UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
     
 
FORM 10-Q
 

(Mark One)
       
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 
THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2015
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  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 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  
 
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
At September 30, 2015, 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.

























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TABLE OF CONTENTS

 
                    Page
     
Forward Looking Statements
4
Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)
5
    Consolidated Results
6
    Segment Operations
11
    GECC Corporate Items and Eliminations
14
    Discontinued Operations
14
    Statement of Financial Position
15
    Financial Resources and Liquidity
18
    Exposures
22
    Critical Accounting Estimates
23
    Other Items
24
Controls and Procedures
25
Regulations and Supervision
26
Legal Proceedings
27
Financial Statements and Notes
29
Exhibits
75
Form 10-Q Cross Reference Index
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," "will," "would," or "target."

Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about GE's announced plan to reduce the size of its financial services businesses, including expected cash and non-cash charges associated with this plan; expected income; revenues; net interest margin; cost structure; restructuring charges; cash flows; assets; return on capital or assets; capital structure, including Tier 1 common ratio; and dividends.

For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

·
obtaining (or the timing of obtaining) any required regulatory reviews or approvals or any other consents or approvals associated with GE's announced plan to reduce the size of its financial services businesses;
·
our ability to complete incremental asset sales as part of that plan in a timely manner (or at all) and at the prices we have assumed;
·
changes in law, economic and financial conditions, including interest and exchange rate volatility, commodity and equity prices and the value of financial assets, including the impact of these conditions on our ability to sell or the value of incremental assets to be sold as part of GE's announced plan to reduce the size of its financial services businesses as well as other aspects of that plan;
·
the impact of conditions in the financial and credit markets on the availability and cost of GECC's funding, GECC's exposure to counterparties and GECC's ability to reduce asset levels as planned;
·
the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults;
·
pending and future mortgage loan repurchase claims and other litigation claims 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;
·
GECC's ability to pay dividends to GE at the planned level, which may be affected by GECC's cash flows and earnings, financial services regulation and oversight, and other factors;
·
the level of demand and financial performance of the major industries and customers GE serves;
·
the effectiveness of our risk management framework;
·
the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation and litigation;
·
adverse market conditions, timing of and ability to obtain required bank regulatory approvals, or other factors relating to GE or Synchrony Financial that could prevent GE from completing the Synchrony Financial split-off as planned;
·
our success in completing, including obtaining regulatory approvals for, announced transactions, such as GE's announced plan and transactions to reduce the size of its financial services business;
·
our success in integrating acquired businesses and operating joint ventures;
·
the impact of potential information technology or data security breaches; and
·
the other factors that are described in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014.

These or other 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. This document includes certain forward-looking projected financial information that is based on current estimates and forecasts.  Actual results could differ materially.
2015 3Q FORM 10-Q  PAGE 4
 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)


PRESENTATION

Throughout this MD&A, unless otherwise indicated, we refer to captions such as revenues and earnings from continuing operations attributable to General Electric Capital Corporation (GE Capital or GECC) simply as "revenues" and "earnings." Similarly, discussion of other matters in our consolidated financial statements relates to continuing operations unless otherwise indicated.

We integrate acquisitions as quickly as possible. Only revenues and earnings from the date we complete the acquisition through the end of the following fourth quarter are attributed to such businesses.

We have reclassified certain prior-period amounts to conform to the current-period presentation.

NON-GAAP FINANCIAL MEASURES

In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered "non-GAAP financial measures" under the SEC rules. For such measures, we have provided supplemental explanations and reconciliations in Exhibit 99 to this Form 10-Q Report.

REFERENCES

The MD&A should be read in conjunction with the Financial Statements and Notes to the consolidated financial statements.

CORPORATE INFORMATION AND WEBSITES

GE's Investor Relations website at www.ge.com/investor-relations and our corporate blog at www.gereports.com, as well as GE's Facebook page and Twitter accounts, including @GE_Reports, 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.
2015 3Q FORM 10-Q  PAGE 5

CONSOLIDATED RESULTS

THE GE CAPITAL EXIT PLAN

On April 10, 2015, GE announced its plan (the GE Capital Exit Plan) to reduce the size of its financial services businesses through the sale of most of the assets of GECC over the following 24 months, and to focus on continued investment and growth in GE's industrial businesses. Under the GE Capital Exit Plan, which was approved on April 2, 2015 and aspects of which were approved on March 31, 2015, GE will retain certain GECC businesses, principally its vertical financing businesses—GE Capital Aviation Services (GECAS), Energy Financial Services (EFS) and Healthcare Equipment Finance—that directly relate to GE's core industrial domain and other operations, including Working Capital Solutions and our run-off insurance activities (together referred to as GE Capital Verticals or Verticals). The assets planned for disposition include Real Estate, most of Commercial Lending and Leasing (CLL) and all Consumer platforms (including all U.S. banking assets). GE expects to execute this strategy using an efficient approach for exiting non-vertical assets that works for GE's and GECC's debt holders and GE's shareowners. An element of this approach involves a merger of GECC into GE to assure compliance with debt covenants as GECC exits non-vertical assets, and the creation of a new intermediate holding company to hold GECC's businesses after the merger. GE has discussed the GE Capital Exit Plan, aspects of which are subject to regulatory review and approval, with its regulators and staff of the Financial Stability Oversight Council (FSOC) and will work closely with these bodies to take the actions necessary over time to terminate the FSOC's designation of GECC (and the new intermediate holding company, as applicable) as a nonbank systemically important financial institution (nonbank SIFI).

It is expected that as a result of the GE Capital Exit Plan, the GE Capital businesses that will remain with GE will account for about $90 billion in ending net investment (ENI), excluding liquidity, including about $40 billion in the U.S. ENI is a metric used to measure the total capital invested in the financial services businesses. GE Capital's ENI, excluding liquidity* at September 30, 2015 was $176 billion.

REORGANIZATION AND EXCHANGE OFFERS

The merger and creation of a new intermediate holding company is part of a reorganization of GECC's businesses (the Reorganization) pursuant to which GE will also separate GECC's international and U.S. operations. GECC's international operations will be consolidated under a new international holding company (GE Capital International Holdings) and will have a separate capital structure and be supervised by the U.K. Prudential Regulation Authority. The Reorganization, Exchange Offers (as described below) and establishment of GE Capital International Holdings are intended, among other things, to establish an efficient and simplified capital structure that is satisfactory to GECC's regulators, a key step in terminating the nonbank systemically important financial institution designation for GECC. In addition, the Exchange Offers were designed to align the liabilities of GE Capital International Holdings to its assets from a maturity profile and liquidity standpoint, taking into consideration asset sales, and where appropriate, shortening the maturity profile of targeted liabilities.

As part of the GE Capital Exit Plan, on September 21, 2015 GE Capital commenced private offers to exchange (the Exchange Offers) up to $30 billion of certain outstanding debt for new notes with maturities of six months, five years, ten years or twenty years. On October 19, 2015, given the high level of participation, the offering was increased by $6 billion with the aggregate principal amount of $36 billion of outstanding notes being tendered for exchange and settled on October 26, 2015. The new notes that were issued at closing are composed of $15.3 billion of 0.964% Six Month Notes due 2016, £0.8 billion of 1.363% Six Month Notes due 2016, $6.1 billion of 2.342% Notes due 2020, $2.0 billion of 3.373% Notes due 2025 and $11.5 billion of 4.418% Notes due 2035. Of the $16.2 billion exchanged into the Six Month Notes, $1.3 billion is in short term borrowings at September 30, 2015. GECC will continue to evaluate the opportunity to repurchase debt while maintaining our liquidity at the levels communicated as part of the GE Capital Exit Plan. The new notes have been fully, irrevocably and unconditionally guaranteed by GE.








*Non-GAAP Financial Measure
2015 3Q FORM 10-Q  PAGE 6


SALES AGREEMENTS

During the first nine months of 2015, GE signed agreements to sell approximately $94 billion of ENI, excluding liquidity (as originally reported at December 31, 2014), of which approximately $45 billion and $33 billion related to the CLL and Real Estate businesses, respectively. CLL transactions signed in the third quarter 2015 included approximately $9.3 billion related to its Healthcare Financial Services U.S. lending business with Capital One, approximately $7.6 billion related to its Transportation Finance business in the U.S. and Canada with BMO Financial Group, and approximately $1.8 billion related to its Mubadala joint venture with MidCap Finco. Ltd., which is managed by Apollo Capital Management. Of the signed agreements, approximately $60 billion have closed, including approximately $30 billion and $21 billion related to Real Estate and CLL, respectively. The Real Estate transactions that have closed included the majority of GECC's Real Estate debt and equity portfolio sold to funds managed by The Blackstone Group (which, in turn, sold a portion of this portfolio to Wells Fargo & Company). In connection with The Blackstone Group transactions, GECC provided $3.2 billion of seller financing to The Blackstone Group, which GECC intends to syndicate by 2016. As of September 30, 2015, GECC has collected or sold approximately $0.4 billion of this seller financing. The CLL transactions that have closed included its U.S. and European Sponsor Finance businesses and the majority of its Global Fleet services business.

In addition, during October 2015, we signed agreements to sell approximately $32 billion of ENI, excluding liquidity (as originally reported at December 31, 2014) related to our CLL business.  These signed CLL transactions included approximately $30 billion related to our global Commercial Distribution Finance, North American Vendor Finance and North American Corporate Finance businesses with Wells Fargo & Company and approximately $2 billion related to our Corporate Aircraft portfolio with Global Jet Capital.

AFTER-TAX CHARGES RELATED TO THE GE CAPITAL EXIT PLAN

In connection with the GE Capital Exit Plan announced on April 10, GE estimated that it would incur approximately $23 billion in after-tax charges through 2016, approximately $6 billion of which are expected to result in future net cash expenditures. These charges relate to: business dispositions, including goodwill allocations (approximately $13 billion), tax expense related to expected repatriation of foreign earnings and write-off of deferred tax assets (approximately $7 billion), and restructuring and other charges (approximately $3 billion).

In the nine months ended September 30, 2015, GE recorded $21.1 billion of after-tax charges related to the GE Capital Exit Plan, including $0.4 billion of after-tax charges recorded in the third quarter of 2015, primarily exit-related charges in our CLL business, partially offset by income associated with operations in CLL and Real Estate. A description of after-tax charges for the nine months ended September 30, 2015 is provided below.

·
$9.8 billion of net loss primarily related to the planned disposition of the Real Estate business and most of the CLL business, which is recorded in discontinued operations under the caption "Earnings (loss) from discontinued operations, net of taxes" in the Statement of Earnings.

·
$6.2 billion of tax expense related to expected repatriation of foreign earnings and write-off of deferred tax assets, of which $6.1 billion is reported in GECC's Corporate component and $0.2 billion is reported in our Consumer business all recorded in continuing operations under the caption "Benefit (provision) for income taxes" in the Statement of Earnings.

·
$4.7 billion of net asset impairments due to shortened hold periods, of which $3.2 billion is recorded in continuing operations in our Consumer business primarily under the captions "Provisions for losses on financing receivables" and "Revenues from services" in the Statement of Earnings and $1.5 billion is recorded in discontinued operations in our CLL business under the caption "Earnings (loss) from discontinued operations, net of taxes" in the Statement of Earnings.

·
$0.4 billion of restructuring and other charges, of which $0.3 billion is recorded in continuing operations in GECC's Corporate component under the caption "Operating and administrative" in the Statement of Earnings and $0.1 billion is recorded in discontinued operations in our CLL business under the caption "Earnings (loss) from discontinued operations, net of taxes" in the Statement of Earnings.
2015 3Q FORM 10-Q  PAGE 7


GUARANTEE

As part of the GE Capital Exit Plan, on April 10, 2015, GE and GECC entered into an amendment to their existing financial support agreement. Under this amendment (the Amendment), GE has provided a full and unconditional guarantee (the Guarantee) of the payment of principal and interest on all tradable senior and subordinated outstanding long-term debt securities and all commercial paper issued or guaranteed by GECC identified in the Amendment. In the aggregate, the Guarantee applied to approximately $184 billion of GECC debt as of September 30, 2015. The Guarantee replaced the requirement that GE make certain income maintenance payments to GECC in certain circumstances. GECC's U.S. public indentures were concurrently amended to provide the full and unconditional guarantee by GE set forth in the Guarantee.

SYNCHRONY FINANCIAL EXCHANGE OFFER

On October 14, 2015, the Federal Reserve Board approved Synchrony Financial's application to operate as a publicly owned savings and loan holding company following completion of the exchange offer, conditioned on Synchrony Financial complying with certain conditions, including receipt of all required regulatory approvals, and on the commitments made in connection with Synchrony Financial's applications.

On October 19, 2015, GE commenced an offer to exchange GE common stock for common stock of GECC's approximately 84.6% owned subsidiary, Synchrony Financial. This exchange offer is in connection with the previously announced separation of Synchrony Financial and is expected to conclude the week of November 16, 2015. We estimate that the exchange will reduce the outstanding shares of GE common stock by approximately 6-7%. Following the completion of the share exchange, GECC expects the Federal Reserve Board to act in due course on its application to deregister as a savings and loan holding company but cannot predict the timing of the Federal Reserve Board's action. For further information about the Synchrony Financial transaction, see the Form S-4 filed by Synchrony Financial on October 19, 2015.

REVENUES AND EARNINGS

Revenues decreased 1% in the three months ended September 30, 2015 as a result of higher impairments and the effects of currency exchange, partially offset by higher gains and the effects of acquisitions.

Revenues decreased 9% in the nine months ended September 30, 2015 primarily due to the effects of the GE Capital Exit Plan.

Earnings decreased 13% in the three months ended September 30, 2015 primarily due to core decreases, including charges associated with the GE Capital Exit Plan and higher impairments, partially offset by higher gains, the effects of dispositions and lower provisions for losses on financing receivables.

Earnings decreased significantly in the nine months ended September 30, 2015 primarily due to charges associated with the GE Capital Exit Plan.

SIGNIFICANT DEVELOPMENTS IN 2015

·
The GE Capital Exit Plan – see above.
·
Budapest Bank – On June 29, 2015 we closed the sale of Budapest Bank to Hungary's government.
·
Australia and New Zealand (ANZ) Consumer Lending – At September 30, 2015, we had an agreement to sell our consumer finance business in Australia and New Zealand to a consortium including KKR, Varde Partners and Deutsche Bank for approximately 6.0 billion Australian dollars and 1.4 billion New Zealand dollars, respectively.
·
Milestone Aviation GroupOn January 30, 2015, GECAS acquired Milestone Aviation Group, a helicopter leasing business, for approximately $1.8 billion.
·
Synchrony Financial – See above.
·
Dividends – GECC paid no dividends and $0.5 billion of dividends to GE in the three and nine months ended September 30, 2015, respectively.

