geccform10q3q13.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, 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 001-06461
_____________________________
 
GENERAL ELECTRIC CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)

Delaware
  
13-1500700
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)
     
901 Main Avenue, Norwalk, CT
  
06851-1168
(Address of principal executive offices)
  
(Zip Code)

(Registrant’s telephone number, including area code) (203) 840-6300

                                                                                              
(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 þNo ¨
 
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 ¨ 
Accelerated filer ¨
Non-accelerated filer þ
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
 
At November 1, 2013, 1,000 shares of voting common stock, which constitute all of the outstanding common equity, with a par value of $14 per share were outstanding.
 
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION h(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT.
 

 
(1)
 
 

General Electric Capital Corporation
 
Part I – Financial Information
  
Page
       
Item 1.
Financial Statements
    
 
Condensed Statement of Earnings
  
3
 
Condensed Statement of Comprehensive Income
  
4
 
Condensed Statement of Changes in Shareowners’ Equity
  
4
 
Condensed Statement of Financial Position
  
5
 
Condensed Statement of Cash Flows
  
6
 
Summary of Operating Segments
  
7
 
Notes to Condensed Financial Statements (Unaudited)
  
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  
52
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
  
73
Item 4.
Controls and Procedures
  
73
       
Part II – Other Information
    
       
Item 1.
Legal Proceedings
  
74
Item 6.
Exhibits
  
76
Signatures
  
77
     
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, 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 our funding and on our ability to reduce our 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; our ability to pay dividends to GE at the planned level; the level of demand and financial performance of the major industries GE serves, including, without limitation, air 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 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 Capital Corporation and consolidated affiliates
Condensed Statement of Earnings
(Unaudited)

 
 
Three months ended September 30,
 
Nine months ended September 30,
(In millions)
 
 
2013 
 
 
2012 
 
 
2013 
 
 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Revenues from services (a)
 
$
 10,693 
 
$
 11,265 
 
$
 33,562 
 
$
 33,967 
Other-than-temporary impairment on investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
   Total other-than-temporary impairment on investment securities
 
 
 (62)
 
 
 (25)
 
 
 (503)
 
 
 (90)
      Less: portion of other-than-temporary impairment recognized in
 
 
 
 
 
 
 
 
 
 
 
 
         accumulated other comprehensive income
 
 
 6 
 
 
 - 
 
 
 36 
 
 
 1 
   Net other-than-temporary impairment on investment securities
 
 
 
 
 
 
 
 
 
 
 
 
      recognized in earnings
 
 
 (56)
 
 
 (25)
 
 
 (467)
 
 
 (89)
Revenues from services (Note 9)
 
 
 10,637 
 
 
 11,240 
 
 
 33,095 
 
 
 33,878 
Sales of goods
 
 
 33 
 
 
 34 
 
 
 90 
 
 
 90 
   Total revenues
 
 
 10,670 
 
 
 11,274 
 
 
 33,185 
 
 
 33,968 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
Interest
 
 
 2,241 
 
 
 2,798 
 
 
 7,046 
 
 
 8,962 
Operating and administrative
 
 
 2,992 
 
 
 3,020 
 
 
 9,347 
 
 
 8,896 
Cost of goods sold
 
 
 29 
 
 
 27 
 
 
 75 
 
 
 75 
Investment contracts, insurance losses and insurance annuity benefits
 
 
 714 
 
 
 798 
 
 
 2,131 
 
 
 2,271 
Provision for losses on financing receivables
 
 
 821 
 
 
 1,122 
 
 
 3,338 
 
 
 2,728 
Depreciation and amortization
 
 
 1,967 
 
 
 1,734 
 
 
 5,372 
 
 
 5,022 
   Total costs and expenses
 
 
 8,764 
 
 
 9,499 
 
 
 27,309 
 
 
 27,954 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from continuing operations before income taxes
 
 
 1,906 
 
 
 1,775 
 
 
 5,876 
 
 
 6,014 
Benefit (provision) for income taxes
 
 
 (1)
 
 
 (80)
 
 
 (94)
 
 
 (399)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from continuing operations
 
 
 1,905 
 
 
 1,695 
 
 
 5,782 
 
 
 5,615 
Earnings (loss) from discontinued operations, net of taxes (Note 2)
 
 
 (83)
 
 
 (107)
 
 
 (313)
 
 
 (857)
Net earnings
 
 
 1,822 
 
 
 1,588 
 
 
 5,469 
 
 
 4,758 
Less: net earnings (loss) attributable to noncontrolling interests
 
 
 10 
 
 
 20 
 
 
 38 
 
 
 46 
Net earnings attributable to GECC
 
 
 1,812 
 
 
 1,568 
 
 
 5,431 
 
 
 4,712 
Preferred stock dividends declared
 
 
 - 
 
 
 - 
 
 
 (135)
 
 
 - 
Net earnings attributable to GECC common shareowner
 
$
 1,812 
 
$
 1,568 
 
$
 5,296 
 
$
 4,712 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts attributable to GECC
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from continuing operations
 
$
 1,895 
 
$
 1,675 
 
$
 5,744 
 
$
 5,569 
Earnings (loss) from discontinued operations, net of taxes
 
 
 (83)
 
 
 (107)
 
 
 (313)
 
 
 (857)
Net earnings attributable to GECC
 
$
 1,812 
 
$
 1,568 
 
$
 5,431 
 
$
 4,712 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)  
Excluding net other-than-temporary impairment on investment securities.
 
See accompanying notes.
 
 

 
(3)
 
 

General Electric Capital Corporation and consolidated affiliates
Condensed Statement of Comprehensive Income
(Unaudited)

 
Three months ended September 30,
 
Nine months ended September 30,
(In millions)
 
2013 
 
 
2012 
 
 
2013 
 
 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
 1,822 
 
$
 1,588 
 
$
 5,469 
 
$
 4,758 
Less: net earnings (loss) attributable to noncontrolling interests
 
 10 
 
 
 20 
 
 
 38 
 
 
 46 
Net earnings attributable to GECC
$
 1,812 
 
$
 1,568 
 
$
 5,431 
 
$
 4,712 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
      Investment securities
$
 159 
 
$
 128 
 
$
 (377)
 
$
 636 
      Currency translation adjustments
 
 (122)
 
 
 529 
 
 
 (115)
 
 
 255 
      Cash flow hedges
 
 63 
 
 
 27 
 
 
 349 
 
 
 139 
      Benefit plans
 
 8 
 
 
 (11)
 
 
 30 
 
 
 (16)
Other comprehensive income (loss)
 
 108 
 
 
 673 
 
 
 (113)
 
 
 1,014 
Less: other comprehensive income (loss) attributable to
 
 
 
 
 
 
 
 
 
 
 
      noncontrolling interests
 
 12 
 
 
 2 
 
 
 (10)
 
 
 1 
Other comprehensive income (loss) attributable to GECC
$
 96 
 
$
 671 
 
$
 (103)
 
$
 1,013 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
 1,930 
 
$
 2,261 
 
$
 5,356 
 
$
 5,772 
Less: comprehensive income (loss) attributable to
 
 
 
 
 
 
 
 
 
 
 
      noncontrolling interests
 
 22 
 
 
 22 
 
 
 28 
 
 
 47 
Comprehensive income attributable to GECC
$
 1,908 
 
$
 2,239 
 
$
 5,328 
 
$
 5,725 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts presented net of taxes. See Note 8 for further information about other comprehensive income and noncontrolling interests.
 
See accompanying notes.
 

General Electric Capital Corporation and consolidated affiliates
 
 
 
 
 
 
Condensed Statement of Changes in Shareowners’ Equity (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30,
(In millions)
 
 
 
 
 
 
 
2013 
 
 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
GECC shareowners' equity balance at January 1
 
 
 
 
 
 
$
 81,890 
 
$
 77,110 
Increases from net earnings attributable to GECC
 
 
 
 
 
 
 
 5,431 
 
 
 4,712 
Dividends and other transactions with shareowners
 
 
 
 
 
 
 
 (4,082)
 
 
 (5,447)
Other comprehensive income (loss) attributable to GECC
 
 
 
 
 
 
 
 (103)
 
 
 1,013 
Changes in additional paid-in capital
 
 
 
 
 
 
 
 978 
 
 
 3,961 
Ending balance at September 30
 
 
 
 
 
 
 
 84,114 
 
 
 81,349 
Noncontrolling interests
 
 
 
 
 
 
 
 539 
 
 
 711 
Total equity balance at September 30
 
 
 
 
 
 
$
 84,653 
 
$
 82,060 
 
 
 
 
 
 
 
 
 
 
 
 

See Note 8 for further information about changes in shareowners’ equity.
 
