10-Q 1 form10q.htm FORM 10Q form10q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549
 
FORM 10-Q
 (Mark One)
 
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2011
 
OR
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ____ to ____
 
Commission file number 001-00035
 
GENERAL ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer þ
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
 
There were 10,557,351,000 shares of common stock with a par value of $0.06 per share outstanding at September 30, 2011.

 
(1)

 
 
General Electric Company
 

 
   
Page
Part I - Financial Information
   
     
Item 1. Financial Statements
   
Condensed Statement of Earnings
   
Three months Ended September 30, 2011
 
3
Nine months Ended September 30, 2011
 
4
 
5
 
6
 
7
 
8
 
63
 
90
 
90
     
Part II - Other Information
   
     
Item 1. Legal Proceedings
Item 5. Other Information
 
91
92
93
 
94
 
95
 
Forward-Looking Statements
 
This document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; potential market disruptions or other impacts arising in the United States or Europe from developments in the European sovereign debt situation; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation’s (GECC) funding and on our ability to reduce GECC’s asset levels as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; changes in Japanese consumer behavior that may affect our estimates of liability for excess interest refund claims (Grey Zone); potential financial implications from the Japanese natural disaster; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flow and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; strategic actions, including acquisitions, joint ventures and dispositions and our success in completing announced transactions and integrating acquired businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
 
(2)

 

Part I. Financial Information
 
Item 1. Financial Statements.
 
General Electric Company and consolidated affiliates
 
Condensed Statement of Earnings
 
 
Three months ended September 30 (Unaudited)
 
Consolidated
   
GE(a)
 
Financial Services (GECS)
(In millions, except share amounts)
2011 
 
2010 
   
2011 
 
2010 
 
2011 
 
2010 
                                     
Revenues
                                   
Sales of goods
$
 16,859 
 
$
 14,525 
   
$
 16,869 
 
$
 14,485 
 
$
 32 
 
$
 40 
Sales of services
 
 6,279 
   
 9,076 
     
 6,361 
   
 9,108 
   
– 
   
– 
Other income
 
 556 
   
 187 
     
 621 
   
 223 
   
– 
   
– 
GECS earnings from continuing operations
 
– 
   
– 
     
 1,453 
   
 780 
   
– 
   
– 
GECS revenues from services
 
 11,673 
   
 11,585 
     
– 
   
– 
   
 11,986 
   
 11,914 
   Total revenues
 
 35,367 
   
 35,373 
     
 25,304 
   
 24,596 
   
 12,018 
   
 11,954 
                                     
Costs and expenses
                                   
Cost of goods sold
 
 13,003 
   
 10,558 
     
 13,015 
   
 10,518 
   
 30 
   
 39 
Cost of services sold
 
 3,612 
   
 6,069 
     
 3,695 
   
 6,102 
   
– 
   
– 
Interest and other financial charges
 
 3,735 
   
 3,822 
     
 356 
   
 393 
   
 3,560 
   
 3,573 
Investment contracts, insurance losses and
                                   
   insurance annuity benefits
 
 719 
   
 741 
     
– 
   
– 
   
 755 
   
 796 
Provision for losses on financing receivables
 
 1,020 
   
 1,637 
     
– 
   
– 
   
 1,020 
   
 1,637 
Other costs and expenses
 
 9,579 
   
 8,963 
     
 4,634 
   
 3,632 
   
 5,105 
   
 5,497 
   Total costs and expenses
 
 31,668 
   
 31,790 
     
 21,700 
   
 20,645 
   
 10,470 
   
 11,542 
                                     
Earnings from continuing operations
                                   
   before income taxes
 
 3,699 
   
 3,583 
     
 3,604 
   
 3,951 
   
 1,548 
   
 412 
Benefit (provision) for income taxes
 
 (435)
   
 (319)
     
 (378)
   
 (705)
   
 (57)
   
 386 
Earnings from continuing operations
 
 3,264 
   
 3,264 
     
 3,226 
   
 3,246 
   
 1,491 
   
 798 
Earnings (loss) from discontinued operations,
                                   
   net of taxes
 
 1 
   
 (1,052)
     
 1 
   
 (1,052)
   
 2 
   
 (1,052)
Net earnings (loss)
 
 3,265 
   
 2,212 
     
 3,227 
   
 2,194 
   
 1,493 
   
 (254)
Less net earnings (loss) attributable to
                                   
   noncontrolling interests
 
 41 
   
 157 
     
 3 
   
 139 
   
 38 
   
 18 
Net earnings (loss) attributable to the Company
 
 3,224 
   
 2,055 
     
 3,224 
   
 2,055 
   
 1,455 
   
 (272)
Preferred stock dividends declared
 
 (881)
   
 (75)
     
 (881)
   
 (75)
   
– 
   
– 
Net earnings (loss) attributable to GE common
                                   
   shareowners
$
 2,343 
 
$
 1,980 
   
$
 2,343 
 
$
 1,980 
 
$
 1,455 
 
$
 (272)
                                     
                                     
Amounts attributable to the Company
                                   
   Earnings from continuing operations
$
 3,223 
 
$
 3,107 
   
$
 3,223 
 
$
 3,107 
 
$
 1,453 
 
$
 780 
   Earnings (loss) from discontinued operations,
                                   
      net of taxes
 
 1 
   
 (1,052)
     
 1 
   
 (1,052)
   
 2 
   
 (1,052)
   Net earnings (loss) attributable to the Company
$
 3,224 
 
$
 2,055 
   
$
 3,224 
 
$
 2,055 
 
$
 1,455 
 
$
 (272)
                                     
Per-share amounts
                                   
   Earnings from continuing operations
                                   
      Diluted earnings per share
$
 0.22 
 
$
 0.28 
                         
      Basic earnings per share
$
 0.22 
 
$
 0.28 
                         
                                     
   Net earnings
                                   
      Diluted earnings per share
$
 0.22 
 
$
 0.18 
                         
      Basic earnings per share
$
 0.22 
 
$
 0.18 
                         
                                     
Dividends declared per common share
$
 0.15 
 
$
 0.12 
                         
                                     
                                     
(a)
Represents the adding together of all affiliated companies except General Electric Capital Services, Inc. (GECS or financial services), which is presented on a one-line basis.
 
 
 
See Note 3 for other-than-temporary impairment amounts.
 
 
See accompanying notes. Separate information is shown for "GE" and "Financial Services (GECS)." Transactions between GE and GECS have been eliminated from the "Consolidated" columns.
 

 
(3)

 

General Electric Company and consolidated affiliates
 
Condensed Statement of Earnings
 
 
Nine months ended September 30 (Unaudited)
 
Consolidated
   
GE(a)
 
Financial Services (GECS)
(In millions, except share amounts)
2011 
 
2010 
   
2011 
 
2010 
 
2011 
 
2010 
                                     
Revenues
                                   
Sales of goods
$
 47,571 
 
$
 43,195 
   
$
 47,539 
 
$
 42,710 
 
$
 116 
 
$
 489 
Sales of services
 
 20,466 
   
 28,583 
     
 20,754 
   
 28,795 
   
– 
   
– 
Other income
 
 4,805 
   
 815 
     
 4,962 
   
 903 
   
– 
   
– 
GECS earnings from continuing operations
 
– 
   
– 
     
 4,814 
   
 2,016 
   
– 
   
– 
GECS revenues from services
 
 36,485 
   
 35,775 
     
– 
   
– 
   
 37,386 
   
 36,730 
   Total revenues
 
 109,327 
   
 108,368 
     
 78,069 
   
 74,424 
   
 37,502 
   
 37,219 
                                     
Costs and expenses
                                   
Cost of goods sold
 
 37,914 
   
 32,258 
     
 37,890 
   
 31,803 
   
 108 
   
 458 
Cost of services sold
 
 12,901 
   
 19,076 
     
 13,189 
   
 19,288 
   
– 
   
– 
Interest and other financial charges
 
 11,309 
   
 11,689 
     
 1,032 
   
 1,166 
   
 10,750 
   
 10,916 
Investment contracts, insurance losses and
                                   
   insurance annuity benefits
 
 2,201 
   
 2,210 
     
– 
   
– 
   
 2,314 
   
 2,353 
Provision for losses on financing receivables
 
 2,988 
   
 5,824 
     
– 
   
– 
   
 2,988 
   
 5,824 
Other costs and expenses
 
 26,392 
   
 26,766 
     
 11,254 
   
 10,758 
   
 15,610 
   
 16,516 
   Total costs and expenses
 
 93,705 
   
 97,823 
     
 63,365 
   
 63,015 
   
 31,770 
   
 36,067 
                                     
Earnings (loss) from continuing operations
                                   
   before income taxes
 
 15,622 
   
 10,545 
     
 14,704 
   
 11,409 
   
 5,732 
   
 1,152 
Benefit (provision) for income taxes
 
 (5,266)
   
 (1,624)
     
 (4,437)
   
 (2,479)
   
 (829)
   
 855 
Earnings from continuing operations
 
 10,356 
   
 8,921 
     
 10,267 
   
 8,930 
   
 4,903 
   
 2,007 
Earnings (loss) from discontinued operations,
                                   
   net of taxes
 
 274 
   
 (1,506)
     
 274 
   
 (1,506)
   
 276 
   
 (1,502)
Net earnings (loss)
 
