2013 Annual Report on Form 10-K - Part 3 of 3

RNS Number : 2752B
General Electric Company
28 February 2014
 



 United States Securities and Exchange Commission

Washington, D.C. 20549

Form 10-K

 

Part 3 of 3

 

Other Pension Plans in 2013 included 40 U.S. and non-U.S. pension plans with pension assets or obligations greater than $50 million. These defined benefit plans generally provide benefits to employees based on formulas recognizing length of service and earnings.

Pension Plan Participants









Principal


Other




pension


pension

December 31, 2013

Total


plans


plans







Active employees

128,000 


94,000 


34,000 

Vested former employees

229,000 


184,000 


45,000 

Retirees and beneficiaries

263,000 


230,000 


33,000 

Total

620,000 


508,000 


112,000 

 

 

Cost of Pension Plans




























Total


Principal pension plans


Other pension plans

(In millions)


2013 



2012 



2011 



2013 



2012 



2011 



2013 



2012 



2011 




























Service cost for benefits earned

$

1,970 


$

1,779 


$

1,498 


$

1,535 


$

1,387 


$

1,195 


$

435 


$

392 


$

303 

Prior service cost amortization


253 



287 



207 



246 



279 



194 



7 



8 



13 

Expected return on plan assets


(4,163)



(4,394)



(4,543)



(3,500)



(3,768)



(3,940)



(663)



(626)



(603)

Interest cost on benefit obligations


2,983 



2,993 



3,176 



2,460 



2,479 



2,662 



523 



514 



514 

Net actuarial loss amortization


4,007 



3,701 



2,486 



3,664 



3,421 



2,335 



343 



280 



151 

Pension plans cost

$

5,050 


$

4,366 


$

2,824 


$

4,405 


$

3,798 


$

2,446 


$

645 


$

568 


$

378 























































 

Actuarial assumptions are described below. The actuarial assumptions at December 31 are used to measure the year-end benefit obligations and the pension costs for the subsequent year.

Principal pension plans



Other pension plans (weighted average)

December 31

2013 


2012 


2011 


2010 



2013 


2012 


2011 


2010 




















Discount rate

4.85 

%

3.96 

%

4.21 

%

5.28 

%


4.39 

%

3.92 

%

4.42 

%

5.11 

%

Compensation increases

4.00 


3.90 


3.75 


4.25 



3.76 


3.30 


4.31 


4.44 


Expected return on assets

7.50 


8.00 


8.00 


8.00 



6.92 


6.82 


7.09 


7.25 


 

 

To determine the expected long-term rate of return on pension plan assets, we consider current and target asset allocations, as well as historical and expected returns on various categories of plan assets. In developing future return expectations for our principal pension plans' assets, we formulate views on the future economic environment, both in the U.S. and abroad. We evaluate general market trends and historical relationships among a number of key variables that impact asset class returns such as expected earnings growth, inflation, valuations, yields and spreads, using both internal and external sources. We also take into account expected volatility by asset class and diversification across classes to determine expected overall portfolio results given current and target allocations. Based on our analysis of future expectations of asset performance, past return results, and our current and target asset allocations, we have assumed a 7.5% long-term expected return on those assets for cost recognition in 2014. This is a reduction from the 8.0% we had assumed in 2013, 2012 and 2011. For the principal pension plans, we apply our expected rate of return to a market-related value of assets, which stabilizes variability in the amounts to which we apply that expected return.

 

We amortize experience gains and losses, as well as the effects of changes in actuarial assumptions and plan provisions, over a period no longer than the average future service of employees.

 

Funding policy for the GE Pension Plan is to contribute amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws plus such additional amounts as we may determine to be appropriate. We contributed $433 million to the GE Pension Plan in 2012. The ERISA minimum funding requirements did not require a contribution in 2013. As such, we did not contribute to the GE Pension Plan in 2013. We expect to contribute $528 million to the GE Pension Plan in 2014. In addition, we expect to pay approximately $244 million for benefit payments under our GE Supplementary Pension Plan and administrative expenses of our principal pension plans and expect to contribute approximately $800million to other pension plans in 2014. In 2013, comparative amounts were $225 million and $673 million, respectively.

 

Benefit obligations are described in the following tables. Accumulated and projected benefit obligations (ABO and PBO) represent the obligations of a pension plan for past service as of the measurement date. ABO is the present value of benefits earned to date with benefits computed based on current compensation levels. PBO is ABO increased to reflect expected future compensation.

 

Projected Benefit Obligation













Principal pension plans


Other pension plans

(In millions)

2013 


2012 


2013 


2012 













Balance at January 1

$

63,502 


$

 60,510 


$

 13,584 


$

 11,637 

Service cost for benefits earned


1,535 



 1,387 



 435 



 392 

Interest cost on benefit obligations


2,460 



 2,479 



 523 



 514 

Participant contributions


156 



 157 



 14 



 16 

Plan amendments


 - 



 - 



 11 



 (6)

Actuarial loss (gain) (a)


(6,406)



 2,021 



 (575)



 890 

Benefits paid


(3,134)



 (3,052)



 (477)



 (425)

Acquisitions (dispositions) / other - net


 - 



 - 



 46 



 230 

Exchange rate adjustments


 - 



 - 



 (26)



 336 

Balance at December 31(b)

$

58,113 


$

 63,502 


$

 13,535 


$

 13,584 

























(a)           Principally associated with discount rate changes.

(b)           The PBO for the GE Supplementary Pension Plan, which is an unfunded plan, was $5,162 million and $5,494 million at year-end 2013 and 2012, respectively.

 

 

Accumulated Benefit Obligation






December 31 (In millions)

2013 


2012 







GE Pension Plan

$

 50,967 


$

 55,664 

GE Supplementary Pension Plan


 3,946 



 4,114 

Other pension plans


 12,629 



 12,687 

 

 

Plans With Assets Less Than ABO






December 31 (In millions)

2013 


2012 







Funded plans with assets less than ABO






   Plan assets

$

 57,430 


$

 53,276 

   Accumulated benefit obligations


 60,715 



 66,069 

   Projected benefit obligations


 63,532 



 69,234 

Unfunded plans(a)






   Accumulated benefit obligations


 5,243 



 5,390 

   Projected benefit obligations


 6,512 



 6,828 













(a)           Primarily related to the GE Supplementary Pension Plan.

 

Plan Assets

The fair value of the classes of the pension plans' investments is presented below. The inputs and valuation techniques used to measure the fair value of the assets are consistently applied and described in Note 1.

 

 

Fair Value of Plan Assets













Principal pension plans


Other pension plans

(In millions)

2013 


2012 


2013 


2012 













Balance at January 1

$

44,738 


$

 42,137 


$

 9,702 


$

 8,381 

Actual gain on plan assets


6,312 



 4,854 



 1,212 



 720 

Employer contributions


225 



 642 



 673 



 737 

Participant contributions


156 



 157 



 14 



 16 

Benefits paid


(3,134)



 (3,052)



 (477)



 (425)

Acquisitions (dispositions) / other - net


 - 



 - 



 (31)



 - 

Exchange rate adjustments


 - 



 - 



 (34)



 273 

Balance at December 31

$

48,297 


$

 44,738 


$

 11,059 


$

 9,702 

 

Asset Allocation












Other pension plans



Principal pension plans


(weighted average)



2013 


2013 


2013 


2013 



Target


Actual


Target


Actual



allocation


allocation


allocation


allocation











Equity securities

17 - 57

% (a)

45 

% (b)

55 

%

55 

%

Debt securities (including cash equivalents)

13 - 53


31 


32 


34 


Private equities

8 - 18


13 


2 


1 


Real estate

2 - 12


7 


6 


5 


Other

3 - 13


4 


5 


5 




















(a)           Target equally divided between U.S. equity securities and non-U.S. equity securities.

(b)           Actual allocations were 26% for U.S. equity securities and 19% for non-U.S. equity securities.

 

 

Plan fiduciaries of the GE Pension Plan set investment policies and strategies for the GE Pension Trust and oversee its investment allocation, which includes selecting investment managers, commissioning periodic asset-liability studies and setting long-term strategic targets. Long-term strategic investment objectives take into consideration a number of factors, including the funded status of the plan, a balance between risk and return and the plan's liquidity needs. Target allocation percentages are established at an asset class level by plan fiduciaries. Target allocation ranges are guidelines, not limitations, and occasionally plan fiduciaries will approve allocations above or below a target range.

 

Plan fiduciaries monitor the GE Pension Plan's liquidity position in order to meet the near-term benefit payment and other cash needs. The GE Pension Plan holds short-term debt securities to meet its liquidity needs.

 

GE Pension Trust assets are invested subject to the following additional guidelines:

 

·      Short-term securities must generally be rated A-1/P-1 or better, except for 15% of such securities that may be rated A-2/P-2 and other short-term securities as may be approved by the plan fiduciaries.

·      Real estate investments may not exceed 25% of total assets.

·      Investments in restricted securities (excluding real estate investments) that are not freely tradable may not exceed 30% of total assets (actual was 17% of trust assets at December 31, 2013).

According to statute, the aggregate holdings of all qualifying employer securities (e.g., GE common stock) and qualifying employer real property may not exceed 10% of the fair value of trust assets at the time of purchase. GE securities represented 4.5% and 4.2% of trust assets at year-end 2013 and 2012, respectively.

 

The GE Pension Plan has a broadly diversified portfolio of investments in equities, fixed income, private equities, real estate and hedge funds; these investments are both U.S. and non-U.S. in nature. As of December 31, 2013, U.S. government direct and indirect obligations represented 16% of total GE Pension Plan assets. No other sector concentration of assets exceeded 15% of total GE Pension Plan assets.

 

The following tables present GE Pension Plan investments measured at fair value.

(In millions)


Level 1



Level 2



Level 3



Total













December 31, 2013
























Equity securities












   U.S. equity securities(a)

$

 11,067 


$

 1,568 


$

 - 


$

 12,635 

   Non-U.S. equity securities(a)


 7,832 



 1,292 



 - 



 9,124 

Debt securities












   Fixed income and cash investment funds


 - 



 2,078 



 - 



 2,078 

   U.S. corporate(b)


 - 



 4,555 



 - 



 4,555 

   Residential mortgage-backed


 - 



 1,093 



 - 



 1,093 

   U.S. government and federal agency(c)


 - 



 5,253 



 - 



 5,253 

   Other debt securities(d)


 - 



 2,317 



 - 



 2,317 

Private equities(a)


 - 



 - 



 6,269 



 6,269 

Real estate(a)


 - 



 - 



 3,354 



 3,354 

Other investments(e)


 - 



 169 



 1,622 



 1,791 

Total investments

$

 18,899 


$

 18,325 


$

 11,245 



 48,469 

Other(f)











 (172)

Total assets










$

 48,297 













December 31, 2012
























Equity securities












   U.S. equity securities(a)

$

 8,876 


$

 2,462 


$

 - 


$

 11,338 

   Non-U.S. equity securities(a)


 6,699 



 1,644 



 - 



 8,343 

Debt securities












   Fixed income and cash investment funds


 - 



 1,931 



 50 



 1,981 

   U.S. corporate(b)


 - 



 2,758 



 - 



 2,758 

   Residential mortgage-backed


 - 



 1,420 



 3 



 1,423 

   U.S. government and federal agency(c)


 - 



 5,489 



 - 



 5,489 

   Other debt securities(d)


 - 



 2,053 



 22 



 2,075 

Private equities(a)


 - 



 - 



 6,878 



 6,878 

Real estate(a)


 - 



 - 



 3,356 



 3,356 

Other investments(e)


 - 



 44 



 1,694 



 1,738 

Total investments

$

 15,575 


$

 17,801 


$

 12,003 



 45,379 

Other(f)











 (641)

Total assets










$

 44,738 

























(a)           Included direct investments and investment funds.

(b)           Primarily represented investment-grade bonds of U.S. issuers from diverse industries.

(c)           Included short-term investments to meet liquidity needs.

(d)           Primarily represented investments in non-U.S. corporate bonds, non-U.S. government bonds and commercial mortgage-backed securities.

(e)           Substantially all represented hedge fund investments.

(f)            Primarily represented net unsettled transactions related to purchases and sales of investments and accrued income receivables.

 

 

The following tables present the changes in Level 3 investments for the GE Pension Plan.

Changes in Level 3 Investments for the Year Ended December 31, 2013

































































Purchases,


Transfers












issuances


in and/or




January 1,


Net realized


Net unrealized


and


out of


December 31,

(In millions)

2013 


gains (losses)


gains (losses)


settlements


Level 3

(a)

2013 



















Debt securities


















   Fixed income and cash


















      investment funds

$

 50 


$

 (7)


$

 - 


$

 (43)


$

 - 


$

 - 

   Residential mortgage-backed


 3 



 - 



 - 



 - 



 (3)



 - 

   Other debt securities


 22 



 - 



 - 



 (22)



 - 



 - 

Private equities


 6,878 



 525 



 588 



 (1,675)



 (47)



 6,269 

Real estate


 3,356 



 23 



 330 



 (355)



 - 



 3,354 

Other investments


1,694 



(1)



200 



(77)



(194)



1,622 


$

12,003 


$

540 


$

1,118 


$

(2,172)


$

(244)


$

11,245 





































(a)           Transfers in and out of Level 3 are considered to occur at the beginning of the period.

 

 

Changes in Level 3 Investments for the Year Ended December 31, 2012

































































Purchases,


Transfers












issuances


in and/or




January 1,


Net realized


Net unrealized


and


out of


December 31,

(In millions)

2012 


gains (losses)


gains (losses)


settlements


Level 3

(a)

2012 



















Debt securities


















   Fixed income and cash


















      investment funds

$

 62 


$

 - 


$

 9 


$

 (21)


$

 - 


$

 50 

   U.S. corporate


 3 



 (1)



 - 



 (2)



 - 



 - 

   Residential mortgage-backed


 5 



 (2)



 - 



 - 



 - 



 3 

   Other debt securities


 146 



 (2)



 - 



 (122)



 - 



 22 

Private equities


 6,786 



 133 



 438 



 (479)



 - 



 6,878 

Real estate


 3,274 



 20 



 279 



 (217)



 - 



 3,356 

Other investments


 1,709 



 32 



 72 



 (71)



 (48)



 1,694 


$

 11,985 


$

 180 


$

 798 


$

 (912)


$

 (48)


$

 12,003 





































(a)           Transfers in and out of Level 3 are considered to occur at the beginning of the period.

 

 

Other pension plans' assets were $11,059 million and $9,702 million at December 31, 2013 and 2012, respectively. Equity and debt securities amounting to $9,781 million and $8,497 million represented approximately 89% of total investments at both December 31, 2013 and 2012. The plans' investments were classified as 11% Level 1, 78% Level 2 and 11% Level 3 at December 31, 2013. The plans' investments were classified as 14% Level 1, 75% Level 2 and 11% Level 3 at December 31, 2012. The changes in Level 3 investments were insignificant for the years ended December 31, 2013 and 2012.

 

Pension Asset (Liability)













Principal pension plans


Other pension plans

December 31 (In millions)

2013 


2012 


2013 


2012 













Funded status(a)(b)

$

(9,816)


$

(18,764)


$

(2,476)


$

(3,882)

Pension asset (liability) recorded in the












   Statement of Financial Position












      Pension asset

$

 - 


$

 - 


$

325 


$

141 

      Pension liabilities












         Due within one year(c)


(170)



(159)



(67)



(62)

         Due after one year


(9,646)



(18,605)



(2,734)



(3,961)

Net amount recognized

$

(9,816)


$

(18,764)


$

(2,476)


$

(3,882)

Amounts recorded in shareowners'












   equity (unamortized)












      Prior service cost (credit)

$

1,160 


$

1,406 


$

9 


$

(4)

      Net actuarial loss


11,555 



24,437 



2,459 



3,962 

Total

$

12,715 


$

25,843 


$

2,468 


$

3,958 

























(a)         Fair value of assets less PBO, as shown in the preceding tables.

(b)           The GE Pension Plan was underfunded by $4.7 billion and $13.3 billion at December 31, 2013 and December 31, 2012, respectively.

(c)         For principal pension plans, represents the GE Supplementary Pension Plan liability.

 

 

In 2014, we estimate that we will amortize $215 million of prior service cost and $2,565 million of net actuarial loss for the principal pension plans from shareowners' equity into pension cost. For other pension plans, the estimated prior service cost and net actuarial loss to be amortized in 2014 will be $5 million and $215 million, respectively. Comparable amortized amounts in 2013, respectively, were $246 million and $3,664 million for the principal pension plans and $7 million and $343 million for other pension plans.

Estimated Future Benefit Payments



















2019 

-

(In millions)


2014 



2015 



2016 



2017 



2018 



2023 





















Principal pension

$

3,105 


$

3,175 


$

3,240 


$

3,310 


$

3,380 


$

18,370 


   plans



















Other pension



















   plans

$

495 


$

505 


$

510 


$

525 


$

540 


$

2,935 


 

 

Retiree Health and Life Benefits

We sponsor a number of retiree health and life insurance benefit plans (retiree benefit plans). Principal retiree benefit plans are discussed below; other such plans are not significant individually or in the aggregate. We use a December 31 measurement date for our plans.

 

Principal Retiree Benefit Plans provide health and life insurance benefits to certain eligible participants and these participants share in the cost of healthcare benefits. In 2012, we amended our principal retiree benefit plans such that, effective January 1, 2015, our post-65 retiree medical plans will be closed to salaried and retired salaried employees who are not enrolled in the plans as of that date, and we will no longer offer company-provided life insurance in retirement for certain salaried employees who retire after that date. These plans cover approximately  198,000 retirees and dependents.

Cost of Principal Retiree Benefit Plans









(In millions)

2013 


2012 


2011 










Service cost for benefits earned

$

 229 


$

 219 


$

 216 

Prior service cost amortization


 393 



 518 



 647 

Expected return on plan assets


 (60)



 (73)



 (97)

Interest cost on benefit obligations


 410 



 491 



 604 

Net actuarial loss (gain) amortization


 (45)



 32 



 (110)

Net curtailment/settlement gain


 - 



 (101)



 - 

Retiree benefit plans cost

$

 927 


$

 1,086 


$

 1,260 



















 

Actuarial assumptions are described below. The actuarial assumptions at December 31 are used to measure the year-end benefit obligations and the retiree benefit plan costs for the subsequent year.

 

 

December 31

2013 


2012 


2011 


2010 











Discount rate

 4.61 

%

 3.74 

%(a)

 4.09 

%(a)

 5.15 

%

Compensation increases

 4.00 


 3.90 


 3.75 


 4.25 


Expected return on assets

 7.00 


 7.00 


 7.00 


 8.00 


Initial healthcare trend rate(b)

 6.00 


 6.50 


 7.00 


 7.00 




















 

(a)           Weighted average discount rates of 3.77% and 3.94% were used for determination of costs in 2013 and 2012, respectively.

(b)           For 2013, ultimately declining to 5% for 2030 and thereafter.

 

 

To determine the expected long-term rate of return on retiree life plan assets, we consider current and target asset allocations, historical and expected returns on various categories of plan assets, as well as expected benefit payments and resulting asset levels. In developing future return expectations for retiree benefit plan assets, we formulate views on the future economic environment, both in the U.S. and abroad. We evaluate general market trends and historical relationships among a number of key variables that impact asset class returns such as expected earnings growth, inflation, valuations, yields and spreads, using both internal and external sources. We also take into account expected volatility by asset class and diversification across classes to determine expected overall portfolio results given current and target allocations. Based on our analysis of future expectations of asset performance, past return results, our current and target asset allocations as well as a shorter time horizon for retiree life plan assets, we have assumed a 7.0% long-term expected return on those assets for cost recognition in 2014. We apply our expected rate of return to a market-related value of assets, which stabilizes variability in the amounts to which we apply that expected return.

 

We amortize experience gains and losses, as well as the effects of changes in actuarial assumptions and plan provisions, over a period no longer than the average future service of employees.

 

Funding Policy. We fund retiree health benefits on a pay-as-you-go basis. We expect to contribute approximately $545 million in 2014 to fund such benefits. We fund the retiree life insurance trust at our discretion.

 

Changes in the accumulated postretirement benefit obligation for retiree benefit plans follow.

Accumulated Postretirement Benefit Obligation (APBO)







(In millions)


2013 



2012 









Balance at January 1

$

 11,804 


$

 13,056 


Service cost for benefits earned


 229 



 219 


Interest cost on benefit obligations


 410 



 491 


Participant contributions


 52 



 54 


Plan amendments


 - 



 (832)


Actuarial gain


 (1,836)

(a)


 (60)


Benefits paid


 (746)



 (758)


Net curtailment/settlement


 - 



 (366)


Balance at December 31(b)

$

 9,913 


$

 11,804 
















(a)           Primarily associated with discount rate change and lower costs from new healthcare supplier contracts.

(b)         The APBO for the retiree health plans was $7,626 million and $9,218 million at year-end 2013 and 2012, respectively.

 

 

A one percentage point change in the assumed healthcare cost trend rate would have the following effects.

1%


1%

(In millions)

Increase


Decrease







APBO at December 31, 2013

$

 788 


$

 (671)

Service and interest cost in 2013


 63 



 (52)

 

 

Plan Assets

The fair value of the classes of retiree benefit plans' investments is presented below. The inputs and valuation techniques used to measure the fair value of assets are consistently applied and described in Note 1.

Fair Value of Plan Assets






(In millions)


2013 



2012 







Balance at January 1

$

 946 


$

 1,004 

Actual gain on plan assets


 118 



 98 

Employer contributions


 533 



 548 

Participant contributions


 52 



 54 

Benefits paid


 (746)



 (758)

Balance at December 31

$

 903 


$

 946 







 

 

Asset Allocation





December 31

2013 


2013 



Target


Actual



allocation


allocation







Equity securities

35 - 75 

%(a)

 39 

%(b)

Debt securities (including cash equivalents)

11 - 46 


 38 


Private equities

0 - 25 


 14 


Real estate

0 - 12 


 7 


Other

0 - 10 


 2 












(a)           Target allocations were 18-38% for U.S. equity securities and 17-37% for non-U.S. equity securities.

(b)           Actual allocations were 23% for U.S. equity securities and 16% for non-U.S. equity securities.