See accompanying notes.
 

 
(4)
 
 

General Electric Capital Corporation and consolidated affiliates
 
Condensed Statement of Financial Position
 
 
 
 
 
 
 
 
September 30,
 
December 31,
(In millions, except share information)
 
 
 
 
 
 
2013 
 
2012 
 
 
 
 
 
 
 
(Unaudited)
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash and equivalents
 
 
 
 
 
 
$
 76,298 
 
$
 61,942 
Investment securities (Note 3)
 
 
 
 
 
 
 
 43,805 
 
 
 48,439 
Inventories
 
 
 
 
 
 
 
 78 
 
 
 79 
Financing receivables – net (Notes 4 and 12)
 
 
 
 
 
 
 
 254,223 
 
 
 268,951 
Other receivables
 
 
 
 
 
 
 
 14,899 
 
 
 13,917 
Property, plant and equipment, less accumulated amortization of $26,346
 
 
 
 
 
 
 
 
 
 
 
   and $26,113
 
 
 
 
 
 
 
 51,680 
 
 
 52,974 
Goodwill (Note 5)
 
 
 
 
 
 
 
 26,696 
 
 
 27,032 
Other intangible assets – net (Note 5)
 
 
 
 
 
 
 
 1,176 
 
 
 1,294 
Other assets
 
 
 
 
 
 
 
 50,139 
 
 
 62,201 
Assets of businesses held for sale (Note 2)
 
 
 
 
 
 
 
 51 
 
 
 211 
Assets of discontinued operations (Note 2)
 
 
 
 
 
 
 
 1,664 
 
 
 2,299 
Total assets(a)
 
 
 
 
 
 
$
 520,709 
 
$
 539,339 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings (Note 6)
 
 
 
 
 
 
$
 79,830 
 
$
 95,940 
Accounts payable
 
 
 
 
 
 
 
 7,189 
 
 
 6,259 
Non-recourse borrowings of consolidated securitization entities (Note 6)
 
 
 
 
 
 
 
 29,966 
 
 
 30,123 
Bank deposits (Note 6)
 
 
 
 
 
 
 
 50,761 
 
 
 46,461 
Long-term borrowings (Note 6)
 
 
 
 
 
 
 
 215,503 
 
 
 224,776 
Investment contracts, insurance liabilities and insurance annuity benefits
 
 
 
 
 
 
 
 27,155 
 
 
 28,696 
Other liabilities
 
 
 
 
 
 
 
 17,656 
 
 
 15,961 
Deferred income taxes
 
 
 
 
 
 
 
 5,660 
 
 
 5,988 
Liabilities of businesses held for sale (Note 2)
 
 
 
 
 
 
 
 4 
 
 
 157 
Liabilities of discontinued operations (Note 2)
 
 
 
 
 
 
 
 2,332 
 
 
 2,381 
Total liabilities(a)
 
 
 
 
 
 
 
 436,056 
 
 
 456,742 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock, $0.01 par value (750,000 shares authorized at both September 30, 2013
 
 
 
 
 
 
 
 
 
    and December 31, 2012, and 50,000 and 40,000 shares issued and outstanding
 
 
 
 
 
 
 
 - 
 
 
 - 
        at September 30, 2013 and December 31, 2012, respectively)
 
 
 
 
 
 
 
 
 
 
 
Common stock, $14 par value (4,166,000 shares authorized at
 
 
 
 
 
 
 
 
 
 
 
    both September 30, 2013 and December 31, 2012 and 1,000 shares
 
 
 
 
 
 
 
 
 
 
 
        issued and outstanding at both September 30, 2013 and December 31, 2012, respectively)
 
 
 
 
 
 - 
 
 
 - 
Accumulated other comprehensive income (loss) – net(b)
 
 
 
 
 
 
 
 
 
 
 
   Investment securities
 
 
 
 
 
 
 
 297 
 
 
 673 
   Currency translation adjustments
 
 
 
 
 
 
 
 (238)
 
 
 (131)
   Cash flow hedges
 
 
 
 
 
 
 
 (396)
 
 
 (746)
   Benefit plans
 
 
 
 
 
 
 
 (706)
 
 
 (736)
Additional paid-in capital
 
 
 
 
 
 
 
 32,564 
 
 
 31,586 
Retained earnings
 
 
 
 
 
 
 
 52,593 
 
 
 51,244 
Total GECC shareowners' equity
 
 
 
 
 
 
 
 84,114 
 
 
 81,890 
Noncontrolling interests(c)(Note 8)
 
 
 
 
 
 
 
 539 
 
 
 707 
Total equity
 
 
 
 
 
 
 
 84,653 
 
 
 82,597 
Total liabilities and equity
 
 
 
 
 
 
$
 520,709 
 
$
 539,339 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
Our consolidated assets at September 30, 2013 include total assets of $46,877 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 $40,398 million and investment securities of $4,148 million. Our consolidated liabilities at September 30, 2013 include liabilities of certain VIEs for which the VIE creditors do not have recourse to GECC. These liabilities include non-recourse borrowings of consolidated securitization entities (CSEs) of $28,416 million. See Note 13.
 
(b)
The sum of accumulated other comprehensive income (loss) attributable to GECC was $(1,043) million and $(940) million at September 30, 2013 and December 31, 2012, respectively.
 
(c)
Included accumulated other comprehensive income (loss) attributable to noncontrolling interests of $(139) million and $(129) million at September 30, 2013 and December 31, 2012, respectively.
 
See accompanying notes.
 
 

 
(5)
 
 

General Electric Capital Corporation and consolidated affiliates
 
Condensed Statement of Cash Flows
 
(Unaudited)
 
 
 
 
 
Nine months ended September 30,
(In millions)
 
 
 
 
2013 
 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows – operating activities
 
 
 
 
 
 
 
 
 
 
 
Net earnings
 
 
 
 
 
 
$
 5,469 
 
$
 4,758 
Less: net earnings (loss) attributable to noncontrolling interests
 
 
 
 
 
 
 
 38 
 
 
 46 
Net earnings attributable to GECC
 
 
 
 
 
 
 
 5,431 
 
 
 4,712 
(Earnings) loss from discontinued operations
 
 
 
 
 
 
 
 313 
 
 
 857 
Adjustments to reconcile net earnings attributable to GECC
 
 
 
 
 
 
 
 
 
 
 
   to cash provided from operating activities
 
 
 
 
 
 
 
 
 
 
 
      Depreciation and amortization of property, plant and equipment
 
 
 
 
 
 
 
 5,372 
 
 
 5,022 
      Increase (decrease) in accounts payable
 
 
 
 
 
 
 
 747 
 
 
 (310)
      Provision for losses on financing receivables
 
 
 
 
 
 
 
 3,338 
 
 
 2,728 
      All other operating activities
 
 
 
 
 
 
 
 (3,335)
 
 
 1,881 
Cash from (used for) operating activities – continuing operations
 
 
 
 
 
 
 
 11,866 
 
 
 14,890 
Cash from (used for) operating activities – discontinued operations
 
 
 
 
 
 
 
 (104)
 
 
 142 
Cash from (used for) operating activities
 
 
 
 
 
 
 
 11,762 
 
 
 15,032 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows – investing activities
 
 
 
 
 
 
 
 
 
 
 
Additions to property, plant and equipment
 
 
 
 
 
 
 
 (7,582)
 
 
 (8,098)
Dispositions of property, plant and equipment
 
 
 
 
 
 
 
 4,119 
 
 
 4,836 
Increase in loans to customers
 
 
 
 
 
 
 
 (219,256)
 
 
 (217,198)
Principal collections from customers – loans
 
 
 
 
 
 
 
 229,207 
 
 
 227,408 
Investment in equipment for financing leases
 
 
 
 
 
 
 
 (6,251)
 
 
 (6,585)
Principal collections from customers – financing leases
 
 
 
 
 
 
 
 8,001 
 
 
 9,150 
Net change in credit card receivables
 
 
 
 
 
 
 
 (3,206)
 
 
 (3,254)
Proceeds from sales of discontinued operations
 
 
 
 
 
 
 
 - 
 
 
 227 
Proceeds from principal business dispositions
 
 
 
 
 
 
 
 841 
 
 
 244 
Net cash from (payments for) principal businesses purchased
 
 
 
 
 
 
 
 6,384 
 
 
 - 
All other investing activities
 
 
 
 
 
 
 
 15,916 
 
 
 9,519 
Cash from (used for) investing activities – continuing operations
 
 
 
 
 
 
 
 28,173 
 
 
 16,249 
Cash from (used for) investing activities – discontinued operations
 
 
 
 
 
 
 
 95 
 
 
 (152)
Cash from (used for) investing activities
 
 
 
 
 
 
 
 28,268 
 
 
 16,097 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows – financing activities
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in borrowings (maturities of 90 days or less)
 
 
 
 
 
 
 
 (9,917)
 
 
 (1,209)
Net increase (decrease) in bank deposits
 
 
 
 
 
 
 
 (2,222)
 
 
 1,195 
Newly issued debt (maturities longer than 90 days)
 
 
 
 
 
 
 
 
 
 
 
   Short-term (91 to 365 days)
 
 
 
 
 
 
 
 8 
 
 
 59 
   Long-term (longer than one year)
 
 
 
 
 
 
 
 41,347 
 
 
 43,156 
Repayments and other debt reductions (maturities longer than 90 days)
 
 
 
 
 
 
 
 
 
 
 
   Short-term (91 to 365 days)
 
 
 
 
 
 
 
 (46,686)
 
 
 (66,837)
   Long-term (longer than one year)
 
 
 
 
 
 
 
 (3,182)
 
 
 (3,162)
   Non-recourse, leveraged leases
 
 
 
 
 
 
 
 (528)
 
 
 (389)
Proceeds from issuance of preferred stock
 
 
 
 
 
 
 
 990 
 
 
 3,960 
Dividends paid to shareowners
 
 
 
 
 
 
 
 (4,082)
 
 
 (5,446)
All other financing activities
 
 
 
 
 
 
 
 (425)
 
 
 (2,729)
Cash from (used for) financing activities – continuing operations
 
 
 
 
 
 
 
 (24,697)
 
 
 (31,402)
Cash from (used for) financing activities – discontinued operations
 
 
 
 
 
 
 
 15 
 
 
 - 
Cash from (used for) financing activities
 
 
 
 
 
 
 
 (24,682)
 
 
 (31,402)
 
 
 
 
 
 
 
 
 
 
 
 
Effect of currency exchange rate changes on cash and equivalents
 
 
 
 
 
 
 
 (986)
 
 
 1,227 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in cash and equivalents
 
 
 
 
 
 
 
 14,362 
 
 
 954 
Cash and equivalents at beginning of year
 
 
 
 
 
 
 
 62,044 
 
 
 76,823 
Cash and equivalents at September 30
 
 
 
 
 
 
 
 76,406 
 
 
 77,777 
Less: cash and equivalents of discontinued operations at September 30
 
 
 
 
 
 
 
 108 
 
 
 110 
Cash and equivalents of continuing operations at September 30
 
 
 
 
 
 
$
 76,298 
 
$
 77,667 
 
 
 
 
 
 
 
 
 
 
 
 

See accompanying notes.
 

 
(6)
 
 

General Electric Capital Corporation and consolidated affiliates
Summary of Operating Segments
(Unaudited)

 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
(In millions)
 
2013 
 
2012 
 
2013 
 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
CLL
 
$
 3,677 
 
$
 4,028 
 
$
 11,091 
 
$
 12,406 
Consumer
 
 
 3,747 
 
 
 3,911 
 
 
 11,353 
 
 
 11,600 
Real Estate
 
 
 689 
 
 
 948 
 
 
 3,218 
 
 
 2,660 
Energy Financial Services
 
 
 438 
 
 
 401 
 
 
 1,084 
 
 
 1,086 
GECAS
 
 
 1,312 
 
 
 1,249 
 
 
 3,973 
 
 
 3,897 
    Total segment revenues
 
 
 9,863 
 
 
 10,537 
 
 
 30,719 
 
 
 31,649 
Corporate items and eliminations
 
 
 807 
 
 
 737 
 
 
 2,466 
 
 
 2,319 
Total revenues
 
$
 10,670 
 
$
 11,274 
 
$
 33,185 
 
$
 33,968 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment profit
 
 
 
 
 
 
 
 
 
 
 