2015 3Q FORM 10-Q  PAGE 8


OTHER CONSOLIDATED INFORMATION

INCOME TAXES

Income taxes have a significant effect on our net earnings. As a global commercial enterprise, our tax rates are affected by many factors, including our global mix of earnings, the extent to which those global earnings are indefinitely reinvested outside the United States, legislation, acquisitions, dispositions and tax characteristics of our income. Our tax rates are also affected by tax incentives introduced in the U.S. and other countries in furtherance of policies to encourage and support certain types of activity. Our tax returns are routinely audited and settlements of issues raised in these audits sometimes affect our tax provisions.

GE and GECC file a consolidated U.S. federal income tax return. This enables GE to use GECC tax deductions and credits to reduce the tax that otherwise would have been payable by GE. The GECC effective tax rate for each period reflects the benefit of these tax reductions in the consolidated return. GE makes cash payments to GECC for these tax reductions at the time GE's tax payments are due.

   
Three months ended September 30
 
Nine months ended September 30
(In billions)
 
2015
   
2014
   
2015
   
2014
                       
(Benefit) provision for income taxes
$
-
 
$
-
 
$
6.2
 
$
(0.1)
                       

2015 – 2014 COMMENTARY – THREE MONTHS ENDED SEPTEMBER 30

The GECC income tax rate for the third quarter of 2015 decreased to a negative (6.2%) from a negative (1.7%) in the third of 2014. The tax benefits when compared to the pre-tax income in each respective period resulted in the negative effective tax rates. The 4.5 percentage point decrease was primarily attributable to net tax benefits from marks on businesses held for sale and restructurings related to the GE Capital Exit Plan, partially offset by lower tax benefits on foreign operations.
2015 – 2014 COMMENTARY – NINE MONTHS ENDED SEPTEMBER 30
The negative nine month tax rate of 640.1% is caused by comparing the positive tax expense of $6.2 billion with the pre-tax loss of $1 billion resulting in a negative tax rate. As discussed in Note 7 to the consolidated financial statements, during the first nine months of 2015 in conjunction with the GE Capital Exit Plan we incurred tax expense of $6.2 billion related to expected repatriation of foreign earnings and write-off of deferred tax assets. The increase in the income tax expense from a benefit of $0.1 billion for the first nine months of 2014 to an expense of $6.2 billion for the first nine months of 2015 is primarily due to the tax impacts, discussed in Note 7 to the consolidated financial statements, related to the GE Capital Exit Plan.

BENEFITS FROM GLOBAL OPERATIONS

Absent the effects of the GE Capital Exit Plan, our effective income tax rate is lower than the U.S. statutory rate primarily because of benefits from lower-taxed global operations, including the use of global funding structures. There is a tax benefit from global operations as non-U.S. income is subject to local country tax rates that are significantly below the 35% U.S. statutory rate. These non-U.S. earnings have been indefinitely reinvested outside the U.S. and are not subject to current U.S. income tax. The rate of tax on our indefinitely reinvested non-U.S. earnings is below the 35% U.S. statutory rate because we have significant business operations subject to tax in countries where the tax on that income is lower than the U.S. statutory rate and because GECC funds certain of its non-U.S. operations through foreign companies that are subject to low foreign taxes.
2015 3Q FORM 10-Q  PAGE 9


Historically, the most significant portion of these benefits depends on the provision of U.S. law deferring the tax on active financial services income, which, as discussed below, is subject to expiration. A substantial portion of the remaining benefit related to business operations subject to tax in countries where the tax on that income is lower than the U.S. statutory rate is derived from our GECAS aircraft leasing operations located in Ireland. No other operation in any one country accounts for a material portion of the remaining balance of the benefit.

We expect our ability to benefit from non-U.S. income taxed at less than the U.S. rate to continue, subject to changes in our earnings profile due to the GE Capital Exit Plan and changes in U.S. or foreign law, including the expiration of the U.S. tax law provision deferring tax on active financial services income. In addition, since this benefit depends on management's intention to indefinitely reinvest amounts outside the U.S., our tax provision will increase to the extent we no longer intend to indefinitely reinvest foreign earnings.

2015 3Q FORM 10-Q  PAGE 10

SEGMENT OPERATIONS

Operating segments comprise our four segments focused on the broad markets they serve: Commercial Lending and Leasing, Consumer, Energy Financial Services and GECAS. The Chairman allocates resources to, and assesses the performance of, these four businesses.

Corporate items and eliminations include unallocated Treasury and Tax operations; Trinity, a group of sponsored special purpose entities; certain consolidated liquidating securitization entities; the effects of eliminating transactions between operating segments; results of our run-off insurance operations remaining in continuing operations attributable to GECC; unallocated corporate costs; certain non-allocated amounts determined by the Chairman; and a variety of sundry items. Corporate items and eliminations is not an operating segment. Rather, it is added to operating segment totals to reconcile to consolidated totals on the financial statements.

Segment profit is determined based on internal performance measures used by the Chairman to assess the performance of each business in a given period. In connection with that assessment, the Chairman may exclude matters such as charges for restructuring; rationalization and other similar expenses; acquisition costs and other related charges; technology and product development costs; certain gains and losses from acquisitions or dispositions; and litigation settlements or other charges, for which responsibility preceded the current management team.

Segment profit excludes results reported as discontinued operations, the portion of earnings attributable to noncontrolling interests of consolidated subsidiaries, GECC preferred stock dividends declared and accounting changes. Segment profit, which we sometimes refer to as "net earnings", includes interest and income taxes. GE allocates certain corporate costs to its segments based on an estimate of expected benefit to the respective segment relative to total GE. Factors considered in the determination of relative benefit include a segment's direct costs and number of employees compared to the total direct costs and number of employees for all segments.

We have reclassified certain prior-period amounts to conform to the current-period presentation.
2015 3Q FORM 10-Q  PAGE 11


SUMMARY OF OPERATING SEGMENTS
                                   
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
2015
 
2014
 
V%
 
2015
 
2014
 
V%
                                   
Revenues
                                 
CLL
$
285
 
$
251
   
 14 %
 
$
790
 
$
743
   
 6 %
Consumer
 
3,652
   
3,622
   
 1 %
   
9,237
   
10,822
   
 (15)%
Energy Financial Services
 
225
   
344
   
 (35)%
   
906
   
1,120
   
 (19)%
GECAS
 
1,307
   
1,262
   
 4 %
   
3,935
   
3,952
   
 - %
    Total segment revenues
 
5,468
   
5,479
   
 - %
   
14,867
   
16,637
   
 (11)%
GECC corporate items and eliminations
 
843
   
905
   
 (7)%
   
2,585
   
2,586
   
 - %
Total revenues
$
6,312
 
$
6,384
   
 (1)%
 
$
17,452
 
$
19,223
   
 (9)%
                                   
Segment profit (loss)
                                 
CLL
$
111
 
$
90
   
 23 %
 
$
286
 
$
252
   
 13 %
Consumer
 
795
   
621
   
 28 %
   
(1,521)
   
1,879
   
U
Energy Financial Services
 
(38)
   
61
   
U
   
106
   
290
   
 (63)%
GECAS
 
313
   
133
   
F
   
981
   
828
   
 18 %
    Total segment profit (loss)
 
1,180
   
905
   
 30 %
   
(149)
   
3,249
   
U
GECC corporate items and eliminations
 
(445)
   
(62)
   
U
   
(7,245)
   
3
   
U
Earnings (loss) from continuing operations attributable to GECC
 
734
   
843
   
 (13)%
   
(7,394)
   
3,252
   
U
Preferred stock dividends declared
 
-
   
-
   
 - %
   
(161)
   
(161)
   
 - %
Earnings (loss) from continuing operations attributable to
                                 
   GECC common shareowner
 
734
   
843
   
 (13)%
   
(7,555)
   
3,091
   
U
Earnings (loss) from discontinued operations, net of taxes
 
(347)
   
706
   
U
   
(10,332)
   
2,070
   
U
Net earnings (loss) attributable to GECC common shareowner
$
387
 
$
1,549
   
 (75)%
 
$
(17,887)
 
$
5,161
   
U
                                   

(In millions)
September 30, 2015
 
December 31, 2014
 
September 30, 2014
                 
Assets
               
CLL
$
21,573
 
$
21,673
 
$
19,366
Consumer
 
120,879
   
135,987
   
140,529
Energy Financial Services
 
15,406
   
15,467
   
16,197
GECAS
 
45,816
   
42,625
   
42,960
GECC Corporate items and eliminations
 
230,146
   
286,818
   
290,392
Total assets
$
433,819
 
$
502,570
 
$
509,444
                 

2015 3Q FORM 10-Q  PAGE 12

2015 – 2014 COMMENTARY:

COMMERCIAL LENDING AND LEASING

During the second quarter of 2015, the majority of CLL's business met held for sale criteria and was classified as discontinued operations.  See Note 2 for additional information. The discussion below relates solely to the portion of CLL's business classified as continuing operations, which include Healthcare Equipment Finance and Working Capital Solutions.

CLL 2015 revenues increased 14% and net earnings increased 23% in the three months ended September 30, 2015. Revenues increased primarily as a result of organic revenue growth. Net earnings increased reflecting core increases.

CLL 2015 revenues increased 6% and net earnings increased 13% in the nine months ended September 30, 2015. Revenues increased primarily as a result of organic revenue growth, partially offset by the effects of currency exchange. Net earnings increased reflecting core increases.

CONSUMER

Consumer 2015 revenues increased 1% and net earnings increased 28% in the three months ended September 30, 2015. Revenues increased reflecting higher gains ($0.2 billion), organic revenue growth ($0.1 billion) and the effects of acquisitions, partially offset by the effects of dispositions ($0.2 billion) and the effects of currency exchange ($0.1 billion). Net earnings increased as a result of higher gains ($0.1 billion) and lower provisions for financing receivables ($0.1 billion), partially offset by core decreases.

Consumer 2015 revenues decreased 15% and net earnings decreased unfavorably in the nine months ended September 30, 2015. Revenues decreased as a result of higher impairments ($1.4 billion), the effects of dispositions ($0.5 billion) and the effects of currency exchange ($0.4 billion), partially offset by higher gains ($0.4 billion), organic revenue growth ($0.3 billion) and the effects of acquisitions. Net earnings decreased as a result of higher provisions for losses on financing receivables ($2.0 billion), higher impairments ($1.2 billion) and core decreases ($0.4 billion), partially offset by higher gains ($0.2 billion). These decreases are primarily related to the reclassification of assets within Consumer to financing receivables held-for-sale recorded at the lower of cost or fair value, less cost to sell ($2.2 billion), and asset impairments related to equity method investments in connection with the GE Capital Exit Plan ($1.2 billion).

ENERGY FINANCIAL SERVICES

Energy Financial Services 2015 revenues decreased 35% and net earnings decreased unfavorably in the three months ended September 30, 2015. Revenues decreased as a result of higher impairments ($0.2 billion), lower gains ($0.1 billion) and organic revenue declines, partially offset by the effects of dispositions ($0.2 billion). Net earnings decreased as a result of higher impairments ($0.1 billion) and lower gains, partially offset by the effects of dispositions ($0.1 billion).

Energy Financial Services 2015 revenues decreased 19% and net earnings decreased 63% in the nine months ended September 30, 2015. Revenues decreased as a result of organic revenue declines ($0.3 billion), higher impairments ($0.1 billion) and lower gains ($0.1 billion), partially offset by the effects of dispositions ($0.2 billion). Net earnings decreased as a result of core decreases ($0.2 billion), higher impairments ($0.1 billion) and lower gains, partially offset by the effects of dispositions ($0.1 billion).

GECAS

GECAS 2015 revenues increased 4% and net earnings increased favorably in the three months ended September 30, 2015. Revenues increased as a result of the effects of acquisitions ($0.1 billion), partially offset by organic revenue declines ($0.1 billion). Net earnings increased as a result of lower impairments ($0.1 billion), the effects of acquisitions and core increases.

GECAS 2015 revenues decreased slightly and net earnings increased 18% in the nine months ended September 30, 2015. Revenues decreased as a result of organic revenue declines ($0.4 billion), partially offset by the effects of acquisitions ($0.2 billion) and lower impairments ($0.1 billion). Net earnings increased as a result of lower impairments ($0.2 billion) and the effects of acquisitions ($0.1 billion), partially offset by core decreases ($0.1 billion).
2015 3Q FORM 10-Q  PAGE 13

GECC CORPORATE ITEMS AND ELIMINATIONS

Corporate items and eliminations included $0.2 billion of Treasury operation expenses and $0.1 billion of Treasury operation income in the three months ended September 30, 2015 and 2014, respectively, and $0.2 billion of Treasury operation expenses and $0.1 billion of Treasury operation income in the nine months ended September 30, 2015 and 2014, respectively, reflecting derivative activities that reduce or eliminate interest rate, currency or market risk between financial assets and liabilities.

Corporate items and eliminations included $6.2 billion of net unallocated tax expenses in the nine months ended September 30, 2015, primarily related to tax expenses on expected repatriation of foreign earnings and write-off of deferred tax assets related to the GE Capital Exit Plan.

Corporate items and eliminations included $0.1 billion and $0.1 billion of corporate headquarters expenses in the three months ended September 30, 2015 and 2014, respectively, and $0.5 billion and $0.3 billion in the nine months ended September 30, 2015 and 2014, respectively, encompassing executive staff and functional support to our businesses.

Certain amounts included in corporate items and eliminations are not allocated to the four operating businesses because they are excluded from the measurement of their operating performance for internal purposes. Unallocated costs included an insignificant amount in both the three months ended September 30, 2015 and 2014, respectively, and $0.1 billion in both the nine months ended September 30, 2015 and 2014, respectively, primarily related to restructuring, rationalization and other charges.

DISCONTINUED OPERATIONS

Discontinued operations primarily included most of our CLL business, our Real Estate business and our U.S. mortgage business (WMC).

Results of operations, financial position and cash flows for these businesses are separately reported as discontinued operations for all periods presented.

FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS
                       
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
2015
 
2014
 
2015
 
2014
                       
Earnings (loss) from discontinued operations, net of taxes
$
(347)
 
$
706
 
$
(10,332)
 
$
2,070
                       

2015 – 2014 COMMENTARY: THREE MONTHS ENDED SEPTEMBER 30

The third quarter 2015 loss from discontinued operations, net of taxes, primarily reflected the following:
·
$0.5 billion after-tax loss at our CLL business (including $1.2 billion after-tax impairment charges on planned disposals).
·
Third quarter 2015 losses were partially offset by $0.1 billion after-tax earnings at our Real Estate business, including a $0.2 billion after-tax gain on transactions closed in the quarter.

The third quarter 2014 earnings from discontinued operations, net of taxes, primarily reflected the following:
·
$0.5 billion of after-tax earnings from operations at our CLL business, and
·
$0.2 billion of after-tax earnings from operations at our Real Estate business.

2015 – 2014 COMMENTARY: NINE MONTHS ENDED SEPTEMBER 30

The 2015 loss from discontinued operations, net of taxes, primarily reflected the following:
·
$8.2 billion after-tax loss at our CLL business (including a $8.4 billion after-tax loss on planned disposals), and
·
$2.2 billion after-tax loss at our Real Estate business primarily loss on planned disposals.

The 2014 earnings from discontinued operations, net of taxes, primarily reflected the following:
·
$1.4 billion of after-tax earnings from operations at our CLL business, and
·
$0.7 billion of after-tax earnings from operations at our Real Estate business.
2015 3Q FORM 10-Q  PAGE 14

For additional information related to discontinued operations, see Note 2 to the consolidated financial statements.

STATEMENT OF FINANCIAL POSITION


MAJOR CHANGES IN OUR FINANCIAL POSITION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015:

·
Cash and equivalents increased $13.3 billion. See the following Liquidity Sources and Statement of Cash Flows sections for additional information.
·
Financing receivables-net decreased $38.7 billion. See the following Financing Receivables section for additional information.
·
Financing receivables held for sale increased $22.9 billion. See the following Financing Receivables Held for Sale section for additional information.
·
Assets of discontinued operations decreased $65.0 billion, primarily due to the disposition of CLL businesses of $35.0 billion and Real Estate of $29.1 billion. See Note 2 for additional information.   
·
Borrowings decreased $50.5 billion, primarily due to net repayments on borrowings of $43.4 billion, along with a $7.3 billion reduction in the balances driven by the strengthening of the U.S. dollar against all major currencies.
·
Bank deposits increased $4.8 billion, primarily due to an increase in U.S. bank deposits of $5.4 billion at Synchrony Financial, offset by a $0.7 billion reduction driven by the strengthening of the U.S. dollar in non-U.S. bank deposits.
·
Liabilities of discontinued operations decreased $5.0 billion, primarily due to the disposition of CLL businesses of $3.3 billion and Real Estate of $1.7 billion. See Note 2 for additional information.

FINANCING RECEIVABLES

Financing receivables held for investment are those that we have the intent and ability to hold for the foreseeable future and are measured at the principal amount outstanding, net of the allowance for losses, write-offs, unamortized discounts and premiums, and net deferred loan fees or costs.

At September 30, 2015, our financing receivables portfolio primarily relates to Synchrony Financial (our U.S. consumer business), Working Capital Solutions, which purchases GE customer receivables and GECAS, Energy Financial Services and Healthcare Equipment Finance (that directly relate to GE's core industrial businesses). The portfolios in our GECAS and Energy Financial Services businesses are collateralized by commercial aircraft and operating assets in the global energy and water industries, respectively. Our Healthcare Equipment Finance portfolio is collateralized by equipment used in the healthcare industry and the Working Capital Solutions portfolio is substantially recourse to GE or insured. Both the Healthcare Equipment Finance and Working Capital Solutions portfolios are reported in the CLL segment. Substantially all of the Synchrony Financial portfolio consists of U.S. consumer credit card and sales finance receivables and are reported in the Consumer segment.

For purposes of the discussion that follows, "delinquent" receivables are those that are 30 days or more past due based on their contractual terms. Loans purchased at a discount are initially recorded at fair value and accrete interest income over their estimated lives based on reasonably estimable cash flows even if the underlying loans are contractually delinquent at acquisition. "Nonaccrual" financing receivables are those on which we have stopped accruing interest. We stop accruing interest at the earlier of the time at which collection of an account becomes doubtful or the account becomes 90 days past due, with the exception of consumer credit card accounts, for which we continue to accrue interest until the accounts are written off in the period that the account becomes 180 days past due. Recently restructured financing receivables are not considered delinquent when payments are brought current according to the restructured terms, but may remain classified as nonaccrual until there has been a period of satisfactory payment performance by the borrower and future payments are reasonably assured of collection.

Further information on the determination of the allowance for losses on financing receivables and the credit quality and categorization of our financing receivables is provided in Notes 4 and 13 to the consolidated financial statements.

2015 3Q FORM 10-Q  PAGE 15


FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES
 
                                     
 
Financing receivables at
 
Nonaccrual receivables at
 
Allowance for losses at(a)
 
(In millions)
September 30, 2015
 
December 31, 2014
 
September 30, 2015
 
December 31, 2014
 
September 30, 2015
 
December 31, 2014
 
                                     
Commercial
                                   
  CLL
$
13,341
 
$
14,418
 
$
27
 
$
25
 
$
32
 
$
21
 
  Energy
                                   
     Financial Services
 
2,443
   
2,580
   
82
   
68
   
14
   
26
 
  GECAS
 
7,394
   
8,263
   
195
   
419
   
37
   
46
 
  Other
 
506
   
480
   
-
   
-
   
2
   
-
 
Total Commercial
 
23,684
   
25,741
   
304
   
512
   
85
   
93
 
Consumer
 
63,520
   
100,820
(b)
 
2
(d)
 
1,484
(b)
 
3,372
   
4,011
(b)
Total
$
87,204
 
$
126,561
 
$
306
(c)
$
1,996
 
$
3,457
 
$
4,104
 
                                     
(a)
Write-offs to net realizable value are recognized against the allowance for losses primarily in the reporting period in which management has deemed all or a portion of the financing receivable to be uncollectible.
(b)
Included financing receivables of $10,564 million, nonaccrual receivables of $546 million and allowance for losses of $136 million at December 31, 2014, respectively, primarily related to loans, net of credit insurance, whose terms permitted repayments that are less than the repayments for fully amortizing loans and high loan-to-value ratios at inception (greater than 90%). At origination, we underwrite loans with an adjustable rate to the reset value. Of these loans at December 31, 2014, about 85% are in our U.K. and France portfolios, which have a delinquency rate of 10%, have a loan-to-value ratio at origination of 82% and have re-indexed loan-to-value ratios of 77% and 62%, respectively. Re-indexed loan-to-value ratios may not reflect actual realizable values of future repossessions. At December 31, 2014, 13% (based on dollar values) of these loans in our U.K. and France portfolios have been restructured.
(c)
The majority of our $0.3 billion of nonaccrual loans at September 30, 2015 are currently paying in accordance with the contractual terms.
(d)
We continue to accrue interest on consumer credit cards until the accounts are written off in the period the account becomes 180 days past due.

Financing receivables, before allowance for losses, decreased $39.4 billion from December 31, 2014, primarily as a result of reclassifications to financing receivables held for sale or assets of businesses held for sale (primarily Consumer) ($34.5 billion), write-offs ($5.6 billion) and the stronger U.S. dollar ($4.0 billion), partially offset by originations exceeding collections (which includes sales) ($5.8 billion).

Nonaccrual receivables decreased $1.7 billion from December 31, 2014, primarily due to reclassifications to financing receivables held for sale (including write-offs) or assets of businesses held for sale (primarily Consumer).

Allowance for losses decreased $0.6 billion from December 31, 2014, primarily as a result of write-offs on financing receivables reclassified to financing receivables held for sale and the transfer of that portion of the allowance for losses related to financing receivables reclassified to assets of businesses held for sale (primarily Consumer). The allowance for losses as a percent of total financing receivables increased from 3.2% at December 31, 2014 to 4.0% at September 30, 2015 reflecting decreases in both the allowance for losses and the overall financing receivables balance related to the financing receivables reclassified to financing receivables held for sale and assets of businesses held for sale as part of the GE Capital Exit Plan.
2015 3Q FORM 10-Q  PAGE 16


SELECTED RATIOS RELATED TO NONACCRUAL FINANCING RECEIVABLES AND THE ALLOWANCES FOR LOSSES
 
                         
 
Nonaccrual financing receivables
 
Allowance for losses
 
Allowance for losses
 
 
as a percent of
 
as a percent of
 
as a percent of
 
 
total financing receivables at
 
nonaccrual financing receivables at
 
total financing receivables at
 
 
September 30, 2015
 
December 31, 2014
 
September 30, 2015
 
December 31, 2014
 
September 30, 2015
 
December 31, 2014
 
                         
Commercial
                       
  CLL
0.2
%
0.2
%
118.5
%
84.0
%
0.2
%
0.2
%
  Energy
                       
     Financial Services
3.4
 
2.6
 
17.1
 
38.2
 
0.6
 
1.0
 
  GECAS
2.6
 
5.1
 
19.0
 
11.0
 
0.5
 
0.6
 
  Other
-
 
-
 
-
 
-
 
0.4
 
-
 
Total Commercial
1.3
 
2.0
 
28.0
 
18.2
 
0.4
 
0.4
 
Consumer
-
(a)
1.5
(b)
(c)
 
270.3
(b)
5.3
(d)
4.0
(b)
Total
0.4
 
1.6
 
(c)
 
205.6
 
4.0
 
3.2
 
                         
(a)
We continue to accrue interest on consumer credit cards until the accounts are written off in the period the account becomes 180 days past due.
(b)
Included nonaccrual financing receivables as a percent of financing receivables of 5.2%, allowance for losses as a percent of nonaccrual receivables of 24.8% and allowance for losses as a percent of total financing receivables of and 1.3% at 2014, respectively, primarily related to loans, net of credit insurance, whose terms permitted repayments that are less than the repayments for fully amortizing loans and high loan-to-value ratios at inception (greater than 90%). Compared to the overall non-U.S. residential mortgage loan portfolio, the ratio of allowance for losses as a percent of nonaccrual financing receivables for these loans is lower, driven primarily by the higher mix of such products in the U.K. and France portfolios and as a result of the better performance and collateral realization experience in these markets.
(c)
Not meaningful.
(d)
The ratio of allowance for losses as a percent of financing receivables increased from 4.0% at December 31, 2014 to 5.3% at September 30, 2015, primarily reflecting the transfer of our non-U.S. Consumer financing receivables to financing receivables held for sale or assets of businesses held for sale.

FINANCING RECEIVABLES HELD FOR SALE

Financing receivables held for sale are recorded at the lower of cost or fair value, less cost to sell, and represent those financing receivables that management does not intend to hold for the foreseeable future. Subsequent declines in fair value are recognized in the period in which they occur. Valuations are primarily performed on a portfolio basis, except for commercial financing receivables which may be performed on an individual financing receivable basis. Interest income on financing receivables held for sale is accrued and subject to the nonaccrual policies described above. Because financing receivables held for sale are recognized at the lower of cost or fair value, less cost to sell, the allowance for losses and write-off policies do not apply to these financing receivables.

During the first quarter of 2015, we transferred all of our non-U.S. Consumer financing receivables to financing receivables held for sale or assets of businesses held for sale as a result of the GE Capital Exit Plan and the signing of an agreement to sell our consumer finance business in Australia and New Zealand.

The transfer of financing receivables to financing receivables held for sale and assets of businesses held for sale in the nine months ended September 30, 2015, totaled $29.0 billion and $5.5 billion, respectively. Prior to transferring the financing receivables to financing receivables held for sale we recognized a pre-tax provision for losses on financing receivables of $2.4 billion ($2.2 billion after-tax), to reduce the carrying value of the financing receivables to the lower of cost or fair value, less cost to sell, and wrote-off the associated balance of the allowance for losses of $2.9 billion to establish a new cost basis of the financing receivables held for sale at September 30, 2015.

For businesses held for sale, financing receivable balances of $5.5 billion and the related allowance for loan losses of $0.2 billion were reclassified to assets of businesses held for sale. The businesses held for sale were recorded at the lower of cost or fair value, less cost to sell.

A majority of the provision for losses on financing receivables recognized upon the transfer of financing receivables to financing receivables held for sale during the nine months ended September 30, 2015 relates to our Consumer non-U.S. residential mortgage portfolios in the U.K., France, Poland and Spain, which primarily comprise variable rate mortgages with a remaining weighted average maturity of more than ten years. We estimate that the effect on the provision for losses is largely attributable to credit loss exposures that are not incurred losses recognizable under GAAP but nevertheless affect fair value that would be determined by a market participant when pricing the portfolio.
2015 3Q FORM 10-Q  PAGE 17


As a result of the GE Capital Exit Plan and transfer of financing receivables to financing receivables held for sale or assets of businesses held for sale, nonaccrual receivables and impaired loan balances at December 31, 2014 were reduced by $1.2 billion and $1.0 billion, respectively. Loans held for sale are not reported as impaired, as these loans are recorded at lower of cost or fair value, less cost to sell.

Further information on financing receivables held for sale is provided in Note 2 to the consolidated financial statements.


FINANCIAL RESOURCES AND LIQUIDITY


LIQUIDITY AND BORROWINGS

We maintain a strong focus on liquidity. We manage our liquidity to help provide access to sufficient funding to meet our business needs and financial obligations throughout business cycles.

Our liquidity and borrowing plans are established within the context of our annual financial and strategic planning processes. Our liquidity and funding plans take into account the liquidity necessary to fund our operating commitments. We also take into account our capital allocation and growth objectives, including paying dividends.

We rely on a diversified source of funding, including the unsecured term debt markets, the global commercial paper markets, deposits, secured funding, retail funding products, bank borrowings and securitizations to fund our balance sheet. We also rely on cash generated through collection of principal, interest and other payments on our existing portfolio of loans and leases as well as dispositions to fund our operating and interest expense costs. Our liquidity position is targeted to meet our obligations under both normal and stressed conditions. We establish a funding plan annually that is based on the projected asset size and cash needs of the business, which, over the past few years, has incorporated our strategy to reduce our ending net investment. In connection with the GE Capital Exit Plan, we do not intend to issue any incremental unsecured term debt in the next five years. We expect to maintain an elevated liquidity position as we generate cash from asset sales, returning to more normalized levels in 2019. While we maintain elevated liquidity levels, we may engage in liability management actions, such as buying back debt, based on market and economic conditions.