Plan fiduciaries set investment policies and strategies for the trust and oversee its investment allocation, which includes selecting investment managers and setting long-term strategic targets. The primary strategic investment objectives are balancing investment risk and return and monitoring the plan's liquidity position in order to meet the near-term benefit payment and other cash needs. Target allocation percentages are established at an asset class level by plan fiduciaries. Target allocation ranges are guidelines, not limitations, and occasionally plan fiduciaries will approve allocations above or below a target range.

 

Trust assets invested in short-term securities must generally be invested in securities rated A-1/P-1 or better, except for 15% of such securities that may be rated A-2/P-2 and other short-term securities as may be approved by the plan fiduciaries. According to statute, the aggregate holdings of all qualifying employer securities (e.g., GE common stock) and qualifying employer real property may not exceed 10% of the fair value of trust assets at the time of purchase. GE securities represented 4.0% and 5.8% of trust assets at year-end 2013 and 2012, respectively.

Retiree life plan assets were $903 million and $946 million at December 31, 2013 and 2012, respectively. Equity and debt securities amounting to $727 million and $741 million represented approximately 77% and 75% of total investments at December 31, 2013 and 2012, respectively. The plans' investments were classified as 33% Level 1, 43% Level 2 and 24% Level 3 at December 31, 2013. The plans' investments were classified as 28% Level 1, 47% Level 2 and 25% Level 3 at December 31, 2012. The changes in Level 3 investments were insignificant for the years ended December 31, 2013 and 2012.

 

Retiree Benefit Asset (Liability)






December 31 (In millions)


2013 



2012 







Funded status(a)

$

 (9,010)


$

 (10,858)

Liability recorded in the Statement of Financial Position






   Retiree health plans






      Due within one year

$

 (531)


$

 (589)

      Due after one year


 (7,095)



 (8,629)

   Retiree life plans


 (1,384)



 (1,640)

Net liability recognized

$

 (9,010)


$

 (10,858)

Amounts recorded in shareowners' equity (unamortized)






   Prior service cost

$

 963 


$

 1,356 

   Net actuarial loss (gain)


 (1,667)



 182 

Total

$

 (704)


$

 1,538 













(a)         Fair value of assets less APBO, as shown in the preceding tables.

 

In 2014, we estimate that we will amortize $395 million of prior service cost and $170 million of net actuarial gain from shareowners' equity into retiree benefit plans cost. Comparable amortized amounts in 2013 were $393 million of prior service cost and $45 million of net actuarial gain.

 

Estimated Future Benefit Payments



















2019 

-

(In millions)


2014 



2015 



2016 



2017 



2018 



2023 






















$

 725 


$

 725 


$

 725 


$

 725 


$

 725 


$

 3,500 





















 

 

Postretirement Benefit Plans

2013 Cost of Postretirement Benefit Plans and Changes in Other Comprehensive Income

 

 

Total


Principal


Other


Retiree


postretirement


pension


pension


benefit

(In millions)

benefit plans


plans


plans


plans













Cost of postretirement benefit plans

$

 5,977 


$

 4,405 


$

 645 


$

 927 

Changes in other comprehensive income












      Prior service cost - current year


 11 



 - 



 11 



 - 

      Net actuarial gain - current year(a)


 (12,263)



 (9,218)



 (1,151)



 (1,894)

      Prior service cost amortization


 (646)



 (246)



 (7)



 (393)

      Net actuarial gain (loss) amortization


 (3,962)



 (3,664)



 (343)



 45 

Total changes in other comprehensive income


 (16,860)



 (13,128)



 (1,490)



 (2,242)

Cost of postretirement benefit plans and












      changes in other comprehensive income

$

 (10,883)


$

 (8,723)


$

 (845)


$

 (1,315)













 

(a)           Principally associated with discount rate changes and plan asset gains in excess of expected return on plan assets.


 

 

NOTE 13. ALL OTHER LIABILITIES

This caption includes liabilities for various items including non-current compensation and benefits, deferred income, interest on tax liabilities, unrecognized tax benefits, environmental remediation, asset retirement obligations, derivative instruments, product warranties and a variety of sundry items.

 

Accruals for non-current compensation and benefits amounted to $27,853 million and $40,318 million at December 31, 2013 and 2012, respectively. These amounts include postretirement benefits, pension accruals, and other compensation and benefit accruals such as deferred incentive compensation. See Note 12.

 

We are involved in numerous remediation actions to clean up hazardous wastes as required by federal and state laws. Liabilities for remediation costs exclude possible insurance recoveries and, when dates and amounts of such costs are not known, are not discounted. When there appears to be a range of possible costs with equal likelihood, liabilities are based on the low end of such range. It is reasonably possible that our environmental remediation exposure will exceed amounts accrued. However, due to uncertainties about the status of laws, regulations, technology and information related to individual sites, such amounts are not reasonably estimable. Total reserves related to environmental remediation and asbestos claims, were $2,612 million at December 31, 2013.


NOTE 14. INCOME TAXES

 

Provision for Income Taxes









(In millions)


2013 



2012 



2011 










GE









Current tax expense

$

 4,239 


$

2,307 


$

5,166 

Deferred tax expense (benefit) from temporary differences


 (2,571)



(294)



(327)



 1,668 



2,013 



4,839 

GECC









Current tax expense (benefit)


 (268)



1,379 



783 

Deferred tax expense (benefit) from temporary differences


 (724)



(858)



123 



 (992)



521 



906 

Consolidated









Current tax expense


 3,971 



3,686 



5,949 

Deferred tax expense (benefit) from temporary differences


 (3,295)



(1,152)



(204)

Total

$

 676 


$

2,534 


$

5,745 

 

 

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.

 

Consolidated U.S. earnings from continuing operations before income taxes were $6,099 million, $8,309 million and $10,206 million in 2013, 2012 and 2011, respectively. The corresponding amounts for non-U.S.-based operations were $10,052 million, $9,072 million and $9,953 million in 2013, 2012 and 2011, respectively.

 

Consolidated current tax expense includes amounts applicable to U.S. federal income taxes of $85 million, $685 million and $1,079 million in 2013, 2012 and 2011, respectively, including the benefit from GECC deductions and credits applied against GE's current U.S. tax expense. Consolidated current tax expense amounts applicable to non-U.S. jurisdictions were $3,659 million, $2,871 million and $4,624 million in 2013, 2012 and 2011, respectively. Consolidated deferred taxes related to U.S. federal income taxes were an expense (benefit) of $(2,315) million, $(414) million and $1,529 million in 2013, 2012 and 2011, respectively, and amounts applicable to non-U.S. jurisdictions of an expense (benefit) of $(1,038) million, $(773) million and $(2,077) million in 2013, 2012 and 2011, respectively.

 

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss and tax credit carryforwards, and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. We evaluate the recoverability of these future tax deductions and credits by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent we do not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established.

 

Our businesses are subject to regulation under a wide variety of U.S. federal, state and foreign tax laws, regulations and policies. Changes to these laws or regulations may affect our tax liability, return on investments and business operations. For example, GE's effective tax rate is reduced because active business income earned and indefinitely reinvested outside the United States is taxed at less than the U.S. rate. A significant portion of this reduction depends upon a provision of U.S. tax law that defers the imposition of U.S. tax on certain active financial services income until that income is repatriated to the United States as a dividend. This provision is consistent with international tax norms and permits U.S. financial services companies to compete more effectively with foreign banks and other foreign financial institutions in global markets. This provision, which had expired at the end of 2011, was reinstated in January 2013 retroactively for two years through the end of 2013. The provision had been scheduled to expire and had been extended by Congress on six previous occasions, but there can be no assurance that it will continue to be extended. In the event the provision is not extended after 2013, the current U.S. tax imposed on active financial services income earned outside the United States would increase, making it more difficult for U.S. financial services companies to compete in global markets. If this provision is not extended, we expect our effective tax rate to increase significantly after 2014.

 

We have not provided U.S. deferred taxes on cumulative earnings of non-U.S. affiliates and associated companies that have been reinvested indefinitely. These earnings relate to ongoing operations and, at December 31, 2013 and December 31, 2012, were approximately $110 billion and $108 billion, respectively. Most of these earnings have been reinvested in active non-U.S. business operations and we do not intend to repatriate these earnings to fund U.S. operations. Because of the availability of U.S. foreign tax credits, it is not practicable to determine the U.S. federal income tax liability that would be payable if such earnings were not reinvested indefinitely. Deferred taxes are provided for earnings of non-U.S. affiliates and associated companies when we plan to remit those earnings.

 

Annually, we file over 5,800 income tax returns in over 250 global taxing jurisdictions. We are under examination or engaged in tax litigation in many of these jurisdictions. During 2013, the Internal Revenue Service (IRS) completed the audit of our consolidated U.S. income tax returns for 2008-2009, except for certain issues that remain under examination. During 2011, the IRS completed the audit of our consolidated U.S. income tax returns for 2006-2007, except for certain issues that remained under examination. At December 31, 2013, the IRS was auditing our consolidated U.S. income tax returns for 2010-2011. In addition, certain other U.S. tax deficiency issues and refund claims for previous years were unresolved. The IRS has disallowed the tax loss on our 2003 disposition of ERC Life Reinsurance Corporation. We have contested the disallowance of this loss. It is reasonably possible that the unresolved items could be resolved during the next 12 months, which could result in a decrease in our balance of "unrecognized tax benefits" - that is, the aggregate tax effect of differences between tax return positions and the benefits recognized in our financial statements. We believe that there are no other jurisdictions in which the outcome of unresolved issues or claims is likely to be material to our results of operations, financial position or cash flows. We further believe that we have made adequate provision for all income tax uncertainties. Resolution of audit matters, including the IRS audit of our consolidated U.S. income tax returns for 2008-2009, reduced our 2013 consolidated income tax rate by 2.8 percentage points. Resolution of audit matters, including the IRS audit of our consolidated U.S. income tax returns for 2006-2007, reduced our 2011 consolidated effective tax rate by 2.4 percentage points.

 

The balance of unrecognized tax benefits, the amount of related interest and penalties we have provided and what we believe to be the range of reasonably possible changes in the next 12 months were:

December 31 (In millions)


2013 



2012 







Unrecognized tax benefits

$

 5,816 


$

 5,445 

   Portion that, if recognized, would reduce tax expense and effective tax rate(a)


 4,307 



 4,032 

Accrued interest on unrecognized tax benefits


 975 



 961 

Accrued penalties on unrecognized tax benefits


 164 



 173 

Reasonably possible reduction to the balance of unrecognized tax benefits






   in succeeding 12 months


0-900 



0-800 

   Portion that, if recognized, would reduce tax expense and effective tax rate(a)


0-350 



0-700 













(a)         Some portion of such reduction might be reported as discontinued operations.

 

 

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

(In millions)


2013 



2012 







Balance at January 1

$

 5,445 


$

 5,230 

Additions for tax positions of the current year


 771 



 293 

Additions for tax positions of prior years


 872 



 882 

Reductions for tax positions of prior years


 (1,140)



 (723)

Settlements with tax authorities


 (98)



 (191)

Expiration of the statute of limitations


 (34)



 (46)

Balance at December 31

$

 5,816 


$

 5,445 

 

 

We classify interest on tax deficiencies as interest expense; we classify income tax penalties as provision for income taxes. For the years ended December 31, 2013, 2012 and 2011, $22 million, $(45) million and $(197) million of interest expense (income), respectively, and $0 million, $33 million and $10 million of tax expense (income) related to penalties, respectively, were recognized in the Statement of Earnings.

 

A reconciliation of the U.S. federal statutory income tax rate to the actual income tax rate is provided below.

Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate



Consolidated


GE


GECC



2013 


2012 


2011 


2013 


2012 


2011 


2013 


2012 


2011 





















U.S. federal statutory income



















   tax rate

 35.0 

%

 35.0 

%

 35.0 

%

 35.0 

%

 35.0 

%

 35.0 

%

 35.0 

%

 35.0 

%

 35.0 

%

   Increase (reduction) in rate



















      resulting from



















      inclusion of after-tax



















      earnings of GECC in



















      before-tax earnings of GE

 - 


 - 


 - 


 (16.9)


 (15.3)


 (11.9)


 - 


 - 


 - 


   Tax on global activities



















      including exports(a)

 (24.7)


 (12.5)


 (10.4)


 (4.1)


 (4.3)


 (5.2)


 (45.0)


 (18.4)


 (14.7)


   NBCU gain

 (0.7)


 - 


 9.3 


 (0.7)


 - 


 9.8 


 - 


 - 


 - 


   Business Property disposition

 - 


 (1.9)


 - 


 - 


 - 


 - 


 - 


 (4.2)


 - 


   U.S. business credits(b)

 (3.6)


 (2.6)


 (3.2)


 (1.5)


 (0.7)


 (1.5)


 (4.6)


 (4.3)


 (4.7)


   All other - net

 (1.8)


 (3.4)


 (2.2)


 (2.0)


 (2.7)


 (0.9)


 1.0 


 (1.5)


 (3.5)



 (30.8)


 (20.4)


 (6.5)


 (25.2)


 (23.0)


 (9.7)


 (48.6)


 (28.4)


 (22.9)


Actual income tax rate

 4.2 

%

 14.6 

%

 28.5 

%

 9.8 

%

 12.0 

%

 25.3 

%

 (13.6)

%

 6.6 

%

 12.1 

%







































(a)           Included (6.0)% and (13.3)% in consolidated and GECC, respectively, related to the sale of 68.5% of our Swiss consumer finance bank, Cembra Money Bank AG (Cembra), through an initial public offering in 2013.

(b)           U.S. general business credits, primarily the credit for manufacture of energy efficient appliances, the credit for energy produced from renewable sources, the advanced energy project credit, the low-income housing credit and the credit for research performed in the U.S.

 

 

Deferred Income Taxes

Aggregate deferred income tax amounts are summarized below.

December 31 (In millions)


2013 



2012 







Assets






GE

$

 15,284 


$

 19,745 

GECC


 13,224 



 11,876 



 28,508 



 31,621 

Liabilities






GE


 (10,223)



 (13,799)

GECC


 (18,010)



 (17,876)



 (28,233)



 (31,675)

Net deferred income tax asset (liability)

$

 275 


$

 (54)

 

 

Principal components of our net asset (liability) representing deferred income tax balances are as follows:

December 31 (In millions)


2013 



2012 







GE






Provision for expenses(a)

$

 5,934 


$

 6,503 

Principal pension plans


 3,436 



 6,567 

Retiree insurance plans


 3,154 



 3,800 

Non-U.S. loss carryforwards(b)


 874 



 942 

Contract costs and estimated earnings


 (3,550)



 (3,087)

Intangible assets


 (2,268)



 (2,269)

Depreciation


 (1,079)



 (698)

Investment in global subsidiaries


 (1,077)



 (921)

Investment in NBCU LLC


 - 



 (4,937)

Other - net


 (363)



 46 



 5,061 



 5,946 

GECC






Operating leases


 (6,284)



 (6,141)

Financing leases


 (4,075)



 (4,506)

Intangible assets


 (1,943)



 (1,666)

Cash flow hedges


 (163)



 (115)

Net unrealized gains (losses) on securities


 (145)



 (314)

Non-U.S. loss carryforwards(b)


 3,791 



 3,049 

Allowance for losses


 2,640 



 1,975 

Investment in global subsidiaries


 1,883 



 1,689 

Other - net


 (490)



 29 



 (4,786)



 (6,000)

Net deferred income tax asset (liability)

$

 275 


$

 (54)













(a)         Represented the tax effects of temporary differences related to expense accruals for a wide variety of items, such as employee compensation and benefits, other pension plan liabilities, interest on tax liabilities, product warranties and other sundry items that are not currently deductible.

(b)         Net of valuation allowances of $2,089 million and $1,712 million for GE and $862 million and $628 million for GECC, for 2013 and 2012, respectively. Of the net deferred tax asset as of December 31, 2013, of $4,665 million, $30 million relates to net operating loss carryforwards that expire in various years ending from December 31, 2014, through December 31, 2016; $478 million relates to net operating losses that expire in various years ending from December 31, 2017 through December 31, 2030 and $4,157 million relates to net operating loss carryforwards that may be carried forward indefinitely.


NOTE 15. SHAREOWNERS' EQUITY

 

(In millions)


2013 



2012 



2011 










Preferred stock issued

$

 - 


$

 - 


$

 - 

Common stock issued

$

 702 


$

 702 


$

 702 

Accumulated other comprehensive income









Balance at January 1

$

 (20,230)


$

 (23,974)


$

 (17,855)

Other comprehensive income before reclassifications


 8,844 



 841 



 (9,601)

Reclassifications from other comprehensive income


 2,266 



 2,903 



 3,482 

Other comprehensive income, net, attributable to GE


 11,110 



 3,744 



 (6,119)

Balance at December 31

$

 (9,120)


$

 (20,230)


$

 (23,974)

Other capital









Balance at January 1

$

 33,070 


$

 33,693 


$

 36,890 

Gains (losses) on treasury stock dispositions and other


 (576)



 (623)



 (703)

Preferred stock redemption


 - 



 - 



 (2,494)

Balance at December 31

$

 32,494 


$

 33,070 


$

 33,693 

Retained earnings









Balance at January 1

$

 144,055 


$

 137,786 


$

 131,137 

Net earnings attributable to the Company


 13,057 



 13,641 



 14,151 

Dividends(a)


 (8,060)



 (7,372)



 (7,498)

Other


 (1)



 - 



 (4)

Balance at December 31

$

 149,051 


$

 144,055 


$

 137,786 

Common stock held in treasury









Balance at January 1

$

 (34,571)


$

 (31,769)


$

 (31,938)

Purchases


 (10,466)



 (5,295)



 (2,067)

Dispositions


 2,476 



 2,493 



 2,236 

Balance at December 31

$

 (42,561)


$

 (34,571)


$

 (31,769)

Total equity









GE shareowners' equity balance at December 31

$

 130,566 


$

 123,026 


$

 116,438 

Noncontrolling interests balance at December 31


 6,217 



 5,444 



 1,696 

Total equity balance at December 31

$

 136,783 


$

 128,470 


$

 118,134 



















 

(a)           Included $1,031 million ($806 million related to our preferred stock redemption) of dividends on preferred stock in 2011.

 

Shares of GE Preferred Stock

On October 16, 2008, we issued 30,000 shares of 10% cumulative perpetual preferred stock (par value $1.00 per share) having an aggregate liquidation value of $3,000 million, and warrants to purchase 134,831,460 shares of common stock (par value $0.06 per share) to Berkshire Hathaway Inc. (Berkshire Hathaway) for net proceeds of $2,965 million in cash. The proceeds were allocated to the preferred shares ($2,494 million) and the warrants ($471 million) on a relative fair value basis and recorded in other capital. The warrants were exercisable through October 16, 2013, at an exercise price of $22.25 per share of common stock and were to be settled through physical share issuance. The terms of the warrants were amended in January 2013 to allow for net share settlement where the total number of issued shares is based on the amount by which the average market price of GE common stock over the 20 trading days preceding the date of exercise exceeds the exercise price of $22.25. On October 16, 2013, Berkshire Hathaway Inc. (Berkshire Hathaway) exercised in full their warrants to purchase shares of GE common stock and on October 17, 2013, GE delivered 10.7 million shares to Berkshire Hathaway. The transaction had equal and offsetting effects on other capital and common stock held in treasury.

 

The preferred stock was redeemable at our option three years after issuance at a price of 110% of liquidation value plus accrued and unpaid dividends. On September 13, 2011, we provided notice to Berkshire Hathaway that we would redeem the shares for the stated redemption price of $3,300 million, plus accrued and unpaid dividends. In connection with this notice, we recognized a preferred dividend of $806 million (calculated as the difference between the carrying value and redemption value of the preferred stock), which was recorded as a reduction to earnings attributable to common shareowners and common shareowners' equity. The preferred shares were redeemed on October 17, 2011.

 

GE has 50 million authorized shares of preferred stock ($1.00 par value). No shares were issued and outstanding as of December 31, 2013 and 2012.

 

Shares of GE Common Stock

On December 14, 2012, we increased the existing authorization by $10 billion to $25 billion for our share repurchase program and extended the program (which would have otherwise expired on December 31, 2013) through 2015. On February 12, 2013, we increased the existing authorization by an additional $10 billion resulting in authorization to repurchase up to a total of $35 billion of our common stock through 2015. Under this program, on a book basis, we repurchased 432.6 million shares for a total of $10,375 million during 2013 and 248.6 million shares for a total of $5,185 million during 2012.

 

GE has 13.2 billion authorized shares of common stock ($0.06 par value).

 

 

Common shares issued and outstanding are summarized in the following table.

December 31 (In thousands)


2013 


2012 


2011 








Issued


 11,693,841 


 11,693,841 


 11,693,841 

In treasury


 (1,632,960)


 (1,288,216)


 (1,120,824)

Outstanding


 10,060,881 


 10,405,625 


 10,573,017 

 

Accumulated Other Comprehensive Income


















(In millions)


2013 



2012 



2011 










Investment securities









Balance at January 1

$

 677 


$

 (30)


$

 (636)

OCI before reclassifications - net of deferred taxes of $(407), $387 and $341(a)


 (692)



 683 



 577 

Reclassifications from OCI - net of deferred taxes of $222, $13 and $1


 318 



 22 



 31 

Other comprehensive income(b)


 (374)



 705 



 608 

Less: OCI attributable to noncontrolling interests


 (4)



 (2)



 2 

Balance at December 31

$

 307 


$

 677 


$

 (30)










Currency translation adjustments (CTA)









Balance at January 1

$

 412 


$

 133 


$

 (86)

OCI before reclassifications - net of deferred taxes of $(613), $(266) and $(717)


 510 



 474 



 (201)

Reclassifications from OCI - net of deferred taxes of $793, $54 and $357


 (818)



 (174)



 381 

Other comprehensive income(b)


 (308)



 300 



 180 

Less: OCI attributable to noncontrolling interests


 (22)



 21 



 (39)

Balance at December 31

$

 126 


$

 412 


$

 133 










Cash flow hedges









Balance at January 1

$

 (722)


$

 (1,176)


$

 (1,280)

OCI before reclassifications - net of deferred taxes of $250, $392 and $238


 738 



 385 



 (860)

Reclassifications from OCI - net of deferred taxes of $(177), $(245) and $202


 (271)



 68 



 978 

Other comprehensive income(b)


 467 



 453 



 118 

Less: OCI attributable to noncontrolling interests


 2 



 (1)



 14 

Balance at December 31

$

 (257)


$

 (722)


$

 (1,176)










Benefit plans









Balance at January 1

$

 (20,597)


$

 (22,901)


$

 (15,853)

Prior service credit (cost) - net of deferred taxes of $(5), $304 and $(276)


 (6)



 534 



 (495)

Net actuarial gain (loss) - net of deferred taxes of $4,506, $(574) and $(4,746)


 8,269 



 (1,396)



 (8,637)

Net curtailment/settlement - net of deferred taxes of $0, $123 and $0


 - 



 174 



 - 

Prior service cost amortization - net of deferred taxes of $267, $326 and $341


 397 



 497 



 514 

Net actuarial loss amortization - net of deferred taxes of $1,343, $1,278 and $811


 2,640 



 2,490 



 1,578 

Other comprehensive income(b)


 11,300 



 2,299 



 (7,040)

Less: OCI attributable to noncontrolling interests


 (1)



 (5)



 8 

Balance at December 31

$

 (9,296)


$

 (20,597)


$

 (22,901)










Accumulated other comprehensive income at December 31

$

 (9,120)


$

 (20,230)


$

 (23,974)



















 

(a)           Includes adjustments of $(1,171) million, $527 million and $786 million in 2013, 2012 and 2011, respectively, to deferred acquisition costs, present value of future profits, and investment contracts, insurance liabilities and insurance annuity benefits in our run-off insurance operations to reflect the effects that would have been recognized had the related unrealized investment securities holding gains and losses actually been realized.

(b)           Total other comprehensive income was $11,085 million, $3,757 million and $(6,134) million in 2013, 2012 and 2011, respectively.

 

Reclassification out of AOCI






















Components of AOCI

2013 


2012 


2011 


Statement of Earnings

Caption












Available-for-sale securities











   Realized gains (losses) on











      sale/impairment of securities

$

 (540)


$

 (35)


$

 (32)


Other income



 222 



 13 



 1 


Tax (expense) or benefit


$

 (318)


$

 (22)


$

 (31)


Net of tax












Currency translation adjustments











   Gains (losses) on dispositions

$

 25 


$

 120 


$

 (738)


Costs and expenses



 793 



 54 



 357 


Tax (expense) or benefit


$

 818 


$

 174 


$

 (381)


Net of tax












Cash flow hedges











  Gains (losses) on interest rate

     derivatives

$

 (364)


$

 (499)


$

 (820)


Interest and other financial charges

  Foreign exchange contracts


 564 



 792 



 (510)


(a)

  Other


 248 



 (116)



 150 


(b)



 448 



 177 



 (1,180)


Total before tax



 (177)



 (245)



 202 


Tax (expense) or benefit


$

 271 


$

 (68)


$

 (978)


Net of tax












Benefit plan items











  Amortization of prior service costs

$

 (664)


$

 (823)


$

 (855)


(c)

  Amortization of actuarial gains (losses)


 (3,983)



 (3,768)



 (2,389)


(c)



 (4,647)



 (4,591)



 (3,244)


Total before tax



 1,610 



 1,604 



 1,152 


Tax (expense) or benefit


$

 (3,037)


$

 (2,987)


$

 (2,092)


Net of tax












Total reclassification adjustments

$

 (2,266)


$

 (2,903)


$

 (3,482)


Net of tax























 

(a)           Includes $608 million, $894 million and $(310) million in GECC revenues from services and $(44) million, $(102) million and $(200) million in interest and other financial charges for the years ended December 31, 2013, 2012 and 2011, respectively.

(b)           Primarily included in costs and expenses.

(c)           Amortization of prior service costs and actuarial gains and losses out of AOCI are included in the computation of net periodic pension costs. See Note 12 for further information.

Noncontrolling Interests

Noncontrolling interests in equity of consolidated affiliates includes common shares in consolidated affiliates and preferred stock issued by GECC. The balance is summarized as follows.

 

December 31 (In millions)

 

2013 

 

 

2012 

 

 

 

 

 

 

GECC preferred stock

$

 4,950 

 

$

 3,960 

Other noncontrolling interests in consolidated affiliates(a)

 

 1,267 

 

 

 1,484 

Total

$

 6,217 

 

$

 5,444 







 

(a)           Consisted of a number of individually insignificant noncontrolling interests in partnerships and consolidated affiliates.



Changes to noncontrolling interests are as follows.

Years ended December 31

(In millions)


2013 



2012 



2011 










Beginning balance

$

 5,444 


$

 1,696 


$

 5,262 

Net earnings


 298 



 223 



 292 

GECC issuance of preferred stock


 990 



 3,960 



 - 

GECC preferred stock dividend


 (298)



 (123)



 - 

Repurchase of NBCU shares(a)


 - 



 - 



 (3,070)

Dispositions(b)


 (175)



 - 



 (609)

Dividends


 (80)



 (42)



 (34)

Other (including AOCI)(c)


 38 



 (270)



 (145)

Ending balance

$

 6,217 


$

 5,444 


$

 1,696 



















(a)           In January 2011 and prior to the transaction with Comcast, we acquired 12.3% of NBCU's outstanding shares from Vivendi for $3,673 million and made an additional payment of $222 million related to previously purchased shares. Of these amounts, $3,070 million reflects a reduction in carrying value of noncontrolling interests. The remaining amount of $825 million represents the amount paid in excess of our carrying value, which was recorded as an increase in our basis in NBCU.

(b)           Includes noncontrolling interests related to the sale of GE SeaCo of $311 million and the redemption of Heller Financial preferred stock of $275 million in 2011.

(c)           Primarily acquisitions and eliminations.

 

During the second quarter of 2013, GECC issued 10,000 shares of non-cumulative perpetual preferred stock with a $0.01 par value for proceeds of $990 million. The preferred shares bear an initial fixed interest rate of 5.25% through June 15, 2023, bear a floating rate equal to three-month LIBOR plus 2.967% thereafter and are callable on June 15, 2023. Dividends on the GECC preferred stock are payable semi-annually, in June and December, with the first payment on this issuance made in December 2013.

 

During 2012, GECC issued 40,000 shares of non-cumulative perpetual preferred stock with a $0.01 par value for proceeds of $3,960 million. Of these shares, 22,500 bear an initial fixed interest rate of 7.125% through June 15, 2022, bear a floating rate equal to three-month LIBOR plus 5.296% thereafter and are callable on June 15, 2022, and 17,500 shares bear an initial fixed interest rate of 6.25% through December 15, 2022, bear a floating rate equal to three-month LIBOR plus 4.704% thereafter and are callable on December 15, 2022. Dividends on the GECC preferred stock are payable semi-annually, in June and December, with the first payment on these issuances made in December 2012. GECC preferred stock is presented as noncontrolling interests in the GE consolidated statement of financial position.

 

During 2013 and 2012, GECC paid quarterly dividends of $1,930 million and $1,926 million, respectively, and special dividends of $4,055 million and $4,500 million, respectively, to GE. No dividends were paid during 2011.


 

 

NOTE 16. OTHER STOCK-RELATED INFORMATION

We grant stock options, restricted stock units (RSUs) and performance share units (PSUs) to employees under the 2007 Long-Term Incentive Plan. This plan replaced the 1990 Long-Term Incentive Plan. In addition, we grant options and RSUs in limited circumstances to consultants, advisors and independent contractors under a plan approved by our Board of Directors in 1997 (the Consultants' Plan). Share requirements for all plans may be met from either unissued or treasury shares. Stock options expire 10 years from the date they are granted and vest over service periods that range from one to five years. RSUs give the recipients the right to receive shares of our stock upon the vesting of their related restrictions. Restrictions on RSUs vest in various increments and at various dates, beginning after one year from date of grant through grantee retirement. Although the plan permits us to issue RSUs settleable in cash, we have only issued RSUs settleable in shares of our stock. PSUs give recipients the right to receive shares of our stock upon the achievement of certain performance targets.

 

All grants of GE options under all plans must be approved by the Management Development and Compensation Committee, which consists entirely of independent directors.

Stock Compensation Plans










Securities







to be


Weighted


Securities


issued


average


available


upon


exercise


for future

December 31, 2013 (Shares in thousands)

exercise


price


issuance










Approved by shareowners









Options


 473,247 


$

 20.02 



(a) 

RSUs


 13,572 



(b) 



(a) 

PSUs


 950 



(b) 



(a) 

Not approved by shareowners (Consultants' Plan)









Options


 364 



 25.32 



(c) 

RSUs


 - 



(b) 



(c) 

Total


 488,133 


$

 20.02 



 404,574 



















(a)         In 2007, the Board of Directors approved the 2007 Long-Term Incentive Plan (the Plan), which replaced the 1990 Long-Term Incentive Plan. During 2012, an amendment was approved to increase the number of shares authorized for issuance under the Plan from 500 million shares to 925 million shares. No more than 230 million of the total number of authorized shares may be available for awards granted in any form provided under the Plan other than options or stock appreciation rights. Total shares available for future issuance under the Plan amounted to 376.4 million shares at December 31, 2013.

(b)         Not applicable.

(c)         Total shares available for future issuance under the Consultants' Plan amount to 28.2 million shares.

 

 

Outstanding options expire on various dates through December 13, 2023.

 

The following table summarizes information about stock options outstanding at December 31, 2013.

Stock Options Outstanding


Outstanding



Exercisable









Average






Average



Shares



Average



exercise



Shares



exercise

Exercise price range


(In thousands)



life(a)



price



(In thousands)



price
















Under $10.00


 34,973 



4.9 


$

 9.57 



 26,995 


$

 9.57 

10.01-15.00


 56,571 



5.1 



 11.98 



 45,821 



 11.98 

15.01-20.00


 172,157 



6.8 



 17.46 



 91,007 



 17.24 

20.01-25.00


 139,740 



9.1 



 22.55 



 20,533 



 21.57 

25.01-30.00


 20,638 



4.3 



 28.19 



 20,115 



 28.23 

30.01-35.00


 35,993 



1.6 



 33.54 



 35,993 



 33.54 

Over $35.00


 13,539 



3.3 



 38.67 



 13,539 



 38.67 

Total


 473,611 



6.5 


$

 20.02 



 254,003 


$

 20.15 































At year-end 2012, options with a weighted average exercise price of $20.85 were exercisable on 214 million shares.

(a)         Average contractual life remaining in years.

 

 

Stock Option Activity

















Weighted






Weighted


average


Aggregate




average


remaining


intrinsic


Shares


exercise


contractual


value


(In thousands)


price


term (In years)


(In millions)













Outstanding at January 1, 2013


 467,837 


$

 19.27 







   Granted


 62,762 



 23.80 







   Exercised


 (36,191)



 13.65 







   Forfeited


 (9,688)



 18.95 







   Expired


 (11,109)



 31.60 







Outstanding at December 31, 2013


 473,611 


$

 20.02 



6.5 


$

 4,140 

Exercisable at December 31, 2013


 254,003 


$

 20.15 



5.1 


$

 2,348 

Options expected to vest


 200,909 


$

 19.79 



8.0 


$

 1,656 

 

 

We measure the fair value of each stock option grant at the date of grant using a Black-Scholes option pricing model. The weighted average grant-date fair value of options granted during 2013, 2012 and 2011 was $4.52, $3.80 and $4.00, respectively. The following assumptions were used in arriving at the fair value of options granted during 2013, 2012 and 2011, respectively: risk-free interest rates of 2.5%, 1.3% and 2.6%; dividend yields of 4.0%, 4.0% and 3.9%; expected volatility of 28%, 29% and 30%; and expected lives of 7.5 years, 7.8 years and 7.7 years. Risk-free interest rates reflect the yield on zero-coupon U.S. Treasury securities. Expected dividend yields presume a set dividend rate and we used a historical five-year average for the dividend yield. Expected volatilities are based on implied volatilities from traded options and historical volatility of our stock. The expected option lives are based on our historical experience of employee exercise behavior.

 

The total intrinsic value of options exercised during 2013, 2012 and 2011 amounted to $392 million, $265 million and $65 million, respectively. As of December 31, 2013, there was $663 million of total unrecognized compensation cost related to nonvested options. That cost is expected to be recognized over a weighted average period of 2 years, of which approximately $180 million after tax is expected to be recognized in 2014.

 

Stock option expense recognized in net earnings during 2013, 2012 and 2011 amounted to $231 million, $220 million and $230 million, respectively. Cash received from option exercises during 2013, 2012 and 2011 was $490 million, $355 million and $89 million, respectively. The tax benefit realized from stock options exercised during 2013, 2012 and 2011 was $128 million, $88 million and $21 million, respectively.

 

Other Stock-based Compensation 

















Weighted






Weighted


average


Aggregate




average


remaining


intrinsic


Shares


grant date


contractual


value


(In thousands)


fair value


term (In years)


(In millions)













RSUs outstanding at January 1, 2013


 14,878 


$

 22.45 







   Granted


 3,951 



 24.54 







   Vested


 (4,583)



 24.35 







   Forfeited


 (674)



 21.25 







RSUs outstanding at December 31, 2013


 13,572 


$

 22.58 



 2.8 


$

 380 

RSUs expected to vest


 12,352 


$

 22.32 



 2.7 


$

 346 

 

 


 

 

NOTE 17. OTHER INCOME

 

(In millions)

2013 


2012 


2011 










GE









Purchases and sales of business interests(a)

$

 1,777 


$

574 


$

3,804 

Licensing and royalty income


 320 



290 



304 

Marketable securities and bank deposits


 54 



38 



52 

Associated companies(b)


 40 



1,545 



894 

Interest income from GECC


 21 



114 



206 

Other items(c)


 674 



96 



8 



 2,886 



2,657 



5,268 

Eliminations


 222 



(94)



(205)

Total

$

 3,108 


$

2,563 


$

5,063 



















(a)           Included a pre-tax gain of $1,096 million on the sale of our 49% common equity interest in NBCU LLC and $3,705 million related to formation of NBCU LLC, in 2013 and 2011, respectively. See Note 2.

(b)           Included income of $1,416 million and $789 million from our former equity method investment in NBCU LLC, in 2012 and 2011, respectively.

(c)           Included net gains on asset sales of $330 million in 2013.


NOTE 18. GECC REVENUES FROM SERVICES

 

(In millions)


2013 



2012 



2011 










Interest on loans

$

 17,951 


$

18,843 


$

19,818 

Equipment leased to others


 9,804 



10,456 



10,879 

Fees


 4,720 



4,709 



4,669 

Investment income(a)


 1,809 



2,630 



2,500 

Financing leases


 1,667 



1,888 



2,378 

Associated companies(b)


 1,809 



1,538 



2,337 

Premiums earned by insurance activities


 1,573 



1,715 



1,905 

Real estate investments(c)


 2,528 



1,709 



1,625 

Other items(a)(d)


 2,080 



1,757 



2,065 



 43,941 



45,245 



48,176 

Eliminations


 (1,546)



(1,273)



(1,219)

Total

$

 42,395 


$

43,972 


$

46,957 



















(a)           Included net other-than-temporary impairments on investment securities of $747 million, $140 million and $387 million in 2013, 2012 and 2011, respectively, of which $96 million related to the impairment of an investment in a Brazilian company that was fully offset by the benefit of a guarantee provided by GE as a component of other items for 2013. See Note 3.

(b)           During 2013, we sold our remaining equity interest in the Bank of Ayudhya (Bay Bank) and recorded a pre-tax gain of $641 million. During 2012, we sold our remaining equity interest in Garanti Bank, which was classified as an available-for-sale security. During 2011, we sold an 18.6% equity interest in Garanti Bank and recorded a pre-tax gain of $690 million.

(c)           During 2013, we sold real estate comprising certain floors located at 30 Rockefeller Center, New York for a pre-tax gain of $902 million.

(d)           During 2013, we sold a portion of Cembra through an initial public offering and recorded a pre-tax gain of $351 million.


 

NOTE 19. SUPPLEMENTAL COST INFORMATION

We funded research and development expenditures of $4,750 million in 2013, $4,520 million in 2012 and $4,601 million in 2011. Research and development costs are classified in cost of goods sold in the Statement of Earnings. In addition, research and development funding from customers, principally the U.S. government, totaled $711 million, $680 million and $788 million in 2013, 2012 and 2011, respectively.

 

Consolidated other costs and expenses totaled $35,143 million, $35,897 million and $36,841 million in 2013, 2012 and 2011, respectively, and comprised selling, general and administrative costs (SG&A), depreciation and amortization and other operating costs. GE's SG&A totaled $16,105 million, $17,671 million and $17,554 million in 2013, 2012 and 2011, respectively. GECC's operating and administrative expenses totaled $12,463 million, $12,023 million and $13,009 million in 2013, 2012 and 2011, respectively, and depreciation and amortization totaled $7,313 million, $6,901 million and $6,918 million in 2013, 2012 and 2011, respectively.

 

Our businesses enter into collaborative arrangements primarily with manufacturers and suppliers of components used to build and maintain certain engines, under which GE and these participants share in risks and rewards of these product programs. Under these arrangements, participation fees earned and recorded as other income totaled $44 million, $36 million and $12 million for the years 2013, 2012 and 2011, respectively. GE's payments to participants are recorded as cost of services sold ($820 million, $594 million and $612 million for the years 2013, 2012 and 2011, respectively) or as cost of goods sold ($2,613 million, $2,507 million and $1,996 million for the years 2013, 2012 and 2011, respectively).

 

Rental expense under operating leases is shown below.

(In millions)


2013 



2012 



2011 










GE

$

 1,220 


$

 1,134 


$

 958 

GECC


 428 



 539 



 592 



 1,648 



 1,673 



 1,550 

Eliminations


 (135)



 (142)



 (165)

Total

$

 1,513 


$

 1,531 


$

 1,385 

 

 

At December 31, 2013, minimum rental commitments under noncancellable operating leases aggregated $3,087 million and $1,427 million for GE and GECC, respectively. Amounts payable over the next five years follow.

(In millions)


2014 



2015 



2016 



2017 



2018 
















GE

$

 660 


$

 581 


$

 523 


$

 440 


$

 354 

GECC


 253 



 213 



 185 



 153 



 113 



 913 



 794 



 708 



 593 



 467 

Eliminations


 (59)



 (42)



 (34)



 (24)



 (16)

Total

$

 854 


$

 752 


$

 674 


$

 569 


$

 451 


 

 

NOTE 20. EARNINGS PER SHARE INFORMATION

 

2013 


2012 


2011 

(In millions; per-share amounts in dollars)


Diluted



Basic



Diluted



Basic



Diluted



Basic



















Amounts attributable to the Company:


















Consolidated


















Earnings from continuing operations for per-share


















   calculation(a)(b)

$

15,145 


$

15,157 


$

14,604 


$

14,603 


$

14,102 


$

14,101 

Preferred stock dividends declared(c)


 - 



 - 



 - 



 - 



(1,031)



(1,031)

Earnings from continuing operations attributable to


















   common shareowners for per-share calculation(a)(b)


15,145 



15,157 



14,604 



14,603 



13,070 



13,070 

Earnings (loss) from discontinued operations for


















   per-share calculation(a)(b)


(2,128)



(2,116)



(980)



(980)



30 



30 

Net earnings attributable to GE common shareowners


















   for per-share calculation(a)(b)

$

13,028 


$

13,040 


$

13,622 


$

13,622 


$

13,099 


$

13,098 





































Average equivalent shares


















Shares of GE common stock outstanding


10,222 



10,222 



10,523 



10,523 



10,591 



10,591 

Employee compensation-related shares (including


















   stock options) and warrants


67 



 - 



41 



 - 



29 



 - 

Total average equivalent shares


10,289 



10,222 



10,564 



10,523 



10,620 



10,591 



















Per-share amounts


















Earnings from continuing operations

$

1.47 


$

1.48 


$

1.38 


$

1.39 


$

1.23 


$

1.23 

Earnings (loss) from discontinued operations


(0.21)



(0.21)



(0.09) 



(0.09) 



 - 



 - 

Net earnings


1.27 



1.28 



1.29 



1.29 



1.23 



1.24 





































Our unvested restricted stock unit awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities and, therefore, are included in the computation of earnings per share pursuant to the two-class method. Application of this treatment has an insignificant effect.

(a)         Included an insignificant amount of dividend equivalents in each of the three years presented.

(b)           Included in 2013 is a dilutive adjustment for the change in income for forward purchase contracts that may be settled in stock.

(c)           Included $806 million related to the redemption of our 10% cumulative preferred stock in 2011. See Note 15.

 

For the years ended December 31, 2013, 2012 and 2011, there were approximately 121 million, 292 million and 321 million, respectively, of outstanding stock awards that were not included in the computation of diluted earnings per share because their effect was antidilutive.

 

Earnings-per-share amounts are computed independently for earnings from continuing operations, earnings (loss) from discontinued operations and net earnings. As a result, the sum of per-share amounts from continuing operations and discontinued operations may not equal the total per-share amounts for net earnings.


NOTE 21. FAIR VALUE MEASUREMENTS

For a description of how we estimate fair value, see Note 1.

 

The following tables present our assets and liabilities measured at fair value on a recurring basis. Included in the tables are investment securities primarily supporting obligations to annuitants and policyholders in our run-off insurance operations and supporting obligations to holders of GICs in Trinity and investment securities held in our CLL business collateralized by senior secured loans of high-quality, middle-market companies in a variety of industries.








Netting



(In millions)

Level 1

(a)

Level 2

(a)

Level 3


adjustment

(b)

Net balance
















December 31, 2013















Assets















Investment securities















   Debt















      U.S. corporate

$

 - 


$

 18,788 


$

 2,953 


$

 - 


$

 21,741 

      State and municipal


 - 



 4,193 



 96 



 - 



 4,289 

      Residential mortgage-backed


 - 



 1,824 



 86 



 - 



 1,910 

      Commercial mortgage-backed


 - 



 3,025 



 10 



 - 



 3,035 

      Asset-backed(c)


 - 



 489 



 6,898 



 - 



 7,387 

      Corporate - non-U.S.


 61 



 645 



 1,064 



 - 



 1,770 

      Government - non-U.S.


 1,590 



 789 



 31 



 - 



 2,410 

       U.S. government and federal















         agency


 - 



 545 



 225 



 - 



 770 

   Retained interests


 - 



 - 



 72 



 - 



 72 

   Equity















      Available-for-sale


 475 



 31 



 11 



 - 



 517 

      Trading


 78 



 2 



 - 



 - 



 80 

Derivatives(d)


 - 



 8,304 



 175 



 (6,739)



 1,740 

Other(e)


 - 



 - 



 494 



 - 



 494 

Total

$

 2,204 


$

 38,635 


$

 12,115 


$

 (6,739)


$

 46,215 
















Liabilities















Derivatives

$

 - 


$

 5,409 


$

 20 


$

 (4,355)


$

 1,074 

Other(f)


 - 



 1,170 



 - 



 - 



 1,170 

Total

$

 - 


$

 6,579 


$

 20 


$

 (4,355)


$

 2,244 
















December 31, 2012















Assets















Investment securities















   Debt















      U.S. corporate

$

 - 


$

 20,580 


$

 3,591 


$

 - 


$

 24,171 

      State and municipal


 - 



 4,469 



 77 



 - 



 4,546 

      Residential mortgage-backed


 - 



 2,162 



 100 



 - 



 2,262 

      Commercial mortgage-backed


 - 



 3,088 



 6 



 - 



 3,094 

      Asset-backed(c)


 - 



 715 



 5,023 



 - 



 5,738 

      Corporate - non-U.S.


 71 



 1,132 



 1,218 



 - 



 2,421 

      Government - non-U.S.


 702 



 1,019 



 42 



 - 



 1,763 

      U.S. government and federal















         agency


 - 



 3,288 



 277 



 - 



 3,565 

   Retained interests


 - 



 - 



 83 



 - 



 83 

   Equity















      Available-for-sale


 590 



 16 



 13 



 - 



 619 

      Trading


 248 



 - 



 - 



 - 



 248 

Derivatives(d)


 - 



 11,432 



 434 



 (7,926)



 3,940 

Other(e)


 35 



 - 



 799 



 - 



 834 

Total

$

 1,646 


$

 47,901 


$

 11,663 


$

 (7,926)


$

 53,284 
















Liabilities















Derivatives

$

 - 


$

 3,434 


$

 20 


$

 (3,177)


$

 277 

Other(f)


 - 



 908 



 - 



 - 



 908 

Total

$

 - 


$

 4,342 


$

 20 


$

 (3,177)


$

 1,185 































(a)           The fair value of securities transferred between Level 1 and Level 2 was $2 million during 2013.

(b)           The netting of derivative receivables and payables (including the effects of any collateral posted or received) is permitted when a legally enforceable master netting agreement exists.

(c)           Includes investments in our CLL business in asset-backed securities collateralized by senior secured loans of high-quality, middle-market companies in a variety of industries.

(d)           The fair value of derivatives included an adjustment for non-performance risk. The cumulative adjustment was a gain (loss) of $(7) million and $(15) million at December 31, 2013 and 2012, respectively. See Note 22 for additional information on the composition of our derivative portfolio.

(e)           Included private equity investments and loans designated under the fair value option.

(f)            Primarily represented the liability associated with certain of our deferred incentive compensation plans.

 

 

The following tables present the changes in Level 3 instruments measured on a recurring basis for the years ended December 31, 2013 and 2012, respectively. The majority of our Level 3 balances consist of investment securities classified as available-for-sale with changes in fair value recorded in shareowners' equity.

 

Changes in Level 3 Instruments for the Year Ended December 31, 2013






















Net


(In millions)





















change in







Net realized/
















unrealized






Net


unrealized





















gains





realized/


gains (losses)
















(losses)





unrealized


included in
















relating to



Balance


gains


accumulated













Balance



instruments



at


(losses)


other








Transfers


Transfers


at



still held at



January 1,


included


comprehensive









into


out of


December 31,



December 31,



2013 


in earnings

(a)

income


Purchases


Sales


Settlements


Level 3

(b)

Level 3

(b)

2013 



2013 

(c)

































Investment securities   
































  Debt
































    U.S. corporate

$

 3,591 


$

 (497)


$

 135 


$

 380 


$

 (424)


$

 (231)


$

 108 


$

 (109)


$

 2,953 



$

 - 


    State and municipal


 77 



 - 



 (7)



 21 



 - 



 (5)



 10 



 - 



 96 




 - 


    Residential
































       mortgage-backed


 100 



 - 



 (5)



 - 



 (2)



 (7)



 - 



 - 



 86 




 - 


    Commercial
































       mortgage-backed


 6 



 - 



 - 



 - 



 - 



 (6)



 10 



 - 



 10 




 - 


    Asset-backed


 5,023 



 5 



 32 



 2,632 



 (4)



 (795)



 12 



 (7)



 6,898 




 - 


    Corporate - non-U.S.


 1,218 



 (103)



 49 



 5,814 



 (3)



 (5,874)



 21 



 (58)



 1,064 




 - 


    Government
































       - non-U.S.


 42 



 1 



 (12)



 - 



 - 



 - 



 - 



 - 



 31 




 - 


    U.S. government and
































       federal agency


 277 



 - 



 (52)



 - 



 - 



 - 



 - 



 - 



 225 




 - 


  Retained interests


 83 



 3 



 1 



 6 



 - 



 (21)



 - 



 - 



 72 




 - 


  Equity
































    Available-for-sale


 13 



 - 



 - 



 - 



 - 



 - 



 - 



 (2)



 11 




 - 


    Trading


 - 



 - 



 - 



 - 



 - 



 - 



 - 



 - 



 - 




 - 


Derivatives(d)(e)


 416 



 (66)



 2 



 (2)



 - 



 (226)



 37 



 3 



 164 




 (30)


Other


 799 



 (68)



 12 



 538 



 (779)



 - 



 4 



 (12)



 494 




 (102)


Total

$

 11,645 


$

 (725)


$

 155 


$

 9,389 


$

 (1,212)


$

 (7,165)


$

 202 


$

 (185)


$

 12,104 



$

 (132)


































































(a)           Earnings effects are primarily included in the "GECC revenues from services" and "Interest and other financial charges" captions in the Statement of Earnings.

(b)           Transfers in and out of Level 3 are considered to occur at the beginning of the period. Transfers out of Level 3 were a result of increased use of quotes from independent pricing vendors based on recent trading activity.

(c)           Represented the amount of unrealized gains or losses for the period included in earnings.

(d)           Represented derivative assets net of derivative liabilities and included cash accruals of $9 million not reflected in the fair value hierarchy table.

(e)           Gains (losses) included in net realized/unrealized gains (losses) included in earnings were offset by the earnings effects from the underlying items that were economically hedged. See Note 22.

 

Changes in Level 3 Instruments for the Year Ended December 31, 2012






















Net


(In millions)





















change in







Net realized/
















unrealized






Net


unrealized





















gains





realized/


gains (losses)
















(losses)





unrealized


included in
















relating to



Balance


gains


accumulated













Balance



instruments



at


(losses)


other








Transfers


Transfers


at



still held at



January 1,


included


comprehensive









into


out of


December 31,



December 31,



2012 


in earnings

(a)

income


Purchases


Sales


Settlements


Level 3

(b)

Level 3

(b)

2012 



2012 

(c)

































Investment securities   
































  Debt
































    U.S. corporate

$

 3,235 


$

 66 


$

 32 


$

 483 


$

 (214)


$

 (110)


$

 299 


$

 (200)


$

 3,591 



$

 - 


    State and municipal


 77 



 - 



 10 



 16 



 - 



 (1)



 78 



 (103)



 77 




 - 


    Residential
































       mortgage-backed


 41 



 (3)



 1 



 6 



 - 



 (3)



 135 



 (77)



 100 




 - 


    Commercial
































       mortgage-backed


 4 



 - 



 (1)



 - 



 - 



 - 



 6 



 (3)



 6 




 - 


    Asset-backed


 4,040 



 1 



 (25)



 1,490 



 (502)



 - 



 25 



 (6)



 5,023 




 - 


    Corporate - non-U.S.


 1,204 



 (11)



 19 



 341 



 (51)



 (172)



 24 



 (136)



 1,218 




 - 


    Government
































        - non-U.S.


 84 



 (33)



 38 



 65 



 (72)



 (40)



 - 



 - 



 42 




 - 


    U.S. government and
































        federal agency


 253 



 - 



 24 



 - 



 - 



 - 



 - 



 - 



 277 




 - 


  Retained interests


 35 



 (1)



 (3)



 16 



 (6)



 (12)



 54 



 - 



 83 




 - 


  Equity
































    Available-for-sale


 17 



 - 



 (1)



 3 



 (3)



 (1)



 2 



 (4)



 13 




 - 


    Trading


 - 



 - 



 - 



 - 



 - 



 - 



 - 



 - 



 - 




 - 


Derivatives(d)(e)


 369 



 29 



 (1)



 (1)



 - 



 (112)



 190 



 (58)



 416 




 160 


Other


 817 



 50 



 2 



 159 



 (137)



 - 



 - 



 (92)



 799 




 43 


Total

$

 10,176 


$

 98 


$

 95 


$

 2,578 


$

 (985)


$

 (451)


$

 813 


$

 (679)


$

 11,645 



$

 203 


































































(a)           Earnings effects are primarily included in the "GECC revenues from services" and "Interest and other financial charges" captions in the Statement of Earnings.

(b)           Transfers in and out of Level 3 are considered to occur at the beginning of the period. Transfers out of Level 3 were a result of increased use of quotes from independent pricing vendors based on recent trading activity.

(c)           Represented the amount of unrealized gains or losses for the period included in earnings.

(d)           Represented derivative assets net of derivative liabilities and included cash accruals of $2 million not reflected in the fair value hierarchy table.

(e)           Gains (losses) included in net realized/unrealized gains (losses) included in earnings were offset by the earnings effects from the underlying items that were economically hedged. See Note 22.

 

Non-Recurring Fair Value Measurements

The following table represents non-recurring fair value amounts (as measured at the time of the adjustment) for those assets remeasured to fair value on a non-recurring basis during the fiscal year and still held at December 31, 2013 and 2012. These assets can include loans and long-lived assets that have been reduced to fair value when they are held for sale, impaired loans that have been reduced based on the fair value of the underlying collateral, cost and equity method investments and long-lived assets that are written down to fair value when they are impaired and the remeasurement of retained investments in formerly consolidated subsidiaries upon a change in control that results in deconsolidation of a subsidiary, if we sell a controlling interest and retain a noncontrolling stake in the entity. Assets that are written down to fair value when impaired and retained investments are not subsequently adjusted to fair value unless further impairment occurs.

Remeasured during the year ended December 31


2013 


2012 

(In millions)

Level 2


Level 3


Level 2


Level 3













Financing receivables and loans held for sale

$

 210 


$

 2,986 


$

 366 


$

 4,094 

Cost and equity method investments(a)


 - 



 690 



 8 



 313 

Long-lived assets, including real estate


 2,050 



 1,088 



 702 



 2,182 

Total

$

 2,260 


$

 4,764 


$

 1,076 


$

 6,589 

























(a)           Includes the fair value of private equity and real estate funds included in Level 3 of $126 million and $84 million at December 31, 2013 and 2012, respectively.

 

 

The following table represents the fair value adjustments to assets measured at fair value on a non-recurring basis and still held at December 31, 2013 and 2012.


Year ended December 31

(In millions)


2013 



2012 







Financing receivables and loans held for sale

$

(361)


$

(595)

Cost and equity method investments(a)


(484)



(153)

Long-lived assets, including real estate(b)


(1,188)



(624)

Total

$

(2,033)


$

(1,372)













(a)           Includes fair value adjustments associated with private equity and real estate funds of $(14) million and $(33) million during 2013 and 2012, respectively.

(b)           Includes impairments related to real estate equity properties and investments recorded in other costs and expenses of $108 million and $218 million during 2013 and 2012, respectively.

 

 

 

Level 3 Measurements

 

The following table presents information relating to the significant unobservable inputs of our Level 3 recurring and non-recurring measurements.

 



Valuation


Unobservable


Range (weighted

(Dollars in millions)

Fair value


technique


inputs


average)










December 31, 2013


















Recurring fair value measurements


















Investment securities









  Debt


















      U.S. corporate

$

898 


Income approach


Discount rate(a)


1.5%-13.3% (6.5%)










      Asset-backed


6,854 


Income approach


Discount rate(a)


1.2%-10.5% (3.7%)










      Corporate - non-U.S.


819 


Income approach


Discount rate(a)


1.4%-46.0% (15.1%)










Other financial assets


381 


Income approach, Market comparables


Weighted average

   cost of capital


9.3%-9.3% (9.3%)
















EBITDA multiple


5.4X-12.5X (9.5X)
















Discount rate(a)


5.2%-8.8% (5.3%)
















Capitalization rate(b)


6.3%-7.5% (7.2%)










Non-recurring fair value measurements


















Financing receivables and

  loans held for sale

$

1,937 


Income approach, Business enterprise

   value


Capitalization rate(b)


5.5%-16.7% (8.0%)












EBITDA multiple


4.3X-5.5X (4.8X)












Discount rate(a)


6.6%-6.6% (6.6%)










Cost and equity method investments


102 


Income approach, Market comparables


Discount rate(a)


5.7%-5.9% (5.8%)














Capitalization rate(b)


8.5%-10.6% (10.0%)














Weighted average

   cost of capital


9.3%-9.6% (9.4%)
















EBITDA multiple


7.1X-14.5X (11.3X)
















Revenue multiple


2.2X-12.6X (9.4X)










Long-lived assets, including real estate


694 


Income approach


Capitalization rate(b)


5.4%-14.5% (7.8%)
















Discount rate(a)


4.0%-23.0% (9.0%)










December 31, 2012

















Recurring fair value measurements


















Investment securities









  Debt









      U.S. corporate

$

1,652 


Income approach


Discount rate(a)


1.3%-29.9% (11.1%)










      Asset-backed


4,977 


Income approach


Discount rate(a)


2.1%-13.1% (3.8%)










      Corporate - non-U.S.


865 


Income approach


Discount rate(a)


1.5%-25.0% (13.2%)










Other financial assets


633 


Income approach, Market comparables


Weighted average

   cost of capital


8.7%-10.2% (8.7%)












EBITDA multiple


4.9X-10.6X (7.9X)










Non-recurring fair value measurements


















Financing receivables and

  loans held for sale

$

2,835 


Income approach, Business enterprise

   value


Capitalization rate(b)


3.8%-14.0% (8.0%)












EBITDA multiple


2.0X-6.0X (4.8X)










Cost and equity method investments


72 


Income approach


Capitalization rate(b)


9.2%-12.8% (12.0%)










Long-lived assets, including real estate


985 


Income approach


Capitalization rate(b)


4.8%-14.6% (7.3%)



















 

(a)         Discount rates are determined based on inputs that market participants would use when pricing investments, including credit and liquidity risk. An increase in the discount rate would result in a decrease in the fair value.

(b)         Represents the rate of return on net operating income that is considered acceptable for an investor and is used to determine a property's capitalized value. An increase in the capitalization rate would result in a decrease in the fair value.

 

At December 31, 2013 and December 31, 2012, other Level 3 recurring fair value measurements of $2,816 million and $3,146 million, respectively, and non-recurring measurements of $1,460 million and $2,412 million, respectively, are valued using non-binding broker quotes or other third-party sources. For a description of our process to evaluate third-party pricing servicers, see Note 1. At December 31, 2013 and December 31, 2012, other recurring fair value measurements of $327 million and $370 million, respectively, and non-recurring fair value measurements of $571 million and $285 million, respectively, were individually insignificant and utilize a number of different unobservable inputs not subject to meaningful aggregation.


 

 

NOTE 22. FINANCIAL INSTRUMENTS

The following table provides information about the assets and liabilities not carried at fair value in our Statement of Financial Position. The table excludes finance leases and non-financial assets and liabilities. Substantially all of the assets discussed below are considered to be Level 3. The vast majority of our liabilities' fair value can be determined based on significant observable inputs and thus considered Level 2. Few of the instruments are actively traded and their fair values must often be determined using financial models. Realization of the fair value of these instruments depends upon market forces beyond our control, including marketplace liquidity.


2013 


2012 




Assets (liabilities)




Assets (liabilities)




Carrying






Carrying




Notional


amount


Estimated


Notional


amount


Estimated 

December 31 (In millions)

amount


(net)


fair value


amount


(net)


fair value 



















GE


















Assets


















   Investments and notes


















       receivable

$

(a) 


$

488 


$

512 


$

(a) 


$

222 


$

222 

Liabilities


















   Borrowings(b)


(a) 



(13,356)



(13,707)



(a) 



(17,469)



(18,619)

GECC


















Assets


















   Loans


(a) 



226,293 



230,792 



(a) 



235,888 



238,254 

   Other commercial mortgages


(a) 



2,270 



2,281 



(a) 



2,222 



2,249 

   Loans held for sale


(a) 



512 



512 



(a) 



1,180 



1,181 

   Other financial instruments(c)


(a) 



1,622 



2,203 



(a) 



1,858 



2,276 

Liabilities


















   Borrowings and bank


















      deposits(b)(d)


(a) 



(371,062)



(386,823)



(a) 



(397,039)



(414,264)

   Investment contract benefits


(a) 



(3,144)



(3,644)



(a) 



(3,321)



(4,150)

   Guaranteed investment


















      contracts


(a) 



(1,471)



(1,459)



(a) 



(1,644)



(1,674)

   Insurance - credit life(e)


2,149 



(108)



(94)



2,277 



(120)



(104)





































(a)         These financial instruments do not have notional amounts.

(b)           See Note 10.

(c)         Principally cost method investments.

(d)         Fair values exclude interest rate and currency derivatives designated as hedges of borrowings. Had they been included, the fair value of borrowings at December 31, 2013 and 2012 would have been reduced by $2,284 million and $7,937 million, respectively.

(e)         Net of reinsurance of $1,250 million and $2,000 million at December 31, 2013 and 2012, respectively.

 

 

A description of how we estimate fair values follows.

 

Loans

Based on a discounted future cash flows methodology, using current market interest rate data adjusted for inherent credit risk or quoted market prices and recent transactions, if available.

 

Borrowings and bank deposits

Based on valuation methodologies using current market interest rate data that are comparable to market quotes adjusted for our non-performance risk.

 

Investment contract benefits

Based on expected future cash flows, discounted at currently offered rates for immediate annuity contracts or the income approach for single premium deferred annuities.

 

Guaranteed investment contracts

Based on valuation methodologies using current market interest rate data, adjusted for our non-performance risk.

 

All other instruments

Based on observable market transactions and/or valuation methodologies using current market interest rate data adjusted for inherent credit risk.

 

Assets and liabilities that are reflected in the accompanying financial statements at fair value are not included in the above disclosures; such items include cash and equivalents, investment securities and derivative financial instruments.

 

Additional information about certain categories in the table above follows.

 

Insurance - credit life

Certain insurance affiliates, primarily in Consumer, issue credit life insurance designed to pay the balance due on a loan if the borrower dies before the loan is repaid. As part of our overall risk management process, we cede to third parties a portion of this associated risk, but are not relieved of our primary obligation to policyholders.

 

Loan Commitments







Notional amount

December 31 (In millions)

2013 


2012 






Ordinary course of business lending commitments(a)

$

 4,756 


$

 3,708 

Unused revolving credit lines(b)






   Commercial(c)


 16,570 



 17,929 

   Consumer - principally credit cards


 290,662 



 271,211 













(a)         Excluded investment commitments of $1,395 million and $1,276 million as of December 31, 2013 and 2012, respectively.

(b)         Excluded inventory financing arrangements, which may be withdrawn at our option, of $13,502 million and $12,813 million as of December 31, 2013 and 2012, respectively.

(c)           Included commitments of $11,629 million and $12,923 million as of December 31, 2013 and 2012, respectively, associated with secured financing arrangements that could have increased to a maximum of $14,590 million and $15,731 million at December 31, 2013 and 2012, respectively, based on asset volume under the arrangement.

 

Securities Repurchase and Reverse Repurchase Arrangements

Our issuances of securities repurchase agreements are insignificant and are limited to activities at certain of our foreign banks primarily for purposes of liquidity management. At December 31, 2013, we were party to repurchase agreements totaling $126 million, which were reported in short-term borrowings on the financial statements. We have had no repurchase agreements that were accounted for as off-book financing and we do not engage in securities lending transactions.

 

We also enter into reverse securities repurchase agreements primarily for short-term investment with maturities of 90 days or less. At December 31, 2013, we were party to reverse repurchase agreements totaling $20.8 billion, which were reported in cash and equivalents on the financial statements. Under these reverse securities repurchase agreements, we typically lend available cash at a specified rate of interest and hold U.S. or highly-rated European government securities as collateral during the term of the agreement. Collateral value is in excess of amounts loaned under the agreements.

 

Derivatives and hedging

As a matter of policy, we use derivatives for risk management purposes, and we do not use derivatives for speculative purposes. A key risk management objective for our financial services businesses is to mitigate interest rate and currency risk by seeking to ensure that the characteristics of the debt match the assets they are funding. If the form (fixed versus floating) and currency denomination of the debt we issue do not match the related assets, we typically execute derivatives to adjust the nature and tenor of funding to meet this objective within pre-defined limits. The determination of whether we enter into a derivative transaction or issue debt directly to achieve this objective depends on a number of factors, including market-related factors that affect the type of debt we can issue.

 

The notional amounts of derivative contracts represent the basis upon which interest and other payments are calculated and are reported gross, except for offsetting foreign currency forward contracts that are executed in order to manage our currency risk of net investment in foreign subsidiaries. Of the outstanding notional amount of $320,000 million, approximately 87%, or $277,000 million, is associated with reducing or eliminating the interest rate, currency or market risk between financial assets and liabilities in our financial services businesses. The remaining derivative activities primarily relate to hedging against adverse changes in currency exchange rates and commodity prices related to anticipated sales and purchases and contracts containing certain clauses that meet the accounting definition of a derivative. The instruments used in these activities are designated as hedges when practicable. When we are not able to apply hedge accounting, or when the derivative and the hedged item are both recorded in earnings concurrently, the derivatives are deemed economic hedges and hedge accounting is not applied. This most frequently occurs when we hedge a recognized foreign currency transaction (e.g., a receivable or payable) with a derivative. Since the effects of changes in exchange rates are reflected concurrently in earnings for both the derivative and the transaction, the economic hedge does not require hedge accounting.

 

The following table provides information about the fair value of our derivatives by contract type, separating those accounted for as hedges and those that are not.

2013 


2012 


Fair value


Fair value

December 31 (In millions)


Assets



Liabilities



Assets



Liabilities













Derivatives accounted for as hedges












   Interest rate contracts

$

 3,837 


$

 1,989 


$

 8,443 


$

 719 

   Currency exchange contracts


 1,830 



 984 



 890 



 1,777 

   Other contracts


 1 



 - 



 1 



 - 



 5,668 



 2,973 



 9,334 



 2,496 













Derivatives not accounted for as hedges












   Interest rate contracts


 270 



 169 



 452 



 195 

   Currency exchange contracts


 2,257 



 2,245 



 1,797 



 691 

   Other contracts


 284 



 42 



 283 



 72 



 2,811 



 2,456 



 2,532 



 958 













Gross derivatives recognized in statement of












  financial position












     Gross derivatives


 8,479 



 5,429 



 11,866 



 3,454 

     Gross accrued interest


 1,227 



 241 



 1,683 



 14 



 9,706 



 5,670 



 13,549 



 3,468 













Amounts offset in statement of financial position












     Netting adjustments(a)


 (4,120)



 (4,113)



 (2,801)



 (2,786)

     Cash collateral(b)


 (2,619)



 (242)



 (5,125)



 (391)



 (6,739)



 (4,355)



 (7,926)



 (3,177)













Net derivatives recognized in statement of












  financial position












     Net derivatives


 2,967 



 1,315 



 5,623 



 291 













Amounts not offset in statement of












  financial position












     Securities held as collateral(c)


 (1,962)



 - 



 (5,227)



 - 

























Net amount

$

 1,005 


$

 1,315 


$

 396 


$

 291 

























Derivatives are classified in the captions "All other assets" and "All other liabilities" and the related accrued interest is classified in "Other GECC receivables" and "All other liabilities" in our financial statements.

 

 (a)          The netting of derivative receivables and payables is permitted when a legally enforceable master netting agreement exists. Amounts included fair value adjustments related to our own and counterparty non-performance risk. At December 31, 2013 and 2012, the cumulative adjustment for non-performance risk was a gain (loss) of $(7) million and $(15) million, respectively.

(b)           Excludes excess cash collateral received and posted of $160 million and $37 million at December 31, 2013, respectively, and $42 million and $10 million at December 31, 2012, respectively.

(c)           Excludes excess securities collateral received of $363 million and $359 million at December 31, 2013 and 2012, respectively.

 

Fair value hedges

We use interest rate and currency exchange derivatives to hedge the fair value effects of interest rate and currency exchange rate changes on local and non-functional currency denominated fixed-rate debt. For relationships designated as fair value hedges, changes in fair value of the derivatives are recorded in earnings within interest and other financial charges, along with offsetting adjustments to the carrying amount of the hedged debt. The following table provides information about the earnings effects of our fair value hedging relationships for the years ended December 31, 2013 and 2012, respectively.

2013 


2012 

(In millions)

Gain (loss)


Gain (loss)


Gain (loss)


Gain (loss)


on hedging


on hedged


on hedging


on hedged


derivatives


items


derivatives


items













Interest rate contracts

$

 (5,258)


$

 5,180 


$

 708 


$

 (1,041)

Currency exchange contracts


 (7)



 6 



 (68)



 98 

























Fair value hedges resulted in $(79) million and $(303) million of ineffectiveness in 2013 and 2012, respectively. In both 2013 and 2012, there were insignificant amounts excluded from the assessment of effectiveness.

 

Cash flow hedges

We use interest rate, currency exchange and commodity derivatives to reduce the variability of expected future cash flows associated with variable-rate borrowings and commercial purchase and sale transactions, including commodities. For derivatives that are designated in a cash flow hedging relationship, the effective portion of the change in fair value of the derivative is reported as a component of AOCI and reclassified into earnings contemporaneously and in the same caption with the earnings effects of the hedged transaction.

 

The following table provides information about the amounts recorded in AOCI, as well as the gain (loss) recorded in earnings, primarily in GECC revenue from services, interest and other financial charges, and other costs and expenses, when reclassified out of AOCI, for the years ended December 31, 2013 and 2012, respectively. See Note 15 for additional information about reclassifications out of AOCI.

 

Gain (loss) recognized


Gain (loss) reclassified from


in AOCI


AOCI into earnings

(In millions)

2013 


2012 


2013 


2012 





































Interest rate contracts

$

 (26)


$

 (158)


$

 (364)


$

 (499)

Currency exchange contracts


 941 



 1,004 



 817 



 681 

Commodity contracts


 (6)



 6 



 (5)



 (5)

Total

$

 909 


$

 852 


$

 448 


$

 177 

























The total pre-tax amount in AOCI related to cash flow hedges of forecasted transactions was a $251 million loss at December 31, 2013. We expect to transfer $208 million to earnings as an expense in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions. In 2013, we recognized insignificant gains and losses related to hedged forecasted transactions and firm commitments that did not occur by the end of the originally specified period. At December 31, 2013 and 2012, the maximum term of derivative instruments that hedge forecasted transactions was 19 years and 20 years, respectively.

 

For cash flow hedges, the amount of ineffectiveness in the hedging relationship and amount of the changes in fair value of the derivatives that are not included in the measurement of ineffectiveness are both reflected in earnings each reporting period. These amounts are primarily reported in GECC revenues from services and totaled $0 million and $5 million for the years ended December 31, 2013 and 2012, respectively.

 

Net investment hedges in foreign operations

We use currency exchange derivatives to protect our net investments in global operations conducted in non-U.S. dollar currencies. For derivatives that are designated as hedges of net investment in a foreign operation, we assess effectiveness based on changes in spot currency exchange rates. Changes in spot rates on the derivative are recorded as a component of AOCI until such time as the foreign entity is substantially liquidated or sold. The change in fair value of the forward points, which reflects the interest rate differential between the two countries on the derivative, is excluded from the effectiveness assessment.

 

The following table provides information about the amounts recorded in AOCI for the years ended December 31, 2013 and 2012, as well as the gain (loss) recorded in GECC revenues from services when reclassified out of AOCI.

Gain (loss) recognized


Gain (loss) reclassified

(In millions)

in CTA


from CTA


2013 


2012 


2013 


2012 













Currency exchange contracts

$

 2,322 


$

 (2,905)


$

 (1,525)


$

 27 

 

The amounts related to the change in the fair value of the forward points that are excluded from the measure of effectiveness were $(678) million and $(874) million for the years ended December 31, 2013 and 2012, respectively, and are recorded in interest and other financial charges.

 

Free-standing derivatives

Changes in the fair value of derivatives that are not designated as hedges are recorded in earnings each period. As discussed above, these derivatives are typically entered into as economic hedges of changes in interest rates, currency exchange rates, commodity prices and other risks. Gains or losses related to the derivative are typically recorded in GECC revenues from services or other income, based on our accounting policy. In general, the earnings effects of the item that represent the economic risk exposure are recorded in the same caption as the derivative. Losses for the year ended December 31, 2013 on derivatives not designated as hedges were $(449) million composed of amounts related to interest rate contracts of $(111) million, currency exchange contracts of $(595) million, and other derivatives of $257 million. These losses were more than offset by the earnings effects from the underlying items that were economically hedged. Losses for the year ended December 31, 2012 on derivatives not designated as hedges were $(90) million composed of amounts related to interest rate contracts of $(296) million, currency exchange contracts of $80 million, and other derivatives of $126 million. These losses were more than offset by the earnings effects from the underlying items that were economically hedged.

 

Counterparty credit risk

Fair values of our derivatives can change significantly from period to period based on, among other factors, market movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not make payments to us according to the terms of our agreements) on an individual counterparty basis. Where we have agreed to netting of derivative exposures with a counterparty, we net our exposures with that counterparty and apply the value of collateral posted to us to determine the exposure. We actively monitor these net exposures against defined limits and take appropriate actions in response, including requiring additional collateral.

 

As discussed above, we have provisions in certain of our master agreements that require counterparties to post collateral (typically, cash or U.S. Treasury securities) when our receivable due from the counterparty, measured at current market value, exceeds a specified limit. The fair value of such collateral was $4,581 million, of which $2,619 million was cash and $1,962 million was in the form of securities held by a custodian for our benefit. Under certain of these same agreements, we post collateral to our counterparties for our derivative obligations, the fair value of which was $242 million at December 31, 2013. At December 31, 2013, our exposure to counterparties (including accrued interest), net of collateral we hold, was $871 million. This excludes exposure related to embedded derivatives.

 

Additionally, our master agreements typically contain mutual downgrade provisions that provide the ability of each party to require termination if the long-term credit rating of the counterparty were to fall below A-/A3. In certain of these master agreements, each party also has the ability to require termination if the short-term rating of the counterparty were to fall below A-1/P-1. Our master agreements also typically contain provisions that provide termination rights upon the occurrence of certain other events, such as a bankruptcy or events of default by one of the parties. If an agreement was terminated under any of these circumstances, the termination amount payable would be determined on a net basis and could also take into account any collateral posted. The net amount of our derivative liability, after consideration of collateral posted by us and outstanding interest payments was $1,234 million at December 31, 2013. This excludes embedded derivatives.


NOTE 23. VARIABLE INTEREST ENTITIES

We use variable interest entities primarily to securitize financial assets and arrange other forms of asset-backed financing in the ordinary course of business. Except as noted below, investors in these entities only have recourse to the assets owned by the entity and not to our general credit. We do not have implicit support arrangements with any VIE. We did not provide non-contractual support for previously transferred financing receivables to any VIE in 2013 or 2012.

 

In evaluating whether we have the power to direct the activities of a VIE that most significantly impact its economic performance, we consider the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and our decision-making role, if any, in those activities that significantly determine the entity's economic performance as compared to other economic interest holders. This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity's future performance and the exercise of professional judgment in deciding which decision-making rights are most important.

 

In determining whether we have the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, we evaluate all of our economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity's design, including: the entity's capital structure, contractual rights to earnings (losses), subordination of our interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have the potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of our economic interests is a matter that requires the exercise of professional judgment.

 

Consolidated Variable Interest Entities

We consolidate VIEs because we have the power to direct the activities that significantly affect the VIEs economic performance, typically because of our role as either servicer or manager for the VIE. Our consolidated VIEs fall into three main groups, which are further described below:

 

·      Trinity comprises two consolidated entities that hold investment securities, the majority of which are investment grade, and were funded by the issuance of GICs. The GICs included conditions under which certain holders could require immediate repayment of their investment should the long-term credit ratings of GECC fall below AA-/Aa3 or the short-term credit ratings fall below A-1+/P-1. The outstanding GICs are subject to their scheduled maturities and individual terms, which may include provisions permitting redemption upon a downgrade of one or more of GECC's ratings, among other things, and are reported in investment contracts, insurance liabilities and insurance annuity benefits.

 

·      Consolidated Securitization Entities (CSEs) were created to facilitate securitization of financial assets and other forms of asset-backed financing that serve as an alternative funding source by providing access to variable funding notes and term markets. The securitization transactions executed with these entities are similar to those used by many financial institutions and substantially all are non-recourse. We provide servicing for substantially all of the assets in these entities.
 
The financing receivables in these entities have similar risks and characteristics to our other financing receivables and were underwritten to the same standard. Accordingly, the performance of these assets has been similar to our other financing receivables; however, the blended performance of the pools of receivables in these entities reflects the eligibility criteria that we apply to determine which receivables are selected for transfer. Contractually the cash flows from these financing receivables must first be used to pay third-party debt holders as well as other expenses of the entity. Excess cash flows are available to GE. The creditors of these entities have no claim on other assets of GE.
 

·      Other remaining assets and liabilities of consolidated VIEs relate primarily to three categories of entities: (1) joint ventures that lease equipment of $1,539 million of assets and $727 million of liabilities; (2) other entities that are involved in power generating and leasing activities of $762 million of assets and no liabilities; and (3) insurance entities that, among other lines of business, provide property and casualty and workers' compensation coverage for GE of $1,209 million of assets and $566 million of liabilities.

 

The table below summarizes the assets and liabilities of consolidated VIEs described above.

 



Consolidated Securitization Entities








Credit




Trade





December 31 (In millions)

Trinity

(a)

cards

(b)

Equipment

(b)

receivables


Other


Total



















2013 




































Assets(c)


















Financing


















   receivables, net

$

 - 


$

 24,766 


$

 12,928 


$

 2,509 


$

 2,044 


$

 42,247 

Investment securities


 2,786 



 - 



 - 



 - 



 1,044 



 3,830 

Other assets


 213 



 20 



 557 



 - 



 2,430 



 3,220 

Total

$

 2,999 


$

 24,786 


$

 13,485 


$

 2,509 


$

 5,518 


$

 49,297 



















Liabilities(c)


















Borrowings

$

 - 


$

 - 


$

 - 


$

 - 


$

 598 


$

 598 

Non-recourse


















   borrowings


 - 



 15,363 



 10,982 



 2,180 



 49 



 28,574 

Other liabilities


 1,482 



 228 



 248 



 25 



 1,351 



 3,334 

Total

$

 1,482 


$

 15,591 


$

 11,230 


$

 2,205 


$

 1,998 


$

 32,506 



















2012 




































Assets(c)


















Financing


















   receivables, net

$

 - 


$

 24,169 


$

 12,456 


$

 2,339 


$

 1,952 


$

 40,916 

Investment securities


 3,435 



 - 



 - 



 - 



 1,051 



 4,486 

Other assets


 217 



 29 



 360 



 - 



 2,428 



 3,034 

Total

$

 3,652 


$

 24,198 


$

 12,816 


$

 2,339 


$

 5,431 


$

 48,436 



















Liabilities(c)


















Borrowings

$

 - 


$

 - 


$

 - 


$

 - 


$

 711 


$

 711 

Non-recourse


















   borrowings


 - 



 17,208 



 9,811 



 2,050 



 54 



 29,123 

Other liabilities


 1,656 



 146 



 11 



 8 



 1,215 



 3,036 

Total

$

 1,656 


$

 17,354 


$

 9,822 


$

 2,058 


$

 1,980 


$

 32,870 





































 

(a)           Excludes intercompany advances from GECC to Trinity, which are eliminated in consolidation of $1,837 million and $2,441 million at December 31, 2013 and 2012, respectively.

(b)           We provide servicing to the CSEs and are contractually permitted to commingle cash collected from customers on financing receivables sold to CSE investors with our own cash prior to payment to a CSE, provided our short-term credit rating does not fall below A-1/P-1. These CSEs also owe us amounts for purchased financial assets and scheduled interest and principal payments. At December 31, 2013 and 2012, the amounts of commingled cash owed to the CSEs were $6,314 million and $6,225 million, respectively, and the amounts owed to GECC by CSEs were $5,540 million and $6,143 million, respectively.

(c)           Asset amounts exclude intercompany receivables for cash collected on behalf of these entities by GE as servicer, which are eliminated in consolidation. Such receivables provide the cash to repay the entities' liabilities. If these intercompany receivables were included in the table above, assets would be higher. In addition, other assets, borrowings and other liabilities exclude intercompany balances that are eliminated in consolidation.

 

Total revenues from our consolidated VIEs were $7,540 million, $7,127 million and $6,326 million in 2013, 2012 and 2011, respectively. Related expenses consisted primarily of provisions for losses of $1,247 million, $1,171 million and $1,146 million in 2013, 2012 and 2011, respectively, and interest and other financial charges of $355 million, $541 million and $594 million in 2013, 2012 and 2011, respectively. These amounts do not include intercompany revenues and costs, principally fees and interest between GE and the VIEs, which are eliminated in consolidation.

 

Investments in Unconsolidated Variable Interest Entities

Our involvement with unconsolidated VIEs consists of the following activities: assisting in the formation and financing of the entity, providing recourse and/or liquidity support, servicing the assets and receiving variable fees for services provided. We are not required to consolidate these entities because the nature of our involvement with the activities of the VIEs does not give us power over decisions that significantly affect their economic performance.

 

Our largest exposure to any single unconsolidated VIE at December 31, 2013 is an investment in asset-backed securities issued by the Senior Secured Loan Program (SSLP), a fund that invests in high-quality senior secured debt of various middle-market companies ($6,996 million). Other significant unconsolidated VIEs include investments in real estate entities ($2,369 million), which generally consist of passive limited partnership investments in tax-advantaged, multi-family real estate and investments in various European real estate entities; and exposures to joint ventures that purchase factored receivables ($2,624 million).

 

The classification of our variable interests in these entities in our financial statements is based on the nature of the entity and the type of investment we hold. Variable interests in partnerships and corporate entities are classified as either equity method or cost method investments. In the ordinary course of business, we also make investments in entities in which we are not the primary beneficiary but may hold a variable interest such as limited partner interests or mezzanine debt investments. These investments are classified in two captions in our financial statements: "All other assets" for investments accounted for under the equity method, and "Financing receivables - net" for debt financing provided to these entities. Our investments in unconsolidated VIEs at December 31, 2013 and December 31, 2012 follow.

 

December 31 (In millions)


2013 


2012 








Other assets and investment securities


$

 9,129 


$

10,027 

Financing receivables - net



 3,346 



2,654 

Total investments



 12,475 



12,681 

Contractual obligations to fund







   investments or guarantees



 2,741 



2,608 

Revolving lines of credit



 31 



41 

Total


$

 15,247 


$

15,330 

 

As previously reported, during 2012, Penske Truck Leasing Co., L.P. (PTL) effected a recapitalization and subsequently acquired third-party financing in order to repay outstanding debt owed to GECC. In the first quarter of 2013, PTL had repaid all outstanding debt owed and terminated its borrowing arrangement with GECC. During the second quarter of 2013, PTL ceased to be a VIE as a result of a principal in PTL retiring from the GE Board. Therefore, our investment in PTL ($899 million at December 31, 2013) is not reported in the December 31, 2013 balance in the table above. As co-issuer and co-guarantor of the $700 million of debt raised by the funding entity related to PTL, GECC reports this amount, which is also our loss exposure and excluded from the table above, as debt of GECC in its financial statements. GECC has been indemnified by the other limited partners of PTL for their proportionate share of the debt obligation.

 

In addition to the entities included in the table above, we also hold passive investments in RMBS, CMBS and ABS issued by VIEs. Such investments were, by design, investment grade at issuance and held by a diverse group of investors. Further information about such investments is provided in Note 3.


NOTE 24. COMMITMENTS AND GUARANTEES

Commitments

In our Aviation segment, we had committed to provide financing assistance on $2,669 million of future customer acquisitions of aircraft equipped with our engines, including commitments made to airlines in 2013 for future sales under our GE90 and GEnx engine campaigns. The GECAS business of GE Capital had placed multiple-year orders for various Boeing, Airbus and other aircraft with list prices approximating $29,405 million and secondary orders with airlines for used aircraft of approximately $816 million at December 31, 2013.

 

Product Warranties

We provide for estimated product warranty expenses when we sell the related products. Because warranty estimates are forecasts that are based on the best available information - mostly historical claims experience - claims costs may differ from amounts provided. An analysis of changes in the liability for product warranties follows.

(In millions)


2013 



2012 



2011 










Balance at January 1

$

 1,383 


$

 1,507 


$

 1,405 

Current-year provisions


 745 



 611 



 866 

Expenditures


 (814)



 (723)



 (881)

Other changes


 10 



 (12)



 117 

Balance at December 31

$

 1,324 


$

 1,383 


$

 1,507 










 

Guarantees

Our guarantees are provided in the ordinary course of business. We underwrite these guarantees considering economic, liquidity and credit risk of the counterparty. We believe that the likelihood is remote that any such arrangements could have a significant adverse effect on our financial position, results of operations or liquidity. We record liabilities for guarantees at estimated fair value, generally the amount of the premium received, or if we do not receive a premium, the amount based on appraisal, observed market values or discounted cash flows. Any associated expected recoveries from third parties are recorded as other receivables, not netted against the liabilities.

 

At December 31, 2013, we were committed under the following guarantee arrangements beyond those provided on behalf of VIEs. See Note 23.

 

·      Credit Support. We have provided $2,775 million of credit support on behalf of certain customers or associated companies, predominantly joint ventures and partnerships, using arrangements such as standby letters of credit and performance guarantees. These arrangements enable these customers and associated companies to execute transactions or obtain desired financing arrangements with third parties. Should the customer or associated company fail to perform under the terms of the transaction or financing arrangement, we would be required to perform on their behalf. Under most such arrangements, our guarantee is secured, usually by the asset being purchased or financed, or possibly by certain other assets of the customer or associated company. The length of these credit support arrangements parallels the length of the related financing arrangements or transactions. The liability for such credit support was $36 million at December 31, 2013.

 

·      Indemnification Agreements. We have agreements that require us to fund up to $125 million at December 31, 2013 under residual value guarantees on a variety of leased equipment. Under most of our residual value guarantees, our commitment is secured by the leased asset. The liability for these indemnification agreements was $21 million at December 31, 2013.

 

At December 31, 2013, we also had $1,009 million of other indemnification commitments, substantially all of which relate to representations and warranties in sales of businesses or assets.

 

·      Contingent Consideration. These are agreements to provide additional consideration to a buyer or seller in a business combination if contractually specified conditions related to the acquisition or disposition are achieved.


NOTE 25. SUPPLEMENTAL CASH FLOWS INFORMATION

Changes in operating assets and liabilities are net of acquisitions and dispositions of principal businesses.

 

Amounts reported in the "Proceeds from sales of discontinued operations" and "Proceeds from principal business dispositions" lines in the Statement of Cash Flows are net of cash disposed and included certain deal-related costs. Amounts reported in the "Net cash from (payments for) principal businesses purchased" line is net of cash acquired and included certain deal-related costs and debt assumed and immediately repaid in acquisitions. Amounts reported in the "Proceeds from sale of equity interest in NBCU LLC" line included certain deal-related costs.

 

Amounts reported in the "All other operating activities" line in the Statement of Cash Flows consist primarily of adjustments to current and noncurrent accruals, deferrals of costs and expenses and adjustments to assets. GECC had non-cash transactions related to foreclosed properties and repossessed assets totaling $482 million, $839 million and $859 million in 2013, 2012 and 2011, respectively.

 

Certain supplemental information related to GE and GECC cash flows is shown below.

For the years ended December 31 (In millions)


2013 



2012 



2011 










GE









Net dispositions (purchases) of GE shares for treasury









   Open market purchases under share repurchase program

$

 (10,225)


$

 (5,005)


$

 (2,065)

   Other purchases


 (91)



 (110)



 (100)

   Dispositions


 1,038 



 951 



 709 


$

 (9,278)


$

 (4,164)


$

 (1,456)

GECC









All other operating activities









Amortization of intangible assets

$

 425 


$

 447 


$

 562 

Net realized losses on investment securities


 523 



 34 



 197 

Cash collateral on derivative contracts


 (2,271)



 2,900 



 1,247 

Increase (decrease) in other liabilities


 2,334 



 560 



 (1,344)

Other


 (912)



 1,477 



 2,465 


$

 99 


$

 5,418 


$

 3,127 

Net decrease (increase) in GECC financing receivables









Increase in loans to customers

$

 (311,860)


$

 (308,156)


$

 (322,270)

Principal collections from customers - loans


 307,849 



 307,250 



 332,100 

Investment in equipment for financing leases


 (8,652)



 (9,192)



 (9,610)

Principal collections from customers - financing leases


 9,646 



 10,976 



 12,431 

Net change in credit card receivables


 (8,058)



 (8,030)



 (6,243)

Sales of financing receivables


 14,664 



 12,642 



 8,117 


$

 3,589 


$

 5,490 


$

 14,525 

All other investing activities









Purchases of investment securities

$

 (16,422)


$

 (15,666)


$

 (20,816)

Dispositions and maturities of investment securities


 18,139 



 17,010 



 19,535 

Decrease (increase) in other assets - investments


 1,089 



 4,338 



 2,672 

Proceeds from sales of real estate properties


 10,680 



 3,381 



 3,152 

Other


 1,486 



 2,731 



 3,190 


$

 14,972 


$

 11,794 


$

 7,733 

Newly issued debt (maturities longer than 90 days)









Short-term (91 to 365 days)

$

 55 


$

 59 


$

 10 

Long-term (longer than one year)


 44,833 



 55,782 



 43,257 


$

 44,888 


$

 55,841 


$

 43,267 

Repayments and other reductions (maturities









longer than 90 days)









Short-term (91 to 365 days)

$

 (52,553)


$

 (94,114)


$

 (81,918)

Long-term (longer than one year)


 (3,291)



 (9,368)



 (2,786)

Principal payments - non-recourse, leveraged leases


 (585)



 (426)



 (732)


$

 (56,429)


$

 (103,908)


$

 (85,436)

All other financing activities









Proceeds from sales of investment contracts

$

 491 


$

 2,697 


$

 4,396 

Redemption of investment contracts


 (980)



 (5,515)



 (6,230)

Other


 (420)



 (49)



 42 


$

 (909)


$

 (2,867)


$

 (1,792)


 

 

NOTE 26. INTERCOMPANY TRANSACTIONS

Transactions between related companies are made on an arms-length basis, are eliminated 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 overhead costs.

 

These intercompany transactions are reported in the GE and GECC columns of our financial statements, but are eliminated in deriving our consolidated financial statements. Effects of these eliminations on our consolidated cash flows from operating, investing and financing activities are $(5,088) million, $492 million and $4,690 million for 2013, $(8,542) million, $2,328 million and $6,703 million for 2012 and $(558) million, $(373) million and $903 million for 2011, respectively. Details of these eliminations are shown below.

 

For the years ended December 31 (In millions)

2013 


2012 


2011 










Cash from (used for) operating activities-continuing operations









Combined

$

 34,125 


$

 39,557 


$

 32,669 

   GE customer receivables sold to GECC


 360 



 (1,809)



 (577)

   GECC dividends to GE


 (5,985)



 (6,426)



 - 

   Other reclassifications and eliminations


 537 



 (307)



 19 


$

 29,037 


$

 31,015 


$

 32,111 

Cash from (used for) investing activities-continuing operations









Combined

$

 28,182 


$

 9,262 


$

 21,540 

   GE customer receivables sold to GECC


 262 



 2,005 



 421 

   Other reclassifications and eliminations


 230 



 323 



 (794)


$

 28,674 


$

 11,590 


$

 21,167 

Cash from (used for) financing activities-continuing operations









Combined

$

 (50,319)


$

 (57,758)


$

 (47,818)

   GE customer receivables sold to GECC


 (622)



 (196)



 156 

   GECC dividends to GE


 5,985 



 6,426 



 - 

   Other reclassifications and eliminations


 (673)



 473 



 747 


$

 (45,629)


$

 (51,055)


$

 (46,915)











 

 

NOTE 27. OPERATING SEGMENTS

Basis for presentation

Our operating businesses are organized based on the nature of markets and customers. Segment accounting policies are the same as described in Note 1. Segment results for our financial services businesses reflect the discrete tax effect of transactions.

 

Results of our formerly consolidated subsidiary, NBCU, and our equity method investment in NBCU LLC, which we sold in the first quarter of 2013 are reported in the Corporate items and eliminations line on the Summary of Operating Segments.

 

A description of our operating segments as of December 31, 2013, can be found below, and details of segment profit by operating segment can be found in the Summary of Operating Segments table in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations."

 

Power & Water

Power plant products and services, including design, installation, operation and maintenance services are sold into global markets. Gas, steam and aeroderivative turbines, nuclear reactors, generators, combined cycle systems, controls and related services, including total asset optimization solutions, equipment upgrades and long-term maintenance service agreements are sold to power generation and other industrial customers. Renewable energy solutions include wind turbines. Water treatment services and equipment include specialty chemical treatment programs, water purification equipment, mobile treatment systems and desalination processes.

 

Oil & Gas

Oil & Gas supplies mission critical equipment for the global oil and gas industry, used in applications spanning the entire value chain from drilling and completion through production, liquefied natural gas (LNG) and pipeline compression, pipeline inspection, and including downstream processing in refineries and petrochemical plants. The business designs and manufactures surface and subsea drilling and production systems, equipment for floating production platforms, compressors, turbines, turboexpanders, high pressure reactors, industrial power generation and a broad portfolio of auxiliary equipment.

 

Energy Management

Energy Management is GE's electrification business. Global teams design leading technology solutions for the delivery, management, conversion and optimization of electrical power for customers across multiple energy-intensive industries. GE has invested in our Energy Management capabilities, with strategic acquisitions and joint ventures that enable GE to increase its offerings to the utility, industrial, renewables, oil and gas, marine, metals and mining industries. Plant automation hardware, software and embedded computing systems including controllers, embedded systems, advanced software, motion control, operator interfaces and industrial computers are also provided by Energy Management. 

 

Aviation

Aviation products and services include jet engines, aerospace systems and equipment, replacement parts and repair and maintenance services for all categories of commercial aircraft; for a wide variety of military aircraft, includ-ing fighters, bombers, tankers and helicopters; for marine appli-cations; and for executive and regional aircraft. Products and services are sold worldwide to airframe manufacturers, airlines and government agencies.

 

 

Healthcare

Healthcare products include diagnostic imaging systems such as Magnetic Resonance (MR), Computed Tomography (CT) and Positron Emission Tomography (PET) scanners, X-ray, nuclear imaging, digital mammography, and Molecular Imaging technologies. Healthcare-manufactured technologies include patient and resident monitoring, diagnostic cardiology, ultrasound, bone densitometry, anesthesiology and oxygen therapy, and neonatal and critical care devices. Related services include equipment monitoring and repair, information technologies and customer productivity services. Products also include diagnostic imaging agents used in medical scanning procedures, drug discovery, biopharmaceutical manufacturing and purification, and tools for pro-tein and cellular analysis for pharmaceutical and academic research, including a pipeline of precision molecular diagnostics in development for neurology, cardiology and oncology applications. Products and services are sold worldwide to hospitals, medical facilities, pharmaceutical and biotechnology companies, and to the life science research market.

 

 

Transportation

Transportation is a global technology leader and supplier to the railroad, mining, marine and drilling industries. GE provides freight and passenger locomotives, diesel engines for rail, marine and stationary power applications, railway signaling and communications systems, underground mining equipment, motorized drive systems for mining trucks, information technology solutions, high-quality replacement parts and value added services.

 

Appliances & Lighting

Products include major appliances and related services for products such as refrigerators, freezers, electric and gas ranges, cooktops, dishwashers, clothes washers and dryers, microwave ovens, room air conditioners, residential water systems for filtration, softening and heating, and hybrid water heaters. These products are distributed both to retail outlets and direct to consumers, mainly for the replacement market, and to building contractors and distributors for new installations. Lighting products include a wide variety of lamps and lighting fixtures, including light-emitting diodes. Products and services are sold in North America and in global markets under various GE and private-label brands.

 

 

GE Capital

CLL has particular mid-market expertise, and primarily offers secured commercial loans, equipment financing and other financial services to companies across a wide range of industries including construction, retail, manufacturing, transportation, media, communications, technology and healthcare. Equipment financing activities include industrial, medical, fleet vehicles, corporate aircraft, construction, office imaging and many other equipment types.

 

Consumer offers a full range of financial products including private-label credit cards; personal loans; bank cards; auto loans and leases; mortgages; debt consolidation; home equity loans; deposit and other savings products; and small and medium enterprise lending on a global basis.

 

Real Estate offers a comprehensive range of capital and investment solutions and finances, with both equity and loan structures, the acquisition, refinancing and renovation of office buildings, apartment buildings, retail facilities, hotels and industrial properties.

 

Energy Financial Services offers financial products to the global energy industry including structured equity, debt, leasing, partnership financing, product finance, and broad-based commercial finance.

 

GECAS, our commercial aircraft financing and leasing business, offers a wide range of aircraft types and financing options, including operating leases and secured debt financing, and also provides productivity solutions including spare engine leasing, airport and airline consulting services, and spare parts financing and management.



























Revenues




























Total revenues(a)


Intersegment revenues(b)


External revenues

(In millions)


2013 



2012 



2011 



2013 



2012 



2011 



2013 



2012 



2011 





















      







Power & Water

$

 24,724 


$

28,299 


$

25,675 


$

 947 


$

1,119 


$

794 


$

 23,777 


$

27,180 


$

24,881 

Oil & Gas


 16,975 



15,241 



13,608 



 360 



314 



302 



 16,615 



14,927 



13,306 

Energy Management


 7,569 



7,412 



6,422 



 848 



487 



504 



 6,721 



6,925 



5,918 

Aviation


 21,911 



19,994 



18,859 



 500 



672 



417 



 21,411 



19,322 



18,442 

Healthcare


 18,200 



18,290 



18,083 



 14 



37 



65 



 18,186 



18,253 



18,018 

Transportation


 5,885 



5,608 



4,885 



 12 



11 



33 



 5,873 



5,597 



4,852 

Appliances & Lighting


 8,338 



7,967 



7,693 



 25 



23 



22 



 8,313 



7,944 



7,671 

   Total industrial


 103,602 



102,811 



95,225 



 2,706 



2,663 



2,137 



 100,896 



100,148 



93,088 

GE Capital


 44,067 



45,364 



48,324 



 1,150 



1,037 



977 



 42,917 



44,327 



47,347 

Corporate items



























   and eliminations(c)


 (1,624)



(1,491)



2,993 



 (3,856)



(3,700)



(3,114)



 2,232 



2,209 



6,107 

Total

$

 146,045 


$

146,684 


$

146,542 


$

 - 


$

 - 


$

 - 


$

 146,045 


$

146,684 


$

146,542 























































(a)         Revenues of GE businesses include income from sales of goods and services to customers and other income.

(b)         Sales from one component to another generally are priced at equivalent commercial selling prices.

(c)           Includes the results of NBCU (our formerly consolidated subsidiary) and our former equity method investment in NBCUniversal LLC.

 

Revenues from customers located in the United States were $68,617 million, $70,466 million and $69,910 million in 2013, 2012 and 2011, respectively. Revenues from customers located outside the United States were $77,428 million, $76,218 million and $76,632 million in 2013, 2012 and 2011, respectively.






























Property, plant and




Assets(a)(b)


equipment additions(c)


Depreciation and amortization


At December 31


For the years ended December 31


For the years ended December 31

(In millions)


2013 



2012 



2011 



2013 



2012 



2011 



2013 



2012 



2011 




























Power & Water

$

 29,526 


$

27,174 


$

27,074 


$

 714 


$

661 


$

770 


$

 668 


$

647 


$

605 

Oil & Gas


 26,181 



20,099 



18,855 



 1,185 



467 



904 



 479 



426 



434 

Energy Management


 9,962 



9,253 



9,835 



 137 



155 



414 



 323 



287 



239 

Aviation


 32,272 



25,144 



23,567 



 1,178 



781 



699 



 677 



644 



569 

Healthcare


 27,956 



28,458 



27,981 



 316 



322 



378 



 861 



879 



869 

Transportation


 4,472 



4,389 



2,633 



 282 



724 



193 



 167 



90 



88 

Appliances & Lighting


 4,237 



4,133 



3,675 



 405 



485 



268 



 300 



265 



260 

GE Capital


 516,829 



539,351 



584,643 



 9,978 



11,879 



9,871 



 7,738 



7,348 



7,480 

Corporate items



























   and eliminations(d)


 5,125 



26,998 



19,740 



194 



(99)



56 



 260 



218 



186 

Total

$

 656,560 


$

684,999 


$

718,003 


$

14,389 


$

15,375 


$

13,553 


$

11,473 


$

10,804 


$

10,730 























































(a)         Assets of discontinued operations, NBCU (our formerly consolidated subsidiary) and our former equity method investment in NBCUniversal LLC are included in Corporate items and eliminations for all periods presented.

(b)         Total assets of the Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Appliances & Lighting and GE Capital operating segments at December 31, 2013, include investment in and advances to associated companies of $507 million, $108 million, $788 million, $1,463 million, $576 million, $10 million, $388 million and $17,348 million, respectively. Investments in and advances to associated companies contributed approximately $(26) million, $18 million, $3 million, $4 million, $(48) million, $0 million, $40 million and $1,809 million to segment pre-tax income of Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Appliances & Lighting and GE Capital operating segments, respectively, for the year ended December 31, 2013. Aggregate summarized financial information for significant associated companies assuming a 100% ownership interest included: total assets of $98,658 million, primarily financing receivables of $46,655 million; total liabilities of $66,535 million, primarily debt of $40,030 million; revenues totaled $22,692 million; and net earnings totaled $2,431 million.

(c)         Additions to property, plant and equipment include amounts relating to principal businesses purchased.

(d)           Includes deferred income taxes that are presented as assets for purposes of our consolidating balance sheet presentation.

 

 

Interest and other financial charges


Provision (benefit) for income taxes

(In millions)


2013 



2012 



2011 



2013 



2012 



2011 



















GE Capital

$

 9,267 


$

11,596 


$

13,760 


$

 (992)


$

521 


$

906 

Corporate items and eliminations(a)


 849 



811 



662 



 1,668 



2,013 



4,839 

Total

$

 10,116 


$

12,407 


$

14,422 


$

 676 


$

2,534 


$

5,745 





































(a)         Included amounts for Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Appliances & Lighting, for which our measure of segment profit excludes interest and other financial charges and income taxes.

 

Property, plant and equipment - net associated with operations based in the United States were $28,657 million, $27,192 million and $25,974 million at year-end 2013, 2012 and 2011, respectively. Property, plant and equipment - net associated with operations based outside the United States were $40,170 million, $41,441 million and $38,573 million at year-end 2013, 2012 and 2011, respectively.


NOTE 28. QUARTERLY INFORMATION (UNAUDITED)

 

 

First quarter


Second quarter


Third quarter


Fourth quarter

(In millions; per-share amounts in dollars)

2013 


2012 


2013 


2012 


2013 


2012 


2013 


2012 

























Consolidated operations
























Earnings from continuing operations

$

3,631 


$

3,257 


$

3,423 


$

3,681 


$

3,272 


$

3,460 


$

5,149 


$

4,449 

Earnings (loss) from discontinued
























   operations


(120)



(185)



(124)



(543)



(91)



48 



(1,785)



(303)

Net earnings


3,511 



3,072 



3,299 



3,138 



3,181 



3,508 



3,364 



4,146 

Less net earnings attributable to
























   noncontrolling interests


(16)



38 



166 



33 



(10)



17 



158 



135 

Net earnings attributable to
























   the Company

$

3,527 


$

3,034 


$

3,133 


$

3,105 


$

3,191 


$

3,491 


$

3,206 


$

4,011 

Per-share amounts - earnings from
























   continuing operations
























      Diluted earnings per share

$

 0.35 


$

 0.30 


$

 0.31 


$

 0.34 


$

 0.32 


$

 0.33 


$

 0.49 


$

 0.41 

      Basic earnings per share


 0.35 



 0.30 



 0.32 



 0.34 



 0.32 



 0.33 



 0.49 



 0.41 

Per-share amounts - earnings (loss)
























   from discontinued operations
























      Diluted earnings per share


 (0.01) 



 (0.02) 



 (0.01) 



 (0.05) 



 (0.01) 



 - 



 (0.18)



 (0.03) 

      Basic earnings per share


 (0.01) 



 (0.02) 



 (0.01) 



 (0.05) 



 (0.01) 



 - 



 (0.18)



 (0.03) 

Per-share amounts - net earnings
























      Diluted earnings per share


 0.34 



 0.29 



 0.30 



 0.29 



 0.31 



 0.33 



 0.32 



 0.38 

      Basic earnings per share


 0.34 



 0.29 



 0.30 



 0.29 



 0.31 



 0.33 



 0.32 



 0.38 

























Selected data
























GE
























   Sales of goods and services

$

22,303 


$

23,687 


$

24,623 


$

25,138 


$

25,262 


$

24,749 


$

28,826 


$

27,301 

   Gross profit from sales


4,867 



5,653 



6,007 



5,800 



5,691 



6,025 



6,819 



8,341 

GECC
























   Total revenues


11,468 



11,267 



10,916 



11,285 



10,606 



11,207 



11,077 



11,605 

   Earnings from continuing operations
























      attributable to the Company


1,938 



1,760 



1,924 



2,112 



1,903 



1,668 



2,493 



1,805 

 

 

For GE, gross profit from sales is sales of goods and services less costs of goods and services sold.

 

Earnings-per-share amounts are computed independently each quarter for earnings from continuing operations, earnings (loss) from discontinued operations and net earnings. As a result, the sum of each quarter's per-share amount may not equal the total per-share amount for the respective year; and the sum of per-share amounts from continuing operations and discontinued operations may not equal the total per-share amounts for net earnings for the respective quarters.


Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not applicable.


 

Item 9A. 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 (i) our disclosure controls and procedures were effective as of December 31, 2013, and (ii) no change in internal control over financial reporting occurred during the quarter ended December 31, 2013, that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting.

 

Management's annual report on internal control over financial reporting and the report of our independent registered public accounting firm appears in Part II, Item 8. "Financial Statements and Supplementary Data" of this Form 10-K Report.


Item 9B. Other Information.

Not applicable.


Part III

Item 10. Directors, Executive Officers and Corporate Governance.

Executive Officers of the Registrant (As of February 1, 2014)





   

Date assumed







Executive

Name

   

Position

   

Age


Officer Position








Jeffrey R. Immelt


Chairman of the Board and Chief Executive Officer


57


January 1997

Jeffrey S. Bornstein


Senior Vice President and Chief Financial Officer   


48


July 2013

Kathryn A. Cassidy


Senior Vice President and GE Treasurer


59


March 2003

Elizabeth J. Comstock


Senior Vice President, Chief Marketing Officer


53


April 2013

Brackett B. Denniston III


Senior Vice President and General Counsel


66


February 2004

Jan R. Hauser


Vice President, Controller & Chief Accounting Officer


54


April 2013

Daniel C. Heintzelman


Vice Chairman, Enterprise Risk and Operations


56


October 2013

Susan Peters


Senior Vice President, Human Resources


60


August 2013

John G. Rice


Vice Chairman of General Electric Company;







    President & CEO, Global Growth & Operations


57


September 1997

Keith S. Sherin


Vice Chairman of General Electric Company; CEO,

  GE Capital


55


January 1999

 

 

All Executive Officers are elected by the Board of Directors for an initial term that continues until the Board meeting immediately preceding the next annual statutory meeting of shareowners, and thereafter are elected for one-year terms or until their successors have been elected. All Executive Officers have been executives of General Electric Company for the last five years except for Ms. Hauser. Prior to joining GE in March 2013, Ms. Hauser served as a partner, Accounting Services, National Professional Services Group at PricewaterhouseCoopers LLP.

 

The remaining information called for by this item is incorporated by reference to "Election of Directors," "Section 16(a) Beneficial Ownership Reporting Compliance," "Other Governance Policies and Practices" and "Board Committees" in our definitive proxy statement for our 2014 Annual Meeting of Shareowners to be held April 23, 2014, which will be filed within 120 days of the end of our fiscal year ended December 31, 2013 (the 2014 Proxy Statement).


Item 11. Executive Compensation.

Incorporated by reference to "Compensation Discussion and Analysis," "Compensation Committee Report," "Summary Compensation," "All Other Compensation," "Other Benefits," "Grants of Plan-Based Awards," "Outstanding Equity Awards," "Option Exercises and Stock Vested," "Pension Benefits," "Nonqualified Deferred Compensation," "Potential Payments Upon Termination at Fiscal Year-End" and "Director Compensation" in the 2014 Proxy Statement.


Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Incorporated by reference to "Stock Ownership Information" in the 2014 Proxy Statement. The remaining information called for by this item relating to "Securities Authorized for Issuance under Equity Compensation Plans" is provided in Note 16 to the consolidated financial statements in Part II, Item 8. "Financial Statements and Supplementary Data" of this Form 10-K Report.


Item 13. Certain Relationships and Related Transactions, and Director Independence.

Incorporated by reference to "Related Person Transactions" and "Director Independence" in the 2014 Proxy Statement.


Item 14. Principal Accounting Fees and Services.

Incorporated by reference to "Independent Auditor Information" in the 2014 Proxy Statement.


 

Part IV

Item 15. Exhibits, Financial Statement Schedules.

(a)1. Financial Statements

Included in Part II of this report:

Statement of Earnings for the years ended December 31, 2013, 2012 and 2011

Consolidated Statement of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011

Consolidated Statement of Changes in Shareowners' Equity for the years ended December 31, 2013, 2012 and 2011

Statement of Financial Position at December 31, 2013 and 2012

Statement of Cash Flows for the years ended December 31, 2013, 2012 and 2011

Management's Annual Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Other financial information:

Summary of Operating Segments

Notes to consolidated financial statements

Operating segment information

 

(a)2. Financial Statement Schedules

The schedules listed in Reg. 210.5-04 have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

 

(a)3. Exhibit Index

2(a)

Master Agreement dated as of December 3, 2009 by and among General Electric Company, NBC Universal, Inc., Comcast Corporation and Navy, LLC. (Incorporated by reference to Exhibit 2(a) to General Electric's Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 2009).

 


 


3(i)

The Certificate of Incorporation, as amended, of General Electric Company.*

 


 


3(ii)

The By-Laws, as amended, of General Electric Company (Incorporated by reference to Exhibit 3(ii) of General Electric's Current Report on Form 8-K dated February 15, 2013 (Commission file number 001-00035)).

 


 


4(a) 

Amended and Restated General Electric Capital Corporation (GECC) Standard Global Multiple Series Indenture Provisions dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(a) to GECC's Registration Statement on Form S-3, File No. 333-59707 (Commission file number 001-06461)).

 


 


4(b)

Third Amended and Restated Indenture dated as of February 27, 1997, between GECC and The Bank of New York Mellon, as successor trustee (Incorporated by reference to Exhibit 4(c) to GECC's Registration Statement on Form S-3, File No. 333-59707 (Commission file number 001-06461)).

 


 


4(c)

First Supplemental Indenture dated as of May 3, 1999, supplemental to Third Amended and Restated Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(dd) to GECC's Post-Effective Amendment No. 1 to Registration Statement on Form S-3, File No. 333-76479 (Commission file number 001-06461)).

 


 


4(d)

Second Supplemental Indenture dated as of July 2, 2001, supplemental to Third Amended and Restated Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(f) to GECC's Post-Effective Amendment No.1 to Registration Statement on Form S-3, File No. 333-40880 (Commission file number 001-06461)).

 


 


4(e)

Third Supplemental Indenture dated as of November 22, 2002, supplemental to Third Amended and Restated Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(cc) to GECC's Post-Effective Amendment No. 1 to the Registration Statement on Form S-3, File No. 333‑100527 (Commission file number 001-06461)).

 


 


4(f)

Fourth Supplemental Indenture dated as of August 24, 2007, supplemental to Third Amended and Restated Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(g) to GECC's Registration Statement on Form S-3, File number 333-156929 (Commission file number 001-06461)).

 


 


4(g)

 

 

 

 

Indenture dated December 1, 2005, between General Electric Company and The Bank of New York Mellon, as successor trustee (Incorporated by reference to Exhibit 4(a) of General Electric's Current Report on Form 8-K filed on December 9, 2005 (Commission file number 001-00035)).

 

 


4(h)

Senior Note Indenture dated as of October 9, 2012, between General Electric Company and The Bank of New York Mellon, as trustee (Incorporated by reference to Exhibit 4.1 to General Electric's Current Report on Form 8-K filed on October 9, 2012 (Commission file number 001-00035)).

 


 


4(i)

Twelfth Amended and Restated Fiscal and Paying Agency Agreement among GECC, GE Capital Australia Funding Pty Ltd., GE Capital European Funding, GE Capital U.K. Funding and The Bank of New York Mellon and The Bank of New York Mellon (Luxembourg) S.A., as fiscal and paying agents, dated as of April 5, 2013 (Incorporated by reference to Exhibit 4(i) to GECC's Form 10-K Report for the year ended December 31, 2013 (Commission file number 001-06461)).

 


 


4(j)

Letter from the Senior Vice President and Chief Financial Officer of General Electric to GECC dated September 15, 2006, with respect to returning dividends, distributions or other payments to GECC in certain circumstances described in the Indenture for Subordinated Debentures dated September 1, 2006, between GECC and the Bank of New York, as successor trustee (Incorporated by reference to Exhibit 4(c) to GECC's Post-Effective Amendment No. 2 to Registration Statement on Form S-3, File No. 333-132807 (Commission file number 001-06461)).

 




 


4(k)

 

Agreement to furnish to the Securities and Exchange Commission upon request a copy of instruments defining the rights of holders of certain long-term debt of the registrant and consolidated subsidiaries.*

 


 


(10)

Except for 10(y), (z) and (aa) below, all of the following exhibits consist of Executive Compensation Plans or Arrangements:

 


 



(a)

General Electric Incentive Compensation Plan, as amended effective July 1, 1991 (Incorporated by reference to Exhibit 10(a) to General Electric Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 1991).




(b)

General Electric Financial Planning Program, as amended through September 1993 (Incorporated by reference to Exhibit 10(h) to General Electric Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 1993).




(c)

General Electric Supplemental Life Insurance Program, as amended February 8, 1991 (Incorporated by reference to Exhibit 10(i) to General Electric Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 1990).




(d)

General Electric Directors' Charitable Gift Plan, as amended through December 2002 (Incorporated by reference to Exhibit 10(i) to General Electric Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 2002).




(e)

General Electric Leadership Life Insurance Program, effective January 1, 1994 (Incorporated by reference to Exhibit 10(r) to General Electric Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 1993).




(f)

General Electric 1996 Stock Option Plan for Non-Employee Directors (Incorporated by reference to Exhibit A to the General Electric Proxy Statement for its Annual Meeting of Shareowners held on April 24, 1996 (Commission file number 001-00035)).




(g)

General Electric Supplementary Pension Plan, as amended effective January 1, 2011 (Incorporated by reference to Exhibit 10(g) to General Electric's Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 2010).

 



(h)

General Electric 2003 Non-Employee Director Compensation Plan, Amended and Restated as of February 7, 2014.*




(i)

Amendment to Nonqualified Deferred Compensation Plans, dated as of December 14, 2004 (Incorporated by reference to Exhibit 10(w) to the General Electric Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 2004).




(j)

GE Retirement for the Good of the Company Program, as amended effective January 1, 2009 (Incorporated by reference to Exhibit 10(j) to General Electric's Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 2008.




(k)

GE Excess Benefits Plan, effective January 1, 2009 (Incorporated by reference to Exhibit 10(k) to General Electric's Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 2008).




(l)

General Electric 2006 Executive Deferred Salary Plan, as amended January 1, 2009 (Incorporated by reference to Exhibit 10(l) to General Electric's Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 2008).




(m)

General Electric Company 2007 Long-Term Incentive Plan (as amended and restated April 25, 2012) (Incorporated by reference to Exhibit 99.1 to General Electric's Registration Statement on Form S-8, dated May 4, 2012, File number 333-181177 (Commission file number 001-00035)).




(n)

Form of Agreement for Stock Option Grants to Executive Officers under the General Electric Company 2007 Long-term Incentive Plan, as amended January 1, 2009 (Incorporated by reference to Exhibit 10(n) to General Electric's Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 2008).




(o)

Form of Agreement for Annual Restricted Stock Unit Grants to Executive Officers under the General Electric Company 2007 Long-term Incentive Plan, as amended January 1, 2009 (Incorporated by reference to Exhibit 10(o) to General Electric's Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 2008).




(p)

Form of Agreement for Periodic Restricted Stock Unit Grants to Executive Officers under the General Electric Company 2007 Long-term Incentive Plan (Incorporated by reference to Exhibit 10.4 of General Electric's Current Report on Form 8-K dated April 27, 2007 (Commission file number 001-00035)).




(q)

Form of Agreement for Long Term Performance Award Grants to Executive Officers under the General Electric Company 2007 Long-term Incentive Plan (as amended and restated April 25, 2012) (Incorporated by reference to Exhibit 10(a) of General Electric's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (Commission file number 001-00035)).




(r)

Form of Agreement for Performance Stock Unit Grants to Executive Officers under the General Electric Company 2007 Long-term Incentive Plan (Incorporated by reference to Exhibit 10.6 of General Electric's Current Report on Form 8-K dated April 27, 2007 (Commission file number 001-00035)).




(s)

First Restatement of the General Electric International Employee Stock Purchase Plan effective May 1, 2002 (Incorporated by reference to Exhibit 4.1 to General Electric's Registration Statement on Form S-8, File No. 333-163106 (Commission file number 001-00035)).




(t)

Form of Agreement for Long Term Performance Award Grants to Executive Officers under the General Electric Company 2007 Long-term Incentive Plan (Incorporated by reference to Exhibit 10 of General Electric's Current Report on Form 8-K dated February 12, 2010 (Commission file number 001-00035)).







(u)

Time Sharing Agreement dated November 22, 2010 between General Electric Company and Jeffrey R. Immelt (Incorporated by reference to Exhibit 10(z) to General Electric's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (Commission file number 001-00035)).

 



(v)

 

 

 

(w)

 

 

 

(x)

 

 

GE Stock Option Grant Agreement Dated March 4, 2010 for Jeffrey R. Immelt Terms & Conditions as Amended April 18, 2011 (Incorporated by reference to Exhibit 10(h) of General Electric's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (Commission file number 001-00035)).

 

Non-Competition Agreement between General Electric Company and John Krenicki effective July 24, 2012 (Incorporated by reference to Exhibit 10(a) of General Electric's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 (Commission file number 001-00035)).

 

Time Sharing Agreement dated March 13, 2013 between General Electric Company and Brackett B. Denniston III (Incorporated by reference to Exhibit 10(b) of General Electric's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission file number 001-00035)).

 



(y)

Amended and Restated Income Maintenance Agreement, dated October 29, 2009, between the Registrant and General Electric Capital Corporation (Incorporated by reference to Exhibit 10 to GECC's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (Commission file number 001-06461)).

 



(z)

 

 

 

 

 

(aa)

Transaction Agreement dated as of February 12, 2013 among General Electric Company, Comcast Corporation, National Broadcasting Company Holding, Inc., Navy Holdings, Inc., NBCUniversal, LLC and NBCUniversal Media, LLC (Incorporated by reference to Exhibit 10(a) of General Electric's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission file number 001-00035)).

 

Amendment dated as of March 19, 2013 to the Transaction Agreement dated as of February 12, 2013 by and among General Electric Company, Comcast Corporation, NBCUniversal, LLC, NBCUniversal Media, LLC, National Broadcasting Company Holding, Inc. and Navy Holdings, Inc. (Incorporated by reference to Exhibit 10(c) of General Electric's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission file number 001-00035)).

 


 


(11)

Statement re Computation of Per Share Earnings.**

 


 


12(a)

Computation of Ratio of Earnings to Fixed Charges.*

 


 


12(b)

Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.*

 


 


(21)

Subsidiaries of Registrant.*

 


 


(23)

Consent of Independent Registered Public Accounting Firm.*

 


 


(24)

Power of Attorney.*

 


 


31(a)

Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.*

 


 


31(b)

Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.*

 


 


(32)

Certification Pursuant to 18 U.S.C. Section 1350.*

 


 


99(a) 

Undertaking for Inclusion in Registration Statements on Form S-8 of General Electric Company (Incorporated by reference to Exhibit 99(b) to General Electric Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 1992).

 




 


99(b) 

Computation of Ratio of Earnings to Fixed Charges (Incorporated by reference to Exhibit 12(a) to GECC's Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (Commission file number 001-06461)).

 




 


(101)

The following materials from General Electric Company's Annual Report on Form 10-K for the year ended December 31, 2011, formatted in XBRL (eXtensible Business Reporting Language); (i) Statement of Earnings for the years ended December 31, 2013, 2012 and 2011, (ii) Consolidated Statement of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011, (iii) Consolidated Statement of Changes in Shareowners' Equity for the years ended December 31, 2013, 2012 and 2011, (iv) Statement of Financial Position at December 31, 2013 and 2012, (v) Statement of Cash Flows for the years ended December 31, 2013, 2012 and 2011, and (vi) the Notes to Consolidated Financial Statements.

 


 

*

Filed electronically herewith.

 

** 

Information required to be presented in Exhibit 11 is provided in Note 20 to the consolidated financial statements in Part II, Item 8. "Financial Statements and Supplementary Data" of this Form 10-K Report in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification 260, Earnings Per Share.

 



 

 


Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report on Form 10-K for the fiscal year ended December 31, 2013, to be signed on its behalf by the undersigned, and in the capacities indicated, thereunto duly authorized in the Town of Fairfield and State of Connecticut on the 27th day of February 2014.

 


General Electric Company
(Registrant)








 

 

 

 



By

/s/ Jeffrey S. Bornstein




Jeffrey S. Bornstein
Senior Vice President and

Chief Financial Officer
(Principal Financial Officer)


 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signer


Title


Date




















/s/ Jeffrey S. Bornstein


Principal Financial Officer


February 27, 2014


Jeffrey S. Bornstein
Senior Vice President and

Chief Financial Officer


















/s/ Jan R. Hauser


Principal Accounting Officer


February 27, 2014


Jan R. Hauser
Vice President and Controller












Jeffrey R. Immelt*


Chairman of the Board of Directors
(Principal Executive Officer)










W. Geoffrey Beattie*

John J. Brennan*


Director

Director




James I. Cash, Jr.*

Francisco D'Souza*

Marijn E. Dekkers*


Director

Director

Director




Ann M. Fudge*


Director




Susan Hockfield*


Director




Andrea Jung*


Director




Robert W. Lane*


Director




Ralph S. Larsen*


Director




Rochelle B. Lazarus*


Director




James J. Mulva*


Director




James E. Rohr*


Director




Mary L. Schapiro*


Director




Robert J. Swieringa*


Director




James S. Tisch*


Director




Douglas A. Warner III*


Director










A majority of the Board of Directors























*By

/s/ Christoph A. Pereira






Christoph A. Pereira
Attorney-in-fact
February 27, 2014






Exhibit 3(i)

 

 

 

Restated Certificate of Incorporation

of

General Electric Company

 

 

Section 1. Name 

 

The name of the corporation is General Electric Company.

 

Section 2. Purposes 

 

The purposes of the corporation are as follows:

 

A. To manufacture, process, construct, develop, assemble, and produce in any way, to sell, lease, supply, and distribute in any way, to purchase, lease, mine, extract, and acquire in any way, to own, operate, experiment with, deal in, service, finance, and use in any way, equipment, apparatus, appliances, devices, structures, materials, processes, information, tangible and intangible property, services and systems of every kind, nature and description:

 

(1) for any electrical, or energy-conversion, application or purpose, including but not limited to the production, transmission, distribution, storage, regulation, control and use in any manner of electricity, or in any way connected with or deriving from any electrical, or energy-conversion, application or purpose, and,

 

(2) for any other application or purpose, whatsoever, including but not limited to industrial, utility, consumer, defense, governmental, scientific, educational, cultural, financial, recreational, agricultural, transportation, construction, mining, and communication applications or purposes.

 

B. To conduct studies and research and development, and to engage in any other activity relating to the development, application, and dissemination of information concerning science, technology, and other fields of endeavor.

 

C. To acquire by purchase, subscription or otherwise all or part of any interest in the property, assets, business, or good will of any corporation, association, firm, or individual, and to dispose of, or otherwise deal with, such property, assets, business or good will.

 

D. To engage in any activity which may promote the interests of the corporation, or enhance the value of its property, to the fullest extent permitted by law, and in furtherance of the foregoing purposes to exercise all powers now or hereafter granted or permitted by law, including the powers specified in the New York Business Corporation Law.

 

Section 3. Authorized Shares

 

A. General Authorization

 

The aggregate number of shares which the corporation is authorized to issue is 13,250,000,000 shares, consisting of:

 

(1) 13,200,000,000 shares of common stock having a par value of $0.06 per share; and

 

(2) 50,000,000 shares of preferred stock having a par value of $1 per share.

 

B. Preferred Stock

 

(1) The Board of Directors is authorized, subject to limitations prescribed by law and the provisions of this subsection B, to provide for the issuance of the preferred shares in series, and by filing a certificate pursuant to the Business Corporation Law, to establish the number of shares to be included in each such series, and to fix the designation, relative rights, preferences and limitations of the shares of each such series. The authority of the Board with respect to each series shall include, but not be limited to, determination of the following:

 

(a) The number of shares constituting that series and the distinctive designation of that series;

 

(b) The dividend rate on the shares of that series, whether dividends shall be cumulative and, if so, from which date or dates;

 

(c) Whether that series shall have voting rights, in addition to the voting rights provided by law and, if so, the terms of such voting rights;

 

(d) Whether that series shall have conversion privileges and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors shall determine;

 

(e) Whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;

 

(f) The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation;

 

(g) Any other relative rights, preferences and limitations of that series.

 

(2) Dividends on outstanding preferred shares shall be declared and paid, or set apart for payment, before any dividends shall be declared and paid, or set apart for payment, on the common shares with respect to the same dividend period.

 

C. Preemptive Rights

 

No present or future holder of any shares of the corporation of any class or series, whether heretofore or hereafter issued, shall have any preemptive rights with respect to (1) any shares of the corporation of any class or series, or (2) any other security of the corporation (including bonds and debentures) convertible into or carrying rights or options to purchase such shares.

 

 

Section 4. Office

 

The office of the corporation is located in the City of Schenectady, County of Schenectady, State of New York.

 

Section 5. By-laws

 

The by-laws may be amended or repealed, and new by-laws may be adopted, by the shareholders or the Board of Directors, except that the Board of Directors shall have no authority to amend or repeal any by-law which is adopted by the shareholders after April 20, 1948, unless such authority is granted to the Board by the specific provisions of a by-law adopted by the shareholders.

 

Section 6. Directors

 

The Board of Directors of the corporation shall consist of not less than ten directors, the exact number to be determined pursuant to procedures set forth in the by-laws.

 

A person who is or was a director of the corporation shall have no personal liability to the corporation or its shareholders for damages for any breach of duty in such capacity except that the foregoing shall not eliminate or limit liability where such liability is imposed under the Business Corporation Law of the State of New York.

 

The vote required for election of a director by the shareholders shall, except in a contested election, be the affirmative vote of a majority of the votes cast in favor of or against the election of a nominee at a meeting of shareholders. In a contested election, directors shall be elected by a plurality of the votes cast at a meeting of shareholders by the holders of shares entitled to vote in the election. An election shall be considered contested if as of the record date there are more nominees for election than positions on the board of directors to be filled by election at the meeting.

 

Section 7. Agent for Process

 

The Secretary of State of the State of New York is designated as the agent of the corporation upon whom process against it may be served, and the post office address to which the Secretary of State shall mail a copy of such process served upon him is Senior Litigation Counsel, General Electric Company, 3135 Easton Turnpike, Fairfield, CT 06828.

 

Exhibit 4(k)

 

 

 

Kathryn A. Cassidy

Senior Vice President and GE Treasurer

 

General Electric Company

3135 Easton Turnpike

Fairfield, CT 06828

 

 

Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549

 

February 27, 2014

 

 

Subject: 

General Electric Company Annual Report on Form 10-K for the fiscal year ended December 31, 2013 - File No. 001-00035

 

Dear Sirs:

 

Neither General Electric Company (the "Company") nor any of its consolidated subsidiaries has outstanding any instrument with respect to its long-term debt, other than those filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, under which the total amount of securities authorized exceeds 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. In accordance with paragraph (b)(4)(iii) of Item 601 of Regulation S-K (17 CFR Sec. 229.601), the Company hereby agrees to furnish to the Securities and Exchange Commission, upon request, a copy of each instrument that defines the rights of holders of such long term debt not filed or incorporated by reference as an exhibit to the Company's Annual Report on Form 10‑K for the fiscal year ended December 31, 2013.

 

 

 

Very truly yours,

 

GENERAL ELECTRIC COMPANY

 

 

 

 

 

/s/ Kathryn A. Cassidy


Kathryn A. Cassidy


Senior Vice President and GE Treasurer

 


 

 

 

10(h)

 

 

2003 NON-EMPLOYEE DIRECTOR COMPENSATION PLAN

(Amended and Restated as of February 7, 2014)

 

 

I.  Non-Employee Director Compensation

 

A. Establishment of Annual Compensation

 

An annual compensation amount (the "Annual Base Compensation") payable to Non-Employee Directors (hereafter "Directors") of General Electric Company (the "Company") shall be established from time-to-time by the Board of Directors.  Directors who are members of the Audit Committee, the Management Development and Compensation Committee or the Risk Committee, and any director who is serving as the lead independent director, shall also receive additional annual compensation equal to ten percent (10%) of the Annual Base Compensation for service on each such committee (such additional compensation together with the Annual Base Compensation are collectively referred to as the "Annual Compensation").  The amount of Annual Compensation will be reported annually in the Proxy Statement.

 

B.  Payment of Annual Compensation

 

1.  The Annual Compensation shall be payable in quarterly installments, with each installment payable as promptly as practicable following the last business day of the calendar quarter to which it applies.  Quarterly payments shall be pro rated if Board service commences or terminates during a calendar quarter. 

2.  The Annual Compensation shall be paid sixty percent (60%) in Deferred Stock Units ("DSUs") and forty percent (40%) in cash.  The number of DSUs to be paid and the terms of the DSUs shall be determined as provided in the following sections of this Plan.

 

3.  Prior to the beginning of the calendar year of their annual election to the Board, Directors who have previously been elected to the Board may elect to receive in DSUs all or part of that portion of his or her Annual Compensation otherwise payable in cash.  Notwithstanding the above, within 30 days from the date of their initial election or appointment to the Board, Directors may elect to receive in DSUs all or part of that portion of his or her Annual Compensation otherwise payable in cash; provided, however, that such election shall only apply to Annual Compensation earned in calendar quarters beginning after the date of such election.  Such elections shall be irrevocable for the period for which the director is elected.

 

4.  All DSUs earned with respect to Annual Compensation will be credited to the Director's DSU account (the "DSU Account") when such Annual Compensation is otherwise payable (the "Payment Date").

 

5.  The Director's DSU Account will be credited with the number of DSUs calculated to the nearest thousandths of a DSU, determined by dividing the dollar amount of Annual Compensation to be paid in DSUs on the Payment Date by the average of the closing market price of the Company's common stock as reported on the Consolidated Tape of the New York Stock Exchange for the 20 trading days immediately preceding such Payment Date.