 
CLL
 
$
 479 
 
$
 563 
 
$
 1,702 
 
$
 1,855 
Consumer
 
 
 889 
 
 
 749 
 
 
 2,240 
 
 
 2,485 
Real Estate
 
 
 464 
 
 
 217 
 
 
 1,589 
 
 
 494 
Energy Financial Services
 
 
 150 
 
 
 132 
 
 
 293 
 
 
 325 
GECAS
 
 
 173 
 
 
 251 
 
 
 825 
 
 
 877 
    Total segment profit
 
 
 2,155 
 
 
 1,912 
 
 
 6,649 
 
 
 6,036 
Corporate items and eliminations
 
 
 (260)
 
 
 (237)
 
 
 (905)
 
 
 (467)
Earnings from continuing operations
 
 
 
 
 
 
 
 
 
 
 
 
    attributable to GECC
 
 
 1,895 
 
 
 1,675 
 
 
 5,744 
 
 
 5,569 
Earnings (loss) from discontinued operations,
 
 
 
 
 
 
 
 
 
 
 
 
    net of taxes, attributable to GECC
 
 
 (83)
 
 
 (107)
 
 
 (313)
 
 
 (857)
Total net earnings attributable to GECC
 
$
 1,812 
 
$
 1,568 
 
$
 5,431 
 
$
 4,712 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 

 
(7)
 
 

Notes to Condensed Financial Statements (Unaudited)
 
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
General Electric Company (GE Company or GE) owns all of the common stock of General Electric Capital Corporation (GECC). Our financial statements consolidate all of our affiliates – companies that we control and in which we hold a majority voting interest. We also consolidate the economic interests we hold in certain businesses within companies in which we hold a voting equity interest and are majority owned by our parent, but which we have agreed to actively manage and control. 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. GECC includes Commercial Lending and Leasing (CLL), Consumer, Real Estate, Energy Financial Services and GE Capital Aviation Services (GECAS).

Effects of transactions between related companies are made on an arms-length basis and are eliminated. As a wholly-owned subsidiary, GECC enters into various operating and financing arrangements with its parent, GE. These arrangements are made on an arms-length basis and consist primarily of GECC dividends to GE; GE customer receivables sold to GECC; GECC services for trade receivables management and material procurement; buildings and equipment (including automobiles) leased between GE and GECC; information technology (IT) and other services sold to GECC by GE; aircraft engines manufactured by GE that are installed on aircraft purchased by GECC from third-party producers for lease to others; and various investments, loans and allocations of GE corporate costs.

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.

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.


 
(8)
 
 


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 our Consumer auto and personal loan business in Portugal.  We completed the sale on July 15, 2013 for proceeds of $83 million.

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.


 
 
 
 
 
 
 
September 30,
 
December 31,
(In millions)
 
 
 
 
 
 
2013
  
2012
 
 
 
 
 
 
 
  
           
      
Assets
 
 
 
 
 
 
  
           
      
Cash and equivalents
 
 
 
 
 
 
$
 4 
 
$
 74 
Financing receivables – net
 
 
 
 
 
 
  
 - 
 
  
 47 
Property, plant and equipment – net
 
 
 
 
 
 
 
 - 
  
 
 31 
All other
 
 
 
 
 
 
  
 47 
 
  
 59 
Assets of businesses held for sale
 
 
 
 
 
 
$
 51 
 
$
 211 
 
 
 
 
 
 
 
  
            
 
  
            
Liabilities
 
 
 
 
 
 
  
  
 
  
  
Short-term borrowings
 
 
 
 
 
 
$
 - 
 
$
 138 
All other
 
 
 
 
 
 
 
 4 
  
 
 19 
Liabilities of businesses held for sale
 
 
 
 
 
 
$
 4 
  
$
 157 

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.
 
 

 
(9)
 
 

Summarized financial information for discontinued operations is shown below.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
(In millions)
 
2013 
 
2012 
 
2013 
 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operations
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues (loss)
 
$
 79 
 
$
 (17)
 
$
 109 
 
$
 (161)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
 
   before income taxes
 
$
 1 
 
$
 (139)
 
$
 (157)
 
$
 (587)
Benefit (provision) for income taxes
 
 
 9 
 
 
 30 
 
 
 151 
 
 
 187 
Earnings (loss) from discontinued operations,
 
 
 
 
 
 
 
 
 
 
 
 
   net of taxes
 
$
 10 
 
$
 (109)
 
$
 (6)
 
$
 (400)
 
 
 
 
 
 
 
 
 
 
 
 
 
Disposal
 
 
 
 
 
 
 
 
 
 
 
 
Gain (loss) on disposal before income taxes
 
$
 (108)
 