Our 2015 funding plan anticipates repayment of principal on outstanding short-term borrowings, including the current portion of long-term debt ($37.0 billion at December 31, 2014), principally through dispositions, asset sales and cash on hand. Long-term maturities and early redemptions were $12.9 billion in the third quarter of 2015.

We maintain a detailed liquidity policy that requires us to maintain a contingency funding plan. The liquidity policy defines our liquidity risk tolerance under different stress scenarios based on our liquidity sources and also establishes procedures to escalate potential issues. We actively monitor our access to funding markets and our liquidity profile through tracking external indicators and testing various stress scenarios. The contingency funding plan provides a framework for handling market disruptions and establishes escalation procedures in the event that such events or circumstances arise. We will continue to evaluate the need to modify the existing contingency funding plan due to the GE Capital Exit Plan.

On April 10, 2015, Moody's Investors Service (Moody's) downgraded the senior unsecured debt rating for GE to A1 from Aa3 following GE's April 10 announcement of the GE Capital Exit Plan. GE's P-1 short-term rating was affirmed. Moody's affirmed GECC's A1/P-1 ratings. The rating outlook for GE and GECC remains stable. On April 10, 2015, Standard & Poor's Rating Services (S&P) affirmed GE's AA+/A-1+ ratings and GECC's AA+/A-1+ ratings each with a stable outlook. On October 7, 2015, S&P revised its outlook on GE's credit rating to negative from stable. S&P affirmed GE's AA+/A-1+ ratings.

As part of the GE Capital Exit Plan, on September 21, 2015 GE Capital commenced private offers to exchange up to $30 billion of certain outstanding debt for new notes with maturities of six months, five years, ten years or twenty years. On October 19, 2015, given the high level of participation, the offering was increased by $6 billion with the aggregate principal amount of $36 billion of outstanding notes being tendered for exchange and settled on October 26, 2015. The new notes that were issued at closing are composed of $15.3 billion of 0.964% Six Month Notes due 2016, £0.8 billion of 1.363%  Six Month Notes due 2016, $6.1 billion of 2.342% Notes due 2020, $2.0 billion of 3.373 % Notes due 2025 and $11.5 billion of 4.418 % Notes due 2035. Of the $16.2 billion exchanged into the Six Month Notes, $1.3 billion is in short term borrowings at September 30, 2015. GECC will continue to evaluate the opportunity to
2015 3Q FORM 10-Q  PAGE 18


repurchase debt while maintaining our liquidity at the levels communicated as part of the GE Capital Exit Plan. The new notes have been fully, irrevocably and unconditionally guaranteed by GE.

LIQUIDITY SOURCES

We maintain liquidity sources of $97.0 billion that consisted of cash and equivalents of $82.3 billion, high-quality, liquid investments of $3.2 billion and cash and equivalents of $11.5 billion classified as discontinued operations and businesses held for sale. Additionally, we have $45.3 billion of committed unused credit lines.

CASH AND EQUIVALENTS
     
       
(In billions)
 
September 30, 2015
 
       
U.S.
$
37.0
 
Non-U.S.
 
45.3
(a)
Total consolidated
$
82.3
(b)
       
(a)
Of this amount at September 30, 2015, no cash was considered indefinitely reinvested.
(b)
At September 30, 2015, cash and equivalents of about $17.0 billion were in regulated banks and insurance entities and were subject to regulatory restrictions.

COMMITTED UNUSED CREDIT LINES
     
(In billions)
September 30, 2015
     
Revolving credit agreements (exceeding one year)
$
24.5
Revolving credit agreements (364-day line)(a)
 
20.8
Total(b)
$
45.3
     
(a)
Contain a term-out feature that allows us to extend borrowings for two years from the date on which such borrowings would otherwise be due.
(b)
Total committed unused credit lines were extended to us by 47 financial institutions. GECC can borrow up to $45.3 billion under all of these credit lines. GE can borrow up to $14.8 billion under certain of these credit lines.

FUNDING PLAN

GE reduced its GE Capital ENI, excluding liquidity* to $176 billion at September 30, 2015.

During the first nine months of 2015, we completed issuances of $8.1 billion of senior unsecured debt (excluding securitizations described below) with maturities up to 10 years. In addition, Synchrony Financial completed issuances of $2.0 billion of senior unsecured debt including $1.0 billion in February 2015, maturing in 2020, and $1.0 billion in July 2015, maturing in 2025.

COMMERCIAL PAPER
     
(In billions)
 
     
Average commercial paper borrowings during the third quarter of 2015
$
22.5
Maximum commercial paper borrowings outstanding during the third quarter of 2015
 
25.1
     

Our commercial paper maturities have historically been funded principally through new commercial paper issuances. Our commercial paper borrowings as of September 30, 2015 were $12.9 billion. As announced on April 10, 2015, we are targeting to reduce the outstanding commercial paper to approximately $5 billion by the end of 2015.

We securitize financial assets as an alternative source of funding. During the first nine months of 2015, we completed $2.1 billion of non-recourse issuances and $5.2 billion of non-recourse borrowings matured. At September 30, 2015, consolidated non-recourse securitization borrowings were $16.2 billion.

We have nine deposit-taking banks outside of the U.S., five of which are classified as discontinued operations, and two deposit-taking banks in the U.S. – Synchrony Bank (formerly GE Capital Retail Bank), a Federal Savings Bank (FSB), and GE Capital Bank, an industrial bank (IB), which is also classified as discontinued operations. The FSB and IB currently issue certificates of deposit (CDs) in maturity terms up to 10 years.

*Non-GAAP Financial Measure
2015 3Q FORM 10-Q  PAGE 19


ALTERNATIVE FUNDING
       
(In billions)
 
       
Total alternative funding at December 31, 2014
$
86.4
 
Total alternative funding at September 30, 2015, as follows:
 
75.3
 
Bank deposits
 
48.7
 
Non-recourse securitization borrowings
 
16.2
 
Funding secured by real estate, aircraft and other collateral
 
5.0
 
Bank unsecured
 
5.4
       


As a matter of general practice, we routinely evaluate the economic impact of calling debt instruments where we have the right to exercise a call. In determining whether to call debt, we consider the economic benefit to GECC of calling debt, the effect of calling debt on our liquidity profile and other factors. During 2015, we called $0.6 billion of long-term debt.

INCOME MAINTENANCE AGREEMENT AND GE GUARANTEE OF CERTAIN GECC DEBT

GE provides implicit and explicit support to GECC through commitments, capital contributions and operating support. As part of the GE Capital Exit Plan, on April 10, 2015, GE and GECC entered into an amendment to their existing financial support agreement. Under this amendment (the Amendment), GE has provided a full and unconditional guarantee (the Guarantee) of the payment of principal and interest on all tradable senior and subordinated outstanding long-term debt securities and all commercial paper issued or guaranteed by GECC identified in the Amendment. In the aggregate, the Guarantee applied to approximately $184 billion of GECC debt as of September 30, 2015. The Guarantee replaced the requirement that GE make certain income maintenance payments to GECC in certain circumstances. GECC's U.S. public indentures were concurrently amended to provide the full and unconditional guarantee by GE set forth in the Guarantee.

2015 3Q FORM 10-Q  PAGE 20

STATEMENT OF CASH FLOWS - NINE MONTHS ENDED SEPTEMBER 30, 2015

Our business uses a variety of financial resources to meet its capital needs.  Cash for our business activities is primarily provided from the issuance of term debt and commercial paper in public and private markets and deposits, as well as financing receivables collections, sales and securitizations.

CASH FLOWS
         
           
 
Nine months ended September 30
(In billions)
 
2015
   
2014
           
Cash from operating activities
$
4.0
 
$
6.8
Cash from investing activities
 
55.7
   
7.0
Cash used for financing activities
 
(43.7)
   
(10.6)
           
2015 – 2014 COMMENTARY:

GECC cash from operating activities decreased $2.8 billion primarily due to the following:
·
A decrease in net cash collateral activity with counterparties on derivative contracts of $2.2 billion.

GECC cash from investing activities increased $48.6 billion primarily due to the following:
·
In 2015, we closed the sale of certain of our Real Estate businesses and CLL businesses for proceeds of $25.6 billion and $16.8 billion, respectively.
·
A net increase in financing receivables activity of $6.1 billion driven by higher net collections (which includes sales) of financing receivables.
·
The 2014 payment of our obligation to the buyer of GE Money Japan for $1.7 billion.
·
These increases were partially offset by the 2015 acquisition of Milestone Aviation Group, resulting in net cash paid of $1.7 billion.

GECC cash used for financing activities increased $33.1 billion primarily due to the following:
·
Higher net repayments of borrowings of $29.4 billion driven primarily by a decrease in issuances of senior unsecured notes and an increase in short-term debt maturities.
·
A decrease in deposits at our banks of $1.6 billion.
·
Proceeds received from the initial public offering of Synchrony Financial of $2.8 billion in 2014.
·
These increases were partially offset by GECC paying quarterly dividends of $0.5 billion and no special dividends to GE in the nine months ended September 30, 2015. GECC paid quarterly dividends of $1.5 billion and special dividends of $0.7 billion to GE in the nine months ended September 30, 2014.
2015 3Q FORM 10-Q  PAGE 21

EXPOSURES


GECC SELECTED EUROPEAN EXPOSURES

At September 30, 2015, we had $28.1 billion in financing receivables to consumer and commercial customers in Europe, including $22.1 billion classified as financing receivables held for sale, and $6.0 billion classified as assets held for investment. The GECC financing receivables portfolio in Europe is well diversified across European geographies and customers. Approximately 88% of the portfolio is secured by collateral. Several European countries, including Spain, Portugal, Ireland, Italy, Greece and Hungary (focus countries), have been subject to credit deterioration due to weaknesses in their economic and fiscal situations. The carrying value of GECC funded exposures in these focus countries and in the rest of Europe comprised the following at September 30, 2015.

                                     
Rest of
 
Total
(In millions)
Spain
 
Portugal
 
Ireland
 
Italy
 
Greece
 
Hungary
 
Europe
 
Europe
                                               
Financing receivables - net (a)(d)
$
339
 
$
74
 
$
251
 
$
1,422
 
$
-
 
$
377
 
$
3,525
 
$
5,988
Financing receivables held for sale
 
332
   
33
   
14
   
-
   
-
   
-
   
21,742
   
22,121
Investments(b)(c)
 
3
   
-
   
-
   
-
   
-
   
-
   
1,244
   
1,247
Cost and equity method investments(d)
 
-
   
-
   
443
   
-
   
-
   
-
   
292
   
735
Derivatives, net of collateral(b)(e)
 
-
   
-
   
-
   
-
   
-
   
-
   
318
   
318
Equipment leased to others (ELTO)(f)
 
368
   
250
   
562
   
452
   
266
   
195
   
7,081
   
9,174
                                               
Total funded exposures(g)(h)
$
1,042
 
$
357
 
$
1,270
 
$
1,874
 
$
266
 
$
572
 
$
34,202
 
$
39,583
                                               
Unfunded commitments(i)
$
-
 
$
-
 
$
31
 
$
-
 
$
-
 
$
-
 
$
2,066
 
$
2,097
                                               
(a)
Financing receivable amounts are classified based on the location or nature of the related obligor.
(b)
Investments and derivatives are classified based on the location of the parent of the obligor or issuer.
(c)
Included $0.4 billion related to financial institutions, $47.5 million related to non-financial institutions and $0.8 billion related to sovereign issuers. We held no investments issued by sovereign entities in the countries of focus.
(d)
Substantially all is non-sovereign.
(e)
Net of cash collateral; entire amount is non-sovereign.
(f)
These assets are held under long-term investment and operating strategies, and our ELTO strategies contemplate an ability to redeploy assets under lease should default by the lessee occur. The values of these assets could be subject to decline or impairment in the current environment.
(g)
Excluded $29.6 billion of cash and equivalents, which is composed of $21.7 billion of cash on short-term placement with highly rated global financial institutions based in Europe, sovereign central banks and agencies or supranational entities, of which $0.5 billion is in focus countries, and $7.9 billion of cash and equivalents placed with highly rated European financial institutions on a short-term basis, secured by U.S. Treasury securities ($4.5 billion) and sovereign bonds of non-focus countries ($3.4 billion), where the value of our collateral exceeds the amount of our cash exposure.
(h)
Rest of Europe included $1.5 billion and $0.1 billion of exposure for Russia and Ukraine, respectively, substantially all ELTO and financing receivables related to commercial aircraft in our GECAS portfolio.
(i)
Includes ordinary course of business lending commitments, commercial and consumer unused revolving credit lines, inventory financing arrangements and investment commitments.

We manage counterparty exposure, including credit risk, on an individual counterparty basis. We place defined risk limits around each obligor and review our risk exposure on the basis of both the primary and parent obligor, as well as the issuer of securities held as collateral. These limits are adjusted on an ongoing basis based on our continuing assessment of the credit risk of the obligor or issuer. In setting our counterparty risk limits, we focus on high-quality credits and diversification through spread of risk in an effort to actively manage our overall exposure. We actively monitor each exposure against these limits and take appropriate action when we believe that risk limits have been exceeded or there are excess risk concentrations. Our collateral position and ability to work out problem accounts have historically mitigated our actual loss experience. Delinquency experience has been relatively stable in our European commercial and consumer platforms in the aggregate, and we actively monitor and take action to reduce exposures where appropriate. Uncertainties surrounding European markets could have an impact on the judgments and estimates used in determining the carrying value of these assets.
2015 3Q FORM 10-Q  PAGE 22
CRITICAL ACCOUNTING ESTIMATES

We utilized significant estimates in the preparation of the third quarter financial statements.

In addition to the discussion below on estimates used to determine the fair value of businesses and assets held for sale, please refer to the Critical Accounting Estimates section within MD&A and Note 1, Basis of Presentation and Summary of Significant Accounting Policies, to the consolidated financial statements of our Form 8-K Report filed on May 8, 2015 for a discussion of our accounting policies and the critical accounting estimates we use to: assess the recoverability of assets such as financing receivables and goodwill; determine the fair value of financial assets; and determine our provision for income taxes and recoverability of deferred tax assets.