 10,630 
   
 7,415 
     
 10,541 
   
 7,424 
   
 5,179 
   
 505 
Less net earnings (loss) attributable to
                                   
   noncontrolling interests
 
 209 
   
 306 
     
 120 
   
 315 
   
 89 
   
 (9)
Net earnings (loss) attributable to the Company
 
 10,421 
   
 7,109 
     
 10,421 
   
 7,109 
   
 5,090 
   
 514 
Preferred stock dividends declared
 
 (1,031)
   
 (225)
     
 (1,031)
   
 (225)
   
– 
   
– 
Net earnings (loss) attributable to GE common
                                   
   shareowners
$
 9,390 
 
$
 6,884 
   
$
 9,390 
 
$
 6,884 
 
$
 5,090 
 
$
 514 
                                     
                                     
Amounts attributable to the Company
                                   
   Earnings from continuing operations
$
 10,147 
 
$
 8,615 
   
$
 10,147 
 
$
 8,615 
 
$
 4,814 
 
$
 2,016 
   Earnings (loss) from discontinued operations,
                                   
      net of taxes
 
 274 
   
 (1,506)
     
 274 
   
 (1,506)
   
 276 
   
 (1,502)
   Net earnings (loss) attributable to the Company
$
 10,421 
 
$
 7,109 
   
$
 10,421 
 
$
 7,109 
 
$
 5,090 
 
$
 514 
                                     
Per-share amounts
                                   
   Earnings from continuing operations
                                   
      Diluted earnings per share
$
 0.86 
 
$
 0.78 
                         
      Basic earnings per share
$
 0.86 
 
$
 0.78 
                         
                                     
   Net earnings
                                   
      Diluted earnings per share
$
 0.88 
 
$
 0.64 
                         
      Basic earnings per share
$
 0.88 
 
$
 0.64 
                         
                                     
Dividends declared per common share
$
 0.44 
 
$
 0.32 
                         
                                     
                                     

(a)
Represents the adding together of all affiliated companies except General Electric Capital Services, Inc. (GECS or financial services), which is presented on a one-line basis.
 
See Note 3 for other-than-temporary impairment amounts.
 
See accompanying notes. Separate information is shown for “GE” and “Financial Services (GECS).” Transactions between GE and GECS have been eliminated from the “Consolidated” columns.
 

 
(4)

 

General Electric Company and consolidated affiliates
Condensed Statement of Financial Position
 
Consolidated
   
GE(a)
 
Financial Services (GECS)
 
September 30,
 
December 31,
   
September 30,
 
December 31,
 
September 30,
 
December 31,
(In millions, except share amounts)
2011 
 
2010 
   
2011 
 
2010 
 
2011 
 
2010 
 
(Unaudited)
          
(Unaudited)
     
(Unaudited)
   
Assets
                                   
Cash and equivalents
$
 91,368 
 
$
 78,943 
   
$
 8,692 
 
$
 19,241 
 
$
 83,278 
 
$
 60,257 
Investment securities
 
 46,458 
   
 43,938 
     
 18 
   
 19 
   
 46,442 
   
 43,921 
Current receivables
 
 18,689 
   
 18,621 
     
 11,893 
   
 10,383 
   
– 
   
– 
Inventories
 
 15,021 
   
 11,526 
     
 14,977 
   
 11,460 
   
 44 
   
 66 
Financing receivables – net
 
 285,844 
   
 303,012 
     
– 
   
– 
   
 293,737 
   
 312,234 
Other GECS receivables
 
 8,492 
   
 8,956 
     
– 
   
– 
   
 13,689 
   
 14,304 
Property, plant and equipment – net
 
 66,094 
   
 66,212 
     
 13,728 
   
 12,444 
   
 52,328 
   
 53,768 
Investment in GECS
 
– 
   
– 
     
 75,959 
   
 68,984 
   
– 
   
– 
Goodwill
 
 73,291 
   
 64,388 
     
 45,565 
   
 36,880 
   
 27,726 
   
 27,508 
Other intangible assets – net
 
 12,433 
   
 9,971 
     
 10,723 
   
 8,088 
   
 1,710 
   
 1,883 
All other assets
 
 115,271 
   
 96,342 
     
 36,589 
   
 17,454 
   
 79,542 
   
 79,240 
Assets of businesses held for sale
 
 3,173 
   
 36,887 
     
 123 
   
 33,760 
   
 3,050 
   
 3,127 
Assets of discontinued operations
 
 1,566 
   
 12,425 
     
 50 
   
 50 
   
 1,516 
   
 12,375 
Total assets(b)
$
 737,700 
 
$
 751,221 
   
$
 218,317 
 
$
 218,763 
 
$
 603,062 
 
$
 608,683 
                                     
Liabilities and equity
                                   
Short-term borrowings
$
 127,327 
 
$
 117,959 
   
$
 1,179 
 
$
 456 
 
$
 126,866 
 
$
 118,797 
Accounts payable, principally trade accounts
 
 16,150 
   
 14,656 
     
 13,204 
   
 11,620 
   
 7,995 
   
 7,035 
Progress collections and price adjustments accrued
 
 11,114 
   
 11,142 
     
 11,903 
   
 11,841 
   
– 
   
– 
Other GE current liabilities
 
 19,997 
   
 12,959 
     
 19,997 
   
 12,959 
   
– 
   
– 
Non-recourse borrowings of consolidated
                                   
   securitization entities
 
 29,022 
   
 30,018 
     
– 
   
– 
   
 29,022 
   
 30,018 
Bank deposits
 
 41,515 
   
 37,298 
     
– 
   
– 
   
 41,515 
   
 37,298 
Long-term borrowings
 
 268,270 
   
 293,323 
     
 9,485 
   
 9,656 
   
 259,404 
   
 284,407 
Investment contracts, insurance liabilities
                                         
   and insurance annuity benefits
 
 29,925 
   
 29,582 
     
– 
   
– 
   
 30,405 
   
 29,993 
All other liabilities
 
 62,057 
   
 58,699 
     
 39,241 
   
 37,815 
   
 22,881 
   
 20,982 
Deferred income taxes
 
 1,980 
   
 2,753 
     
 (2,460)
   
 (4,237)
   
 4,440 
   
 6,990 
Liabilities of businesses held for sale
 
 1,855 
   
 16,047 
     
 42 
   
 15,455 
   
 1,813 
   
 592 
Liabilities of discontinued operations
 
 1,715 
   
 2,587 
     
 158 
   
 164 
   
 1,557 
   
 2,423 
Total liabilities(b)
 
 610,927 
   
 627,023 
     
 92,749 
   
 95,729 
   
 525,898 
   
 538,535 
                                     
Preferred stock (30,000 shares outstanding at
                                   
   both September 30, 2011 and December 31, 2010)
 
– 
   
– 
     
– 
   
– 
   
– 
   
– 
Common stock (10,557,351,000 and 10,615,376,000
                                   
   shares outstanding at September 30, 2011 and
                                   
   December 31, 2010, respectively)
 
 702 
   
 702 
     
 702 
   
 702 
   
 1 
   
 1 
Accumulated other comprehensive income – net(c)
                                   
   Investment securities
 
 (182)
   
 (636)
     
 (182)
   
 (636)
   
 (188)
   
 (639)
   Currency translation adjustments
 
 2,390 
   
 (86)
     
 2,390 
   
 (86)
   
 303 
   
 (1,411)
   Cash flow hedges
 
 (1,619)
   
 (1,280)
     
 (1,619)
   
 (1,280)
   
 (1,588)
   
 (1,281)
   Benefit plans
 
 (14,253)
   
 (15,853)
     
 (14,253)
   
 (15,853)
   
 (353)
   
 (380)
Other capital
 
 33,830 
   
 36,890 
     
 33,830 
   
 36,890 
   
 27,626 
   
 27,626 
Retained earnings
 
 135,857 
   
 131,137 
     
 135,857 
   
 131,137 
   
 50,158 
   
 45,068 
Less common stock held in treasury
 
 (32,264)
   
 (31,938)
     
 (32,264)
   
 (31,938)
   
– 
   
– 
                                     
Total GE shareowners’ equity
 
 124,461 
   
 118,936 
     
 124,461 
   
 118,936 
   
 75,959 
   
 68,984 
Noncontrolling interests(d)
 
 2,312 
   
 5,262 
     
 1,107 
   
 4,098 
   
 1,205 
   
 1,164 
Total equity
 
 126,773 
   
 124,198 
     
 125,568 
   
 123,034 
   
 77,164 
   
 70,148 
                                     
Total liabilities and equity
$
 737,700 
 
$
 751,221 
   
$
 218,317 
 
$
 218,763 
 
$
 603,062 
 
$
 608,683 
                                     
                                     
(a)
Represents the adding together of all affiliated companies except General Electric Capital Services, Inc. (GECS or financial services), which is presented on a one-line basis.
 
(b)
Our consolidated assets at September 30, 2011 include total assets of $45,038 million of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs. These assets include net financing receivables of $36,170 million and investment securities of $5,638 million. Our consolidated liabilities at September 30, 2011 include liabilities of certain VIEs for which the VIE creditors do not have recourse to GE. These liabilities include non-recourse borrowings of consolidated securitization entities (CSEs) of $28,522 million. See Note 18.
 
(c)
The sum of accumulated other comprehensive income - net was $(13,664) million and $(17,855) million at September 30, 2011 and December 31, 2010, respectively.
 
(d)
Included accumulated other comprehensive income - net attributable to noncontrolling interests of $(175) million and $(153) million at September 30, 2011 and December 31, 2010, respectively.
 
See accompanying notes. Separate information is shown for "GE" and "Financial Services (GECS)." Transactions between GE and GECS have been eliminated from the "Consolidated" columns.
 

 
(5)

 

General Electric Company and consolidated affiliates
Condensed Statement of Cash Flows
 
Nine months ended September 30 (Unaudited)
 
Consolidated
   
GE(a)
 
Financial Services (GECS)
(In millions)
2011 
 
2010 
   
2011 
 
2010 
 
2011 
 
2010 
                                     
Cash flows – operating activities
                                   
Net earnings
$
 10,630 
 
$
 7,415 
   
$
 10,541 
 
$
 7,424 
 
$
 5,179 
 
$
 505 
Less net earnings (loss) attributable to noncontrolling interests
 
 209 
   
 306 
     
 120 
   
 315 
   
 89 
   
 (9)
Net earnings attributable to the Company
 
 10,421 
   
 7,109 
     
 10,421 
   
 7,109 
   
 5,090 
   
 514 
(Earnings) loss from discontinued operations
 
 (274)
   
 1,506 
     
 (274)
   
 1,506 
   
 (276)
   
 1,502 
Adjustments to reconcile net earnings attributable to the
                                   
   Company to cash provided from operating activities
                                   
      Depreciation and amortization of property,
                                   
         plant and equipment
 
 6,944 
   
 7,449 
     
 1,539 
   
 1,668 
   
 5,405 
   
 5,781 
      Earnings from continuing operations retained by GECS
 
– 
   
– 
     
 (4,814)
   
 (2,016)
   
– 
   
– 
      Deferred income taxes
 
 (2,213)
   
 (1,825)
     
 (61)
   
 (198)
   
 (2,152)
   
 (1,627)
      Decrease (increase) in GE current receivables
 
 340 
   
 689 
     
 (449)
   
 307 
   
– 
   
– 
      Decrease (increase) in inventories
 
 (2,408)
   
 (118)
     
 (2,384)
   
 (82)
   
 22 
   
 9 
      Increase (decrease) in accounts payable
 
 1,314 
   
 1,092 
     
 1,459 
   
 639 
   
 1,103 
   
 664 
      Increase (decrease) in GE progress collections
 
 (679)
   
 (1,291)
     
 (588)
   
 (1,366)
   
– 
   
– 
      Provision for losses on GECS financing receivables
 
 2,988 
   
 5,824 
     
– 
   
– 
   
 2,988 
   
 5,824 
      All other operating activities
 
 6,956 
   
 5,190 
     
 1,695 
   
 2,575 
   
 4,460 
   
 2,818 
Cash from (used for) operating activities – continuing
                                   
   operations
 
 23,389 
   
 25,625 
     
 6,544 
   
 10,142 
   
 16,640 
   
 15,485 
Cash from (used for) operating activities – discontinued
                                   
   operations
 
 834 
   
 850 
     
– 
   
– 
   
 834 
   
 850 
Cash from (used for) operating activities
 
 24,223 
   
 26,475 
     
 6,544 
   
 10,142 
   
 17,474 
   
 16,335 
                                     
Cash flows – investing activities
                                   
Additions to property, plant and equipment
 
 (9,051)
   
 (4,390)
     
 (2,067)
   
 (1,484)
   
 (7,149)
   
 (3,113)
Dispositions of property, plant and equipment
 
 4,637 
   
 3,097 
     
– 
   
– 
   
 4,637 
   
 3,097 
Net decrease (increase) in GECS financing receivables
 
 17,668 
   
 22,888 
     
– 
   
– 
   
 18,530 
   
 23,633 
Proceeds from sale of discontinued operations
 
 8,951 
   
– 
     
– 
   
– 
   
 8,951 
   
– 
Proceeds from principal business dispositions
 
 8,265 
   
 2,787 
     
 6,148 
   
 1,712 
   
 2,117 
   
 905 
Payments for principal businesses purchased
 
 (10,839)
   
 (576)
     
 (10,789)
   
 (15)
   
 (50)
   
 (561)
Capital contribution from GE to GECS
 
– 
   
– 
     
– 
   
– 
   
– 
   
– 
All other investing activities
 
 3,588 
   
 10,970 
     
 (233)
   
 (270)
   
 4,226 
   
 11,084 
Cash from (used for) investing activities – continuing
                                   
   operations
 
 23,219 
   
 34,776 
     
 (6,941)
   
 (57)
   
 31,262 
   
 35,045 
Cash from (used for) investing activities – discontinued
                                   
   operations
 
 (802)
   
 (234)
     
– 
   
– 
   
 (802)
   
 (234)
Cash from (used for) investing activities
 
 22,417 
   
 34,542 
     
 (6,941)
   
 (57)
   
 30,460 
   
 34,811 
                                     
Cash flows – financing activities
                                   
Net increase (decrease) in borrowings (maturities of
                                   
   90 days or less)
 
 (770)
   
 (1,986)
     
 393 
   
 (1,288)
   
 (1,893)
   
 (823)
Net increase (decrease) in bank deposits
 
 3,746 
   
 3,982 
     
– 
   
– 
   
 3,746 
   
 3,982 
Newly issued debt (maturities longer than 90 days)
 
 34,074 
   
 31,349 
     
 146 
   
 4,133 
   
 33,808 
   
 27,000 
Repayments and other reductions (maturities longer
                                   
   than 90 days)
 
 (60,191)
   
 (77,802)
     
 57 
   
 (2,251)
   
 (60,248)
   
 (75,551)
Net dispositions (purchases) of GE shares for treasury
 
 (1,581)
   
 (438)
     
 (1,581)
   
 (438)
   
– 
   
– 
Dividends paid to shareowners
 
 (4,796)
   
 (3,434)
     
 (4,796)
   
 (3,434)
   
– 
   
– 
Purchase of subsidiary shares from
                                   
   noncontrolling interest
 
 (4,298)
   
 (2,000)
     
 (4,298)
   
 (2,000)
   
– 
   
– 
All other financing activities
 
 (1,428)
   
 (2,678)
     
 (92)
   
 (274)
   
 (1,336)
   
 (2,404)
Cash from (used for) financing activities – continuing
                                   
   operations
 
 (35,244)
   
 (53,007)
     
 (10,171)
   
 (5,552)
   
 (25,923)
   
 (47,796)
Cash from (used for) financing activities – discontinued
                                   
   operations
 
 (42)
   
 (719)
     
– 
   
– 
   
 (42)
   
 (719)
Cash from (used for) financing activities
 
 (35,286)
   
 (53,726)
     
 (10,171)
   
 (5,552)
   
 (25,965)
   
 (48,515)
Effect of currency exchange rate changes on cash
                                   
   and equivalents
 
 1,061 
   
 (1,225)
     
 19 
   
 (188)
   
 1,042 
   
 (1,037)
Increase (decrease) in cash and equivalents
 
 12,415 
   
 6,066 
     
 (10,549)
   
 4,345 
   
 23,011 
   
 1,594 
Cash and equivalents at beginning of year
 
 79,084 
   
 72,444 
     
 19,241 
   
 8,654 
   
 60,398 
   
 64,540 
Cash and equivalents at September 30
 
 91,499 
   
 78,510 
     
 8,692 
   
 12,999 
   
 83,409 
   
 66,134 
Less cash and equivalents of discontinued operations
                                   
   at September 30
 
 131 
   
 1,865 
     
– 
   
– 
   
 131 
   
 1,865 
Cash and equivalents of continuing operations
                                   
   at September 30
$
 91,368 
 
$
 76,645 
   
$
 8,692 
 
$
 12,999 
 
$
 83,278 
 
$
 64,269 
                                     
                                     
(a)
Represents the adding together of all affiliated companies except General Electric Capital Services, Inc. (GECS or financial services), which is presented on a one-line basis.
 
See accompanying notes. Separate information is shown for "GE" and "Financial Services (GECS)." Transactions between GE and GECS have been eliminated from the "Consolidated" columns and are discussed in Note 19.
 

 
(6)

 

Summary of Operating Segments
General Electric Company and consolidated affiliates
 
 
Three months ended September 30
 
Nine months ended September 30
 
(Unaudited)
 
(Unaudited)
(In millions)
2011 
 
2010 
 
2011 
 
2010 
                       
Revenues
                     
   Energy Infrastructure
$
 10,855 
 
$
 8,359 
 
$
 30,706 
 
$
 26,554 
   Aviation(a)
 
 4,835 
   
 4,391 
   
 13,935 
   
 12,815 
   Healthcare(a)
 
 4,332 
   
 3,958 
   
 12,920 
   
 11,793 
   Transportation(a)
 
 1,287 
   
 869 
   
 3,421 
   
 2,344 
   Home & Business Solutions
 
 2,094 
   
 2,125 
   
 6,236 
   
 6,315 
   GE Capital
 
 11,148 
   
 11,101 
   
 34,985 
   
 34,676 
      Total segment revenues
 
 34,551 
   
 30,803 
   
 102,203 
   
 94,497 
Corporate items and eliminations(a)
 
 816 
   
 4,570 
   
 7,124 
   
 13,871 
Consolidated revenues
$
 35,367 
 
$
 35,373 
 
$
 109,327 
 
$
 108,368 
                       
Segment profit(a)
                     
   Energy Infrastructure
$
 1,503 
 
$
 1,656 
 
$
 4,436 
 
$
 5,047 
   Aviation(a)
 
 862 
   
 805 
   
 2,662 
   
 2,483 
   Healthcare(a)
 
 608 
   
 581 
   
 1,850 
   
 1,739 
   Transportation(a)
 
 196 
   
 101 
   
 531 
   
 242 
   Home & Business Solutions
 
 38 
   
 104 
   
 218 
   
 318 
   GE Capital
 
 1,467 
   
 818 
   
 4,927 
   
 2,131 
      Total segment profit
 
 4,674 
   
 4,065 
   
 14,624 
   
 11,960 
Corporate items and eliminations(a)
 
 (717)
   
 140 
   
 992 
   
 300 
GE interest and other financial charges
 
 (356)
   
 (393)
   
 (1,032)
   
 (1,166)
GE provision for income taxes
 
 (378)
   
 (705)
   
 (4,437)
   
 (2,479)
Earnings from continuing operations attributable
                     
  to the Company
 
 3,223 
   
 3,107 
   
 10,147 
   
 8,615 
Earnings (loss) from discontinued operations,
                     
  net of taxes, attributable to the Company
 
 1 
   
 (1,052)
   
 274 
   
 (1,506)
Consolidated net earnings attributable to
                     
   the Company
$
 3,224 
 
$
 2,055 
 
$
 10,421 
 
$
 7,109 
                       
                       
(a)
Effective January 1, 2011, we reorganized our segments. We have reclassified prior-period amounts to conform to the current-period presentation. See Note 1 for a description of the reorganization. Segment profit excludes results reported as discontinued operations, earnings attributable to noncontrolling interests of consolidated subsidiaries and accounting changes. Segment profit excludes or includes interest and other financial charges and income taxes according to how a particular segment’s management is measured – excluded in determining segment profit, which we sometimes refer to as “operating profit,” for Energy Infrastructure, Aviation, Healthcare, Transportation and Home & Business Solutions; included in determining segment profit, which we sometimes refer to as “net earnings,” for GE Capital. Results of our formerly consolidated subsidiary, NBC Universal, are reported in the Corporate items and eliminations line. See Note 2. Prior to January 1, 2011, segment profit excluded the effects of principal pension plans. Beginning January 1, 2011, we allocate service costs related to our principal pension plans and we no longer allocate the retiree costs of our postretirement healthcare benefits to our segments. This revised allocation methodology better aligns segment operating costs to the active employee costs, which are managed by the segments.
 
See accompanying notes.

 
(7)

 


 
Notes to Condensed, Consolidated Financial Statements (Unaudited)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
The accompanying condensed, consolidated financial statements represent the consolidation of General Electric Company and all companies that we directly or indirectly control, either through majority ownership or otherwise. See Note 1 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2010 (2010 consolidated financial statements), which discusses our consolidation and financial statement presentation. As used in this report on Form 10-Q (Report) and in our 2010 consolidated financial statements, “GE” represents the adding together of all affiliated companies except General Electric Capital Services, Inc. (GECS or financial services), which is presented on a one-line basis; GECS consists of General Electric Capital Services, Inc. and all of its affiliates; and “Consolidated” represents the adding together of GE and GECS with the effects of transactions between the two eliminated.

Effective January 1, 2011, we reorganized the Technology Infrastructure segment into three segments – Aviation, Healthcare and Transportation. The prior-period results of the Aviation, Healthcare and Transportation businesses are unaffected by this reorganization. Also, beginning January 1, 2011, we allocate service costs related to our principal pension plans and we no longer allocate the retiree costs of our postretirement healthcare benefits to our segments. This revised allocation methodology better aligns segment operating costs to active employee costs that are managed by the segments. This change did not significantly affect our reported segment results.

On January 28, 2011, we sold the assets of our NBC Universal (NBCU) business in exchange for cash and a 49% interest in a new entity, NBCUniversal LLC (see Note 2). Results of our formerly consolidated subsidiary, NBCU, and our current equity method investment in NBCUniversal LLC are reported in the Corporate items and eliminations line on the Summary of Operating Segments.

We have reclassified certain prior-period amounts to conform to the current-period presentation. Unless otherwise indicated, information in these notes to the condensed, consolidated financial statements relates to continuing operations.

Accounting Changes
 
On January 1, 2011, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2009-13 and ASU 2009-14, amendments to Accounting Standards Codification (ASC) 605, Revenue Recognition and ASC 985, Software, respectively, (ASU 2009-13 &14). ASU 2009-13 requires the allocation of consideration to separate components of an arrangement based on the relative selling price of each component. ASU 2009-14 requires certain software-enabled products to be accounted for under the general accounting standards for multiple component arrangements. These amendments are effective for new revenue arrangements entered into or materially modified on or subsequent to January 1, 2011.

Although the adoption of these amendments eliminated the allocation of consideration using residual values, which was applied primarily in our Healthcare segment, the overall impact of adoption was insignificant to our financial statements. In addition, there are no significant changes to the number of components or the pattern and timing of revenue recognition following adoption.

Our accounting policy for sales of goods and services is included below and has been updated for the additional disclosure requirements of these amendments.

 
(8)

 
On July 1, 2011, we adopted FASB ASU 2011-02, an amendment to ASC 310, Receivables.  ASU 2011-02 provides guidance for determining whether a restructuring of a debt constitutes a troubled debt restructuring (TDR). ASU 2011-02 requires that a restructuring be classified as a TDR when it is both a concession and the debtor is experiencing financial difficulties. The amendment also clarifies the guidance on a creditor’s evaluation of whether it has granted a concession. The amendment applies to restructurings that have occurred subsequent to January 1, 2011.  As a result of adopting these amendments on July 1, 2011, we have classified an additional $271 million of financing receivables as TDRs and have recorded an increase of $77 million to our allowance for losses on financing receivables.  See Note 17.

See Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2010 for a summary of the remainder of our significant accounting policies.

Sales of Goods and Services
 
We record all sales of goods and services only when a firm sales agreement is in place, delivery has occurred or services have been rendered and collectibility of the fixed or determinable sales price is reasonably assured.

Arrangements for the sale of goods and services sometimes include multiple components. Most of our multiple component arrangements involve the sale of goods and services in the Healthcare segment. Our arrangements with multiple components usually involve an upfront deliverable of large machinery or equipment and future service deliverables such as installation, commissioning, training or the future delivery of ancillary products. In most cases, the relative values of the undelivered components are not significant to the overall arrangement and are typically delivered within three to six months after the core product has been delivered. In such agreements, selling price is determined for each component and any difference between the total of the separate selling prices and total contract consideration (i.e. discount) is allocated pro rata across each of the components in the arrangement. The value assigned to each component is objectively determined and obtained primarily from sources such as the separate selling price for that or a similar item or from competitor prices for similar items. If such evidence is not available, we use our best estimate of selling price, which is established consistent with the pricing strategy of the business and considers product configuration, geography, customer type, and other market specific factors.

Except for goods sold under long-term agreements, we recognize sales of goods under the provisions of U.S. Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 104, Revenue Recognition. We often sell consumer products and computer hardware and software products with a right of return. We use our accumulated experience to estimate and provide for such returns when we record the sale. In situations where arrangements include customer acceptance provisions based on seller or customer-specified objective criteria, we recognize revenue when we have reliably demonstrated that all specified acceptance criteria have been met or when formal acceptance occurs, respectively. In arrangements where we provide goods for trial and evaluation purposes, we only recognize revenue after customer acceptance occurs. Unless otherwise noted, we do not provide for anticipated losses before we record sales.

We recognize revenue on agreements for sales of goods and services under power generation unit and uprate contracts; nuclear fuel assemblies; larger oil drilling equipment projects; aeroderivative unit contracts; military development contracts; and long-term construction projects, using long-term construction and production contract accounting. We estimate total long-term contract revenue net of price concessions as well as total contract costs. For goods sold under power generation unit and uprate contracts, nuclear fuel assemblies, aeroderivative unit contracts and military development contracts, we recognize sales as we complete major contract-specified deliverables, most often when customers receive title to the goods or accept the services as performed. For larger oil drilling equipment projects and long-term construction projects, we recognize sales based on our progress towards contract completion measured by actual costs incurred in relation to our estimate of total expected costs. We measure long-term contract revenues by applying our contract-specific estimated margin rates to incurred costs. We routinely update our estimates of future costs for agreements in process and report any cumulative effects of such adjustments in current operations. We provide for any loss that we expect to incur on these agreements when that loss is probable.

 
(9)

 
We recognize revenue upon delivery for sales of aircraft engines, military propulsion equipment and related spare parts not sold under long-term product services agreements. Delivery of commercial engines, non-U.S. military equipment and all related spare parts occurs on shipment; delivery of military propulsion equipment sold to the U.S. Government or agencies thereof occurs upon receipt of a Material Inspection and Receiving Report, DD Form 250 or Memorandum of Shipment. Commercial aircraft engines are complex aerospace equipment manufactured to customer order under a variety of sometimes complex, long-term agreements. We measure sales of commercial aircraft engines by applying our contract-specific estimated margin rates to incurred costs. We routinely update our estimates of future revenues and costs for commercial aircraft engine agreements in process and report any cumulative effects of such adjustments in current operations. Significant components of our revenue and cost estimates include price concessions, performance-related guarantees as well as material, labor and overhead costs. We measure revenue for military propulsion equipment and spare parts not subject to long-term product services agreements based on the specific contract on a specifically measured output basis. We provide for any loss that we expect to incur on these agreements when that loss is probable; consistent with industry practice, for commercial aircraft engines, we make such provision only if such losses are not recoverable from future highly probable sales of spare parts for those engines.

We sell product services under long-term product maintenance or extended warranty agreements in our Aviation, Transportation and Energy Infrastructure segments, where costs of performing services are incurred on other than a straight-line basis. We also sell product services in our Healthcare segment, where such costs generally are expected to be on a straight-line basis. For the Aviation, Energy and Transportation agreements, we recognize related sales based on the extent of our progress towards completion measured by actual costs incurred in relation to total expected costs. We routinely update our estimates of future costs for agreements in process and report any cumulative effects of such adjustments in current operations. For the Healthcare agreements, we recognize revenues on a straight-line basis and expense related costs as incurred. We provide for any loss that we expect to incur on any of these agreements when that loss is probable.

NBC Universal, which we deconsolidated on January 28, 2011, records broadcast and cable television and Internet advertising sales when advertisements are aired, net of provision for any viewer shortfalls (make goods). Sales from theatrical distribution of films are recorded as the films are exhibited; sales of home videos, net of a return provision, when the videos are delivered to and available for sale by retailers; fees from cable/satellite operators when services are provided; and licensing of film and television programming when the material is available for airing.

Interim Period Presentation
 
The condensed, consolidated financial statements and notes thereto are unaudited. These statements include all adjustments (consisting of normal recurring accruals) that we considered necessary to present a fair statement of our results of operations, financial position and cash flows. The results reported in these condensed, consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. It is suggested that these condensed, consolidated financial statements be read in conjunction with the financial statements and notes thereto included in our 2010 consolidated financial statements. We label our quarterly information using a calendar convention, that is, first quarter is labeled as ending on March 31, second quarter as ending on June 30, and third quarter as ending on September 30. It is our longstanding practice to establish interim quarterly closing dates using a fiscal calendar, which requires our businesses to close their books on either a Saturday or Sunday, depending on the business. The effects of this practice are modest and only exist within a reporting year. The fiscal closing calendar from 1993 through 2013 is available on our website, www.ge.com/secreports.

 
(10)

 

2. ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS
 
Assets and Liabilities of Businesses Held for Sale
 
NBC Universal
 
In December 2009, we entered into an agreement with Comcast Corporation (Comcast) to transfer the assets of the NBCU business to a newly formed entity, comprising our NBCU business and Comcast’s cable networks, regional sports networks, certain digital properties and certain unconsolidated investments, in exchange for cash and a 49% interest in the newly-formed entity.

On March 19, 2010, NBCU entered into a three-year credit agreement and a 364-day bridge loan agreement. On April 30, 2010, NBCU issued $4,000 million of senior, unsecured notes with maturities ranging from 2015 to 2040 (interest rates ranging from 3.65% to 6.40%). On October 4, 2010, NBCU issued $5,100 million of senior, unsecured notes with maturities ranging from 2014 to 2041 (interest rates ranging from 2.10% to 5.95%). Subsequent to these issuances, the credit agreement and bridge loan agreements were terminated, with a $750 million revolving credit agreement remaining in effect. Proceeds from these issuances were used to repay $1,678 million of existing debt and pay a dividend of $7,394 million to GE.

On September 26, 2010, we acquired approximately 38% of Vivendi S.A.’s (Vivendi) 20% interest in NBCU (7.7% of NBCU’s outstanding shares) for $2,000 million. In January 2011 and prior to the transaction with Comcast, we acquired the remaining Vivendi interest in NBCU (12.3% of NBCU’s outstanding shares) for $3,673 million and made an additional payment of $222 million related to the previously purchased shares.

On January 28, 2011, we transferred the assets of the NBCU business and Comcast transferred certain of its assets to a newly formed entity, NBCUniversal LLC (NBCU LLC). In connection with the transaction, we received $6,176 million in cash from Comcast (which included $49 million of transaction-related cost reimbursements) and a 49% interest in NBCU LLC. Comcast holds the remaining 51% interest in NBCU LLC.

With respect to our 49% interest in NBCU LLC, we hold redemption rights, which, if exercised, would require NBCU LLC or Comcast to purchase (either directly or indirectly by GE transferring common stock of our holding company that owns 49% of NBCU LLC) half of our ownership interest after three and a half years and the remaining half after seven years, subject to certain exceptions, conditions and limitations. Our interest in NBCU LLC also is subject to call provisions, which, if exercised, allow Comcast to purchase our interest (either directly or indirectly) at specified times subject to certain exceptions. The redemption prices for such transactions are determined based on a contractually specified formula.

In connection with the transaction, we also entered into a number of agreements with Comcast governing the operation of the venture and transitional services, employee, tax and other matters. Under the operating agreement, excess cash generated by the operations of NBCU LLC will be used to reduce borrowings, except for distributions in amounts necessary to pay taxes on NBCU LLC’s profits. In addition, Comcast is obligated to share with us potential tax savings associated with Comcast’s purchase of its NBCU LLC member interest, if realized. We have not recognized these potential future payments as consideration for the sale, but will record such payments in income as they are received.

As part of the transfer, we provided guarantees and indemnifications related to certain pre-existing contractual arrangements entered into by NBCU. We have provided guarantees, on behalf of NBCU LLC, for the acquisition of sports programming in the amount of $3,258 million, triggered only in the event NBCU LLC fails to meet its payment commitments. We also have agreed to indemnify Comcast against any loss (after giving consideration to underlying collateral) related to pre-existing debt plus accrued interest owed by a joint venture of NBCU LLC and have recorded a liability of $446 million for this guarantee.

 
(11)

 
Following the transaction, we deconsolidated NBCU and we account for our investment in NBCU LLC under the equity method.  We recognized a pre-tax gain on the sale of $3,557 million ($400 million after tax).  In the third quarter of 2011, we recorded an adjustment to the pre-tax gain of $157 million ($131 million after tax) related to the finalization of the estimated fair value of our initial equity investment. In connection with the sale, we recorded income tax expense of $3,181 million, reflecting the low tax basis in our investment in the NBCU business and the recognition of deferred tax liabilities related to our 49% investment in NBCU LLC. As our investment in NBCU LLC is structured as a partnership for U.S. tax purposes, U.S. taxes are recorded separately from the equity investment.

At September 30, 2011, the carrying amount of our equity investment in NBCU LLC was $17,674 million, reported in the “All other assets” caption in our Condensed Statement of Financial Position. Deferred tax liabilities related to our NBCU LLC investment were $4,933 million at September 30, 2011 and were reported in the “Deferred income taxes” caption in our Condensed Statement of Financial Position.

We valued the initial carrying value of our investment in NBCU LLC based on a combination of income and market approaches. An income approach was used to determine the fair values of NBCU LLC’s underlying businesses and, when available and appropriate, an analysis of comparative market multiples was also undertaken. The resulting fair values were weighted equally between the two approaches. For purposes of the income approach, fair value was determined based on the present values of estimated future cash flows discounted at appropriate risk-adjusted rates. We used NBCU LLC management projections to estimate future cash flows and included an estimate of long-term future growth rates based on management’s most recent views of the long-term outlook for its businesses. We believe that these assumptions are consistent with market participant assumptions. We derived discount rates using a weighted average cost of capital. The cost of equity was determined using the capital asset pricing model and the cost of debt financing was based on published rates for industries relevant to NBCU LLC. Under the market approach, the most significant assumption was the price multiple, which was selected based on the operating performance and financial condition of comparable publicly traded companies in industries similar to those of the NBCU LLC businesses. As NBCU LLC is a partnership, the fair value of our investment in NBCU LLC was determined based upon the amount a market participant would pay for the partnership interest taking into consideration the tax benefit associated with such a purchase. The value of our investment also incorporates the fair value of the redemption features described above, which was determined based on an option pricing framework that incorporates the specific contractual terms of the redemption features.

At December 31, 2010, we classified the NBCU assets and liabilities of $33,758 million and $15,455 million, respectively, as held for sale. The major classes of assets at December 31, 2010 were current receivables ($2,572 million), property, plant and equipment – net ($2,082 million), goodwill and other intangible assets – net ($22,263 million) and all other assets ($6,841 million), including film and television production costs of $4,423 million. The major classes of liabilities at December 31, 2010 were accounts payable ($492 million), other GE current liabilities ($3,983 million), long-term debt ($9,906 million) and all other liabilities ($1,073 million).

Other
 
In the third quarter of 2011, we committed to sell our GE Capital Commercial Lending and Leasing (CLL) marine container leasing business, which consists of our controlling interests in the GE SeaCo joint venture along with other owned marine container assets, and our CLL trailer fleet services business in Mexico.

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

In 2010, we committed to sell our GE Capital Consumer businesses in Argentina, Brazil, and Canada, a CLL business in South Korea, and our Interpark business in Real Estate. The GE Capital Consumer Canada disposition was completed during the first quarter of 2011. The GE Capital Consumer Brazil and our Interpark business in Real Estate dispositions were completed during the second quarter of 2011 for proceeds of $22 million and $704 million, respectively.  The GE Capital Consumer Argentina disposition was completed during the third quarter of 2011 for proceeds of $41 million.

Summarized financial information for businesses held for sale is shown below.
 
 
(12)

 

 
At
 
September 30,
 
December 31,
(In millions)
2011
 
2010
   
           
     
Assets
 
           
     
Cash and equivalents
$
218 
 
$
63 
Current receivables
 
– 
   
2,572 
Financing receivables – net
 
483 
   
1,917 
Property, plant and equipment – net
 
2,054 
   
2,185 
Goodwill
 
135 
   
19,606 
Other intangible assets – net
 
37 
   
2,844 
All other assets
 
153 
   
7,560 
Other
 
93 
   
140 
Assets of businesses held for sale
$
3,173 
 
$
36,887 
         
           
Liabilities
         
Short-term borrowings
$
474 
 
$
146 
Accounts payable
 
82 
   
538 
Other GE current liabilities
 
– 
   
3,994 
Long-term borrowings
 
1,144 
   
10,134 
All other liabilities
 
155 
   
1,235 
Liabilities of businesses held for sale
$
1,855 
 
$
16,047 


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

 
(13)

 
Summarized financial information for discontinued operations is shown below.
 
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
 
2011
   
2010 
   
2011
   
2010 
                       
Operations
                     
Total revenues
$
12 
 
$
515 
 
$
336 
 
$
1,565 
                       
Earnings (loss) from discontinued operations
                     
   before income taxes
$
(8)
 
$
45 
 
$
– 
 
$
163 
Benefit (provision) for income taxes
 
21 
   
   
51 
   
(3)
Earnings (loss) from discontinued operations,
                     
   net of taxes
$
13 
 
$
48 
 
$
51 
 
$
160 
                       
Disposal
                     
Gain (loss) on disposal before income taxes
$
(45)
 
$
(1,100)
 
$
(86)
 
$
(1,666)
Benefit (provision) for income taxes
 
33 
   
– 
   
309 
   
– 
Gain (loss) on disposal, net of taxes
$
(12)
 
$
(1,100)
 
$
223 
 
$
(1,666)
                       
Earnings (loss) from discontinued operations,
                     
   net of taxes(a)
$
 
$
(1,052)
 
$
274 
 
$
(1,506)
                       
                       
(a)
The sum of GE industrial earnings (loss) from discontinued operations, net of taxes, and GECS earnings (loss) from discontinued operations, net of taxes, is reported as GE industrial earnings (loss) from discontinued operations, net of taxes, on the Condensed Statement of Earnings.
 


 
At
 
September 30,
 
December 31,
(In millions)
2011 
 
2010 
           
Assets
         
Cash and equivalents
$
131 
 
$
142 
Financing receivables – net
 
98 
   
10,589 
All other assets
 
   
168 
Other
 
1,336 
   
1,526 
Assets of discontinued operations
$
1,566 
 
$
12,425 
           
Liabilities
         
Accounts payable, principally trade accounts
$
 
$
110 
Deferred income taxes
 
204 
   
230 
All other liabilities
 
1,502 
   
2,205 
Other
 
   
42 
Liabilities of discontinued operations
$
1,715 
 
$
2,587 


Assets at September 30, 2011 and December 31, 2010, primarily comprised cash, financing receivables and a deferred tax asset for a loss carryforward, which expires principally in 2015 and in part in 2017, related to the sale of our GE Money Japan business.

BAC Credomatic GECF Inc. (BAC)
 
During the fourth quarter of 2010, we classified BAC as discontinued operations and completed the sale of BAC for $1,920 million. Immediately prior to the sale, and in accordance with terms of a previous agreement, we increased our ownership interest in BAC from 75% to 100% for a purchase price of $633 million. As a result of the sale of our interest in BAC, we recognized an after-tax gain of $780 million in 2010.

BAC revenues from discontinued operations were $264 million and $772 million in the three and nine months ended September 30, 2010, respectively. In total, BAC earnings from discontinued operations, net of taxes, were $19 million and $56 million in the three and nine months ended September 30, 2010, respectively.

 
(14)

 
GE Money Japan
 
During the third quarter of 2007, we committed to a plan to sell our Japanese personal loan business, Lake, upon determining that, despite restructuring, Japanese regulatory limits for interest charges on unsecured personal loans did not permit us to earn an acceptable return. During the third quarter of 2008, we completed the sale of GE Money Japan, which included Lake, along with our Japanese mortgage and card businesses, excluding our investment in GE Nissen Credit Co., Ltd. In connection with the sale, we reduced the proceeds from the sale for estimated interest refund claims in excess of the statutory interest rate. Proceeds from the sale were to be increased or decreased based on the actual claims experienced in accordance with loss-sharing terms specified in the sale agreement, with all claims in excess of 258 billion Japanese Yen (approximately $3,000 million) remaining our responsibility. The underlying portfolio to which this obligation relates is in runoff and interest rates were capped for all designated accounts by mid-2009. In the third quarter of 2010, we began making reimbursements under this arrangement.

Our overall claims experience developed unfavorably through 2010. We believe that the level of excess interest refund claims has been impacted by the challenging global economic conditions, in addition to Japanese legislative and regulatory changes. In September 2010, a large independent personal loan company in Japan filed for bankruptcy, which precipitated a significant amount of publicity surrounding excess interest refund claims in the Japanese marketplace, along with substantial legal advertising. We observed an increase in claims during September 2010 and higher average daily claims in the fourth quarter of 2010 and the first two months of 2011. Since February and through August 2011, we have experienced substantial declines in the rate of incoming claims, though claims severity has been higher than expected and we experienced an increase in claims in September 2011. As of September 30, 2011, our reserve for reimbursement of claims in excess of the statutory interest rate was $739 million.

The amount of these reserves is based on analyses of recent and historical claims experience, pending and estimated future excess interest refund requests, the estimated percentage of customers who present valid requests, and our estimated payments related to those requests. Our estimated liability for excess interest refund claims at September 30, 2011 assumes the pace of incoming claims will continue to decelerate, although at a lower pace than recently experienced, average exposure per claim remains consistent with historical experience, and we continue to see the impact of our loss mitigation efforts. Estimating the pace of decline in incoming claims can have a significant effect on the total amount of our liability. Holding all other assumptions constant, if claims declined at a rate of one percent higher or lower than our assumed long-term average, our liability estimate would change by approximately $250 million.

Uncertainties around the impact of laws and regulations, challenging economic conditions, the runoff status of the underlying book of business, the financial status of other personal lending companies in Japan and the effects of our mitigation efforts make it difficult to develop a meaningful estimate of the aggregate possible claims exposure. Recent trends, including the effect of governmental actions, market activity regarding other personal loan companies, higher claims severity and consumer activity, may continue to have an adverse effect on claims development.

GE Money Japan earnings (loss) from discontinued operations, net of taxes, were $2 million and $(1,101) million in the three months ended September 30, 2011 and 2010, respectively, and $2 million and $(1,673) million in the nine months ended September 30, 2011 and 2010, respectively.

WMC
 
During the fourth quarter of 2007, we completed the sale of WMC, our U.S. mortgage business. WMC substantially discontinued all new loan originations by the second quarter of 2007, and is not a loan servicer. In connection with the sale, WMC retained certain obligations related to loans sold prior to the disposal of the business, including WMC’s contractual obligations to repurchase previously sold loans as to which there was an early payment default or with respect to which certain contractual representations and warranties were not met. All claims received for early payment default have either been resolved or are no longer being pursued.

 
(15)

 
Pending claims for unmet representations and warranties were $783 million at December 31, 2009, $347 million at December 31, 2010 and $568 million at September 30, 2011. Reserves related to these contractual representations and warranties were $122 million and $101 million at September 30, 2011 and December 31, 2010, respectively.  We recorded an adjustment to our reserve of $21 million in the third quarter of 2011 to reflect the higher amount of pending claims and an increase in our reserve for unidentified claims.  The amount of these reserves is based upon pending and estimated future loan repurchase requests, the estimated percentage of loans validly tendered for repurchase, and our estimated losses on loans repurchased. A ten percent adverse change in these key assumptions would result in an increase to our reserves of approximately $35 million. Based on our historical experience, we estimate that a small percentage of the total loans WMC originated and sold will be tendered for repurchase, and of those tendered, only a limited amount will qualify as “validly tendered,” meaning the loans sold did not satisfy specified contractual obligations.  Uncertainties surrounding economic conditions, the ability and propensity of mortgage holders to present valid claims and governmental actions make it difficult to develop a meaningful estimate of aggregate possible claim exposure.  Actual losses could exceed the reserve amount if actual claim rates, investigative or litigation activity, valid tenders or losses WMC incurs on repurchased loans are higher than we have historically observed with respect to WMC.

WMC revenues (loss) from discontinued operations were $(21) million and $(1) million in the three months ended September 30, 2011 and 2010, respectively, and $(21) million and $(4) million in the nine months ended September 30, 2011 and 2010, respectively. In total, WMC’s earnings (loss) from discontinued operations, net of taxes, were $(15) million and $(2) million in the three months ended September 30, 2011 and 2010, respectively, and $(18) million and $(5) million in the nine months ended September 30, 2011 and 2010, respectively.

Other Financial Services
 
In the second quarter of 2011, we entered into an agreement to sell our Australian Home Lending operations and classified it as discontinued operations.  As a result, we recognized an after-tax loss of $148 million in 2011.  We completed the sale in the third quarter of 2011 for proceeds of approximately $4,577 million.  Australian Home Lending revenues from discontinued operations were $33 million and $118 million in the three months ended September 30, 2011 and 2010, respectively, and $248 million and $386 million in the nine months ended September 30, 2011 and 2010, respectively. Australian Home Lending earnings (loss) from discontinued operations, net of taxes, were $15 million and $14 million in the three months ended September 30, 2011 and 2010, respectively, and $(65) million and $51 million in the nine months ended September 30, 2011 and 2010, respectively.

In the first quarter of 2011, we entered into an agreement to sell our Consumer Singapore business for $692 million. The sale was completed in the second quarter of 2011 and resulted in the recognition of a gain on disposal, net of taxes, of $319 million. Consumer Singapore revenues from discontinued operations were $(1) million and $27 million in the three months ended September 30, 2011 and 2010, respectively, and $30 million and $79 million in the nine months ended September 30, 2011 and 2010, respectively. Consumer Singapore earnings from discontinued operations, net of taxes, were $7 million and $11 million in the three months ended September 30, 2011 and 2010, respectively, and $333 million and $27 million in the nine months ended September 30, 2011 and 2010, respectively.

In the fourth quarter of 2010, we entered into agreements to sell our Consumer RV Marine portfolio and Consumer Mexico business. The Consumer RV Marine and Consumer Mexico dispositions were completed during the first quarter and the second quarter of 2011, respectively, for proceeds of $2,365 million and $1,943 million, respectively. Consumer RV Marine revenues from discontinued operations were $0 million and $52 million in the three months ended September 30, 2011 and 2010, respectively, and $11 million and $160 million in the nine months ended September 30, 2011 and 2010, respectively. Consumer RV Marine earnings (loss) from discontinued operations, net of taxes, were $(1) million and $(8) million in the three months ended September 30, 2011 and 2010, respectively, and $1 million and $(9) million in the nine months ended September 30, 2011 and 2010, respectively. Consumer Mexico revenues from discontinued operations were $1 million and $55 million in the three months ended September 30, 2011 and 2010, respectively, and $68 million and $172 million in the nine months ended September 30, 2011 and 2010, respectively. Consumer Mexico earnings from discontinued operations, net of taxes, were $1 million and $18 million in the three months ended September 30, 2011 and 2010, respectively, and $34 million and $53 million in the nine months ended September 30, 2011 and 2010, respectively.

 
(16)

 
GE Industrial
 
GE industrial earnings (loss) from discontinued operations, net of taxes, were $(1) million and $0 million in the three months ended September 30, 2011 and 2010, respectively, and $(2) million and $(4) million in the nine months ended September 30, 2011 and 2010, respectively. The sum of GE industrial earnings (loss) from discontinued operations, net of taxes, and GECS earnings (loss) from discontinued operations, net of taxes, is reported as GE industrial earnings (loss) from discontinued operations, net of taxes, on the Condensed Statement of Earnings.

Assets of GE industrial discontinued operations were $50 million at both September 30, 2011 and December 31, 2010. Liabilities of GE industrial discontinued operations were $158 million and $164 million at September 30, 2011, and December 31, 2010, respectively, and primarily represent taxes payable and pension liabilities related to the sale of our Plastics business in 2007.


3. INVESTMENT SECURITIES
 
Substantially all of our investment securities are classified as available-for-sale. These comprise mainly investment grade debt securities supporting obligations to annuitants, policyholders and holders of guaranteed investment contracts (GICs) in our run-off insurance operations and Trinity, and investment securities at our treasury operations. We do not have any securities classified as held to maturity.
 
 
At
 
September 30, 2011
 
December 31, 2010
     
Gross
 
Gross
         
Gross
 
Gross
   
 
Amortized
 
unrealized
 
unrealized
 
Estimated
 
Amortized
 
unrealized
 
unrealized
 
Estimated
(In millions)
cost
 
gains
 
losses
 
fair value
 
cost
 
gains
 
losses
 
fair value
                                               
GE
                                             
   Debt – U.S. corporate
$
 
$
– 
 
$
– 
 
$
 
$
 
$
– 
 
$
– 
 
$
   Equity – available-for-sale
 
17 
   
– 
   
– 
   
17 
   
18 
   
– 
   
– 
   
18 
   
18 
   
– 
   
– 
   
18 
   
19 
   
– 
   
– 
   
19 
GECS
                                             
   Debt
                                             
      U.S. corporate
 
21,633 
   
3,076 
   
(276)
   
24,433 
   
21,233 
   
1,576 
   
(237)
   
22,572 
      State and municipal
 
2,970 
   
317 
   
(144)
   
3,143 
   
2,961 
   
45 
   
(282)
   
2,724 
      Residential mortgage-
                                             
         backed(a)
 
2,794 
   
191 
   
(303)
   
2,682 
   
3,092 
   
95 
   
(378)
   
2,809 
      Commercial mortgage-backed
 
2,887 
   
137 
   
(269)
   
2,755 
   
3,009 
   
145 
   
(230)
   
2,924 
      Asset-backed
 
4,060 
   
10 
   
(216)
   
3,854 
   
3,407 
   
16 
   
(193)
   
3,230 
      Corporate – non-U.S.
 
2,703 
   
135 
   
(142)
   
2,696 
   
2,883 
   
116 
   
(132)
   
2,867 
      Government – non-U.S.
 
2,282 
   
116 
   
(133)
   
2,265 
   
2,242 
   
82 
   
(58)
   
2,266 
      U.S. government and federal
                                             
         agency
 
3,220 
   
91 
   
– 
   
3,311 
   
3,358 
   
57 
   
(47)
   
3,368 
   Retained interests
 
29 
   
14 
   
(6)
   
37 
   
55 
   
10 
   
(26)
   
39 
   Equity
                                             
      Available-for-sale
 
828 
   
134 
   
(83)
   
879 
   
500 
   
213 
   
(8)
   
705 
      Trading
 
387 
   
– 
   
– 
   
387 
   
417 
   
– 
   
– 
   
417 
   
43,793 
   
4,221 
   
(1,572)
   
46,442 
   
43,157 
   
2,355 
   
(1,591)
   
43,921 
Eliminations
 
(2)
   
– 
   
– 
   
(2)
   
(2)
   
– 
   
– 
   
(2)
Total
$
43,809 
 
$
4,221 
 
$
(1,572)
 
$
46,458 
 
$
43,174 
 
$
2,355 
 
$
(1,591)
 
$
43,938 
                                               
                                               
(a)
Substantially collateralized by U.S. mortgages. Of our total residential mortgage-backed securities (RMBS) portfolio at September 30, 2011, $1,696 million relates to securities issued by government sponsored entities and $986 million relates to securities of private label issuers. Securities issued by private label issuers are collateralized primarily by pools of individual direct mortgage loans of individual financial institutions.
 
 
(17)

 
 
The fair value of investment securities increased to $46,458 million at September 30, 2011, from $43,938 million at December 31, 2010, primarily due to the impact of lower interest rates and purchases in our financial services businesses.

The following tables present the estimated fair values and gross unrealized losses of our available-for-sale investment securities.
 
 
In loss position for
 
 
Less than 12 months
 
12 months or more
 
     
Gross
     
Gross
 
 
Estimated
 
unrealized
 
Estimated
 
unrealized
 
(In millions)
fair value
 
losses
(a)
fair value
 
losses
(a)
                         
September 30, 2011
                       
Debt
                       
   U.S. corporate
$
1,387 
 
$
(104)
 
$
961 
 
$
(172)
 
   State and municipal
 
62 
   
(29)
   
321 
   
(115)
 
   Residential mortgage-backed
 
179 
   
(6)
   
970 
   
(297)
 
   Commercial mortgage-backed
 
366 
   
(36)
   
1,382 
   
(233)
 
   Asset-backed
 
2,836 
   
(48)
   
856 
   
(168)
 
   Corporate – non-U.S.
 
284 
   
(8)
   
773 
   
(134)
 
   Government – non-U.S.
 
597 
   
(25)
   
161 
   
(108)
 
   U.S. government and federal agency
 
– 
   
– 
   
   
– 
 
Retained interests
 
– 
   
– 
   
   
(6)
 
Equity
 
187 
   
(83)
   
– 
   
– 
 
Total
$
5,898 
 
$
(339)
 
$
5,429 
 
$
(1,233)
 
                         
December 31, 2010
                       
Debt
                       
   U.S. corporate
$
2,375 
 
$
(81)
 
$
1,519 
 
$
(156)
 
   State and municipal
 
949 
   
(43)
   
570 
   
(239)
 
   Residential mortgage-backed
 
188 
   
(4)
   
1,024 
   
(374)
 
   Commercial mortgage-backed
 
831 
   
(104)
   
817 
   
(126)
 
   Asset-backed
 
113 
   
(5)
   
910 
   
(188)
 
   Corporate – non-U.S.
 
448 
   
(12)
   
804 
   
(120)
 
   Government – non-U.S.
 
661 
   
(6)
   
107 
   
(52)
 
   U.S. government and federal agency
 
1,822 
   
(47)
   
– 
   
– 
 
Retained interests
 
– 
   
– 
   
34 
   
(26)
 
Equity
 
49 
   
(8)
   
– 
   
– 
 
Total
$
7,436 
 
$
(310)
 
$
5,785 
 
$
(1,281)
 
                         
                         
(a)
At September 30, 2011, other-than-temporary impairments previously recognized through other comprehensive income (OCI) on securities still held amounted to $(500) million, of which $(385) million related to RMBS. Gross unrealized losses related to those securities at September 30, 2011 amounted to $(617) million, of which $(497) million related to RMBS.
 


We regularly review investment securities for impairment using both qualitative and quantitative criteria. We presently do not intend to sell the vast majority of our debt securities and believe that it is not more likely than not that we will be required to sell these securities that are in an unrealized loss position before recovery of our amortized cost. We believe that the unrealized loss associated with our equity securities will be recovered within the foreseeable future. The methodologies and significant inputs used to measure the amount of credit loss for our investment securities during the three and nine months ended September 30, 2011 have not changed from those described in our 2010 consolidated financial statements. See Note 3 in our 2010 consolidated financial statements for additional information regarding these methodologies and inputs.
 
 
 
(18)

 
During the third quarter of 2011, we recorded other-than-temporary impairments of $86 million, of which $68 million was recorded through earnings ($6 million relates to equity securities) and $18 million was recorded in accumulated other comprehensive income (AOCI). At July 1, 2011, cumulative impairments recognized in earnings associated with debt securities still held were $561 million. During the third quarter, we recognized first time impairments of $37 million and incremental charges on previously impaired securities of $23 million. These amounts included $1 million related to securities that were subsequently sold.

During the third quarter of 2010, we recorded other-than-temporary impairments of $38 million, of which $31 million was recorded through earnings ($23 million relates to equity securities) and $7 million was recorded in AOCI. At July 1, 2010, cumulative impairments recognized in earnings associated with debt securities still held were $428 million. During the third quarter of 2010, we recognized first time impairments of $2 million and incremental charges on previously impaired securities of $1 million. These amounts included $1 million related to securities that were subsequently sold.

During the nine months ended September 30, 2011, we recorded other-than-temporary impairments of $270 million, of which $186 million was recorded through earnings ($16 million relates to equity securities) and $84 million was recorded in AOCI. At January 1, 2011, cumulative impairments recognized in earnings associated with debt securities still held were $500 million. During the nine months ended September 30, 2011, we recognized first time impairments of $57 million and incremental charges on previously impaired securities of $104 million. These amounts included $42 million related to securities that were subsequently sold.

During the nine months ended September 30, 2010, we recorded other-than-temporary impairments of $297 million, of which $166 million was recorded through earnings ($24 million relates to equity securities) and $131 million was recorded in AOCI. At January 1, 2010, cumulative impairments recognized in earnings associated with debt securities still held were $340 million. During the nine months ended September 30, 2010, we recognized first time impairments of $94 million and incremental charges on previously impaired securities of $37 million. These amounts included $40 million related to securities that were subsequently sold.

Contractual Maturities of GECS Investment in Available-for-Sale Debt Securities (Excluding Mortgage-
Backed and Asset-Backed Securities)
 
Amortized
 
Estimated
(In millions)
cost
 
fair value
           
Due in
         
   2011
$
 2,865 
 
$
 2,887 
   2012-2015
 
 7,327 
   
 7,537 
   2016-2020
 
 4,759 
   
 4,972 
   2021 and later
 
 17,843 
   
 20,439 
           


We expect actual maturities to differ from contractual maturities because borrowers have the right to call or prepay certain obligations.

 
(19)

 
Supplemental information about gross realized gains and losses on available-for-sale investment securities follows.
 
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
2011 
 
2010 
 
2011 
 
2010 
                       
GE
                     
Gains
$
– 
 
$
– 
 
$
– 
 
$
– 
Losses, including impairments
 
– 
   
– 
   
– 
   
– 
Net
 
– 
   
– 
   
– 
   
– 
                       
GECS
                     
Gains
 
 28 
   
 34 
   
 189 
   
 160 
Losses, including impairments
 
 (70)
   
 (46)
   
 (197)
   
 (191)
Net
 
 (42)
   
 (12)
   
 (8)
   
 (31)
Total
$
 (42)
 
$
 (12)
 
$
 (8)
 
$
 (31)


Although we generally do not have the intent to sell any specific securities at the end of the period, in the ordinary course of managing our investment securities portfolio, we may sell securities prior to their maturities for a variety of reasons, including diversification, credit quality, yield and liquidity requirements and the funding of claims and obligations to policyholders. In some of our bank subsidiaries, we maintain a certain level of purchases and sales volume principally of non-U.S. government debt securities. In these situations, fair value approximates carrying value for these securities.

Proceeds from investment securities sales and early redemptions by the issuer totaled $3,466 million and $4,754 million in the three months ended September 30, 2011 and 2010, respectively, and $13,438 million and $12,070 million in the nine months ended September 30, 2011 and 2010, respectively, principally from the sales of short-term securities in our bank subsidiaries and treasury operations.

We recognized net pre-tax gains (losses) on trading securities of $(29) million and $33 million in the three months ended September 30, 2011 and 2010, respectively, and $26 million and $52 million in the nine months ended September 30, 2011 and 2010, respectively.


4. INVENTORIES
 
Inventories consisted of the following.
 
 
At
 
September 30,
 
December 31,
(In millions)
2011 
 
2010 
           
Raw materials and work in process
$
9,200 
 
$
6,973 
Finished goods
 
5,571 
   
4,501 
Unbilled shipments
 
644 
   
456 
   
15,415 
   
11,930 
Less revaluation to LIFO
 
(394)
   
(404)
Total
$
15,021 
 
$
11,526 

 
(20)

 

5. GECS FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES
 
GECS financing receivables – net, consisted of the following.
 
 
At
 
September 30,
 
December 31,
(In millions)
2011
 
2010 
           
Loans, net of deferred income(a)
$
260,552 
 
$
275,877 
Investment in financing leases, net of deferred income
 
39,854 
   
44,390 
   
300,406 
   
320,267 
Less allowance for losses
 
(6,669)
   
(8,033)
Financing receivables – net(b)
$
293,737 
 
$
312,234 
           
           
(a)  
Deferred income was $2,313 million and $2,351 million at September 30, 2011 and December 31, 2010, respectively.
 
(b)  
Financing receivables at September 30, 2011 and December 31, 2010 included $1,221 million and $1,503 million, respectively, relating to loans that had been acquired in a transfer but have been subject to credit deterioration since origination per Accounting Standards Codification (ASC) 310, Receivables.
 


 
(21)

 
The following tables provide additional information about our financing receivables and related activity in the allowance for losses for our Commercial, Real Estate and Consumer portfolios.

Financing Receivables – net
 
The following table displays our financing receivables balances.
 
 
At
 
September 30,
 
December 31,
(In millions)
2011
 
2010 
           
Commercial
         
CLL
         
Americas(a)
$
81,072 
 
$
88,558 
Europe
 
37,130 
   
37,498 
Asia
 
11,914 
   
11,943 
Other(a)
 
469 
   
664 
Total CLL
 
130,585 
   
138,663 
           
Energy Financial Services
 
5,977 
   
7,011 
           
GECAS
 
11,841 
   
12,615 
           
Other
 
1,388 
   
1,788 
Total Commercial financing receivables
 
149,791 
   
160,077 
           
Real Estate
         
Debt
 
25,748 
   
30,249 
Business Properties
 
8,630 
   
9,962 
Total Real Estate financing receivables
 
34,378 
   
40,211 
           
Consumer
         
Non-U.S. residential mortgages
 
38,708 
   
40,011 
Non-U.S. installment and revolving credit
 
19,801 
   
20,132 
U.S. installment and revolving credit
 
43,249 
   
43,974 
Non-U.S. auto
 
6,462 
   
7,558 
Other
 
8,017 
   
8,304 
Total Consumer financing receivables
 
116,237 
   
119,979 
           
Total financing receivables
 
300,406 
   
320,267 
           
Less allowance for losses
 
(6,669)
   
(8,033)
Total financing receivables – net
$
293,737 
 
$
312,234 
           
           
(a)  
During the third quarter of 2011, we transferred our Railcar lending and leasing portfolio from CLL Other to CLL Americas.  Prior-period amounts were reclassified to conform to the current-period presentation.
 
 

 
(22)

 

Allowance for Losses on Financing Receivables
 
The following tables provide a roll-forward of our allowance for losses on financing receivables.
 
 
Balance at
 
Provision
             
Balance at
 
January 1,
 
charged to
     
Gross
     
September 30,
(In millions)
2011 
 
operations
(a)
Other
(b)
write-offs
(c)
Recoveries
(c)
2011 
                                   
Commercial
                                 
CLL
                                 
Americas
$
1,288 
 
$
250 
 
$
(79)
 
$
(544)
 
$
80 
 
$
995 
Europe
 
429 
   
126 
   
17 
   
(218)
   
49 
   
403 
Asia
 
222 
   
81 
   
16 
   
(194)
   
25 
   
150 
Other
 
   
   
(4)
   
– 
   
– 
   
Total CLL
 
1,945 
   
460 
   
(50)
   
(956)
   
154 
   
1,553 
                                   
                                   
Energy Financial
                                 
    Services
 
22 
   
10 
   
– 
   
(4)
   
   
36 
                                   
GECAS
 
20 
   
(4)
   
– 
   
(2)
   
– 
   
14 
                                   
Other
 
58 
   
13 
   
– 
   
(31)
   
   
43 
Total Commercial
 
2,045 
   
479 
   
(50)
   
(993)
   
165 
   
1,646 
                                   
Real Estate
                                 
Debt
 
1,292 
   
155 
   
13 
   
(494)
   
12 
   
978 
Business Properties
 
196 
   
70 
   
– 
   
(107)
   
   
163 
Total Real Estate
 
1,488 
   
225 
   
13 
   
(601)
   
16 
   
1,141 
                                   
Consumer