$
 (4)
 
$
 (390)
 
$
 (506)
Benefit (provision) for income taxes
 
 
 15 
 
 
 6 
 
 
 83 
 
 
 49 
Gain (loss) on disposal, net of taxes
 
$
 (93)
 
$
 2 
 
$
 (307)
 
$
 (457)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) from discontinued operations,
 
 
 
 
 
 
 
 
 
 
 
 
   net of taxes
 
$
 (83)
 
$
 (107)
 
$
 (313)
 
$
 (857)
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
September 30,
 
December 31,
(In millions)
 
 
 
 
 
 
2013 
 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash and equivalents
 
 
 
 
 
 
$
 108 
 
$
 102 
Property, plant and equipment – net
 
 
 
 
 
 
 
 474 
 
 
 699 
All other
 
 
 
 
 
 
 
 1,082 
 
 
 1,498 
Assets of discontinued operations
 
 
 
 
 
 
$
 1,664 
 
$
 2,299 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Deferred income taxes
 
 
 
 
 
 
$
 325 
 
$
 374 
All other
 
 
 
 
 
 
 
 2,007 
 
 
 2,007 
Liabilities of discontinued operations
 
 
 
 
 
 
$
 2,332 
 
$
 2,381 
 
 
 
 
 
 
 
 
 
 
 
 

Assets at September 30, 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.

 
(10)
 
 
 
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 $527 million at September 30, 2013, as claim payments and the effects of a strengthening U.S. dollar against the Japanese yen were partially offset by an increase to reserves of $205 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 $(80) million and $(9) million in the three months ended September 30, 2013 and 2012, respectively, and $(196) million and $(363) million in the nine months ended September 30, 2013 and 2012, respectively.

WMC
 
During the fourth quarter of 2007, we completed the sale of WMC, our U.S. mortgage business. WMC substantially discontinued all new loan originations by the second quarter of 2007, and is not a loan servicer. In connection with the sale, WMC retained certain 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 $6,311 million at September 30, 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 disallowed 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 been treated as “validly tendered,” meaning the loan was subject to repurchase because there was a breach of a representation and warranty that materially and adversely affected 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 $800 million at September 30, 2013, reflecting an increase to reserves in the nine months ended September 30, 2013 of $167 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, WMC’s historical loss experience and evaluation of claim activity on loans tendered for repurchase.

 
(11)
 
 


The following table provides a roll forward of the reserve and pending repurchase claims.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserve
 
 
Pending claims
 
Three months ended
 
Nine months ended
 
 
Three months ended
 
Nine months ended
(In millions)
September 30, 2013
 
September 30, 2013
 
(In millions)
September 30, 2013
 
September 30, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserve, beginning
 
 
 
 
 
 
Pending claims,
 
 
 
 
 
   of period
$
 787 
 
$
 633 
 
   beginning of period
$
 6,335 
 
$
 5,357 
Provision
 
 18 
 
 
 172 
 
New claims
 
 - 
 
 
 978 
Claim resolutions/
   rescissions
 
 (5)
 
 
 (5)
 
Claim resolutions/
   rescissions
 
 (24)
 
 
 (24)
Reserve, end
 
 
 
 
 
 
Pending claims, end
 
 
 
 
 
   of period
$
 800 
 
$
 800 
 
   of period
$
 6,311 
 
$
 6,311 
 
 
 
 
 
 
 
 
 
 
 
 
 

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 in the estimate of future loan repurchase requests and a 100% increase in the estimated loss rate on loans tendered (and assuming settlements at current demands), would result in an increase to the reserves of approximately $525 million.

There are 16 lawsuits involving claims made against WMC arising from alleged breaches of representations and warranties on mortgage loans included in 15 securitizations. WMC initiated three 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 12 of these lawsuits, the adverse parties seek compensatory or other relief for mortgage loans beyond those included in WMC’s previously discussed pending claims at September 30, 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 ten cases, claims for repurchase or damages based on the alleged failure to provide notice of defective loans, breach of a corporate representation and warranty, and/or non-specific claims for rescissionary damages on approximately $5,700 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 conflict with 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 September 30, 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. The case law on these issues is unsettled, and while several courts have supported some of the theories underlying WMC’s legal defenses, other courts have rejected them. There are a number of pending cases, including WMC cases, which, in the coming months, could provide more certainty regarding the legal status of these claims. 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, result in a reclassification of some or all of the Litigation Claims to Pending Claims and provoke new claims and lawsuits on additional loans. However, WMC continues to believe 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 $1,000 million of mortgage loans after the expiration of the statute of limitations as of September 30, 2013, $700 million of which are also included as Litigation Claims. Subsequent to September 30, 2013, WMC has received approximately $600 million of additional claims tendered after the six-year anniversary of the securitization. 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.

 
(12)
 
 


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 and additional claims and lawsuits could result 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 loan holders to present and resolve valid claims, governmental actions, mortgage industry activity and litigation, court decisions affecting WMC’s defenses, and pending and threatened litigation and indemnification demands against WMC.

WMC revenues (loss) from discontinued operations were $(13) million and $(117) million in the three months ended September 30, 2013 and 2012, respectively, and $(167) million and $(475) million in the nine months ended September 30, 2013 and 2012, respectively. WMC’s losses from discontinued operations, net of taxes, were $11 million and $78 million in the three months ended September 30, 2013 and 2012, respectively, and $116 million and $314 million in the nine months ended September 30, 2013 and 2012, respectively.

Other

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 from discontinued operations were $91 million and $95 million in the three months ended September 30, 2013 and 2012, respectively, and $274 million and $301 million in the nine months ended September 30, 2013 and 2012, respectively. CLL Trailer Services earnings (loss) from discontinued operations, net of taxes, were $(9) million and $5 million in the three months ended September 30, 2013 and 2012, respectively, and $(19) million (including a $118 million loss on disposal) and $24 million in the nine months ended September 30, 2013 and 2012, respectively.

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 from discontinued operations were an insignificant amount and $1 million in the three months ended September 30, 2013 and 2012, respectively, and an insignificant amount and $7 million in the nine months ended September 30, 2013 and 2012, respectively. Consumer Ireland earnings (loss) from discontinued operations, net of taxes, were $6 million and $(8) million in the three months ended September 30, 2013 and 2012, respectively, and $7 million and $(194) million (including a $121 million loss on disposal) in the nine months ended September 30, 2013 and 2012, respectively.

3. INVESTMENT SECURITIES
 
Substantially all of our investment securities are classified as available-for-sale. These comprise mainly investment grade debt securities supporting obligations to annuitants, policyholders and holders of guaranteed investment contracts (GICs) in our run-off insurance operations and Trinity, and investments held in our 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.

 
(13)
 
 


 
September 30, 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   U.S. corporate
$
 20,050 
 
$
 2,516 
 
$
 (209)
 
$
 22,357 
 
$
 20,233 
 
$
 4,201 
 
$
 (302)
 
$
 24,132 
   State and municipal
 
 4,187 
 
 
 246 
 
 
 (189)
 
 
 4,244 
 
 
 4,084 
 
 
 575 
 
 
 (113)
 
 
 4,546 
   Residential mortgage-backed(a)
 
 1,944 
 
 
 146 
 
 
 (59)
 
 
 2,031 
 
 
 2,198 
 
 
 183 
 
 
 (119)
 
 
 2,262 
   Commercial mortgage-backed
 
 2,919 
 
 
 194 
 
 
 (88)
 
 
 3,025 
 
 
 2,930 
 
 
 259 
 
 
 (95)
 
 
 3,094 
   Asset-backed
 
 6,533 
 
 
 8 
 
 
 (62)
 
 
 6,479 
 
 
 5,784 
 
 
 31 
 
 
 (77)
 
 
 5,738 
   Corporate – non-U.S.
 
 1,893 
 
 
 101 
 
 
 (96)
 
 
 1,898 
 
 
 2,391 
 
 
 150 
 
 
 (126)
 
 
 2,415 
   Government – non-U.S.
 
 2,370 
 
 
 86 
 
 
 (7)
 
 
 2,449 
 
 
 1,617 
 
 
 149 
 
 
 (3)
 
 
 1,763 
   U.S. government and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        federal agency
 
 839 
 
 
 52 
 
 
 (40)
 
 
 851 
 
 
 3,462 
 
 
 103 
 
 
 - 
 
 
 3,565 
Retained interests
 
 67 
 
 
 11 
 
 
 - 
 
 
 78 
 
 
 76 
 
 
 7 
 
 
 - 
 
 
 83 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Available-for-sale
 
 208