 

 

II.  Administration of DSU Accounts

 

A.  Consolidation of Prior Deferred Fee Accounts

 

For Directors serving on the Board on January 1, 2003, the balances of deferred stock units in any deferred fee accounts maintained by the Company under the Company's Non-Employee Director Deferred Fee Plan in effect on December 31, 2002, or predecessors to that plan, shall be deemed to be transferred to the DSU Accounts established under this Plan, and, together with any other amounts specifically credited to a Director's DSU Account, shall be administered under the terms of this Plan.  The balances of deferred stock units in any deferred fee accounts maintained by the Company under the Company's Non-Employee Director Deferred Fee Plan in effect on December 31, 2002, or predecessors to that plan, for former directors who were not serving on the Board on January 1, 2003 shall be administered under the applicable terms of such prior plan or plans.

 

B.  Crediting With Dividend Equivalents

 

1.  On each dividend payment date, a Director's DSU Account will be credited with regular quarterly dividend equivalents in the form of additional DSUs determined by multiplying the number of DSUs in the Director's DSU Account on the related dividend record date by any per share cash dividends declared by the Company on its common stock and dividing the product by the closing market price of the Company's common stock as reported on the Consolidated Tape of the New York Stock Exchange on such dividend payment date. 

 

2.  The DSU Accounts will also be credited with DSUs by multiplying the number of DSUs in the Director's DSU Account by any stock dividends declared by the Company on its common stock.

 

C. Recapitalization

 

If, as a result of a recapitalization of the Company (including stock splits), the Company's outstanding shares of common stock shall be changed into a greater or smaller number of shares, the number of DSUs credited to a Director's DSU Account shall be appropriately adjusted on the same basis.

 

D.  Election To Switch DSUs Upon Termination of Board Service

 

Prior to the end of the calendar year in which Board service terminates, a Director may irrevocably elect to switch up to 100% of the value of the DSUs in his or her DSU Account into cash, effective on the date one year following termination of Board service (hereafter "First Anniversary Date").  The cash value of the DSUs will be based on the number of DSUs in the Director's DSU Account on the First Anniversary Date multiplied by the average of the closing market price of the Company's common stock as reported on the Consolidated Tape for the New York Stock Exchange for the 20 trading days immediately preceding the First Anniversary Date.  The cash in the DSU Account will thereafter be credited monthly with interest equivalents based upon the prior calendar month's average yield for U.S. Treasury notes and bonds with maturities of from ten to twenty years, as published by an official agency to be determined by the -Chief Financial Officer and utilized on a consistent year to year basis.

 

E.  Payment of DSU Accounts

1.  Form of Distribution for Director and Survivor Payout Elections for amounts credited to the Director's DSU Account on or before December 31, 2004

 

(a)   At any time before the end of the calendar year in which Board service terminates, a Director may elect to have the DSU Account paid: (i) in a lump sum on the First Anniversary Date (or as soon thereafter as practicable); or (ii) in up to ten (10) annual installments, beginning on  July 15th following the First Anniversary Date (or as soon thereafter as is practical).

(b)   In the event that a Director's service on the Board terminates as a result of death, the beneficiary(s) designated by the Director (or failing such designation, the Director's estate), may elect to have the Director's DSU Account: (i) paid out in a lump sum as soon as practicable following the Director's death; or (ii) paid out in annual installments up to an aggregate of ten (10) annual installments, commencing in the month of July following the Director's death.  In the event of a Director's death subsequent to termination of Board service, but prior to receiving all entitled deferred payments, the beneficiary(s) designated by the Director (or failing such designation, the Director's estate), may elect to have the Director's DSU Account paid out in a lump sum as soon as practicable following the Director's death. 

 

2.  Form of Distribution for Director and Survivor Payout Elections for Post 2004 DSUs.

 

(a)     For amounts credited to the Director's DSU account after December 31, 2004, the amounts shall be paid in accordance with the irrevocable election of the Director (lump sum, five year installments or ten year installments) made prior to the beginning of the calendar year of his or her annual election to the Board (or, for a Director serving his or her initial term, made within 30 days of his or her election to the Board).Installment payments shall begin on July 15th following the First Anniversary Date.   Lump sum payments shall be made on the First Anniversary Date.

(b)    If a Director's service on the Board terminates as a result of death payments shall be made upon the Director's death in the form elected by the Director to the beneficiary(s) designated by the Director (or failing such designation, to the Director's estate).

(c)     In the event of a Director's death subsequent to termination of Board service but prior to receiving all entitled deferred payments, payments shall be continue to be made in the form elected by the Director to the beneficiary(s) designated by the Director (or failing such designation, to the Director's estate).  

 

3.  Determination of Amount of Cash Installment Payments.

 

(a)  Regardless of whether the Director has elected to convert DSUs to cash value under section D above, all payouts of a Director's DSU Account will be paid in cash.

 

(b)  The amount of the first cash installment payment shall be a fraction of the value of the DSUs in the Director's DSU Account on the date of the initial installment payment, the numerator of which is one and the denominator of which is the total number of installments elected. Each subsequent installment shall be calculated in the same manner as of the date of that installment payment, except that the denominator shall be reduced by the number of installments which have been previously paid.

 

(c)  The value of DSUs in a Director's DSU Account will be determined for purposes of the preceding section by multiplying the number of DSUs in the Director's DSU Account on the Payment Date by the average of the closing market price of the Company's common stock as reported on the Consolidated Tape of New York Stock Exchange for the 20 trading days immediately preceding such date.

 

 

III.  General Provisions

 

A. Assignability

 

No right to receive payment under this Plan shall be transferable or assignable by a participant except by will or laws of descent and distribution.

 

B. Amendment of the Plan

 

This Plan may be amended, suspended or terminated at any time by the Board of Directors of the Company.  However, no amendment, suspension or termination of the Plan may, without the consent of a participant, alter or impair any of the rights previously granted under the Plan. Any amendment or termination shall comply with the restrictions of Section 409A of the Internal Revenue Code ("Section 409A") to the extent applicable.  No amendment or termination of the Plan may accelerate a scheduled payment of amounts subject to Section 409A, nor may any amendment or termination permit a subsequent deferral of amounts subject to Section 409A.

 

C.             Compliance with 409A; Effective Date

 

This Plan is intended to comply with Section 409A of the Internal Revenue Code with respect to amounts accrued after December 31, 2004; provided, however, that the requirements of Section 409A of the Code shall only apply to amounts accrued in excess of amounts accrued and vested on December 31, 2004 (adjusted for earnings on such amounts). The Plan shall be administered and interpreted in a manner consistent with such intent. This Plan is effective as of January 1, 2003.

 

 

 


Exhibit 12(a)

General Electric Company

Computation of Ratio of Earnings to Fixed Charges

















Years ended December 31

(Dollars in millions)


2013 



2012 



2011 



2010 



2009 




   



   



   



   



General Electric Company and 















   consolidated affiliates















Earnings(a)

$

15,976 


$

15,396 


$

18,794 


$

14,078 


$

9,696 

Plus:















   Interest and other financial charges















      included in expense(b)


10,116 



12,407 



14,422 



15,431 



17,516 

   One-third of rental expense(c)


504 



510 



462 



563 



595 
















Adjusted "earnings"

$

26,597 


$

28,313 


$

33,677 


$

30,072 


$

27,807 
















Fixed charges:















   Interest and other financial charges















      included in expense(b)

$

10,116 


$

12,407 


$

14,422 


$

15,431 


$

17,516 

   Interest capitalized


29 



28 



25 



39 



42 

   One-third of rental expense(c)


504 



510 



462 



563 



595 
















Total fixed charges

$

10,649 


$

12,945 


$

14,908 


$

16,033 


$

18,153 
















Ratio of earnings to fixed charges


2.50 



2.19 



2.26 



1.88 



1.53 































(a)           Earnings before income taxes, noncontrolling interests, discontinued operations and undistributed earnings of equity investees.

(b)           Includes interest on tax deficiencies.

(c)           Considered to be representative of interest factor in rental expense.

 

Exhibit 12(b)

General Electric Company

Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends

















Years ended December 31

(Dollars in millions)


2013 



2012 



2011 



2010 



2009 




   



   



   



   



General Electric Company and 















   consolidated affiliates















Earnings(a)

$

15,976 


$

15,396 


$

18,794 


$

14,078 


$

9,696 

Plus:















   Interest and other financial charges















      included in expense(b)


10,116 



12,407 



14,422 



15,431 



17,516 

   One-third of rental expense(c)


504 



510 



462 



563 



595 
















Adjusted "earnings"

$

26,597 


$

28,313 


$

33,677 


$

30,072 


$

27,807 
















Fixed charges:















   Interest and other financial charges















      included in expense(b)

$

10,116 


$

12,407 


$

14,422 


$

15,431 


$

17,516 

   Interest capitalized


29 



28 



25 



39 



42 

   One-third of rental expense(c)


504 



510 



462 



563 



595 
















Total fixed charges

$

10,649 


$

12,945 


$

14,908 


$

16,033 


$

18,153 
















Ratio of earnings to fixed charges


2.50 



2.19 



2.26 



1.88 



1.53 
















Preferred stock dividend requirements

$

- 


$

 - 


$

 1,031 


$

 300 


$

 300 
















Ratio of earnings before provision for















   income taxes to earnings from















   continuing operations


1.04 



1.17 



1.40 



1.08 



0.90 
















Preferred stock dividend factor on















   pre-tax basis

$

 - 


$

 - 


$

1,443 


$

325 


$

271 

Fixed charges


10,649 



12,945 



14,908 



16,033 



18,153 
















Total fixed charges and preferred stock















   dividend requirements

$

10,649 


$

12,945 


$

16,351 


$

16,358 


$

18,424 
















Ratio of earnings to combined fixed















   charges and preferred stock dividends


2.50 



2.19 



2.06 



1.84 



1.51 































(a)           Earnings before income taxes, noncontrolling interests, discontinued operations and undistributed earnings of equity investees.

(b)           Includes interest on tax deficiencies.

(c)           Considered to be representative of interest factor in rental expense.


Exhibit 21

 

SUBSIDIARIES OF REGISTRANT

 

General Electric's principal affiliates as of December 31, 2013, are listed below. All other affiliates, if considered in the aggregate as a single affiliate, would not constitute a significant subsidiary.

 

AFFILIATES OF REGISTRANT INCLUDED IN REGISTRANT'S FINANCIAL STATEMENTS

 

    

Percentage of voting

    




securities directly or


State or Country



indirectly owned by


of incorporation



registrant (1)


or organization


   




Amersham Health Norge AS

 

100


Norway

Bently Nevada, Inc.

 

100


Delaware

Calma Company


100


Delaware

Cardinal Cogen, Inc.

 

100


Delaware

Caribe GE International of Puerto Rico, Inc.

 

100


Puerto Rico

Datex-Ohmeda, Inc.

 

100


Delaware

Dresser, Inc.


100


Delaware

Druck Incorporated


100


Connecticut

GE Aviation Service Operation LLP 

 

100


Singapore

GE Aviation Systems Group Limited

 

100


United Kingdom and Northern Ireland

GE Aviation Systems North America, Inc.

 

100


Delaware

GE Aviation UK

 

100


United Kingdom and Northern Ireland

GE Betz International, Inc.

 

100


Pennsylvania

GE Caledonian Limited 

 

100


United Kingdom & Northern Ireland

GE Capital Global Financial Holdings, Inc.

 

100


Connecticut

GE Capital UK Finance

 

100


United Kingdom & Northern Ireland

GE Drives & Controls, Inc. 

 

100


Delaware

GE Druck Holdings Limited 

 

100


United Kingdom & Northern Ireland

GE Energy Europe B.V. 

 

100


Netherlands

GE Energy Netherlands, B.V.

 

100


Netherlands

GE Energy Parts, Inc. 

 

100


Delaware

GE Energy Power Conversion Group SAS


100


France

GE Energy Products France SNC 

 

100


France

GE Energy Services, Inc. 

 

100


Delaware

GE Energy (USA), LLC


100


Delaware

GE Engine Services, LLC

 

100


Delaware

GE Engine Services - Dallas, LP

 

100


Delaware

GE Engine Services Distribution, LLC 

 

100


Delaware

GE Engine Services UNC Holding I, Inc. 

 

100


Delaware

GE Europe Holdings LLC

 

100


Delaware

GE Financial Assurance Holdings, Inc.

 

100


Delaware

GE Financial Funding

 

100


Ireland

GE Financial Ireland

 

100


Ireland

GE Gas Turbines (Greenville) L.L.C.

 

100


Delaware

GE Generators (Pensacola), L.L.C.

 

100


Delaware

GE Global Sourcing LLC


100


Delaware

GE Healthcare AS

 

100


Norway

GE Healthcare Bio-Sciences AB

 

100


Sweden

GE Healthcare BVBA

 

100


Belgium

GE Healthcare European Holdings SARL

 

100


Luxembourg

GE Healthcare Finland Oy 

 

100


Finland

GE Healthcare Japan Corporation

 

100


Japan

GE Healthcare Ltd.

 

100


United Kingdom & Northern Ireland

GE Healthcare Norge AS

 

100


Norway

GE Healthcare USA Holding Inc.

 

100


Delaware

GE Holdings Luxembourg & Co. SARL

 

100


Luxembourg

GE Hungary Kft.

 

100


Hungary

GE Infrastructure Aviation Limited

 

100


United Kingdom & Northern Ireland

GE Infrastructure, Inc. 

 

100


Delaware

GE Infrastructure Technology International LLC.


100


Delaware

GE Inspection and Repair Services Limited

 

100


United Kingdom & Northern Ireland

GE Intelligent Platforms Embedded Systems, Inc.

 

100


Delaware

GE Intelligent Platforms, Inc.

 

100


Delaware

GE Investments, Inc.

 

100


Nevada

GE Ionics Inc.


100


Massachusetts

GE Italia Holding S.p.A 

 

99


Italy

GE Jenbacher GmbH & Co OG

 

100


Austria

GE Keppel Energy Services Pte. Ltd.

 

50


Singapore

GE Maintenance Services, Inc.


100


Delaware

GE Media Holdings, Inc.


100


Delaware

GE Medical Systems Global Technology Company, LLC 

 

100


Delaware

GE Medical Systems Information Technologies, Inc. 

 

100


Wisconsin

GE Medical Systems Societe en Commandite Simple

 

100


France

GE Medical Systems, Inc. 

 

100


Delaware

GE Medical Systems, LLC 

 

100


Delaware

GE Medical Systems, Ultrasound & Primary Care Diagnostics LLC 

 

100


Delaware

GE Military Systems 

 

100


Delaware

GE Oil & Gas U.K. Limited

 

100


United Kingdom & Northern Ireland

GE Osmonics, Inc. 

 

100


Minnesota

GE Pacific Holdings Pte. Ltd.

 

100


Singapore

GE Pacific Private Limited

 

100


Singapore

GE Packaged Power, Inc.

 

100


Delaware

GE Packaged Power, L.P.

 

100


Delaware

GE Transportation Parts, LLC 

 

100


Delaware

GE Transportation Systems Global Signaling, LLC 

 

100


Delaware

GE UK Group Limited

 

100


United Kingdom & Northern Ireland

GE Water & Process Technologies Canada

 

100


Canada

GE Wind Energy, LLC 

 

100


Delaware

GEA Parts, LLC

 

100


Delaware

GEA Products LP 

 

100


Delaware

GEAE Technology, Inc. 

 

100


Delaware

GEFH AS

 

100


Norway

GEH HOLDINGS


100


United Kingdom & Northern Ireland

GENE Holding LLC

 

100


Delaware

General Electric (Bermuda) Ltd. 

 

100


Bermuda

General Electric Canada Company

 

100


Canada

General Electric Capital Corporation

 

100


Delaware

General Electric CGR Europe SAS 

 

100


France

General Electric Europe Holdings C.V.

 

100


Netherlands

General Electric Finance Holding GmbH

 

100


Germany

General Electric Financing C.V.

 

100


Netherlands

General Electric Foreign Sales Corporation


100


The Bahamas and Eleuthera Island

General Electric International (Benelux) BV 

 

100


Netherlands

General Electric International, Inc.

 

100


Delaware

General Electric International Operations Company, Inc.


100


Delaware

General Electric Services (Bermuda) Ltd.

 

100


Bermuda

General Electric Services Luxembourg SARL

 

100


Luxembourg

Granite Services, Inc.

 

100


Delaware

IDX Systems Corporation

 

100


Vermont

Monogram Licensing, Inc.


100


Delaware

Monogram Licensing International, Inc.


100


Delaware

MRA Systems, Inc.

 

100


Delaware

Nuclear Fuel Holding Co., Inc.

 

100


Delaware

Nuovo Pignone S.p.A.

 

100


Italy

OEC Medical Systems, Inc. 

 

100


Delaware

Panametrics Ltd.

 

100


Bermuda

Patent Licensing International, Inc.


100


Delaware

PII Limited

 

100


United Kingdom & Northern Ireland

Reuter-Stokes, Inc.

 

100


Delaware

Unison Industries, LLC

 

100


Delaware

Viceroy, Inc.

 

100


Delaware

Whatman Limited

 

100


United Kingdom & Northern Ireland

 

(1)           With respect to certain companies, shares in names of nominees and qualifying shares in names of directors are included in above percentages.


 

 

Exhibit 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors
General Electric Company:

 

We consent to the incorporation by reference in the registration statement on Form S-3 (Registration Nos. 33-50639, 33-29024, 333-59671, 333-72566, 333-177803 and 333-186882), on Form S-4 (Registration No. 333-107556), and on Form S-8 (Registration Nos. 333-01953, 333-42695, 333-74415, 333-83164, 333-98877, 333-94101, 333-65781, 333-88233, 333-117855, 333-99671, 333-102111, 333-142452, 333-155587, 333-158069, 333-158071, 333-163106, 333-177805, 333-179688, 333-181177 and 333-184792) of General Electric Company of our report dated February 27, 2014, with respect to the statement of financial position of General Electric Company and consolidated affiliates as of December 31, 2013 and 2012, and the related statements of earnings, comprehensive income, changes in shareowners' equity and cash flows for each of the years in the three-year period ended December 31, 2013, and the effectiveness of internal control over financial reporting as of December 31, 2013, which report appears in the December 31, 2013 annual report on Form 10-K of General Electric Company.

 

 

/s/ KPMG LLP

 

Stamford, Connecticut

February 27, 2014


Exhibit 24

 

 

POWER OF ATTORNEY

 

 

 

 

                KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a director or officer of General Electric Company, a New York corporation (the "Company"), hereby constitutes and appoints Jeffrey R. Immelt, Brackett B. Denniston III, Jeffrey S. Bornstein, Jan R. Hauser, and Christoph A. Pereira, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead in any and all capacities, to sign one or more Annual Reports for the Company's fiscal year ended December 31, 2013 on Form 10-K under the Securities Exchange Act of 1934, as amended, or such other form as any such attorney-in-fact may deem necessary or desirable, any amendments thereto, and all additional amendments thereto, each in such form as they or any one of them may approve, and to file the same with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done so that such Annual Report shall comply with the Securities Exchange Act of 1934, as amended, and the applicable Rules and Regulations adopted or issued pursuant thereto, as fully and to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or their substitute or resubstitute, may lawfully do or cause to be done by virtue hereof.

 

 

                IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand this 7th day of February, 2014.

 

 

 

 

 

 


/s/ Jeffrey R. Immelt




Jeffrey R. Immelt




Chairman of the Board




(Principal Executive




Officer and Director)








/s/ Jeffrey S. Bornstein


/s/ Jan R. Hauser

Jeffrey S. Bornstein


Jan R. Hauser

Senior Vice President and


Vice President and Controller

Chief Financial Officer


(Principal Accounting Officer)

(Principal Financial Officer)



 

 

 

 

 

 

 

 

 

 

 

(Page 1 of 2)

 

/s/ W. Geoffrey Beattie


/s/ Ralph S. Larsen

W. Geoffrey Beattie


Ralph S. Larsen

Director


Director







/s/ John J. Brennan


/s/ Rochelle B. Lazarus

John J. Brennan


Rochelle B. Lazarus

Director


Director







/s/ James I. Cash, Jr.


/s/ James J. Mulva

James I. Cash, Jr.


James J. Mulva

Director


Director

 

 

/s/ Francisco D'Souza


 

/s/ James E. Rohr

Francisco D'Souza

Director

 

 


James E. Rohr

Director

/s/ Marijn E. Dekkers


/s/ Mary L. Schapiro

Marijn E. Dekkers


Mary L. Schapiro

Director


Director







/s/ Ann M. Fudge


/s/ Robert J. Swieringa

Ann M. Fudge


Robert J. Swieringa

Director


Director







/s/ Susan Hockfield


/s/ James S. Tisch

Susan Hockfield

Director


James S. Tisch

Director

 

 

/s/ Andrea Jung

Andrea Jung

Director

 

 

/s/ Robert W. Lane

Robert W. Lane

Director

 

 

 



 

 

/s/ Douglas A. Warner III

Douglas A. Warner III

Director

 

 

 

        

 







 

 

 

 

 

 

 

A MAJORITY OF THE BOARD OF DIRECTORS

(Page 2 of 2)


 

 

  Exhibit 31(a)

 

Certification Pursuant to
Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended

 

I, Jeffrey R. Immelt, certify that:



1. 

I have reviewed this annual report on Form 10-K of General Electric Company;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3. 

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4. 

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:




a) 

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;




b) 

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;




c) 

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and




d) 

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and



5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):




a) 

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and




b) 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

 

Date: February 27, 2014

 

 

 

/s/ Jeffrey R. Immelt


Jeffrey R. Immelt


Chief Executive Officer




Exhibit 31(b)

 

Certification Pursuant to
Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended

 

I, Jeffrey S. Bornstein, certify that:


1.

I have reviewed this annual report on Form 10-K of General Electric Company;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:




a) 

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;




b) 

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;




c) 

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and




d) 

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and



5. 

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):




a) 

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and




b) 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

 

Date: February 27, 2014

 

 

 

/s/ Jeffrey S. Bornstein


Jeffrey S. Bornstein


Chief Financial Officer



 

 

Exhibit 32

Certification Pursuant to
18 U.S.C. Section 1350

 

In connection with the Annual Report of General Electric Company (the "registrant") on Form 10-K for the year ending December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "report"), we, Jeffrey R. Immelt and Jeffrey S. Bornstein, Chief Executive Officer and Chief Financial Officer, respectively, of the registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

 

(1)  

The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

 

 

February 27, 2014






/s/ Jeffrey R. Immelt


Jeffrey R. Immelt


Chief Executive Officer

 

 

 


/s/ Jeffrey S. Bornstein


Jeffrey S. Bornstein


Chief Financial Officer


 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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