FORM
10-K/A |
þ |
Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 |
For
the fiscal year ended December 31, 2004 | |
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 1-6461
_____________________________ | |
General
Electric Capital Corporation
(Exact
name of registrant as specified in its
charter) |
Delaware |
13-1500700 | |||||
(State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification No.) | |||||
|
||||||
260
Long Ridge Road, Stamford, Connecticut |
06927 |
203/357-4000 | ||||
(Address
of principal executive offices) |
(Zip
Code) |
(Registrant’s
telephone number,
including
area code) | ||||
Securities
Registered Pursuant to Section 12(b) of the Act:
| ||||||
Title
of each class |
Name
of each exchange
on
which registered | |||||
|
| |||||
7.875%
Guaranteed Subordinated Notes Due December 1,
2006 |
New
York Stock Exchange | |||||
6.625%
Public Income Notes Due June 28, 2032 |
New
York Stock Exchange | |||||
6.10%
Public Income Notes Due November 15, 2032 |
New
York Stock Exchange | |||||
5.875%
Notes Due February 18, 2033 |
New
York Stock Exchange | |||||
Step-Up
Public Income Notes Due January 28, 2035 |
New
York Stock Exchange | |||||
Securities
Registered Pursuant to Section 12(g) of the Act: |
||||||
Title
of each class |
||||||
None. |
TABLE
OF CONTENTS | ||
|
Page | |
2005
Restatement |
3 | |
PART
I |
| |
|
| |
Item
1. |
Business |
7 |
Item
2. |
Properties |
11 |
Item
3. |
Legal
Proceedings |
11 |
Item
4. |
Submission
of Matters to a Vote of Security Holders |
11 |
|
| |
PART
II |
| |
|
| |
Item
5. |
Market
for the Registrant’s Common Equity, Related Stockholder Matters and
Issuer
Purchases of Equity Securities |
12 |
Item
6. |
Selected
Financial Data |
12 |
Item
7. |
Management’s
Discussion and Analysis of Results of Operations and Financial
Condition |
12 |
Item
7A. |
Quantitative
and Qualitative Disclosures About Market Risk |
40 |
Item
8. |
Financial
Statements and Supplementary Data |
40 |
Item
9. |
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure |
84 |
Item
9A. |
Controls
and Procedures |
84 |
Item
9B. |
Other
Information |
88 |
|
| |
PART
III |
| |
|
| |
Item
10. |
Directors
and Executive Officers of the Registrant |
88 |
Item
11. |
Executive
Compensation |
88 |
Item
12. |
Security
Ownership of Certain Beneficial Owners and Management |
88 |
Item
13. |
Certain
Relationships and Related Transactions |
88 |
Item
14. |
Principal
Accounting Fees and Services |
89 |
|
| |
PART
IV |
| |
|
| |
Item
15. |
Exhibits
and Financial Statement Schedule |
89 |
Signatures |
99 |
Effects
of Correction |
|||||||||||||
(In
millions) |
Total |
Quarter
ending
March
31, 2005 |
Cumulative
through
December
31, 2004 |
||||||||||
Increase
(decrease) in earnings before
accounting
changes |
$ |
381 |
$ |
(78 |
) |
$ |
459 |
||||||
Accounting
changes |
157 |
- |
157 |
||||||||||
Increase
(decrease) net earnings |
$ |
538 |
$ |
(78 |
) |
$ |
616 |
· |
The
first errors were in accounting for interest rate and currency swaps at
GECC that included fees paid or received at inception. These swaps related
to about 14% of our overall borrowings at January 1, 2001, and about 6% of
our overall borrowings at December 31, 2004. Our initial accounting viewed
these fees as immaterial. KPMG LLP, our independent registered public
accounting firm, reviewed this initial accounting in connection with their
2001 audit. In 2003, we discontinued use of such swaps, except for one
immaterial transaction, but continued the previous accounting for those
already in place. Because of the swap fees, however, the fair values of
the swaps were not zero at inception as required by SFAS 133 and,
accordingly, we were required to, but did not, test periodically for
effectiveness. |
· |
The
second errors arose from a hedge accounting position related to a
portfolio of assets consolidated by GECC in July 2003 at implementation of
Financial Accounting Standards Board Interpretation No. (FIN) 46,
Consolidation
of Variable Interest Entities.
This portfolio included assets equal to 2% and 1% of GE’s total assets at
consolidation and at December 31, 2004, respectively. We entered into
interest rate swaps in 2003 to adjust the economic yield on these
newly-consolidated fixed-rate assets from a fixed to a floating rate.
Adhering to our hedge documentation at the 2003 inception of these swaps,
we did not perform subsequent periodic testing of their effectiveness. We
determined as a result of the internal audit that the prepayment penalties
in the underlying assets, which penalties had not been identified by us or
KPMG LLP at implementation, were not appropriately mirrored in the
associated swaps, as required in order to avoid periodic testing of
effectiveness under SFAS 133. Accordingly, periodic effectiveness testing
was required under SFAS 133 for these swaps.
|
· |
In
the course of the internal audit, GE's internal audit staff also
identified other errors under SFAS 133 with respect to other aspects of
certain swaps and other derivative instruments. Adjustments to correct the
accounting for these transactions also are included in our restated
results of operations. We do not believe these other adjustments are
material, individually or in the aggregate, to our financial position or
our results of operations for any reported
period. |
· |
we
have completed a review of the documentation and accounting for interest
rate and currency swaps with respect to the types of hedging transactions
affected by the restatement at GECC treasury
operations; |
· |
we
are taking action to adjust our interest rate and currency swaps thereby
eliminating any significant volatility associated with these swaps;
and |
· |
we
have reversed the effects of incorrect hedge accounting by restating our
previously issued financial statements. |
Effects
of Statements of Earnings |
|||||||||||||||
(Income
(expense);in millions) |
Total |
2004 |
2003 |
2002 |
2001 |
||||||||||
Revenues |
$ |
930 |
$ |
503 |
$ |
454 |
$ |
16 |
$ |
(43 |
) | ||||
Interest |
(170 |
) |
(129 |
) |
(67 |
) |
65 |
(39 |
) | ||||||
Provision
for income taxes |
(301 |
) |
(148 |
) |
(153 |
) |
(32 |
) |
32 |
||||||
Earnings
before accounting changes |
459 |
226 |
234 |
49 |
(50 |
) | |||||||||
Cumulative
effect of accounting changes |
157 |
- |
- |
- |
157 |
||||||||||
Net
earnings |
$ |
616 |
$ |
226 |
$ |
234 |
$ |
49 |
$ |
107 |
2004 |
|||||||||||||||
(Income
(expense);in millions) |
Total |
First
quarter |
Second
quarter |
Third
quarter |
Fourth
quarter |
||||||||||
Revenues |
$ |
503 |
$ |
242 |
$ |
(254 |
) |
$ |
64 |
$ |
451 |
||||
Interest |
(129 |
) |
(33 |
) |
(33 |
) |
(31 |
) |
(32 |
) | |||||
Provision
for income taxes |
(148 |
) |
(83 |
) |
114 |
(13 |
) |
(166 |
) | ||||||
Net
earnings |
$ |
226 |
$ |
126 |
$ |
(173 |
) |
$ |
20 |
$ |
253 |
2003 |
|||||||||||||||
(Income
(expense);in millions) |
Total |
First
quarter |
Second
quarter |
Third
quarter |
Fourth
quarter |
||||||||||
Revenues |
$ |
454 |
$ |
441 |
$ |
775 |
$ |
(703 |
) |
$ |
(59 |
) | |||
Interest |
(67 |
) |
33 |
(30 |
) |
(34 |
) |
(36 |
) | ||||||
Provision
for income taxes |
(153 |
) |
(187 |
) |
(295 |
) |
291 |
38 |
|||||||
Net
earnings |
$ |
234 |
$ |
287 |
$ |
450 |
$ |
(446 |
) |
$ |
(57 |
) |
Year
ended December 31 |
|||||||||||||||
(In
millions) |
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
2001
(Restated) |
2000 |
||||||||||
Revenues |
$ |
59,850 |
$ |
53,370 |
$ |
48,835 |
$ |
49,005 |
$ |
54,799 |
|||||
Earnings
before accounting changes |
8,260 |
7,466 |
6,554 |
6,010 |
4,289 |
||||||||||
Cumulative
effect of accounting changes |
- |
(339 |
) |
(1,015 |
) |
(1 |
) |
- |
|||||||
Net
earnings |
8,260 |
7,127 |
5,539 |
6,009 |
4,289 |
||||||||||
Return
on average shareowner’s equity |
16.74 |
% |
16.99 |
% |
19.13 |
% |
21.64 |
% |
17.90 |
% | |||||
Ratio
of earnings to fixed charges |
1.89 |
1.86 |
1.66 |
1.73 |
1.52 |
||||||||||
Ratio
of earnings to combined fixed |
|||||||||||||||
charges
and preferred stock dividends |
1.88 |
1.85 |
1.65 |
1.71 |
1.50 |
||||||||||
Ratio
of debt to equity |
6.53:1 |
6.66:1 |
6.51:1 |
7.26:1 |
7.53:1 |
||||||||||
Financing
receivables - net |
$ |
279,588 |
$ |
245,503 |
$ |
195,322 |
$ |
169,615 |
$ |
138,832 |
|||||
Total
assets |
566,885 |
506,773 |
439,434 |
381,065 |
332,636 |
||||||||||
Borrowings |
352,326 |
311,097 |
261,162 |
230,411 |
196,258 |
||||||||||
Minority
interest |
6,105 |
2,512 |
1,834 |
1,650 |
1,344 |
||||||||||
Shareowner’s
equity |
53,958 |
46,692 |
40,126 |
31,739 |
26,073 |
||||||||||
Increase
(decrease) in |
|||||||||||||||||
Earnings
Before Accounting Changes |
2001
Accounting Change(a) |
||||||||||||||||
(In
millions)
|
2004 |
2003 |
2002 |
2001 |
|||||||||||||
Debt
swaps with fees |
|||||||||||||||||
Interest
rate |
$ |
77 |
$ |
(35 |
) |
$ |
198 |
$ |
(14 |
) |
$ |
167 |
|||||
Currency |
125 |
87 |
(154 |
) |
(45 |
) |
(7 |
) | |||||||||
Asset
swaps with prepayment penalties |
15 |
125 |
- |
- |
- |
||||||||||||
Other,
net |
9 |
57 |
5 |
9 |
(3 |
) | |||||||||||
Total
adjustment |
$ |
226 |
$ |
234 |
$ |
49 |
$ |
(50 |
) |
$ |
157 |
||||||
Previously
reported earnings before |
|||||||||||||||||
accounting
changes |
$ |
8,034 |
$ |
7,232 |
$ |
6,505 |
$ |
6,060 |
|||||||||
Percent
variation from previously reported |
|||||||||||||||||
accounting
changes |
2.81 |
% |
3.24 |
% |
0.75 |
% |
(0.83 |
)% |
|||||||||
(a)
|
Represents
the cumulative effect on earnings as of January 1, 2001, the date we
adopted SFAS 133 |
(In
millions) |
Increase
(decrease) in Net Earnings(a) |
||||||||||||||||||||||||||
2005 |
2004 |
2003 |
|||||||||||||||||||||||||
Quarter |
1st
Qtr. |
4th
Qtr. |
3rd
Qtr. |
2nd
Qtr. |
1st
Qtr. |
4th
Qtr. |
3rd
Qtr. |
2nd
Qtr. |
1st
Qtr. |
||||||||||||||||||
Debt
swaps with fees |
|||||||||||||||||||||||||||
Interest
rate |
$ |
(153 |
) |
$ |
144 |
$ |
142 |
$ |
(436 |
) |
$ |
227 |
$ |
(61 |
) |
$ |
(650 |
) |
$ |
448 |
$ |
228 |
|||||
Currency |
28 |
84 |
(20 |
) |
69 |
(8 |
) |
8 |
74 |
(1 |
) |
6 |
|||||||||||||||
Asset
swaps with |
|||||||||||||||||||||||||||
prepayment |
|||||||||||||||||||||||||||
penalties |
82 |
13 |
(102 |
) |
198 |
(94 |
) |
(5 |
) |
130 |
- |
- |
|||||||||||||||
Other,
net |
(35 |
) |
12 |
- |
(4 |
) |
1 |
1 |
- |
3 |
53 |
||||||||||||||||
Total
adjustment |
$ |
(78 |
) |
$ |
253 |
$ |
20 |
$ |
(173 |
) |
$ |
126 |
$ |
(57 |
) |
$ |
(446 |
) |
$ |
450 |
$ |
287 |
|||||
Previously
reported |
|||||||||||||||||||||||||||
earnings
before |
|||||||||||||||||||||||||||
accounting
changes |
$ |
2,155 |
$ |
2,555 |
$ |
2,250 |
$ |
1,576 |
$ |
1,653 |
$ |
2,009 |
$ |
2,001 |
$ |
1,604 |
$ |
1,618 |
|||||||||
Percent
variation from |
|||||||||||||||||||||||||||
previously
reported |
|||||||||||||||||||||||||||
accounting
changes |
(3.6 |
)% |
9.9 |
% |
0.9 |
% |
(11.0 |
)% |
7.6 |
% |
(2.8 |
)% |
(22.3 |
)% |
28.1 |
% |
17.7 |
% | |||||||||
(a)
|
See
also note 22 to the Notes to Consolidated Financial Statements - Quarterly
Information (Unaudited), as restated |
• |
Commercial
and Consumer Finance (in total, 62% and 80% of total three-year revenues
and earnings before accounting changes, respectively) are large,
profitable growth businesses in which we continue to invest with
confidence. In a challenging economic environment, these businesses grew
earnings by $0.7 billion and $1.1 billion in 2004 and 2003, respectively.
Solid core growth, disciplined risk management and successful acquisitions
have delivered these strong results. |
• |
Equipment
& Other Services (13% and 3% of total three-year revenues and earnings
before accounting changes, respectively) is particularly sensitive to
economic conditions and consequently was affected adversely by the U.S.
recession in 2002 and by slow global growth in developed countries. Higher
capacity, in combination with declining or weak volume growth in many of
these industries serviced by this business, resulted in fierce competitive
price pressures. |
• |
Liquidity
risk is the risk of being unable to accommodate liability maturities, fund
asset growth and meet contractual obligations through access to funding at
reasonable market rates. Additional information about our liquidity and
how we manage this risk can be found on page 27 and in notes 11 and
19. |
• |
Credit
risk is the risk of financial loss arising from a customer or
counterparty’s failure to meet its contractual obligations. We face credit
risk in our lending and leasing activities (see pages 27 and 37 and notes
1, 5, 6 and 21) and derivative financial instruments activities (see note
19). |
• |
Market
risk is the potential loss in value of investment and other asset and
liability portfolios, including financial instruments, caused by changes
in market variables, such as interest and currency exchange rates and
equity and commodity prices. We are exposed to market risk in the normal
course of our business operations as a result of our ongoing investing and
funding activities. We attempt to mitigate the risks to our various
portfolios arising from changes in interest and currency exchange rates in
a variety of ways that often include offsetting positions in local
currencies or use of derivatives. Additional information about how we
mitigate the risks to our various portfolios from changes in interest and
currency exchange rates can be found on page 30 and in note 19.
|
• |
Event
risk is that body of risk beyond liquidity, credit and market risk. Event
risk includes the possibility of adverse occurrences both within and
beyond our control. Examples of event risk include natural disasters,
availability of necessary materials, guarantees of product performance and
business interruption. This type of risk is often insurable, and success
in managing this risk is ultimately determined by the balance between the
level of risk retained or assumed and the cost of transferring the risk to
others. The decision as to the appropriate level of event risk to retain
or cede is evaluated in the framework of business decisions. Additional
information about how we mitigate event risk can be found in note 21.
|
|
For
the years ended December 31 (In millions) |
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
||||||
|
|
|
|||||||
Revenues |
|||||||||
Commercial
Finance |
$ |
23,489 |
$ |
20,813 |
$ |
19,592 |
|||
Consumer
Finance |
15,734 |
12,845 |
10,266 |
||||||
Equipment
& Other Services |
8,986 |
4,881 |
5,561 |
||||||
Insurance |
23,070 |
26,194 |
23,296 |
||||||
Total
revenues |
71,279 |
64,733 |
58,715 |
||||||
Less
portion of revenues not included in GECC |
(11,429 |
) |
(11,363 |
) |
(9,880 |
) | |||
Total
revenues in GECC |
$ |
59,850 |
$ |
53,370 |
$ |
48,835 |
|||
Net
earnings |
|||||||||
Commercial
Finance |
$ |
4,465 |
$ |
3,910 |
$ |
3,310 |
|||
Consumer
Finance |
2,520 |
2,161 |
1,799 |
||||||
Equipment
& Other Services |
833 |
(185 |
) |
(339 |
) | ||||
Insurance |
569 |
2,102 |
(95 |
) | |||||
Total
earnings before accounting changes |
8,387 |
7,988 |
4,675 |
||||||
Less
portion of earnings not included in GECC |
(127 |
) |
(522 |
) |
1,879 |
||||
Total
earnings in GECC before accounting changes |
8,260 |
7,466 |
6,554 |
||||||
Cumulative
effect of accounting changes |
- |
(339 |
) |
(1,015 |
) | ||||
Total
net earnings as reported in GECC |
$ |
8,260 |
$ |
7,127 |
$ |
5,539 |
(In
millions) |
2004 |
2003 |
2002 |
||||||||||
Revenues |
$ |
23,489 |
$ |
20,813 |
$ |
19,592 |
|||||||
Less
portion of Commercial Finance not included in GECC |
(489 |
) |
(316 |
) |
(290 |
) | |||||||
Total
revenues in GECC |
$ |
23,000 |
$ |
20,497 |
$ |
19,302 |
|||||||
Net
revenues |
|||||||||||||
Total
revenues |
$ |
23,000 |
$ |
20,497 |
$ |
19,302 |
|||||||
Interest
expense |
6,021 |
5,780 |
5,965 |
||||||||||
Total
net revenues |
$ |
16,979 |
$ |
14,717 |
$ |
13,337 |
|||||||
Net
earnings |
$ |
4,465 |
$ |
3,910 |
$ |
3,310 |
|||||||
Less
portion of Commercial Finance not included in GECC |
(195 |
) |
(104 |
) |
(47 |
) | |||||||
Total
net earnings in GECC |
$ |
4,270 |
$ |
3,806 |
$ |
3,263 |
|||||||
At |
|||||||||||||
December
31 (In
millions) |
2004 |
2003 |
|||||||||||
Total
assets |
$ |
232,123 |
$ |
214,125 |
|||||||||
Less
portion of Commercial Finance not included in GECC |
288 |
686 |
|||||||||||
Total
assets in GECC |
$ |
232,411 |
$ |
214,811 |
|||||||||
(In
millions) |
2004 |
2003 |
2002 |
||||||||||
Real
Estate(a) |
|||||||||||||
Revenues
in GECS |
$ |
2,519 |
$ |
2,386 |
$ |
2,124 |
|||||||
Net
Earnings in GECS |
$ |
957 |
$ |
834 |
$ |
650 |
|||||||
Aviation
Services(a) |
|||||||||||||
Revenues
in GECS |
$ |
3,159 |
$ |
2,881 |
$ |
2,694 |
|||||||
Net
Earnings in GECS |
$ |
520 |
$ |
506 |
$ |
454 |
|||||||
At |
|||||||||||||
December
31 (In
millions) |
2004 |
2003 |
|||||||||||
Real
Estate(a) |
|||||||||||||
Total
assets in GECS |
$ |
33,497 |
$
|
27,767 |
|||||||||
Aviation
Services(a) |
|||||||||||||
Total
assets in GECS |
$ |
37,384 |
$ |
33,271 |
|||||||||
(a) |
We
provide additional information on two of our segment product lines, Real
Estate (commercial real estate financing) and Aviation Services
(commercial aircraft financing). Each of these product lines finances a
single form of collateral, and each has understandable concentrations of
risk and opportunities.
|
(In
millions) |
2004 |
2003 |
2002 |
||||||
Revenues |
$ |
15,734 |
$ |
12,845 |
$ |
10,266 |
|||
Less
portion of Consumer Finance not included in GECC |
(9 |
) |
(111 |
) |
(433 |
) | |||
Total
revenues in GECC |
$ |
15,725 |
$ |
12,734 |
$ |
9,833 |
|||
Net
revenues |
|||||||||
Total
revenues |
$ |
15,725 |
$ |
12,734 |
$ |
9,833 |
|||
Interest
expense |
3,560 |
2,683 |
2,105 |
||||||
Total
net revenues |
$ |
12,165 |
$ |
10,051 |
$ |
7,728 |
|||
Net
earnings |
$ |
2,520 |
$ |
2,161 |
$ |
1,799 |
|||
Less
portion of Consumer Finance not included in GECC |
(25 |
) |
50 |
(117 |
) | ||||
Total
net earnings in GECC |
$ |
2,495 |
$ |
2,211 |
$ |
1,682 |
|||
At |
|||||||||
December
31 (In
millions) |
2004 |
2003
|
|||||||
Total
assets |
$ |
151,255 |
$ |
106,530 |
|||||
Less
portion of Consumer Finance not included in GECC |
(724 |
) |
(595 |
) |
|||||
Total
assets in GECC |
$ |
150,531 |
$ |
105,935 |
(In
millions) |
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
||||||
Revenues |
8,986 |
$ |
4,881 |
$ |
5,561 |
||||
Less
portion of Equipment & Other Services not included |
|||||||||
in
GECC |
706 |
595 |
118 |
||||||
Total
revenues in GECC |
$ |
9,692 |
$ |
5,476 |
$ |
5,679 |
|||
Net
earnings |
$ |
833 |
$ |
(185 |
) |
$ |
(339 |
) | |
Less
portion of Equipment & Other Services not included |
|||||||||
in
GECC |
152 |
41 |
261 |
||||||
Total
net earnings in GECC |
$ |
985 |
$ |
(144 |
) |
$ |
(78 |
) |
• |
The
exit of certain European operations at IT Solutions ($1.3 billion) in
response to intense competition and transition of the computer equipment
market to a direct distribution model, |
• |
Continued
poor market conditions and ongoing dispositions and run-offs of IT
Solutions and the Auto Financial Services business ($0.3 billion),
and |
• |
Lower
asset utilization and price ($0.2 billion), an effect of industry-wide
excess equipment capacity reflective of the then current conditions in the
road and rail transportation sector. |
(In
millions) |
2004 |
2003 |
2002 |
|||||||
Revenues |
$ |
23,070 |
$ |
26,194 |
$ |
23,296 |
||||
Less
portion of Insurance not included in GECC |
(11,637 |
) |
(11,531 |
) |
(9,275 |
) | ||||
Total
revenues in GECC |
$ |
11,433 |
$ |
14,663 |
$ |
14,021 |
||||
Net
earnings |
$ |
569 |
$ |
2,102 |
$ |
(95 |
) | |||
Less
portion of Insurance not included in GECC |
(59 |
) |
(509 |
) |
1,782 |
|||||
Total
net earnings in GECC |
$ |
510 |
$ |
1,593 |
$ |
1,687 |
||||
GE
Insurance Solutions(a) |
||||||||||
Revenues
in GECS |
$ |
10,005 |
$ |
11,600 |
$ |
9,432 |
||||
Net
Earnings in GECS |
$ |
36 |
$ |
481 |
$ |
(1,794 |
) | |||
(a) |
Formerly
GE Global Insurance Holding Corporation, the parent of Employers
Reinsurance Corporation (ERC).
|
• |
During
2004, we completed acquisitions of the commercial lending business of
Transamerica Finance Corporation; Sophia S.A., a real estate company in
France; the U.S. leasing business of IKON Office Solutions; and Benchmark
Group PLC, a U.K.-listed real estate property company at Commercial
Finance. Consumer Finance completed acquisitions of AFIG and WMC. At their
respective acquisition dates, these transactions resulted in a combined
increase in total assets of $32.1 billion, of which $23.0 billion was
financing receivables before allowance for losses, and a combined increase
in total liabilities of approximately $20.5 billion, of which $18.9
billion was debt. |
• |
Minority
interest in equity of consolidated affiliates increased $3.6 billion
during 2004, primarily because of our sale of approximately 30% of the
common shares of Genworth, our formerly wholly-owned subsidiary that
conducts most of our consumer insurance business, including life and
mortgage insurance operations. |
• |
We
adopted Financial Accounting Standards Board (FASB) Interpretation No.
(FIN) 46R, Consolidation
of Variable Interest Entities (Revised),
on January 1, 2004, adding $1.5 billion of assets and $1.1 billion of
liabilities to our consolidated balance sheet as of that date, relating to
Penske. |
2004 |
2003 |
2002 |
|||||||
Commercial
Finance |
1.40 |
% |
1.38 |
% |
1.75 |
% |
|||
Consumer
Finance |
4.85 |
5.62 |
5.62 |
• |
If,
on January 1, 2005, interest rates had increased 100 basis points across
the yield curve (a “parallel shift” in that curve) and that increase
remained in place for 2005, we estimate, based on our year-end 2004
portfolio and holding everything else constant, that our 2005 net earnings
would decline pro-forma by $0.1 billion. |
• |
If,
on January 1, 2005, currency exchange rates were to decline by 10% against
the U.S. dollar and that decline remained in place for 2005, we estimate,
based on our year-end 2004 portfolio and holding everything else constant,
that the effect on our 2005 net earnings would be insignificant.
|
Payments
due by period | |||||||||||||||||||||
(In
millions) |
Total |
2005 |
2006-2007 |
2008-2009 |
2010
and
thereafter | ||||||||||||||||
Borrowings
(note 11)(e) |
$ |
352,326 |
$ |
147,792 |
$ |
82,932 |
$ |
47,454 |
$ |
74,148 |
|||||||||||
Interest
on borrowings |
55,000 |
11,000 |
15,000 |
9,000 |
20,000 |
||||||||||||||||
Operating
lease obligations (note 3) |
4,407 |
704 |
1,281 |
959 |
1,463 |
||||||||||||||||
Purchase
obligations(a)(b) |
23,000 |
16,000 |
6,000 |
1,000 |
- |
||||||||||||||||
Insurance
liabilities (note
12)(c) |
86,000 |
14,000 |
18,000 |
12,000 |
42,000 |
||||||||||||||||
Other
liabilities(d) |
15,000 |
13,000 |
1,000 |
- |
1,000 |
||||||||||||||||
(a) |
Included
all take-or-pay arrangements, capital expenditures, contractual
commitments to purchase equipment that will be classified as equipment
leased to others, software acquisition/license commitments and
contractually required cash payments for acquisitions.
|
||||||||||||||||||||
(b) |
Excluded
funding commitments entered into in the ordinary course of business.
Further information on these commitments is provided in note
21.
|
||||||||||||||||||||
(c) |
Included
GICs, structured settlements and single premium immediate annuities based
on scheduled payouts, as well as those contracts with reasonably
determinable cash flows such as deferred annuities, universal life, term
life, long-term care, whole life and other life insurance
contracts.
|
||||||||||||||||||||
(d) |
Included
an estimate of future expected funding requirements related to our pension
benefit plans. Because their future cash outflows are uncertain, the
following non-current liabilities are excluded from the table above:
deferred taxes, derivatives, deferred revenue and other sundry items.
Refer to notes 13 and 19 for further information on these
items. |
||||||||||||||||||||
(e) |
As
restated. |
• |
Earnings
and profitability, including earnings quality, revenue growth, the breadth
and diversity of sources of income and return on
assets, |
• |
Asset
quality, including delinquency and write-off ratios and reserve
coverage, |
• |
Funding
and liquidity, including cash generated from operating activities,
leverage ratios such as debt-to-capital, market access, back-up liquidity
from banks and other sources, composition of total debt and interest
coverage, and |
• |
Capital
adequacy, including required capital and tangible leverage
ratios. |
• |
Franchise
strength, including competitive advantage and market conditions and
position, |
• |
Strength
of management, including experience, corporate governance and strategic
thinking, and |
• |
Financial
reporting quality, including clarity, completeness and transparency of all
financial performance communications. |
• |
22%
of retained operating earnings ($1.8
billion), |
• |
Proceeds
from the Genworth initial public offering less dividend payments to GE
through GECS ($1.6 billion), |
• |
Mortgage
Insurance contingent note payment ($0.5
billion), |
• |
Sale
of a majority interest of Gecis ($0.5 billion),
and |
• |
Rationalization
of Insurance and Equipment & Other Services related activities ($0.3
billion). |
December
31 |
2004 |
2003 | |||||
Senior
notes and other long-term debt |
59 |
% |
56 |
% | |||
Commercial
paper |
24 |
26 |
|||||
Current
portion of long-term debt |
11 |
13 |
|||||
Other
- bank and other retail deposits |
6 |
5 |
|||||
Total
|
100 |
% |
100 |
% |
• |
Under
certain swap, forward and option contracts, if our long-term credit rating
were to fall below A-/A3, certain remedies are required as discussed in
note 19. |
• |
If
our ratio of earnings to fixed charges, which was 1.89:1 at the end of
2004, were to deteriorate to 1.10:1 or, upon redemption of certain
preferred stock, our ratio of debt to equity, which was 6.53:1 at the end
of 2004, were to exceed 8:1, GE has committed to contribute capital to us.
GE also has guaranteed our subordinated debt with a face amount of $0.7
billion at December 31, 2004 and 2003. |
• |
If
our short-term credit rating or certain consolidated SPEs discussed
further in note 20 were to fall below A-1/P-1, we would be required to
provide substitute liquidity for those entities or provide funds to retire
the outstanding commercial paper. The maximum net amount that we would be
required to provide in the event of such a downgrade is determined by
contract, and amounted to $12.8 billion at January 1, 2005. Amounts
related to non-consolidated SPEs were $1.4
billion. |
• |
If
our long-term credit rating were to fall below AA/Aa2, we would be
required to provide substitute credit support or liquidate the
consolidated SPEs. The maximum amount that we would be required to
substitute in the event of such a downgrade is determined by contract, and
amounted to $0.9 billion at December 31,
2004. |
• |
For
certain transactions, if our long-term credit rating were to fall below
A/A2 or BBB+/Baa1 or our short-term credit rating were to fall below
A-2/P-2, we could be required to provide substitute credit support or fund
the undrawn commitment. We could be required to provide up to $2.3 billion
in the event of such a downgrade based on terms in effect at December 31,
2004. |
• |
Net
revenues (revenues from services less interest) of the Commercial Finance
and Consumer Finance segments for the three years ended December 31, 2004,
and |
• |
Delinquency
rates on financing receivables of the Commercial Finance and Consumer
Finance segments for 2004, 2003 and 2002. |
December
31 |
2004 |
2003 |
2002 |
|||
Managed |
1.40 |
% |
1.38 |
% |
1.75 |
% |
Off-book |
0.90 |
1.27 |
0.09 |
|||
On-book |
1.58 |
1.41 |
2.16 |
December
31 |
2004 |
2003 |
2002 |
|||
Managed |
4.85 |
% |
5.62 |
% |
5.62 |
% |
Off-book |
5.09 |
5.04 |
4.84 |
|||
On-book |
4.84 |
5.67 |
5.76 |
For
the years ended December 31 (In millions) |
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
|||||||
Revenues |
||||||||||
Revenues
from services (note 2) |
$ |
57,010 |
$ |
51,142 |
$ |
45,539 |
||||
Sales
of goods |
2,840 |
2,228 |
3,296 |
|||||||
Total
revenues |
59,850 |
53,370 |
48,835 |
|||||||
Costs
and expenses |
||||||||||
Interest
|
11,158 |
9,999 |
9,479 |
|||||||
Operating
and administrative (note 3) |
18,810 |
15,243 |
13,175 |
|||||||
Cost
of goods sold |
2,741 |
2,119 |
3,039 |
|||||||
Insurance
losses and policyholder and annuity benefits |
7,139 |
8,510 |
8,275 |
|||||||
Provision
for losses on financing receivables (note 6) |
3,868 |
3,612 |
2,978 |
|||||||
Depreciation
and amortization (note 8) |
5,774 |
4,594 |
4,248 |
|||||||
Minority
interest in net earnings of consolidated affiliates |
359 |
84 |
95 |
|||||||
Total
costs and expenses |
49,849 |
44,161 |
41,289 |
|||||||
Earnings
before income taxes and accounting changes |
10,001 |
9,209 |
7,546 |
|||||||
Provision
for income taxes (note 13) |
(1,741 |
) |
(1,743 |
) |
(992 |
) | ||||
Earnings
before accounting changes |
8,260 |
7,466 |
6,554 |
|||||||
Cumulative
effect of accounting changes (note 1) |
- |
(339 |
) |
(1,015 |
) | |||||
Net
earnings |
$ |
8,260 |
$ |
7,127 |
$ |
5,539 |
||||
Statement
of Changes in Shareowner’s Equity |
||||||||||
(In
millions) |
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
|||||||
Changes
in shareowner’s equity
(note 16) |
||||||||||
Balance
at January 1 |
$ |
46,692 |
$ |
40,126 |
$ |
31,739 |
||||
Dividends
and other transactions with shareowner |
(2,805 |
) |
(4,466 |
) |
2,462 |
|||||
Changes
other than transactions with shareowner |
||||||||||
Increase
attributable to net earnings |
8,260 |
7,127 |
5,539 |
|||||||
Investment
securities - net |
(595 |
) |
517 |
1,414 |
||||||
Currency
translation adjustments - net |
2,296 |
3,150 |
(32 |
) | ||||||
Cash
flow hedges - net |
203 |
247 |
(974 |
) | ||||||
Minimum
pension liabilities - net |
(93 |
) |
(9 |
) |
(22 |
) | ||||
Total
changes other than transactions with shareowner |
10,071 |
11,032 |
5,925 |
|||||||
Balance
at December 31 |
$ |
53,958 |
$ |
46,692 |
$ |
40,126 |
||||
The
notes to consolidated financial statements on pages 44-84 are an integral
part of these statements. |
At
December 31 (In millions) |
2004
(Restated) |
2003
(Restated) |
||||
Assets |
||||||
Cash
and equivalents |
$ |
9,840 |
$ |
9,719 |
||
Investment
securities (note 4) |
86,932 |
100,782 |
||||
Financing
receivables - net (notes 5 and 6) |
279,588 |
245,503 |
||||
Insurance
receivables - net (note 7) |
27,183 |
12,440 |
||||
Other
receivables |
21,968 |
16,553 |
||||
Inventories |
189 |
197 |
||||
Buildings
and equipment, less accumulated amortization of $20,459 |
||||||
and
$16,587 (note 8) |
46,351 |
38,621 |
||||
Intangible
assets - net (note 9) |
25,426 |
22,610 |
||||
Other
assets (note 10) |
69,408 |
60,348 |
||||
Total
assets |
$ |
566,885 |
$ |
506,773 |
||
Liabilities
and equity |
||||||
Borrowings
(note 11) |
$ |
352,326 |
$ |
311,097 |
||
Accounts
payable |
17,083 |
14,250 |
||||
Insurance
liabilities, reserves and annuity benefits (note 12) |
103,890 |
100,613 |
||||
Other
liabilities |
23,253 |
20,905 |
||||
Deferred
income taxes (note 13) |
10,270 |
10,704 |
||||
Total
liabilities |
506,822 |
457,569 |
||||
Minority
interest in equity of consolidated affiliates (note 14) |
6,105 |
2,512 |
||||
Variable
cumulative preferred stock, $100 par value, liquidation preference
$100,000
per share (33,000 shares authorized; 26,000 shares issued
and
outstanding at December 31, 2004 and 2003) |
3 |
3 |
||||
Common
stock, $14 par value (4,166,000 shares authorized at
December
31, 2004 and 2003, and 3,985,403 shares
issued
and outstanding at December 31, 2004 and 2003) |
56 |
56 |
||||
Accumulated
gains (losses) - net |
||||||
Investment
securities |
974 |
1,569 |
||||
Currency
translation adjustments |
4,844 |
2,548 |
||||
Cash
flow hedges |
(1,281 |
) |
(1,484 |
) | ||
Minimum
pension liabilities |
(124 |
) |
(31 |
) | ||
Additional
paid-in capital |
14,539 |
14,196 |
||||
Retained
earnings |
34,947 |
29,835 |
||||
Total
shareowner’s equity (note 16) |
53,958 |
46,692 |
||||
Total
liabilities and equity |
$ |
566,885 |
$ |
506,773 |
||
The
sum of accumulated gains (losses) on investment securities, currency
translation adjustments, cash flow hedges and minimum pension liabilities
constitutes “Accumulated nonowner changes other than earnings,” as shown
in note 16, and was $4,413 million and $2,602 million at year-end 2004 and
2003, respectively. |
||||||
|
||||||
The
notes to consolidated financial statements on pages 44-84 are an integral
part of this statement.
|
For
the years ended December 31 (In millions) |
2004
(Restated) |
(a) |
2003
(Restated) |
(a) |
2002
(Restated) |
(a) | |||
Cash
flows - operating activities |
|||||||||
Net
earnings |
$ |
8,260 |
$ |
7,127 |
$ |
5,539 |
|||
Adjustments
to reconcile net earnings to cash provided
from
operating activities |
|||||||||
Cumulative
effect of accounting changes |
- |
339 |
1,015 |
||||||
Depreciation
and amortization of buildings and equipment |
5,774 |
4,594 |
4,248 |
||||||
Deferred
income taxes |
(1,346 |
) |
836 |
1,309 |
|||||
Decrease
(increase) in inventories |
(9 |
) |
(35 |
) |
62 |
||||
Increase
(decrease) in accounts payable |
3,744 |
2,793 |
(2,120 |
) | |||||
Increase
in insurance liabilities and reserves |
4,439 |
1,372 |
5,539 |
||||||
Provision
for losses on financing receivables |
3,868 |
3,612 |
2,978 |
||||||
All
other operating activities (note 17) |
805 |
1,412 |
1,455 |
||||||
Cash
from operating activities |
25,535 |
22,050 |
20,025 |
||||||
Cash
flows - investing activities |
|||||||||
Net
increase in financing receivables (note 17) |
(14,952 |
) |
(4,736 |
) |
(18,285 |
) | |||
Additions
to buildings and equipment |
(10,317 |
) |
(7,255 |
) |
(11,346 |
) | |||
Dispositions
of buildings and equipment |
5,493 |
4,622 |
6,227 |
||||||
Payments
for principal businesses purchased |
(13,888 |
) |
(10,537 |
) |
(12,300 |
) | |||
All
other investing activities (note 17) |
(1,783 |
) |
(759 |
) |
(12,368 |
) | |||
Cash
used for investing activities |
(35,447 |
) |
(18,665 |
) |
(48,072 |
) | |||
Cash
flows - financing activities |
|||||||||
Net
decrease in borrowings (maturities of 90 days or less) |
(1,040 |
) |
(12,957 |
) |
(35,348 |
) | |||
Newly
issued debt (maturities longer than 90 days) (note 17) |
61,748 |
59,838 |
96,044 |
||||||
Repayments
and other reductions (maturities longer |
|||||||||
than
90 days) (note 17) |
(45,115 |
) |
(43,128 |
) |
(38,586 |
) | |||
Dividends
paid to shareowner |
(3,148 |
) |
(4,472 |
) |
(2,020 |
) | |||
All
other financing activities (note 17) |
(2,412 |
) |
70 |
8,156 |
|||||
Cash
from (used for) financing activities |
10,033 |
(649) |
28,246 |
||||||
Increase
in cash and equivalents during year |
121 |
2,736 |
199 |
||||||
Cash
and equivalents at beginning of year |
9,719 |
6,983 |
6,784 |
||||||
Cash
and equivalents at end of year |
$ |
9,840 |
$ |
9,719 |
$ |
6,983 |
|||
Supplemental
disclosure of cash flows information |
|||||||||
Cash
paid during the year for interest |
$ |
(10,995 |
) |
$ |
(10,323 |
) |
$ |
(9,114 |
) |
Cash
recovered during the year for income taxes |
785 |
726 |
1,707 |
||||||
The
notes to consolidated financial statements on pages 44-84 are an integral
part of this statement.
| |
(a)
|
Certain
individual line items within cash from operating activities have been
restated.
|
· |
The
first errors were in accounting for interest rate and currency swaps at
GECC that included fees paid or received at inception. These swaps related
to about 14% of our overall borrowings at January 1, 2001, and about 6% of
our overall borrowings at December 31, 2004. Our initial accounting viewed
these fees as immaterial. In 2003, we discontinued use of such swaps,
except for one immaterial transaction, but continued the previous
accounting for those already in place. Because of the swap fees, however,
the fair values of the swaps were not zero at inception as required by
SFAS 133 and, accordingly, we were required to, but did not, test
periodically for effectiveness. |
· |
The
second errors arose from a hedge accounting position related to a
portfolio of assets consolidated by GECC in July 2003 at implementation of
Financial Accounting Standards Board Interpretation No. (FIN) 46,
Consolidation
of Variable Interest Entities.
This portfolio included assets equal to 2% and 1% of GE’s total assets at
consolidation and at December 31, 2004, respectively. We entered into
interest rate swaps in 2003 to adjust the economic yield on these
newly-consolidated fixed-rate assets from a fixed to a floating rate.
Adhering to our hedge documentation at the 2003 inception of these swaps,
we did not perform subsequent periodic testing of their effectiveness. We
determined as a result of the internal audit that the prepayment penalties
in the underlying assets were not appropriately mirrored in the associated
swaps, as required in order to avoid periodic testing of effectiveness
under SFAS 133. Accordingly, periodic effectiveness testing was required
under SFAS 133 for these swaps. |
· |
In
the course of the internal audit, GE's internal audit staff also
identified other errors under SFAS 133 with respect to other aspects of
certain swaps and other derivative instruments. Adjustments to correct the
accounting for these transactions also are included in our restated
results of operations. We do not believe these other adjustments are
material, individually or in the aggregate, to our financial position or
our results of operations for any reported
period. |
For
the years ended December 31(In millions) |
2004 |
2003 |
2002 |
|||||||||||||||
As
previously reported |
As
restated |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
|||||||||||||
Statement
of Earnings |
||||||||||||||||||
Revenues
from services (note 2) |
$ |
56,507 |
$ |
57,010 |
$ |
50,688 |
$ |
51,142 |
$ |
45,523 |
$ |
45,539 |
||||||
Interest |
11,029 |
11,158 |
9,932 |
9,999 |
9,544 |
9,479 |
||||||||||||
Earnings
before income taxes and |
||||||||||||||||||
accounting
changes |
9,627 |
10,001 |
8,822 |
9,209 |
7,465 |
7,546 |
||||||||||||
Provision
for income taxes (note 13) |
(1,593 |
) |
(1,741 |
) |
(1,590 |
) |
(1,743 |
) |
(960 |
) |
(992 |
) | ||||||
Earnings
before accounting changes |
8,034 |
8,260 |
7,232 |
7,466 |
6,505 |
6,554 |
||||||||||||
Net
earnings |
8,034 |
8,260 |
6,893 |
7,127 |
5,490 |
5,539 |
For
the years ended December 31(In millions) |
2004 |
2003 |
2002 |
|||||||||||||||
As
previously reported |
As
restated |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
|||||||||||||
Statement
of Changes in |
||||||||||||||||||
Shareowner’s
Equity |
||||||||||||||||||
Balance
at January 1 |
$ |
46,241 |
$ |
46,692 |
$ |
39,753 |
$ |
40,126 |
$ |
31,563 |
$ |
31,739 |
||||||
Increase
attributable to net earnings |
8,034 |
8,260 |
6,893 |
7,127 |
5,490 |
5,539 |
||||||||||||
Currency
translation adjustments - net |
2,302 |
2,296 |
3,212 |
3,150 |
(27 |
) |
(32 |
) | ||||||||||
Cash
flow hedges - net |
337 |
203 |
341 |
247 |
(1,127 |
) |
(974 |
) | ||||||||||
Balance
at December 31 |
53,421 |
53,958 |
46,241 |
46,692 |
39,753 |
40,126 |
At
December 31 (In millions) |
2004 |
2003 |
||||||||||
As
previously reported |
As
restated |
As
previously reported |
As
restated |
|||||||||
Statement
of Financial Position |
||||||||||||
Financing
Receivables-net (note 5) |
$ |
279,356 |
$ |
279,588 |
$ |
245,295 |
$ |
245,503 |
||||
Other
assets (note 10) |
69,463 |
69,408 |
60,373 |
60,348 |
||||||||
Total
assets |
566,708 |
566,885 |
506,590 |
506,773 |
||||||||
Borrowings
(note 11) |
352,869 |
352,326 |
311,474 |
311,097 |
||||||||
Other
liabilities |
23,425 |
23,253 |
21,089 |
20,905 |
||||||||
Deferred
income taxes (note 13) |
9,915 |
10,270 |
10,411 |
10,704 |
||||||||
Total
liabilities |
507,182 |
506,822 |
457,837 |
457,569 |
||||||||
Currency
translation adjustments |
4,923 |
4,844 |
2,621 |
2,548 |
||||||||
Cash
flow hedges |
(1,281 |
) |
(1,281 |
) |
(1,618 |
) |
(1,484 |
) | ||||
Retained
earnings |
34,331 |
34,947 |
29,445 |
29,835 |
||||||||
Total
shareowner’s equity (note 16) |
53,421 |
53,958 |
46,241 |
46,692 |
||||||||
Total
liabilities and equity |
566,708 |
566,885 |
506,590 |
506,773 |
2004 |
||||||||||||||||||||||||
First
quarter |
Second
quarter |
Third
quarter |
Fourth
quarter |
|||||||||||||||||||||
(In
millions)(unaudited) |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
||||||||||||||||
Statement
of Earnings |
||||||||||||||||||||||||
Revenues
from services |
$ |
13,629 |
$ |
13,871 |
$ |
13,408 |
$ |
13,154 |
$ |
13,950 |
$ |
14,014 |
$ |
15,520 |
$ |
15,971 |
||||||||
Interest |
2,591 |
2,624 |
2,737 |
2,770 |
2,622 |
2,653 |
3,079 |
3,111 |
||||||||||||||||
Earnings
before income taxes |
||||||||||||||||||||||||
and
accounting changes |
2,072 |
2,281 |
1,860 |
1,573 |
2,910 |
2,943 |
2,785 |
3,204 |
||||||||||||||||
Provision
for income taxes |
(419 |
) |
(502 |
) |
(284 |
) |
(170 |
) |
(660 |
) |
(673 |
) |
(230 |
) |
(396 |
) | ||||||||
Earnings
before accounting |
||||||||||||||||||||||||
changes |
1,653 |
1,779 |
1,576 |
1,403 |
2,250 |
2,270 |
2,555 |
2,808 |
||||||||||||||||
Net
earnings |
1,653 |
1,779 |
1,576 |
1,403 |
2,250 |
2,270 |
2,555 |
2,808 |
2003 |
|||||||||||||||||||||||||
First
quarter |
Second
quarter |
Third
quarter |
Fourth
quarter |
||||||||||||||||||||||
(In
millions) (unaudited) |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
|||||||||||||||||
Statement
of Earnings |
|||||||||||||||||||||||||
Revenues
from services |
$ |
11,674 |
$ |
12,115 |
$ |
12,262 |
$ |
13,037 |
$ |
13,554 |
$ |
12,851 |
$ |
13,198 |
$ |
13,139 |
|||||||||
Interest |
2,368 |
2,335 |
2,444 |
2,474 |
2,489 |
2,523 |
2,631 |
2,667 |
|||||||||||||||||
Earnings
before income taxes |
|||||||||||||||||||||||||
and
accounting changes |
1,916 |
2,390 |
1,910 |
2,655 |
2,574 |
1,837 |
2,422 |
2,327 |
|||||||||||||||||
Provision
for income taxes |
(298 |
) |
(485 |
) |
(306 |
) |
(601 |
) |
(573 |
) |
(282 |
) |
(413 |
) |
(375 |
) | |||||||||
Earnings
before accounting |
|||||||||||||||||||||||||
changes |
1,618 |
1,905 |
1,604 |
2,054 |
2,001 |
1,555 |
2,009 |
1,952 |
|||||||||||||||||
Net
earnings |
1,618 |
1,905 |
1,604 |
2,054 |
1,662 |
1,216 |
2,009 |
1,952 |
2004 |
||||||||||||||||||||||||
First
quarter |
Second
quarter |
Third
quarter |
Fourth
quarter |
|||||||||||||||||||||
(In
millions) (unaudited) |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
||||||||||||||||
Statement
of Financial Position |
||||||||||||||||||||||||
Financing
receivables-net (note 5) |
$ |
249,328 |
$ |
249,379 |
$ |
250,166 |
$ |
250,545 |
$ |
250,609 |
$ |
250,819 |
$ |
279,356 |
$ |
279,588 |
||||||||
Other
assets |
60,135 |
60,112 |
68,267 |
68,233 |
71,075 |
71,030 |
69,463 |
69,408 |
||||||||||||||||
Total
assets |
516,810 |
516,838 |
518,505 |
518,850 |
524,607 |
524,772 |
566,708 |
566,885 |
||||||||||||||||
Borrowings |
316,312 |
315,550 |
316,226 |
316,194 |
320,210 |
319,935 |
352,869 |
352,326 |
||||||||||||||||
Other
liabilities |
20,236 |
20,064 |
22,075 |
21,903 |
21,472 |
21,300 |
23,425 |
23,253 |
||||||||||||||||
Deferred
income taxes |
12,415 |
12,794 |
9,363 |
9,580 |
10,122 |
10,364 |
9,915 |
10,270 |
||||||||||||||||
Total
liabilities |
464,578 |
464,023 |
465,636 |
465,649 |
469,686 |
469,481 |
507,182 |
506,822 |
||||||||||||||||
Currency
translation adjustments |
2,541 |
2,466 |
2,375 |
2,295 |
2,298 |
2,217 |
4,923 |
4,844 |
||||||||||||||||
Cash
flow hedges |
(1,617 |
) |
(1,475 |
) |
(1,028 |
) |
(959 |
) |
(1,294 |
) |
(1,206 |
) |
(1,281 |
) |
(1,281 |
) | ||||||||
Retained
earnings |
30,708 |
31,224 |
30,813 |
31,156 |
32,829 |
33,192 |
34,331 |
34,947 |
||||||||||||||||
Total
shareowner’s equity |
49,226 |
49,809 |
46,731 |
47,063 |
48,878 |
49,248 |
53,421 |
53,958 |
||||||||||||||||
Total
liabilities and equity |
516,810 |
516,838 |
518,505 |
518,850 |
524,607 |
524,772 |
566,708 |
566,885 |
2003 |
||||||||||||||||||||||||
First
quarter |
Second
quarter |
Third
quarter |
Fourth
quarter |
|||||||||||||||||||||
(In
millions) (unaudited) |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
As
previously reported |
As
restated |
||||||||||||||||
Statement
of Financial Position |
||||||||||||||||||||||||
Financing
receivables-net (note 5) |
$ |
197,266 |
$ |
197,266 |
$ |
210,815 |
$ |
210,815 |
$ |
237,248 |
$ |
237,463 |
$ |
245,295 |
$ |
245,503 |
||||||||
Other
assets |
64,043 |
64,033 |
69,608 |
69,580 |
62,919 |
62,893 |
60,373 |
60,348 |
||||||||||||||||
Total
assets |
446,979 |
446,969 |
476,095 |
476,067 |
489,903 |
490,092 |
506,590 |
506,773 |
||||||||||||||||
Borrowings |
266,077 |
265,298 |
284,519 |
282,980 |
301,377 |
300,906 |
311,474 |
311,097 |
||||||||||||||||
Other
liabilities |
15,877 |
15,666 |
16,635 |
16,425 |
17,070 |
16,870 |
21,089 |
20,905 |
||||||||||||||||
Deferred
income taxes |
10,659 |
11,043 |
11,099 |
11,776 |
10,292 |
10,630 |
10,411 |
10,704 |
||||||||||||||||
Total
liabilities |
403,287 |
402,681 |
429,163 |
428,091 |
443,551 |
443,218 |
457,837 |
457,569 |
||||||||||||||||
Currency
translation adjustments |
(494 |
) |
(561 |
) |
105 |
36 |
409 |
340 |
2,621 |
2,548 |
||||||||||||||
Cash
flow hedges |
(2,051 |
) |
(1,831 |
) |
(2,892 |
) |
(2,672 |
) |
(1,701 |
) |
(1,557 |
) |
(1,618 |
) |
(1,484 |
) | ||||||||
Retained
earnings |
28,461 |
28,904 |
29,896 |
30,789 |
29,625 |
30,072 |
29,445 |
29,835 |
||||||||||||||||
Total
shareowner’s equity |
41,834 |
42,430 |
45,136 |
46,180 |
43,819 |
44,341 |
46,241 |
46,692 |
||||||||||||||||
Total
liabilities and equity |
446,979 |
446,969 |
476,095 |
476,067 |
489,903 |
490,092 |
506,590 |
506,773 |
• |
For
short-duration insurance contracts (including property and casualty, and
accident and health insurance), we report premiums as earned income,
generally on a pro-rata basis, over the terms of the related agreements.
For retrospectively rated reinsurance contracts, we record premium
adjustments based on estimated losses and loss expenses, taking into
consideration both case and incurred-but-not-reported (IBNR)
reserves. |
• |
For
traditional long-duration insurance contracts (including term and whole
life contracts and annuities payable for the life of the annuitant), we
report premiums as earned income when due. |
• |
For
investment contracts and universal life contracts, we report premiums
received as liabilities, not as revenues. Universal life contracts are
long-duration insurance contracts with terms that are not fixed and
guaranteed; for these contracts, we recognize revenues for assessments
against the policyholder’s account, mostly for mortality, contract
initiation, administration and surrender. Investment contracts are
contracts that have neither significant mortality nor significant
morbidity risk, including annuities payable for a determined period; for
these contracts, we recognize revenues on the associated investments, and
amounts credited to policyholder accounts are charged to expense.
|
• |
Short-duration
contracts - Acquisition costs consist of commissions, brokerage expenses
and premium taxes and are amortized ratably over the contract periods in
which the related premiums are earned. |
• |
Long-duration
contracts - Acquisition costs consist of first-year commissions in excess
of recurring renewal commissions, certain variable sales expenses and
certain support costs such as underwriting and policy issue expenses. For
traditional long-duration insurance contracts, we amortize these costs
over the respective contract periods in proportion to either anticipated
premium income, or, in the case of limited-payment contracts, estimated
benefit payments. For investment contracts and universal life contracts,
amortization of these costs is based on estimated gross profits and is
adjusted as those estimates are revised. |
• |
FIN
46 required that, if practicable, we consolidate assets and liabilities of
FIN 46 entities based on their carrying amounts. For us, such transition
losses were primarily associated with interest rate swaps that did not
qualify for hedge accounting before transition. Additional transition
losses arose from recording carrying amounts of assets and liabilities as
we eliminated certain previously recognized gains.
|
• |
When
it was impracticable to determine carrying amounts, as defined, FIN 46
required assets and liabilities to be consolidated at their July 1, 2003,
fair values. We recognized a loss on consolidation of certain of these
entities because the fair value of associated liabilities, including the
fair values of interest rate swaps, exceeded independently appraised fair
values of their related assets. |
• |
For
assets that had been securitized using qualifying special purpose entities
(QSPEs), transition carrying amounts were based on hypothetical repurchase
of the assets at fair value. Transition effects associated with
consolidation of these assets and liabilities were insignificant, as were
transition effects of consolidating assets and liabilities associated with
issuance of guaranteed investment contracts
(GICs). |
(In
millions) |
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
|||||||
Interest
on time sales and loans |
$ |
18,756 |
$ |
17,103 |
$ |
13,723 |
||||
Premiums
earned by insurance businesses |
6,967 |
8,633 |
8,655 |
|||||||
Operating
lease rentals |
10,654 |
(a) |
7,123 |
6,812 |
||||||
Investment
income |
4,502 |
5,024 |
4,224 |
|||||||
Financing
leases |
4,069 |
4,117 |
4,334 |
|||||||
Fees
|
3,890 |
3,104 |
2,777 |
|||||||
Other
income |
8,172 |
(b) |
6,038 |
5,014 |
||||||
Total(c) |
$ |
57,010 |
$ |
51,142 |
$ |
45,539 |
||||
(a) |
Included
$2,593 million relating to the consolidation of Penske. |
|||||||||
(b) |
Included
other operating revenue of Penske of $977 million and gain on sale of
Gecis of $396 million, partially offset by the loss on Genworth Financial,
Inc. (Genworth) initial public offering of $388 million. |
|||||||||
(c) |
Included
$985 million in 2004 and $693 million in 2003 related to consolidated,
liquidating securitization entities. |
|
Premiums
written |
Premiums
earned |
||||||||||||||||
(In
millions) |
2004 |
2003 |
2002 |
2004 |
2003 |
2002 |
||||||||||||
Direct |
$ |
6,343 |
$ |
8,669 |
$ |
8,972 |
$ |
6,939 |
$ |
8,665 |
$ |
8,525 |
||||||
Assumed |
1,409 |
1,028 |
1,125 |
1,410 |
1,089 |
1,133 |
||||||||||||
Ceded |
(1,405 |
) |
(949 |
)
|
(980 |
) |
(1,382 |
) |
(1,121 |
) |
(1,003 |
)
| ||||||
Total |
$ |
6,347 |
$ |
8,748 |
$ |
9,117 |
$ |
6,967 |
$ |
8,633 |
$ |
8,655 |
(In
millions) |
Amortized
cost |
Gross
unrealized
gains |
Gross
unrealized
losses |
Estimated
fair
value |
|||||||||
December
31, 2004 |
|||||||||||||
Available-for-sale
securities |
|||||||||||||
Debt: |
|||||||||||||
U.S.
corporate |
$ |
34,112 |
$ |
1,422 |
$ |
(463 |
) |
$ |
35,071 |
||||
State
and municipal |
3,490 |
165 |
(1 |
) |
3,654 |
||||||||
Mortgage-backed |
11,974 |
173 |
(51 |
) |
12,096 |
||||||||
Asset-backed |
9,363 |
205 |
(45 |
) |
9,523 |
||||||||
Corporate
- non-U.S. |
10,694 |
451 |
(28 |
) |
11,117 |
||||||||
Government
- non-U.S. |
2,695 |
103 |
(3 |
) |
2,795 |
||||||||
U.S.
government and federal agency |
597 |
23 |
(1 |
) |
619 |
||||||||
Equity |
3,385 |
353 |
(18 |
) |
3,720 |
||||||||
Trading
securities |
(a) |
(a) |
(a) |
8,337 |
|||||||||
Total |
$ |
76,310 |
$ |
2,895 |
$ |
(610 |
) |
$ |
86,932 |
(b) | |||
December
31, 2003 |
|||||||||||||
Available-for-sale
securities |
|||||||||||||
Debt: |
|||||||||||||
U.S.
corporate |
$ |
46,767 |
$ |
2,336 |
$ |
(630 |
) |
$ |
48,473 |
||||
State
and municipal |
3,794 |
185 |
(2 |
) |
3,977 |
||||||||
Mortgage-backed |
11,274 |
219 |
(76 |
) |
11,417 |
||||||||
Asset-backed |
11,574 |
185 |
(74 |
) |
11,685 |
||||||||
Corporate
- non-U.S. |
10,371 |
453 |
(65 |
) |
10,759 |
||||||||
Government
- non-U.S. |
2,312 |
67 |
(9 |
) |
2,370 |
||||||||
U.S.
government and federal agency |
1,391 |
50 |
(18 |
) |
1,423 |
||||||||
Equity |
3,589 |
363 |
(77 |
) |
3,875 |
||||||||
Trading
securities |
(a) |
(a) |
(a) |
6,803 |
|||||||||
Total |
$ |
91,072 |
$ |
3,858 |
$ |
(951 |
) |
$ |
100,782 |
(b) | |||
(a) |
Not
applicable.
|
||||||||||||
(b) |
Included
$1,147 million in 2004 and $1,566 million in 2003 of debt securities
related to consolidated, liquidating securitization
entities. |
Less
than 12 months |
12
months or more |
|||||||||||||||||||
December
31 (In millions) |
Estimated
fair
value |
Gross
unrealized
losses |
Estimated
fair
value |
Gross
unrealized
losses |
||||||||||||||||
2004 |
||||||||||||||||||||
Debt: |
||||||||||||||||||||
U.S.
corporate |
$ |
5,048 |
$ |
(134 |
) |
$ |
1,983 |
$ |
(329 |
) |
||||||||||
State
and municipal |
108 |
(1 |
) |
4 |
- |
|||||||||||||||
Mortgage-backed |
4,388 |
(37 |
) |
367 |
(14 |
) |
||||||||||||||
Asset-backed |
1,939 |
(14 |
) |
474 |
(31 |
) |
||||||||||||||
Corporate
- non-U.S. |
3,507 |
(17 |
) |
408 |
(11 |
) |
||||||||||||||
Government
- non-U.S. |
440 |
(3 |
) |
35 |
- |
|||||||||||||||
U.S.
government and federal agency |
104 |
(1 |
) |
13 |
- |
|||||||||||||||
Equity |
141 |
(13 |
) |
51 |
(5 |
) |
||||||||||||||
Total |
$ |
15,675 |
$ |
(220 |
) |
$ |
3,335 |
$ |
(390 |
) |
||||||||||
2003 |
||||||||||||||||||||
Debt: |
||||||||||||||||||||
U.S.
corporate |
$ |
6,320 |
$ |
(219 |
) |
$ |
1,882 |
$ |
(411 |
) |
||||||||||
State
and municipal |
213 |
(2 |
) |
2 |
- |
|||||||||||||||
Mortgage-backed |
3,375 |
(70 |
) |
127 |
(6 |
) |
||||||||||||||
Asset-backed |
1,982 |
(18 |
) |
1,476 |
(56 |
) |
||||||||||||||
Corporate
- non-U.S. |
1,341 |
(49 |
) |
97 |
(16 |
) |
||||||||||||||
Government
- non-U.S. |
67 |
(5 |
) |
10 |
(4 |
) |
||||||||||||||
U.S.
government and federal agency |
210 |
(18 |
) |
- |
- |
|||||||||||||||
Equity |
203 |
(45 |
) |
44 |
(32 |
) |
||||||||||||||
Total |
$ |
13,711 |
$ |
(426 |
) |
$ |
3,638 |
$ |
(525 |
) |
(In
millions) |
Amortized
cost |
Estimated
fair
value |
||||
Due
in |
||||||
2005 |
$ |
5,503 |
$ |
5,566 |
||
2006-2009 |
14,458 |
14,651 |
||||
2010-2014 |
14,716 |
15,113 |
||||
2015
and later |
16,911 |
17,926 |
(In
millions) |
2004 |
2003 |
2002 |
||||||
Gains
|
$ |
436 |
$ |
890 |
$ |
1,143 |
|||
Losses,
including impairments |
(235 |
) |
(729 |
) |
(1,120 |
) | |||
Net |
$ |
201 |
$ |
161 |
$ |
23 |
December
31 (In millions) |
2004
|
2003 |
||||
Time
sales and loans, net of deferred income |
$ |
218,837 |
$ |
187,941 |
||
Investment
in financing leases, net of deferred income |
66,340 |
63,760 |
||||
285,177 |
251,701 |
|||||
Less
allowance for losses (note 6) |
(5,589 |
) |
(6,198 |
) | ||
Financing
receivables - net |
$ |
279,588 |
$ |
245,503 |
December
31 (In millions) |
2004
|
2003 |
||||
Time
sales and loans, net of deferred income |
$ |
20,728 |
$ |
18,258 |
||
Investment
in financing leases, net of deferred income |
2,125 |
3,827 |
||||
22,853 |
22,085 |
|||||
Less
allowance for losses |
(5 |
) |
- |
|||
Financing
receivables - net |
$ |
22,848 |
$ |
22,085 |
December
31 (In millions) |
2004 |
2003 |
||||
Commercial
Finance |
||||||
Equipment |
$ |
72,053 |
$ |
66,516 |
||
Commercial
and industrial |
36,190 |
34,597 |
||||
Real
estate |
20,470 |
20,171 |
||||
Commercial
aircraft |
13,562 |
12,424 |
||||
142,275 |
133,708 |
|||||
Consumer
Finance |
||||||
Non-U.S.
residential mortgages |
42,201 |
19,593 |
||||
Non-U.S.
installment and revolving credit |
33,889 |
31,954 |
||||
Non-U.S.
auto |
23,517 |
20,729 |
||||
U.S.
installment and revolving credit |
21,385 |
15,883 |
||||
Other |
6,771 |
5,856 |
||||
127,763 |
94,015 |
|||||
Equipment
& Other Services |
15,139 |
23,978 |
||||
285,177 |
251,701 |
|||||
Less
allowance for losses |
(5,589 |
) |
(6,198 |
) | ||
Total |
$ |
279,588 |
$ |
245,503 |
Total
financing leases |
Direct
financing leases |
Leveraged
leases |
||||||||||||||||
December
31 (In millions) |
2004 |
2003 |
2004 |
2003 |
2004 |
2003 |
||||||||||||
Total
minimum lease payments |
||||||||||||||||||
receivable |
$ |
90,790 |
$ |
90,365 |
$ |
63,128 |
$ |
60,894 |
$ |
27,662 |
$ |
29,471 |
||||||
Less
principal and interest on |
||||||||||||||||||
third-party
nonrecourse debt |
(20,644 |
) |
(22,144 |
) |
- |
- |
(20,644 |
) |
(22,144 |
) | ||||||||
Net
rentals receivable |
70,146 |
68,221 |
63,128 |
60,894 |
7,018 |
7,327 |
||||||||||||
Estimated
unguaranteed residual |
||||||||||||||||||
value
of leased assets |
9,346 |
8,824 |
5,976 |
5,149 |
3,370 |
3,675 |
||||||||||||
Less
deferred income |
(13,152 |
) |
(13,285 |
) |
(9,754 |
) |
(9,509 |
) |
(3,398 |
) |
(3,776 |
) | ||||||
Investment
in financing leases,
net
of deferred income |
66,340 |
63,760 |
59,350 |
56,534 |
6,990 |
7,226 |
||||||||||||
Less
amounts to arrive at net |
||||||||||||||||||
investment |
||||||||||||||||||
Allowance
for losses |
(1,059 |
) |
(803 |
) |
(872 |
) |
(707 |
) |
(187 |
) |
(96 |
) | ||||||
Deferred
taxes |
(9,563 |
) |
(9,815 |
) |
(4,895 |
) |
(5,314 |
) |
(4,668 |
) |
(4,501 |
) | ||||||
Net
investment in financing leases |
$ |
55,718 |
$ |
53,142 |
$ |
53,583 |
$ |
50,513 |
$ |
2,135 |
$ |
2,629 |
(In
millions) |
Total
time
sales
and
loans |
Net
rentals
receivable |
||||
Due
in |
||||||
2005 |
$ |
65,066 |
$ |
17,518 |
||
2006 |
31,319 |
14,451 |
||||
2007 |
25,369 |
10,772 |
||||
2008 |
13,647 |
7,800 |
||||
2009 |
13,653 |
5,046 |
||||
2010
and later |
69,783 |
14,559 |
||||
Total |
$ |
218,837 |
$ |
70,146 |
December
31 (In millions) |
2004 |
2003 |
|||||
|
|
||||||
Loans
requiring allowance for losses |
$ |
1,687 |
$ |
1,054 |
|||
Loans
expected to be fully recoverable |
520 |
1,430 |
|||||
|
$ |
2,207 |
$ |
2,484 |
|||
Allowance
for losses |
$ |
747 |
$ |
434 |
|||
Average
investment during year |
2,398 |
2,312 |
|||||
Interest
income earned while impaired(a) |
26 |
33 |
|||||
(a) |
Recognized
principally on cash basis. |
(In
millions) |
2004 |
2003 |
2002 |
| ||||||
Balance
at January 1 |
||||||||||
Commercial
Finance |
$ |
2,211 |
$ |
2,631 |
$ |
2,510 |
||||
Consumer
Finance |
3,959 |
2,762 |
2,137 |
|||||||
Equipment
& Other Services |
28 |
54 |
87 |
|||||||
|
6,198 |
5,447 |
4,734 |
|||||||
Provision
charged to operations |
||||||||||
Commercial
Finance |
630 |
861 |
1,092 |
|||||||
Consumer
Finance |
3,220 |
2,694 |
1,861 |
|||||||
Equipment
& Other Services |
18 |
57 |
25 |
|||||||
|
3,868 |
3,612 |
2,978 |
|||||||
Other
additions (reductions)(a) |
(59 |
) |
717 |
693 |
||||||
Gross
write-offs |
||||||||||
Commercial
Finance |
(945 |
) |
(1,290 |
) |
(1,241 |
) | ||||
Consumer
Finance(b) |
(4,425 |
) |
(3,044 |
) |
(2,278 |
) | ||||
Equipment
& Other Services |
(75 |
) |
(88 |
) |
(77 |
) | ||||
(5,445 |
) |
(4,422 |
) |
(3,596 |
) | |||||
Recoveries |
||||||||||
Commercial
Finance |
160 |
122 |
91 |
|||||||
Consumer
Finance |
846 |
710 |
534 |
|||||||
Equipment
& Other Services |
21 |
12 |
13 |
|||||||
1,027 |
844 |
638 |
||||||||
Balance
at December 31 |
||||||||||
Commercial
Finance |
2,081 |
2,211 |
2,631 |
|||||||
Consumer
Finance |
3,473 |
3,959 |
2,762 |
|||||||
Equipment
& Other Services |
35 |
28 |
54 |
|||||||
Balance
at December 31 |
$ |
5,589 |
$ |
6,198 |
$ |
5,447 |
||||
(a) |
Other
additions (reductions) primarily included the effects of acquisitions,
securitization activity and the effects of exchange rates. These additions
(reductions) included $294 million, $480 million and $487 million related
to acquisitions and $(461) million, $(335) million and $(80) million
related to securitization activity in 2004, 2003 and 2002,
respectively.
|
|||||||||
(b) |
Included
$889 million in 2004 related to the standardization of our write-off
policy. |
December
31 |
2004 |
2003 |
||||
Allowance
for losses on financing receivables as a percentage of total financing
receivables |
||||||
Commercial
Finance |
1.46 |
% |
1.65 |
% | ||
Consumer
Finance(a) |
2.72 |
4.21 |
||||
Equipment
& Other Services |
0.23 |
0.12 |
||||
Total |
1.96 |
2.46 |
||||
Nonearning
and reduced earning financing receivables as a percentage of total
financing
receivables |
||||||
Commercial
Finance |
1.1 |
% |
1.3 |
% | ||
Consumer
Finance(a) |
2.0 |
2.6 |
||||
Equipment
& Other Services |
1.2 |
0.6 |
||||
Total |
1.5 |
1.7 |
||||
(a) |
The
standardization of our write-off policy in 2004 reduced the allowance for
losses on financing receivables as a percentage of total financing
receivables by 74 basis points, and nonearning and reduced earning
financing receivables as a percentage of total financing receivables by 57
basis points. |
December
31 (In millions) |
2004 |
2003 |
|||||
Reinsurance
recoverables |
$ |
18,620 |
$ |
2,381 |
|||
Commercial
mortgage loans |
6,433 |
6,649 |
|||||
Premiums
receivable |
494 |
507 |
|||||
Policy
loans |
1,266 |
1,138 |
|||||
Funds
on deposit with reinsurers |
7 |
4 |
|||||
Other |
430 |
1,858 |
|||||
Allowance
for losses |
(67 |
) |
(97 |
) | |||
Total(a) |
$ |
27,183 |
$ |
12,440 |
|||
(a) |
Included
$342 million in 2004 and $484 million in 2003 related to consolidated,
liquidating securitization entities. |
December
31 (Dollars in millions) |
Estimated
useful lives-new (years) |
2004 |
2003 |
||||||
Original
cost(a) |
|||||||||
Buildings
and equipment |
1-40 |
$ |
5,898 |
$ |
4,574 |
||||
Equipment
leased to others |
|||||||||
Aircraft |
20 |
26,837 |
23,069 |
||||||
Vehicles |
4-14 |
23,056 |
16,600 |
||||||
Railroad
rolling stock |
9-30 |
3,390 |
3,356 |
||||||
Mobile
and modular space |
12-20 |
2,965 |
3,164 |
||||||
Construction
and manufacturing |
3-25 |
1,762 |
1,563 |
||||||
All
other |
3-33 |
2,902 |
2,882 |
||||||
Total |
$ |
66,810 |
$ |
55,208 |
|||||
Net
carrying value(a) |
|||||||||
Buildings
and equipment |
$ |
3,361 |
$ |
2,695 |
|||||
Equipment
leased to others |
|||||||||
Aircraft(b) |
21,991 |
19,097 |
|||||||
Vehicles |
14,062 |
9,745 |
|||||||
Railroad
rolling stock |
2,193 |
2,220 |
|||||||
Mobile
and modular space |
1,635 |
1,814 |
|||||||
Construction
and manufacturing |
1,150 |
1,121 |
|||||||
All
other |
1,959 |
1,929 |
|||||||
Total |
$ |
46,351 |
$ |
38,621 |
|||||
(a) |
Included
$2.2 billion and $2.1 billion of original cost of assets leased to GE with
accumulated amortization of $0.4 billion and $0.3 billion at December 31,
2004 and 2003, respectively.
|
||||||||
(b) |
Commercial
Finance recognized impairment losses of $0.1 billion in 2004 and $0.2
billion in 2003 recorded in the caption “Depreciation and amortization” in
the Statement of Earnings to reflect adjustments to fair value based on
current market values from independent appraisers.
|
(In
millions) |
|||
Due
in |
|||
2005 |
$ |
6,999 |
|
2006 |
5,537 |
||
2007 |
4,155 |
||
2008 |
2,971 |
||
2009 |
2,056 |
||
2010
and later |
6,272 |
||
Total |
$ |
27,990 |
December
31 (In millions) |
2004 |
2003 |
||||
Goodwill |
$ |
23,067 |
$ |
19,741 |
||
Present
value of future profits (PVFP) |
800 |
1,259 |
||||
Capitalized
software |
658 |
695 |
||||
Other
intangibles |
901 |
915 |
||||
Total |
$ |
25,426 |
$ |
22,610 |
||
Intangible
assets were net
of accumulated amortization of $9,581 million in 2004 and $9,424 million
in 2003. |
2004 |
|||||||||||||||||||||||||||||
(In
millions) |
Commercial
Finance |
Consumer
Finance |
Equipment
&
Other
Services |
Insurance |
Portion
of
goodwill
not
included
in
GECC |
Total |
|||||||||||||||||||||||
Balance
at January 1 |
$ |
8,736 |
$ |
7,779 |
$ |
920 |
$ |
4,092 |
$ |
(1,786 |
) |
$ |
19,741 |
||||||||||||||||
Acquisitions/purchase
|
|||||||||||||||||||||||||||||
accounting
adjustments |
938 |
1,275 |
(11 |
) |
10 |
(65 |
) |
2,147 |
|||||||||||||||||||||
Inter-segment
transfers |
523 |
384 |
(523 |
) |
(384 |
) |
- |
- |
|||||||||||||||||||||
Currency
exchange and other |
74 |
422 |
1,073 |
(a) |
108 |
(498 |
) |
1,179 |
|||||||||||||||||||||
Balance
at December 31 |
$ |
10,271 |
$ |
9,860 |
$ |
1,459 |
$ |
3,826 |
$ |
(2,349 |
) |
$ |
23,067 |
||||||||||||||||
2003 |
|||||||||||||||||||||||||||||
(In
millions) |
Commercial
Finance |
Consumer
Finance |
Equipment
&
Other
Services |
Insurance |
Portion
of
goodwill
not
included
in
GECC |
Total |
|||||||||||||||||||||||
Balance
at January 1 |
$ |
8,469 |
$ |
5,562 |
$ |
887 |
$ |
4,176 |
$ |
(1,695 |
) |
$ |
17,399 |
||||||||||||||||
Acquisitions/purchase
|
|||||||||||||||||||||||||||||
accounting
adjustments |
183 |
1,294 |
29 |
12 |
- |
1,518 |
|||||||||||||||||||||||
Currency
exchange and other |
84 |
923 |
4 |
(96 |
) |
(91 |
) |
824 |
|||||||||||||||||||||
Balance
at December 31 |
$ |
8,736 |
$ |
7,779 |
$ |
920 |
$ |
4,092 |
$ |
(1,786 |
) |
$ |
19,741 |
||||||||||||||||
(a) |
Included
$1,055 million of goodwill associated with the consolidation of Penske
effective January 1, 2004.
|
2004 |
2003 |
|||||||||||||||||||||
December
31 (In millions) |
Gross
carrying
amount |
Accumulated
amortization |
Net |
Gross
carrying
amount |
Accumulated
amortization |
Net |
||||||||||||||||
PVFP |
$ |
2,334 |
$ |
(1,534 |
) |
$ |
800 |
$ |
2,900 |
$ |
(1,641 |
) |
$ |
1,259 |
||||||||
Capitalized
software |
1,451 |
(793 |
) |
658 |
1,348 |
(653 |
) |
695 |
||||||||||||||
Patents,
licenses and other |
458 |
(241 |
) |
217 |
308 |
(201 |
) |
107 |
||||||||||||||
Servicing
assets and all |
||||||||||||||||||||||
Other |
4,713 |
(4,029 |
) |
684 |
4,612 |
(3,804 |
) |
808 |
||||||||||||||
Total |
$ |
8,956 |
$ |
(6,597 |
) |
$ |
2,359 |
$ |
9,168 |
$ |
(6,299 |
) |
$ |
2,869 |
(In
millions) |
2004 |
2003 |
|||||
Balance
at January 1 |
$ |
1,259 |
$ |
2,078 |
|||
Acquisitions |
- |
20 |
|||||
Dispositions |
- |
(574 |
) | ||||
Accrued
interest(a) |
52 |
91 |
|||||
Amortization |
(144 |
) |
(295 |
) | |||
Other |
(367 |
) |
(61 |
) | |||
Balance
at December 31 |
$ |
800 |
$ |
1,259 |
|||
(a) |
Interest
was accrued at a rate of 6.8% and 3.8% for 2004 and 2003,
respectively. |
2005 |
2006 |
2007 |
2008 |
2009 |
|||||||||
10.1 |
% |
|
10.5 |
% |
|
9.5 |
% |
|
8.2 |
% |
|
6.7 |
% |
December
31 (In millions) |
2004
(Restated) |
2003
(Restated) |
|||||
Investments |
|||||||
Associated
companies(a) |
$ |
11,462 |
$ |
13,372 |
|||
Real
estate(b) |
19,112 |
15,463 |
|||||
Assets
held for sale(c) |
6,501 |
1,856 |
|||||
Securities
lending transactions |
3,202 |
3,026 |
|||||
Other(d) |
6,355 |
5,904 |
|||||
46,632 |
39,621 |
||||||
Separate
accounts |
8,884 |
8,243 |
|||||
Deferred
acquisition costs |
5,263 |
5,966 |
|||||
Derivative
instruments(e) |
3,015 |
1,879 |
|||||
Other |
5,614 |
4,639 |
|||||
Total(f) |
$ |
69,408 |
$ |
60,348 |
|||
(a) |
Included
advances to associated companies, which are non-controlled,
non-consolidated equity investments.
|
||||||
(b) |
Our
investment in real estate consists principally of two categories: real
estate held for investment and equity method investments. Both categories
contained a wide range of properties including the following at December
31, 2004: office buildings (46%), apartment buildings (16%), self storage
facilities (11%), retail facilities (10%), industrial properties (6%),
parking facilities (5%), franchise properties (3%) and other (3%). At
December 31, 2004, investments were located in Europe (45%), North America
(41%) and Asia (14%).
|
||||||
(c) |
These
assets held for sale were accounted for at the lower of carrying amount or
each asset’s estimated fair value less costs to sell.
|
||||||
(d) |
Included
cost method investments of $2,362 million in 2004, of which the fair value
and unrealized loss of those in a continuous loss position for less than
12 months was $90 million and $28 million, respectively. The fair value
and unrealized loss of those in a continuous loss position for 12 months
or more was $54 million and $41 million, respectively. