions, settlement activity, actual repurchase rates or losses WMC incurs on repurchased loans differ from its assumptions. It is difficult to develop a meaningful estimate of aggregate possible claims exposure because of uncertainties surrounding economic conditions, the ability and propensity of mortgage holders to present valid claims, governmental actions, mortgage industry activity and litigation, as well as pending and threatened litigation and indemnification demands against WMC.

WMC revenues and other income (loss) from discontinued operations were $(107) million and $(7) million in the three months ended March 31, 2013 and 2012, respectively. WMC’s losses from discontinued operations, net of taxes, were $71 million and $9 million in the three months ended March 31, 2013 and 2012, respectively.

Other Financial Services
 
In the first quarter of 2013, we announced the planned disposition of CLL Trailer Services and classified the business as discontinued operations. CLL Trailer Services revenues and other income (loss) from discontinued operations were $93 million and $102 million in the three months ended March 31, 2013 and 2012, respectively. CLL Trailer Services earnings (loss) from discontinued operations, net of taxes, were $14 million (including a $53 million loss on disposal) and $20 million in the three months ended March 31, 2013 and 2012, respectively.
 
 

 
(13)
 
 
 

In the first quarter of 2012, we announced the planned disposition of Consumer Ireland and classified the business as discontinued operations.  We completed the sale in the third quarter of 2012 for proceeds of $227 million. Consumer Ireland revenues and other income (loss) from discontinued operations were an insignificant amount and $4 million in the three months ended March 31, 2013 and 2012, respectively. Consumer Ireland earnings (loss) from discontinued operations, net of taxes, were $1 million and $(188) million (including a $147 million loss on disposal) in the three months ended March 31, 2013 and 2012, respectively.

 
GE Industrial
 
GE Industrial earnings (loss) from discontinued operations, net of taxes, were insignificant amounts in both the three months ended March 31, 2013 and 2012. The sum of GE industrial earnings (loss) from discontinued operations, net of taxes, and GECC 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


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, investment securities at our treasury operations and investments held in our Commercial Lending and Leasing (CLL) business collateralized by senior secured loans of high-quality, middle-market companies in a variety of industries. We do not have any securities classified as held-to-maturity.
 
 
March 31, 2013
  
December 31, 2012
     
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
$
 28
  
$
 1
  
$
– 
  
$
 29
  
$
 39
  
$
– 
  
$
– 
  
$
 39
      Corporate – non-U.S.
  
 12
    
 1
    
– 
    
 13
    
 6
    
– 
    
– 
    
 6
Equity
                                              
      Available-for-sale
  
 15
    
 1
    
– 
    
 16
    
 26
    
– 
    
– 
    
 26
      Trading
  
 13
    
– 
    
– 
    
 13
    
 3
    
– 
    
– 
    
 3
   
 68
    
 3
    
– 
    
 71
    
 74
    
– 
    
– 
    
 74
                                               
GECC
                                              
Debt
                                              
      U.S. corporate
  
 20,098
    
 3,889
    
 (88)
    
 23,899
    
 20,233
    
 4,201
    
 (302)
    
 24,132
      State and municipal
  
 4,207
    
 553
    
 (112)
    
 4,648
    
 4,084
    
 575
    
 (113)
    
 4,546
      Residential mortgage-
                                              
         backed(a)
  
 2,123
    
 184
    
 (90)
    
 2,217
    
 2,198
    
 183
    
 (119)
    
 2,262
      Commercial mortgage-backed
  
 2,941
    
 263
    
 (78)
    
 3,126
    
 2,930
    
 259
    
 (95)
    
 3,094
      Asset-backed
  
 5,621
    
 36
    
 (55)
    
 5,602
    
 5,784
    
 31
    
 (77)
    
 5,738
      Corporate – non-U.S.
  
 2,409
    
 155
    
 (110)
    
 2,454
    
 2,391
    
 150
    
 (126)
    
 2,415
      Government – non-U.S.
  
 1,904
    
 131
    
 (3)
    
 2,032
    
 1,617
    
 149
    
 (3)
    
 1,763
      U.S. government and federal
                                              
         agency
  
 3,404
    
 86
    
– 
    
 3,490
    
 3,462
    
 103
    
– 
    
 3,565
   Retained interests
  
 74
    
 17
    
– 
    
 91
    
 76
    
 7
    
– 
    
 83
   Equity
                                              
      Available-for-sale
  
 404
    
 122
    
 (10)
    
 516
    
 513
    
 86
    
 (3)
    
 596
      Trading
  
 186
    
– 
    
– 
    
 186
    
 245
    
– 
    
– 
    
 245
   
 43,371
    
 5,436
    
 (546)
    
 48,261
    
 43,533
    
 5,744
    
 (838)
    
 48,439
                                               
Eliminations
  
 (3)
    
– 
    
– 
    
 (3)
    
 (3)
    
– 
    
– 
    
 (3)
Total
$
 43,436
  
$
 5,439
  
$
 (546)
  
$
 48,329
  
$
 43,604
  
$
 5,744
  
$
 (838)
  
$
 48,510
                                               
                                               
(a)
Substantially collateralized by U.S. mortgages. Of our total RMBS portfolio at March 31, 2013, $1,413 million relates to securities issued by government-sponsored entities and $804 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 financial institutions.
 
 

 
(14)
 
 
 


The fair value of investment securities decreased to $48,329 million at March 31, 2013, from $48,510 million at December 31, 2012, primarily due to the impact of higher interest rates.

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)
                         
March 31, 2013
                        
Debt
                        
   U.S. corporate
$
722
  
$
(15)
  
$
414
  
$
(73)
  
   State and municipal
  
232
    
(4)
    
327
    
(108)
  
   Residential mortgage-backed
  
96
    
(1)
    
663
    
(89)
  
   Commercial mortgage-backed
  
117
    
(1)
    
921
    
(77)
  
   Asset-backed
  
11
    
(1)
    
568
    
(54)
  
   Corporate – non-U.S.
  
240
    
(4)
    
606
    
(106)
  
   Government – non-U.S.
  
554
    
(1)
    
38
    
(2)
  
   U.S. government and federal agency
  
253
    
– 
    
– 
    
– 
  
Retained interests
  
5
    
– 
    
– 
    
– 
  
Equity
  
22
    
(10)
    
– 
    
– 
  
Total
$
2,252
  
$
(37)
  
$
3,537
  
$
(509)
  
                         
December 31, 2012
                        
Debt
                        
   U.S. corporate
$
434
  
$
(7)
  
$
813
  
$
(295)
  
   State and municipal
  
146
    
(2)
    
326
    
(111)
  
   Residential mortgage-backed
  
98
    
(1)
    
691
    
(118)
  
   Commercial mortgage-backed
  
37
    
– 
    
979
    
(95)
  
   Asset-backed
  
18
    
(1)
    
658
    
(76)
  
   Corporate – non-U.S.
  
167
    
(8)
    
602
    
(118)
  
   Government – non-U.S.
  
201
    
(1)
    
37
    
(2)