BUSINESSES AND ASSETS HELD FOR SALE

Businesses held for sale represent components that meet the accounting requirements to be classified as held for sale and are presented as single asset and liability amounts in our financial statements with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value less cost to sell. Financing receivables that no longer qualify to be presented as held for investment must be classified as held for sale and recognized in our financial statements at the lower of cost or fair value, less cost to sell, with that amount representing a new cost basis at the date of transfer.

As previously discussed, as a result of the GE Capital Exit Plan, management has committed to reduce the size of its financial services businesses through the sale of most of the assets of GECC over the following 24 months. As a result, certain GECC businesses met the criteria to be classified as businesses held for sale and certain financing receivables were required to be recognized as held for sale at September 30, 2015.

The determination of fair value for businesses and portfolios of financing receivables involves significant judgments and assumptions. Development of estimates of fair values in this circumstance is complex and is dependent upon, among other factors, the nature of the potential sales transaction (for example, asset sale versus sale of legal entity), composition of assets and/or businesses in the disposal group, the comparability of the disposal group to market transactions, negotiations with third party purchasers etc. Such factors bear directly on the range of potential fair values and the selection of the best estimates. Key assumptions were developed based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction as of September 30, 2015.

We review all businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to estimated fair values.

Further information is provided in Notes 2 and 10 to the consolidated financial statements of this Form 10-Q Report.
2015 3Q FORM 10-Q  PAGE 23

OTHER ITEMS


NEW ACCOUNTING STANDARDS

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective. In July 2015, the FASB approved a one-year deferral of this standard, with a revised effective date for fiscal years beginning after December 15, 2017. Early adoption is permitted, although not prior to fiscal years beginning after December 15, 2016. The standard permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method and continue to evaluate the effect of the standard on our ongoing financial reporting.

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis. The ASU amends the consolidation guidance for VIEs and general partners' investments in limited partnerships and modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities. The ASU is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating the effect of the ASU on our consolidated financial statements and related disclosures. While we anticipate additional disclosures, we do not expect the ASU to have a significant impact on our consolidated financial statements.
2015 3Q FORM 10-Q  PAGE 24

CONTROLS AND PROCEDURES

Under the direction of our Chief Executive Officer and Chief Financial Officer, we evaluated our disclosure controls and procedures and internal control over financial reporting and concluded that our disclosure controls and procedures were effective as of September 30, 2015.

On April 10, 2015 GE announced that, as part of the GE Capital Exit Plan, its plan to dispose of a substantial portion of GE Capital's operations over the 2015-2017 timeframe. This plan will affect the operation of GE Capital's framework of internal controls over financial reporting as dispositions and other restructuring activities are executed. During the transition period, we have put in place enhanced procedures and controls to monitor and maintain our system of internal controls over financial reporting. We will continue to assess the effect of the plan on GE Capital's control environment and will make adjustments as appropriate.

2015 3Q FORM 10-Q  PAGE 25

REGULATIONS AND SUPERVISION


We are a regulated savings and loan holding company and in 2011 became subject to Federal Reserve Board (FRB) supervision under the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA). In 2013, the U.S. Financial Stability Oversight Council (FSOC) designated GECC as a nonbank systemically important financial institution (nonbank SIFI) under the DFA. As a result of this change in supervision and designation, stricter prudential regulatory standards and supervision apply to GECC. On July 20, 2015 the Federal Reserve published a final order applying enhanced prudential standards to GECC as a nonbank SIFI.

The final order staggers the application of the enhanced prudential standards with the first set of standards becoming applicable on January 1, 2016 and the second set becoming applicable on January 1, 2018.  Beginning on January 1, 2016 GECC will be subject to the standardized approach for calculating capital adequacy.  GECC will also be subject to a Liquidity Coverage Ratio (LCR) of 90% until December 31, 2016 at which time GECC will be subject to a 100% LCR coverage.

If GECC is still a nonbank SIFI on January 1, 2018 the second set of enhanced prudential standards will apply.  These standards include the application of the Federal Reserve's capital plan rule, stress testing rules, enhanced leverage ratio requirements, enhanced governance requirements, daily liquidity calculations, additional reporting requirements and a market terms requirement for transactions between GE and GECC.

While the enhanced prudential standards do not subject GECC to the Federal Reserve's capital plan rule applicable to large bank holding companies until the capital planning cycle beginning January 1, 2018, we conduct, among others, an annual review of our capital adequacy prior to establishing a plan for dividends to our parent. This review is based on a forward-looking assessment of our material enterprise risks and involves the consideration of a number of factors. This analysis also includes an assessment of our capital and liquidity levels, as well as incorporating risk management and governance considerations. The most recent capital adequacy review, which contemplated the GE Capital Exit Plan, was approved by the GECC board of directors and the GE Board of Directors Risk Committee in October 2015. While a savings and loan holding company and nonbank SIFI like GECC is currently not required to obtain FRB approval to pay a dividend, it may not, under FRB regulations, conduct its operations in an unsafe or unsound manner. The FRB has articulated factors that it expects boards of directors of bank holding companies and savings and loan holding companies to consider in determining whether to pay a dividend.

As a nonbank SIFI GECC is also required to submit an annual resolution plan to the FRB and Federal Deposit Insurance Corporation (FDIC). GECC submitted its first resolution plan to the FRB and FDIC on June 30, 2014 and feedback was provided on July 28, 2015. GECC's second Resolution Plan is due December 31, 2015, and we will work to address the July 28, 2015 feedback. Our resolution plan describes how GECC could be resolved under existing insolvency regimes in a manner that mitigates potential disruption to the U.S. financial system and the global financial markets without the use of government support or taxpayer funds. If the FRB and FDIC determine that our resolution plan is deficient, the DFA authorizes the FRB and FDIC to impose more stringent capital, leverage or liquidity requirements on us or restrict our growth or activities until we submit a plan remedying the deficiencies. If the FRB and FDIC ultimately determine that we have not adequately addressed the deficiencies, they could order us to divest assets or operations in order to facilitate our orderly resolution in the event of our failure.

We are also subject to the Volcker Rule, which U.S. regulators finalized on December 10, 2013. The rule prohibits companies that are affiliated with U.S. insured depository institutions from engaging in "proprietary trading" or acquiring or retaining ownership interest in, or sponsoring or engaging in certain transactions with, a "hedge fund" or a "private equity fund." Proprietary trading and fund investing, as prohibited by the rule, are not core activities for us. Once GE no longer controls GE Capital Bank or Synchrony Bank, and GECC's designation by the FSOC as a nonbank SIFI has been rescinded, the Volcker Rule will no longer apply to GECC or its affiliates.
 
As discussed in Management's Discussion and Analysis, on April 10, 2015, our parent company, General Electric (GE), announced the GE Capital Exit Plan to reduce the size of its financial services businesses. GE has discussed the GE Capital Exit Plan, aspects of which are subject to regulatory review and approval, with its regulators and staff of the FSOC and will work closely with these bodies to take the actions necessary over time to terminate the FSOC's designation of GECC (and the new intermediate holding company, as applicable) as a nonbank SIFI.
2015 3Q FORM 10-Q  PAGE 26

LEGAL PROCEEDINGS


The following information supplements and amends our discussion set forth under  "Legal Proceedings" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.

At October 29, 2015, there are 14 lawsuits relating to pending mortgage loan repurchase claims in which WMC, our U.S. mortgage business that we sold in 2007, is a party. The adverse parties in these cases are securitization trustees or parties claiming to act on their behalf. While the alleged claims for relief vary from case to case, the complaints and counterclaims in these actions generally assert claims for breach of contract, indemnification, and/or declaratory judgment, and seek specific performance (repurchase) and/or monetary damages. Beginning in the fourth quarter 2013, WMC entered into settlements that reduced its exposure on claims asserted in certain securitizations, and the claim amounts reported herein reflect the effect of these settlements.
 
Five WMC cases are pending in the United States District Court for the District of Connecticut. Four of these cases were initiated in 2012, and one was initiated in the third quarter 2013. Deutsche Bank National Trust Company (Deutsche Bank) is the adverse party in four cases, and Law Debenture Trust Company of New York (Law Debenture) is the adverse party in one case. The Deutsche Bank complaints assert claims on approximately $4,300 million of mortgage loans and seek to recover damages in excess of approximately $1,800 million. The Law Debenture complaint asserts claims on approximately $800 million of mortgage loans, and alleges losses on these loans in excess of approximately $425 million. On March 31, 2014, the District Court denied WMC's motions to dismiss these cases.
 
Four WMC cases are pending in the United States District Court for the District of Minnesota against US Bank National Association (US Bank), one of which was initiated by WMC seeking declaratory judgment. Three of these cases were filed in 2012, and one was filed in 2011. The Minnesota cases involve claims on approximately $800 million of mortgage loans and do not specify the amount of damages sought. In September 2013, the District Court granted in part and denied in part WMC's motions to dismiss or for summary judgment in these cases.  On September 8, 2014, US Bank filed a petition for instructions in the administration of trusts in Minnesota state court seeking authorization and instruction for US Bank to implement the terms of a settlement agreement reached with WMC to compromise, settle, and release all claims arising out of the securitizations at issue in these four lawsuits. In February 2015, two bondholders filed objections to the proposed settlement, and in response the court has scheduled an evidentiary hearing for November 2015. In light of the state court action seeking approval of the proposed settlement, the District Court entered orders in April 2015 staying further proceedings in the four cases until August 2015.

Four cases are pending against WMC in New York State Supreme Court, all of which were initiated by securitization trustees or securities administrators. These cases involve, in the aggregate, claims involving approximately $4,559 million of mortgage loans. One of these lawsuits was initiated by Deutsche Bank in the second quarter 2013 and names as defendants WMC and Barclays Bank PLC. It involves claims against WMC on approximately $1,000 million of mortgage loans and does not specify the amount of damages sought. The second case, in which the plaintiff is The Bank of New York Mellon (BNY), was initiated in the fourth quarter 2012 and names as defendants WMC, J.P. Morgan Mortgage Acquisition Corporation and JPMorgan Chase Bank, N.A. BNY asserts claims on approximately $1,300 million of mortgage loans, and seeks to recover damages in excess of $650 million. The third case was initiated by BNY in November 2013 and names as defendants WMC, J.P. Morgan Mortgage Acquisition Corporation and JPMorgan Chase Bank, N.A. In this case, BNY asserts claims on approximately $1,300 million of mortgage loans, and seeks to recover damages in excess of $600 million.  On September 18, 2015, the court granted defendants' motion to dismiss this case on statute of limitations grounds, and the plaintiff filed a notice of appeal on October 21, 2015. The fourth case was filed in October 2014 and names as defendants WMC, J.P. Morgan Mortgage Acquisition Corporation and JPMorgan Chase Bank, N.A.  The plaintiff, BNY, asserts claims on approximately $959 million of mortgage loans and seeks to recover damages in excess of $475 million.
 
2015 3Q FORM 10-Q  PAGE 27


At September 30, 2015, two cases were pending against WMC in the United States District Court for the Southern District of New York. One case, in which the plaintiff is BNY, was filed in the third quarter 2012. In the second quarter 2013, BNY filed an amended complaint in which it asserts claims on approximately $900 million of mortgage loans, and seeks to recover damages in excess of $378 million. In September 2013, the District Court denied WMC's motion to dismiss. On September 18, 2014, the District Court issued an order directing the parties to participate in settlement discussions before a private mediator or the assigned magistrate judge. Following this mediation, the parties reached a settlement in principle on the claims arising from a portion of the loans held in the trust, and, as a result, on February 9, 2015 the District Court stayed the case as to these claims. This settlement became effective September 16, 2015. On September 18, 2015, following a court-ordered mediation before the assigned magistrate judge, the parties reached a settlement in principle on the remaining claims in the case, and the securitization trustee declared this settlement effective October 20, 2015. The second case was initiated by the Federal Housing Finance Agency (FHFA), which filed a summons with notice in the fourth quarter 2012. In the second quarter 2013, Deutsche Bank, in its role as securitization trustee of the trust at issue in the case, intervened as a plaintiff and filed a complaint relating to approximately $1,300 million of loans and alleging losses in excess of approximately $100 million. In December 2013, the District Court issued an order denying WMC's motion to dismiss. In February 2015, the District Court on its own motion requested that the parties re-brief several issues raised by WMC's motion to dismiss.  On July 10, 2015, the District Court entered an order dismissing the lawsuit as time-barred under the applicable statute of limitations. Deutsche Bank filed a notice of appeal from this order of dismissal on August 13, 2015.
 
The amounts of the claims at issue in these cases (discussed above) reflect the purchase price or unpaid principal balances of the mortgage loans at issue 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. All of the mortgage loans involved in these lawsuits are included in WMC's reported claims at September 30, 2015. See Note 2 to the consolidated financial statements for additional information.
2015 3Q FORM 10-Q  PAGE 28

FINANCIAL STATEMENTS AND NOTES

Statement of Earnings (Loss)
30
Statement of Comprehensive Income (Loss)
32
Statement of Changes in Shareowners' Equity
32
Statement of Financial Position
33
Statement of Cash Flows
34
Notes to Consolidated Financial Statements
 
 
1
 
Basis of Presentation and Summary of Significant Accounting Policies
35
 
2
 
Businesses Held for Sale, Financing Receivables Held for Sale and Discontinued Operations
37
 
3
 
Investment Securities
43
 
4
 
Financing Receivables and Allowance for Losses
47
 
5
 
Acquisitions, Goodwill and Other Intangible Assets
49
 
6
 
Borrowings and Bank Deposits
51
 
7
 
Income Taxes
52
 
8
 
Shareowners' Equity
53
 
9
 
Revenues from Services
55
 
10
 
Fair Value Measurements
55
 
11
 
Financial Instruments
61
 
12
 
Variable Interest Entities
67
 
13
 
Supplemental Information About the Credit Quality of Financing Receivables and Allowance for Losses
70


 
2015 3Q FORM 10-Q  PAGE 29

FINANCIAL STATEMENTS

GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES
STATEMENT OF EARNINGS (LOSS)
         
(UNAUDITED)
           
 
Three months ended September 30
(In millions)
 
2015
   
2014
           
Revenues
         
Revenues from services(a)
$
6,292
 
$
6,358
Other-than-temporary impairment on investment securities:
         
   Total other-than-temporary impairment on investment securities
 
(2)
   
(2)
       Less other-than-temporary impairment recognized in
         
         accumulated other comprehensive income
 
-
   
-
   Net other-than-temporary impairment on investment securities recognized in earnings
 
(2)
   
(2)
Revenues from services (Note 9)
 
6,290
   
6,356
Sales of goods
 
21
   
28
   Total revenues
 
6,312
   
6,384
           
Costs and expenses
         
Interest
 
1,151
   
1,061
Operating and administrative
 
2,255
   
2,032
Cost of goods sold
 
18
   
25
Investment contracts, insurance losses and insurance annuity benefits
 
717
   
700
Provision for losses on financing receivables (Note 4)
 
738
   
858
Depreciation and amortization
 
663
   
825
   Total costs and expenses
 
5,542
   
5,501
           
Earnings (loss) from continuing operations before income taxes
 
769
   
883
Benefit (provision) for income taxes
 
48
   
15
           
Earnings (loss) from continuing operations
 
817
   
898
Earnings (loss) from discontinued operations, net of taxes (Note 2)
 
(347)
   
706
Net earnings (loss)
 
470
   
1,604
Less net earnings (loss) attributable to noncontrolling interests
 
83
   
55
Net earnings (loss) attributable to GECC
 
387
   
1,549
Preferred stock dividends declared
 
-
   
-
Net earnings (loss) attributable to GECC common shareowner
$
387
 
$
1,549
           
Amounts attributable to GECC common shareowner:
         
Earnings (loss) from continuing operations
$
817
 
$
898
Less net earnings (loss) attributable to noncontrolling interests
 
83
   
55
Earnings (loss) from continuing operations attributable to GECC
 
734
   
843
Preferred stock dividends declared
 
-
   
-
Earnings (loss) from continuing operations attributable to GECC common shareowner
 
734
   
843
Earnings (loss) from discontinued operations, net of taxes
 
(347)
   
706
Net earnings (loss) attributable to GECC common shareowner
$
387
 
$
1,549
           
(a)            Excluding net other-than-temporary impairment on investment securities.



Amounts may not add due to rounding.

See accompanying notes.

2015 3Q FORM 10-Q  PAGE 30


           
           
           
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES
STATEMENT OF EARNINGS (LOSS)
         
(UNAUDITED)
           
 
Nine months ended September 30
(In millions)
 
2015
   
2014
           
Revenues
         
Revenues from services(a)
$
17,409
 
$
19,148
Other-than-temporary impairment on investment securities:
         
   Total other-than-temporary impairment on investment securities
 
(21)
   
(18)
       Less other-than-temporary impairment recognized in
         
         accumulated other comprehensive income
 
-
   
4
   Net other-than-temporary impairment on investment securities recognized in earnings
 
(21)
   
(14)
Revenues from services (Note 9)
 
17,388
   
19,134
Sales of goods
 
64
   
89
   Total revenues
 
17,452
   
19,223
           
Costs and expenses
         
Interest
 
3,096
   
3,184
Operating and administrative
 
6,714
   
6,076
Cost of goods sold
 
58
   
81
Investment contracts, insurance losses and insurance annuity benefits
 
2,070
   
2,041
Provision for losses on financing receivables (Note 4)
 
4,636
   
2,693
Depreciation and amortization
 
1,841
   
1,929
   Total costs and expenses
 
18,415
   
16,004
           
Earnings (loss) from continuing operations before income taxes
 
(963)
   
3,219
Benefit (provision) for income taxes
 
(6,164)
   
109
           
Earnings (loss) from continuing operations
 
(7,127)
   
3,328
Earnings (loss) from discontinued operations, net of taxes (Note 2)
 
(10,332)
   
2,070
Net earnings (loss)
 
(17,459)
   
5,398
Less net earnings (loss) attributable to noncontrolling interests
 
267
   
76
Net earnings (loss) attributable to GECC
 
(17,726)
   
5,322
Preferred stock dividends declared
 
(161)
   
(161)
Net earnings (loss) attributable to GECC common shareowner
$
(17,887)
 
$
5,161
           
Amounts attributable to GECC common shareowner:
         
Earnings (loss) from continuing operations
$
(7,127)
 
$
3,328
Less net earnings (loss) attributable to noncontrolling interests
 
267
   
76
Earnings (loss) from continuing operations attributable to GECC
 
(7,394)
   
3,252
Preferred stock dividends declared
 
(161)
   
(161)
Earnings (loss) from continuing operations attributable to GECC common shareowner
 
(7,555)
   
3,091
Earnings (loss) from discontinued operations, net of taxes
 
(10,332)
   
2,070
Net earnings (loss) attributable to GECC common shareowner
$
(17,887)
 
$
5,161
           
(a)            Excluding net other-than-temporary impairment on investment securities.



Amounts may not add due to rounding.

See accompanying notes.

2015 3Q FORM 10-Q  PAGE 31


                       
                       
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
                       
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
 
2015
   
2014
   
2015
   
2014
                       
Net earnings (loss)
$
470
 
$
1,604
 
$
(17,459)
 
$
5,398
Less net earnings (loss) attributable to noncontrolling interests
 
83
   
55
   
267
   
76
Net earnings (loss) attributable to GECC
$
387
 
$
1,549
 
$
(17,726)
 
$
5,322
                       
Other comprehensive income (loss)
                     
   Investment securities
$
22
 
$
(260)
 
$
(431)
 
$
523
   Currency translation adjustments
 
734
   
(546)
   
(596)
   
(510)
   Cash flow hedges
 
(36)
   
90
   
(20)
   
188
   Benefit plans
 
4
   
11
   
8
   
3
Other comprehensive income (loss)
 
725
   
(705)
   
(1,039)
   
204
Less other comprehensive income (loss)
                     
   attributable to noncontrolling interests
 
(1)
   
(4)
   
(24)
   
1
Other comprehensive income (loss) attributable to GECC
$
725
 
$
(701)
 
$
(1,015)
 
$
203
                       
Comprehensive income (loss)
$
1,194
 
$
899
 
$
(18,498)
 
$
5,602
Less comprehensive income (loss) attributable to noncontrolling interests
 
82
   
51
   
243
   
77
Comprehensive income (loss) attributable to GECC
$
1,113
 
$
848
 
$
(18,741)
 
$
5,525
                       
Amounts may not add due to rounding.

Amounts presented net of taxes. See Note 8 for further information about other comprehensive income (loss) and noncontrolling interests.

See accompanying notes.



GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES
STATEMENT OF CHANGES IN SHAREOWNERS' EQUITY
(UNAUDITED)
 
             
   
Nine months ended September 30
(In millions)
   
2015
   
2014
             
GECC shareowners' equity balance at January 1
 
$
87,499
 
$
82,694
Increases (decreases) from net earnings (loss) attributable to GECC
   
(17,726)
   
5,322
Dividends and other transactions with shareowners
   
(611)
   
(2,382)
Other comprehensive income (loss) attributable to GECC
   
(1,015)
   
203
Changes in additional paid-in capital
   
20
   
436
Ending balance at September 30
   
68,166
   
86,273
Noncontrolling interests
   
3,160
   
2,804
Total equity balance at September 30
 
$
71,326
 
$
89,077
             
Amounts may not add due to rounding.

See Note 8 for further information about changes in shareowners' equity.

See accompanying notes.
2015 3Q FORM 10-Q  PAGE 32


           
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES
STATEMENT OF FINANCIAL POSITION
           
(In millions, except share amounts)
September 30, 2015
 
December 31, 2014
 
(Unaudited)
   
Assets
         
Cash and equivalents
$
82,276
 
$
69,011
Investment securities (Note 3)
 
36,868
   
38,320
Inventories
 
59
   
50
Financing receivables – net (Notes 4 and 13)
 
83,748
   
122,457
Other receivables
 
14,039
   
14,508
Property, plant and equipment, less accumulated amortization of $16,651 and $16,462
 
34,516
   
31,519
Goodwill (Note 5)
 
11,460
   
11,456
Other intangible assets – net (Note 5)
 
1,177
   
875
Other assets
 
19,155
   
23,198
Financing receivables held for sale (Note 2)
 
23,665
   
778
Assets of businesses held for sale (Note 2)
 
4,917
   
3,474
Assets of discontinued operations (Note 2)
 
121,940
   
186,924
Total assets(a)
$
433,819
 
$
502,570
           
Liabilities and equity
         
Short-term borrowings (Note 6)
$
42,880
 
$
67,705
Accounts payable
 
2,213
   
2,411
Non-recourse borrowings of consolidated securitization entities (Note 6)
 
16,225
   
19,369
Bank deposits (Note 6)
 
48,656
   
43,841
Long-term borrowings (Note 6)
 
164,183
   
186,759
Investment contracts, insurance liabilities and insurance annuity benefits
 
26,646
   
28,027
Other liabilities
 
11,330
   
9,549
Deferred income taxes
 
6,458
   
3,420
Liabilities of businesses held for sale (Note 2)
 
260
   
2,434
Liabilities of discontinued operations (Note 2)
 
43,642
   
48,657
Total liabilities(a)
 
362,493
   
412,172
           
Preferred stock, $0.01 par value (750,000 shares authorized at both September 30, 2015
         
   and December 31, 2014, and 50,000 shares issued and outstanding
         
     at both September 30, 2015 and December 31, 2014)
 
-
   
-
Common stock, $14 par value (4,166,000 shares authorized at both September 30, 2015
         
   and December 31, 2014 and 1,000 shares issued and outstanding at both
         
      September 30, 2015 and December 31, 2014)
 
-
   
-
Accumulated other comprehensive income (loss) – net(b)
         
   Investment securities
 
580
   
1,010
   Currency translation adjustments
 
(1,412)
   
(838)
   Cash flow hedges
 
(192)
   
(172)
   Benefit plans
 
(569)
   
(577)
Additional paid-in capital
 
33,019
   
32,999
Retained earnings
 
36,740
   
55,077
Total GECC shareowners' equity
 
68,166
   
87,499
Noncontrolling interests(c)(Note 8)
 
3,160
   
2,899
Total equity
 
71,326
   
90,398
Total liabilities and equity
$
433,819
 
$
502,570
           
(a) Our consolidated assets at September 30, 2015 included total assets of $41,815 million of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs. These assets included net financing receivables of $27,701 million and investment securities of $1,412 million within continuing operations and assets of discontinued operations of $11,427 million. Our consolidated liabilities at September 30, 2015 included liabilities of certain VIEs for which the VIE creditors do not have recourse to GECC. These liabilities included non-recourse borrowings of consolidated securitization entities (CSEs) of $16,225 million within continuing operations and non-recourse borrowings of CSEs within discontinued operations of $8,072 million. See Note 12.

(b) The sum of accumulated other comprehensive income (loss) (AOCI) attributable to GECC was $(1,593) million and $(577) million at September 30, 2015 and December 31, 2014, respectively.

(c) Included AOCI attributable to noncontrolling interests of $(178) million and $(154) million at September 30, 2015 and December 31, 2014, respectively.


Amounts may not add due to rounding.

See accompanying notes.



2015 3Q FORM 10-Q  PAGE 33


GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES
STATEMENT OF CASH FLOWS
(UNAUDITED)
         
           
 
Nine months ending September 30
(In millions)
2015
 
2014
           
Cash flows – operating activities
         
Net earnings
$
(17,459)
 
$
5,398
Less net earnings (loss) attributable to noncontrolling interests
 
267
   
76
Net earnings (loss) attributable to GECC
 
(17,726)
   
5,322
(Earnings) loss from discontinued operations
 
10,332
   
(2,070)
Adjustments to reconcile net earnings (loss) attributable to GECC
         
   to cash provided from operating activities
         
      Depreciation and amortization of property, plant and equipment
 
1,841
   
1,929
      Deferred income taxes
 
2,772
   
(689)
      Increase (decrease) in accounts payable
 
165
   
764
      Provision for losses on financing receivables
 
4,636
   
2,693
      All other operating activities
 
1,934
   
(1,174)
Cash from (used for) operating activities – continuing operations
 
3,954
   
6,775
Cash from (used for) operating activities – discontinued operations
 
3,090
   
5,078
Cash from (used for) operating activities
 
7,044
   
11,853
           
Cash flows – investing activities
         
Additions to property, plant and equipment
 
(2,643)
   
(2,627)
Dispositions of property, plant and equipment
 
2,074
   
2,059
Increase in loans to customers
 
(39,744)
   
(54,829)
Principal collections from customers – loans
 
45,570
   
55,025
Investment in equipment for financing leases
 
(458)
   
(787)
Principal collections from customers – financing leases
 
834
   
1,956
Net change in credit card receivables
 
(1,667)
   
(2,950)
Proceeds from sale of discontinued operations
 
42,486
   
232
Proceeds from principal business dispositions
 
1,274
   
-
Net cash from (payments for) principal businesses purchased
 
(1,677)
   
-
All other investing activities
 
9,608
   
8,957
Cash from (used for) investing activities – continuing operations
 
55,657
   
7,036
Cash from (used for) investing activities – discontinued operations
 
7,218
   
(3,588)
Cash from (used for) investing activities
 
62,875
   
3,448
           
Cash flows – financing activities
         
Net increase (decrease) in borrowings (maturities of 90 days or less)
 
(17,526)
   
(6,723)
Net increase (decrease) in bank deposits
 
5,329
   
6,933
Newly issued debt (maturities longer than 90 days)
 
14,336
   
26,547
Repayments and other reductions (maturities longer than 90 days)
 
(43,850)
   
(37,439)
Dividends paid to shareowners
 
(611)
   
(2,382)
Proceeds from initial public offering of Synchrony Financial
 
-
   
2,842
All other financing activities
 
(1,363)
   
(359)
Cash from (used for) financing activities – continuing operations
 
(43,685)
   
(10,581)
Cash from (used for) financing activities – discontinued operations
 
(4,496)
   
1,540
Cash from (used for) financing activities
 
(48,181)
   
(9,041)
Effect of currency exchange rate changes on cash and equivalents
 
(3,038)
   
(1,267)
Increase (decrease) in cash and equivalents
 
18,700
   
4,993
Cash and equivalents at beginning of year
 
75,101
   
75,105
Cash and equivalents at September 30
 
93,801
   
80,098
Less cash and equivalents of discontinued operations at September 30
 
11,226
   
5,070
Cash and equivalents of continuing operations at September 30
$
82,575
 
$
75,028
           

Amounts may not add due to rounding.

See accompanying notes.

2015 3Q FORM 10-Q  PAGE 34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

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 of our Form 8-K filed on May 8, 2015 (2014 consolidated financial statements), which discusses our consolidation and financial statement presentation. GECC includes Commercial Lending and Leasing (CLL), Consumer, Energy Financial Services (EFS) 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. Effective September 30, 2015, certain columns and rows may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers in millions. Unless otherwise indicated, information in these notes to the consolidated financial statements relates to continuing operations.

THE GE CAPITAL EXIT PLAN

On April 10, 2015, GE announced its plan (the GE Capital Exit Plan) to reduce the size of its financial services businesses through the sale of most of the assets of GECC over the following 24 months, and to focus on continued investment and growth in GE's industrial businesses. Under the GE Capital Exit Plan, which was approved on April 2, 2015 and aspects of which were approved on March 31, 2015, GE will retain certain GECC businesses, principally its vertical financing businesses— GE Capital Aviation Services, Energy Financial Services and Healthcare Equipment Finance—that directly relate to GE's core industrial domain and other operations, including Working Capital Solutions and our run-off insurance activities (together referred to as GE Capital Verticals or Verticals). The assets planned for disposition include Real Estate, most of Commercial Lending and Leasing and all Consumer platforms (including all U.S. banking assets).

In the nine months ended September 30, 2015, GE recorded $21,061 million of after-tax charges related to the GE Capital Exit Plan, including $362 million of after-tax charges recorded in the third quarter of 2015, primarily exit-related charges in our CLL business, partially offset by income associated with operations in CLL and Real Estate. A description of after-tax charges for the nine months ended September 30, 2015 is provided below.

·
$9,756 million of net loss primarily related to the planned disposition of the Real Estate business and most of the CLL business, which is recorded in discontinued operations under the caption "Earnings (loss) from discontinued operations, net of taxes" in the Statement of Earnings.

·
$6,209 million of tax expense related to expected repatriation of foreign earnings and write-off of deferred tax assets, of which $6,057 million is reported in GECC's Corporate component and $152 million is reported in our Consumer business all recorded in continuing operations under the caption "Benefit (provision) for income taxes" in the Statement of Earnings.

2015 3Q FORM 10-Q  PAGE 35


·
$4,666 million of net asset impairments due to shortened hold periods, of which $3,151 million is recorded in continuing operations in our Consumer business primarily under the captions "Provisions for losses on financing receivables" and "Revenues from services" in the Statement of Earnings and $1,515 million is recorded in discontinued operations in our CLL business under the caption "Earnings (loss) from discontinued operations, net of taxes" in the Statement of Earnings.

·
$430 million of restructuring and other charges, of which $337 million is recorded in continuing operations in GECC's Corporate component under the caption "Operating and administrative" in the Statement of Earnings and $93 million is recorded in discontinued operations in our CLL business under the caption "Earnings (loss) from discontinued operations, net of taxes" in the Statement of Earnings.

As part of the GE Capital Exit Plan, GE and GECC entered into an amendment to their existing financial support agreement. Under this amendment (the Amendment), GE has provided a full and unconditional guarantee (the Guarantee) of the payment of principal and interest on all tradable senior and subordinated outstanding long-term debt securities and all commercial paper issued or guaranteed by GECC identified in the Amendment. In the aggregate, the Guarantee applied to $183,670 million of GECC debt as of September 30, 2015. See Note 6. The Guarantee replaced the requirement that GE make certain income maintenance payments to GECC in certain circumstances.  GECC's U.S. public indentures were concurrently amended to provide the full and unconditional guarantee by GE set forth in the Guarantee.

See Notes 2 and 5 to the consolidated financial statements for additional information.

INTERIM PERIOD PRESENTATION

The 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 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 consolidated financial statements be read in conjunction with the financial statements and notes thereto included in our 2014 consolidated financial statements. Effective for the first quarter of 2015, GECC is following a calendar quarter. Previously, we established interim quarterly closing dates using a fiscal calendar, which required our businesses to close their books on either a Saturday or Sunday, depending on the business.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

In addition to the policies referenced in our 2014 Form 10-K Report and Form 8-K filed on May 8, 2015, we have supplemented the discussion of our significant accounting policies and critical accounting estimates to describe the estimates used to determine the fair value of businesses and assets held for sale as follows.

BUSINESSES AND ASSETS HELD FOR SALE

Businesses held for sale represent components that meet accounting requirements to be classified as held for sale and are presented as single asset and liability amounts in our financial statements with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value less cost to sell. Financing receivables that no longer qualify to be presented as held for investment must be classified as held for sale and recognized in our financial statements at the lower of cost or fair value, less cost to sell, with that amount representing a new cost basis at the date of transfer.

As previously discussed, as a result of the GE Capital Exit Plan, management has committed to reduce the size of its financial services businesses through the sale of most of the assets of GECC over the following 24 months. As a result, certain GECC businesses met the criteria to be classified as businesses held for sale and certain financing receivables were required to be recognized as held for sale at September 30, 2015.

The determination of fair value for businesses and portfolios of financing receivables involves significant judgments and assumptions. Development of estimates of fair values in this circumstance is complex and is dependent upon, among other factors, the nature of the potential sales transaction (for example, asset sale versus sale of legal entity), composition of assets and/or businesses in the disposal group, the comparability of the disposal group to market transactions, negotiations with third party purchasers etc. Such factors bear directly on the range of potential fair values and the selection of the best estimates. Key assumptions were developed based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a
2015 3Q FORM 10-Q  PAGE 36


hypothetical transaction as of September 30, 2015.

We review all businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to estimated fair values.

NOTE 2. BUSINESSES HELD FOR SALE, FINANCING RECEIVABLES HELD FOR SALE AND DISCONTINUED OPERATIONS

ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE

In the first quarter of 2015, we signed an agreement to sell our consumer finance business in Australia and New Zealand (ANZ Consumer Lending) for approximately 6,800 million Australian dollars and 1,400 million New Zealand dollars, respectively. On May 29, 2015, we sold a portion of the Australian business for gross proceeds of $671 million. As of September 30, 2015, ANZ Consumer Lending had assets and liabilities of $4,917 million and $260 million, respectively. The sale is targeted to close in 2015 with expected proceeds of approximately 6,000 million Australian dollars and 1,400 million New Zealand dollars. The transactions remain subject to customary closing conditions and regulatory approvals.

In the fourth quarter of 2014, we signed an agreement to sell our consumer finance business Budapest Bank to Hungary's government. On June 29, 2015 we completed the sale of Budapest Bank for proceeds of $700 million.

FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE
       
(In millions)
September 30, 2015
 
December 31, 2014
 
         
Assets
         
Cash and equivalents
$
299
 
$
676
Investment securities
 
-
   
448
Financing receivables – net
 
4,141
 
 
2,144
Property, plant and equipment – net
 
15
   
37
Goodwill
 
366
   
106
Other intangible assets – net
 
73
   
13
Other
 
23
 
 
50
Assets of businesses held for sale
$
4,917
 
$
3,474
 
 
 
 
 
 
Liabilities
   
 
   
Short-term borrowings
$
27
 
$
435
Bank deposits
 
-
   
1,931
Deferred income taxes
 
(123)
   
(31)
Other
 
356
   
99
Liabilities of businesses held for sale
$
260
 
$
2,434
           
FINANCING RECEIVABLES HELD FOR SALE

In the first quarter of 2015, in connection with the GE Capital Exit Plan, we committed to sell all of our non-U.S. Consumer financing receivables. As a result, we transferred these financing receivables to held for sale and recognized a pre-tax provision for losses on financing receivables of $2,405 million ($2,197 million after tax) and wrote-off the associated balance of the allowance for loan losses of $2,859 million to reduce the carrying value of the financing receivables to the lower of cost or fair value, less cost to sell.

FINANCING RECEIVABLES HELD FOR SALE
             
(in millions)
September 30, 2015
   
December 31, 2014
             
Commercial
           
CLL
$
833
   
$
357
Energy Financial Services
 
-
     
35
GE Capital Aviation Services (GECAS)
 
14
     
27
Other
 
105
     
-
Total Commercial
 
952
     
419
Consumer
 
22,713
(a)
   
359
Total financing receivables held for sale
$
23,665
   
$
778
             
(a) Over 30 days past due and nonaccrual financing receivables related to consumer financing receivables held for sale were $1,060 million and $634 million, respectively.


2015 3Q FORM 10-Q  PAGE 37



DISCONTINUED OPERATIONS

Discontinued operations primarily included most of our CLL business, our Real Estate business and our U.S. mortgage business (WMC). Results of operations, financial position and cash flows for these businesses are separately reported as discontinued operations for all periods presented.

FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS
                       
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
2015
 
2014
 
2015
 
2014
                       
Operations
                     
Total revenues (loss)
$
2,756
 
$
4,033
 
$
9,536
 
$
11,946
                       
Earnings (loss) from discontinued operations before income taxes
$
1,060
 
$
666
 
$
203
 
$
2,062
Benefit (provision) for income taxes
 
(420)
   
40
   
33
   
(7)
Earnings (loss) from discontinued operations, net of taxes
$
640
 
$
706
 
$
236
 
$
2,055
                       
Disposal
                     
Gain (loss) on disposal before income taxes
$
(2,616)
 
$
-
 
$
(9,652)
 
$
14
Benefit (provision) for income taxes
 
1,629
   
-
   
(916)
   
1
Gain (loss) on disposal, net of taxes
$
(987)
 
$
-
 
$
(10,568)
 
$
15
                       
Earnings (loss) from discontinued operations, net of taxes
$
(347)
 
$
706
 
$
(10,332)
 
$
2,070
                       
2015 3Q FORM 10-Q  PAGE 38


(In millions)
September 30, 2015
 
December 31, 2014
           
Assets
         
Cash and equivalents
$
11,226
 
$
5,414
Investment securities
 
8,179
   
10,006
Financing receivables – net
 
11,622
   
114,561
Other receivables
 
1,470
   
2,183
Property, plant and equipment – net
 
12,084
   
18,051
Goodwill
 
9,867
   
13,569
Other intangible assets - net
 
44
   
301
Deferred income taxes
 
2,389
   
2,920
Financing receivables held for sale
 
65,390
   
3,116
Valuation allowance on disposal group classified as discontinued operations
 
(7,650)
   
-
Other
 
7,320
   
16,803
Assets of discontinued operations
$
121,940
 
$
186,924
           
Liabilities
         
Short-term borrowings
$
820
 
$
1,125
Accounts payable
 
3,884
   
3,770
Non-recourse borrowings
 
8,072
   
10,569
Bank deposits
 
18,348
   
18,998
Long-term borrowings
 
316
   
1,182
All other liabilities
 
9,595
   
7,610
Deferred income taxes
 
2,608
   
5,403
Liabilities of discontinued operations
$
43,642
 
$
48,657
           

COMMERCIAL LENDING AND LEASING

In connection with the GE Capital Exit Plan, we announced the planned disposition of most of our CLL business and classified this portion of the business as discontinued operations. We closed certain of our CLL business dispositions for proceeds of $21,215 million for the three and nine months ended September 30, 2015. We expect to dispose of substantially all of the remaining CLL business in 2015 and 2016.


FINANCIAL INFORMATION FOR COMMERCIAL LENDING AND LEASING
                       
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
 
2015
   
2014
   
2015
   
2014
                       
Operations
                     
Total revenues (loss)
$
2,691
 
$
3,370
 
$
8,664
 
$
9,998
                       
Interest
$
(576)
 
$
(762)
 
$
(1,919)
 
$
(2,324)
Operating and administrative
 
(900)
   
(942)
   
(2,905)
   
(2,732)
Depreciation and amortization
 
-
   
(988)
   
(1,768)
   
(2,923)
Provision for losses on financing receivables
 
13
   
(87)
   
(1,744)
   
(294)
Earnings (loss) from discontinued operations, before income taxes   
 
1,228
   
591
   
328
   
1,725
Benefit (provision) for income taxes
 
(484)
   
(108)
   
(169)
   
(326)
Earnings (loss) from discontinued operations, net of taxes
$
744
 
$
483
 
$
159
 
$
1,399
                       
Disposal
                     
Gain (loss) on disposal before income taxes
$
(2,834)
 
$
-
 
$
(8,059)
 
$
-
Benefit (provision) for income taxes
 
1,629
   
-
   
(298)
   
-
Gain (loss) on disposal, net of taxes
$
(1,205)
 
$
-
 
$
(8,357)
 
$
-
                       
Earnings (loss) from discontinued operations, net of taxes(a)
$
(461)
 
$
483
 
$
(8,198)
 
$
1,399
                       
(a) Earnings (loss) from discontinued operations attributable to GECC, before income taxes, was $(1,608) million and $589 million for the three months ended September 30, 2015 and 2014, respectively, and $(7,736) million and $1,710 million for the nine months ended September 30, 2015 and 2014, respectively.

2015 3Q FORM 10-Q  PAGE 39


 REAL ESTATE


In connection with the GE Capital Exit Plan, we announced the planned disposition of our Real Estate business and classified the business as discontinued operations. We closed certain of our Real Estate business dispositions for proceeds of $12,991 million and $30,508 million for the three and nine months ended September 30, 2015, respectively. We expect to dispose of substantially all of the remaining Real Estate business by the end of 2015.

FINANCIAL INFORMATION FOR REAL ESTATE
                 
                       
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
 
2015
   
2014
   
2015
   
2014
                       
Operations
                     
Total revenues (loss)
$
81
 
$
698
 
$
893
 
$
1,992
                       
Interest
$
(64)
 
$
(270)
 
$
(437)
 
$
(817)
Operating and administrative
 
(156)
   
(213)
   
(464)
   
(563)
Depreciation and amortization
 
-
   
(82)
   
(62)
   
(252)
Provision for losses on financing receivables
 
-
   
(12)
   
4
   
92
Earnings (loss) from discontinued operations,
                     
   before income taxes   
 
(139)
   
121
   
(65)
   
452
Benefit (provision) for income taxes
 
53
   
55
   
95
   
251
Earnings (loss) from discontinued operations, net of taxes
$
(86)
 
$
176
 
$
30
 
$
703
                       
Disposal
                     
Gain (loss) on disposal before income taxes
$
218
 
$
-
 
$
(1,593)
 
$
-
Benefit (provision) for income taxes
 
-
   
-
   
(618)
   
-
Gain (loss) on disposal, net of taxes
$
218
 
$
-
 
$
(2,211)
 
$
-
                       
Earnings (loss) from discontinued operations, net of taxes(a)
$
132
 
$
176
 
$
(2,181)
 
$
703
                       
(a) Earnings (loss) from discontinued operations attributable to GECC, before income taxes, was $81 million and $120 million for the three months ended September 30, 2015 and 2014, respectively, and $(1,658) million and $452 million for the nine months ended September 30, 2015 and 2014, respectively.

2015 3Q FORM 10-Q  PAGE 40


 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 that had an early payment default. All claims received by WMC for early payment default have either been resolved or are no longer being pursued.
 
The remaining active claims have been brought by securitization trustees or administrators seeking recovery from WMC for alleged breaches of representations and warranties on mortgage loans that serve as collateral for residential mortgage-backed securities (RMBS). At September 30, 2015, such claims consisted of $3,468 million of individual claims generally submitted before the filing of a lawsuit (compared to $3,694 million at December 31, 2014) and $8,411 million of additional claims asserted against WMC in litigation without making a prior claim (Litigation Claims) (compared to $9,225 million at December 31, 2014). The total amount of these claims, $11,879 million, reflects the purchase price or unpaid principal balances of the loans at the time of purchase and does not give effect to pay downs or potential recoveries based upon the underlying collateral, which in many cases are substantial, nor to accrued interest or fees. As of September 30, 2015, these amounts do not include approximately $426 million of repurchase claims relating to alleged breaches of representations that are not in litigation and that are beyond the applicable statute of limitations. WMC believes that repurchase claims brought based upon representations and warranties made more than six years before WMC was notified of the claim would be disallowed in legal proceedings under applicable law and the June 11, 2015 decision of the New York Court of Appeals in ACE Securities Corp. v. DB Structured Products, Inc., on the statute of limitations period governing such claims.

Reserves related to repurchase claims made against WMC were $832 million at September 30, 2015, reflecting a net increase to reserves in the three months ended September 30, 2015 of $7 million due to incremental provisions net of settlements. The reserve estimate takes into account recent settlement activity and is based upon WMC's evaluation of the remaining exposures as a percentage of estimated lifetime mortgage loan losses within the pool of loans supporting each securitization for which timely claims have been asserted in litigation against WMC. Settlements in prior periods reduced WMC's exposure on claims asserted in certain securitizations and the claim amounts reported above give effect to these settlements.

ROLLFORWARD OF THE RESERVE
                     
                       
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
 
2015
   
2014
   
2015
   
2014
                       
Balance, beginning of period
$
825
 
$
549
 
$
809
 
$
800
Provision
 
28
   
40
   
46
   
142
Claim resolutions / rescissions
 
(21)
   
(1)
   
(23)
   
(354)
Balance, end of period
$
832
 
$
588
 
$
832
 
$
588
                       

Given the significant litigation activity and WMC's continuing efforts to resolve the lawsuits involving claims made against WMC, 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 may result in an increase to these reserves. WMC estimates a range of reasonably possible loss from $0 to approximately $500 million over its recorded reserve at September 30, 2015. This estimate involves significant judgment and may not reflect the range of uncertainties and unpredictable outcomes inherent in litigation, including WMC litigation discussed in Legal Proceedings and potential changes in WMC's legal strategy. This estimate excludes any possible loss associated with an adverse court decision on the applicable statute of limitations, as WMC is unable at this time to develop such a meaningful estimate.

At September 30, 2015, there were 15 lawsuits involving claims made against WMC arising from alleged breaches of representations and warranties on mortgage loans included in 14 securitizations. WMC reached a settlement in principle on one of these lawsuits in the third quarter, and the settlement became effective October 20, 2015. The adverse parties in these cases are securitization trustees or parties claiming to act on their behalf. Although the alleged claims for relief vary from case to case, the complaints and counterclaims in these actions generally assert claims for breach of contract, indemnification, and/or declaratory judgment, and seek specific performance (repurchase of defective mortgage loan) and/or money damages. Adverse court decisions, including in cases not involving WMC, could result in new claims and lawsuits on additional loans. However, WMC continues to believe that it has defenses to the claims asserted in litigation, including, for example, based on causation and materiality requirements and applicable statutes of limitations. It is not possible to predict the outcome or impact of these defenses and other factors, any of which could materially affect the amount of any loss ultimately incurred by WMC on these claims.
2015 3Q FORM 10-Q  PAGE 41


WMC has also received indemnification demands, nearly all of which are unspecified, from depositors/underwriters/sponsors of RMBS in connection with lawsuits brought by RMBS investors concerning alleged misrepresentations in the securitization offering documents to which WMC is not a party or, in two cases, involving mortgage loan repurchase claims made against RMBS sponsors. WMC believes that it has defenses to these demands.

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. The reserve and estimate of possible loss reflect judgment, based on currently available information, and a number of assumptions, including economic conditions, claim and settlement activity, pending and threatened litigation, court decisions regarding WMC's legal defenses, indemnification demands, government activity, and other variables in the mortgage industry. Actual losses arising from claims against WMC could exceed these amounts and additional claims and lawsuits could result if actual claim rates, governmental actions, litigation and indemnification activity, adverse court decisions, actual settlement rates or losses WMC incurs on repurchased loans differ from its assumptions.

FINANCIAL INFORMATION FOR WMC
           
                       
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
 
2015
   
2014
   
2015
   
2014
                       
Total revenues (loss)
$
(22)
 
$
(34)
 
$
(26)
 
$
(70)
                       
Earnings (loss) from discontinued operations, net of taxes
$
(21)
 
$
(25)
 
$
(37)
 
$
(57)
                       
2015 3Q FORM 10-Q  PAGE 42

NOTE 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 and policyholders in our run-off insurance operations. We do not have any securities classified as held-to-maturity.

 
September 30, 2015
 
December 31, 2014
     
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
$
19,975
 
$
3,102
 
$
(178)
 
$
22,899
 
$
19,810
 
$
3,962
 
$
(69)
 
$
23,703
   State and municipal
 
3,972
   
439
   
(71)
   
4,340
   
4,173
   
555
   
(53)
   
4,675
   Residential mortgage-backed(a)
 
905
   
84
   
(5)
   
984
   
1,544
   
153
   
(5)
   
1,692
   Commercial mortgage-backed
 
2,295
   
121
   
(12)
   
2,405
   
2,903
   
170
   
(10)
   
3,063
   Asset-backed
 
107
   
1
   
(10)
   
97
   
304
   
8
   
(17)
   
295
   Corporate – non-U.S.
 
769
   
101
   
(3)
   
867
   
908
   
109
   
(1)
   
1,016
   Government – non-U.S.
 
1,094
   
158
   
(1)
   
1,252
   
1,560
   
152
   
(2)
   
1,710
   U.S. government and federal agency
 
3,783
   
99
   
-
   
3,882
   
1,957
   
56
   
-
   
2,013
Equity
                                             
   Available-for-sale
 
113
   
16
   
(4)
   
125
   
109
   
24
   
(1)
   
132
   Trading
 
19
   
-
   
-
   
19
   
21
   
-
   
-
   
21
Total
$
33,032
 
$
4,121
 
$
(285)
 
$
36,868
 
$
33,289
 
$
5,189
 
$
(158)
 
$
38,320
                                               
(a) Substantially collateralized by U.S. mortgages. At September 30, 2015, $961 million related to securities issued by government-sponsored entities and $23 million related 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.


The fair value of investment securities decreased to $36,868 million at September 30, 2015, from $38,320 million at  December 31, 2014, primarily due to a decline in unrealized gains resulting from higher interest rates and net sales at Trinity, primarily related to mortgage-backed securities, partially offset by net purchases of U.S. government and federal agency securities at Synchrony Financial.

2015 3Q FORM 10-Q  PAGE 43


ESTIMATED FAIR VALUE AND GROSS UNREALIZED LOSSES OF AVAILABLE-FOR-SALE INVESTMENT SECURITIES
 
                         
 
In loss position for
 
 
Less than 12 months
 
12 months or more
 
     
Gross
     
Gross
 
 
Estimated
unrealized
 
Estimated
unrealized
 
(In millions)
fair value
losses
(a)
fair value
losses
(a)
                         
September 30, 2015
                       
Debt
                       
   U.S. corporate
$
2,161
 
$
(130)
 
$
335
 
$
(48)
 
   State and municipal
 
544
   
(16)
   
155
   
(55)
 
   Residential mortgage-backed
 
175
   
(2)
   
77
   
(3)
 
   Commercial mortgage-backed
 
351
   
(8)
   
26
   
(4)
 
   Asset-backed
 
-
   
-
   
48
   
(10)
 
   Corporate – non-U.S.
 
41
   
(3)
   
3
   
-
 
   Government – non-U.S.
 
292
   
(1)
   
-
   
-
 
   U.S. government and federal agency
 
450
   
-
   
1
   
-
 
Equity
 
38
   
(4)
   
-
   
-
 
Total
$
4,052
 
$
(164)
 
$
645
 
$
(121)
(b)
                         
December 31, 2014
                       
Debt
                       
   U.S. corporate
$
554
 
$
(16)
 
$
836
 
$
(53)
 
   State and municipal
 
67
   
(1)
   
308
   
(52)
 
   Residential mortgage-backed
 
30
   
-
   
146
   
(5)
 
   Commercial mortgage-backed
 
165
   
(1)
   
204
   
(9)
 
   Asset-backed
 
9
   
-
   
42
   
(17)
 
   Corporate – non-U.S.
 
42
   
(1)
   
3
   
-
 
   Government – non-U.S.
 
677
   
(2)
   
14
   
-
 
   U.S. government and federal agency
 
705
   
-
   
1
   
-
 
Equity
 
6
   
(1)
   
-
   
-
 
Total
$
2,255
 
$
(22)
 
$
1,554
 
$
(136)
 
                         
(a) Included gross unrealized losses of $1 million related to securities that had other-than-temporary impairments previously recognized at September 30, 2015.
(b) Includes debt securities held to support obligations to holders of GICs all of which are considered to be investment-grade by the major rating agencies at September 30, 2015.  


We regularly review investment securities for other-than-temporary impairment (OTTI) using both qualitative and quantitative criteria. For debt securities, our qualitative review considers our ability and intent to hold the security and the financial condition of and near-term prospects for the issuer, including whether the issuer is in compliance with the terms and covenants of the security. Our quantitative review considers whether there has been an adverse change in expected future cash flows. Unrealized losses are not indicative of the amount of credit loss that would be recognized and at September 30, 2015 are primarily due to increases in market yields subsequent to our purchase of the securities. We presently do not intend to sell the vast majority of our debt securities that are in an unrealized loss position and believe that it is not more likely than not that we will be required to sell the vast majority of these securities before anticipated recovery of our amortized cost. The methodologies and significant inputs used to measure the amount of credit loss for our investment securities during 2015 have not changed. For equity securities, we consider the duration and the severity of the unrealized loss. We believe that the unrealized loss associated with our equity securities will be recovered within the foreseeable future.

Our corporate debt portfolio comprises securities issued by public and private corporations in various industries, primarily in the U.S. Substantially all of our corporate debt securities are rated investment grade by the major rating agencies.

Our RMBS portfolio is collateralized primarily by pools of individual, direct mortgage loans, of which substantially all are in a senior position in the capital structure of the deals, not other structured products such as collateralized debt obligations. Of the total RMBS held at September 30, 2015, $961 million and $23 million related to agency and non-agency securities, respectively. Additionally, $58 million was related to residential subprime credit securities, primarily supporting obligations to annuitants and policyholders in our run-off insurance operations. Substantially all of the subprime exposure is related to securities backed by mortgage loans originated in 2005 and prior and are investment grade.

2015 3Q FORM 10-Q  PAGE 44


Our commercial mortgage-backed securities (CMBS) portfolio is collateralized by both diversified pools of mortgages that were originated for securitization (conduit CMBS) and pools of large loans backed by high-quality properties (large loan CMBS), about half of which were originated in 2008 and prior. The vast majority of the securities in our CMBS portfolio have investment-grade credit ratings.

PRE-TAX, OTHER-THAN-TEMPORARY IMPAIRMENTS ON INVESTMENT SECURITIES
                       
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
2015
 
2014
 
2015
 
2014
                       
Total pre-tax, OTTI recognized
$
2
 
$
2
 
$
21
 
$
18
Pre-tax, OTTI recognized in AOCI
 
-
   
-
   
-
   
(4)
Pre-tax, OTTI recognized in earnings(a)
$
2
 
$
2
 
$
21
 
$
14
                       
(a) Included pre-tax, other-than-temporary impairments recorded in earnings related to equity securities of $1 million and none in the three months ended September 30, 2015 and 2014, respectively and $1 million and $2 million in the nine months ended September 30, 2015 and 2014, respectively.

CHANGES IN CUMULATIVE CREDIT LOSS IMPAIRMENTS RECOGNIZED ON DEBT SECURITIES STILL HELD
                       
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
2015
 
2014
 
2015
 
2014
                       
Cumulative credit loss impairments recognized, beginning of period
 
$
6
 
$
255
 
$
8
 
$
306
Credit loss impairments recognized
                     
   on securities not previously impaired
 
 
-
   
-
   
-
   
-
Incremental credit loss impairments recognized
                     
   on securities previously impaired
 
 
-
   
2
   
-
   
4
Less credit loss impairments previously recognized
 
                     
    on securities sold during the period or that we intend to sell
 
-
   
-
   
2
   
53
Cumulative credit loss impairments recognized, end of period
$
6
 
$
257
 
$
6
 
$
257
                       

CONTRACTUAL MATURITIES OF INVESTMENT IN AVAILABLE-FOR-SALE DEBT SECURITIES
 
(EXCLUDING MORTGAGE-BACKED AND ASSET-BACKED SECURITIES)
                       
             
Amortized
 
Estimated
(In millions)
           
cost
 
fair value
                       
Due
                     
    Within one year
           
$
2,162
 
$
2,171
    After one year through five years
             
4,656
   
4,868
    After five years through ten years
             
4,854
   
5,217
    After ten years
             
17,921
   
20,983
                       

We expect actual maturities to differ from contractual maturities because borrowers have the right to call or prepay certain obligations.
2015 3Q FORM 10-Q  PAGE 45


GROSS REALIZED GAINS AND LOSSES ON AVAILABLE-FOR-SALE INVESTMENT SECURITIES
 
     
                       
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
2015
 
2014
 
2015
 
2014
                       
Gains
$
21
 
$
1
 
$
122
 
$
37
Losses, including impairments
 
(6)
   
(5)
   
(41)
   
(18)
Net
$
15
 
$
(4)
 
$
81
 
$
19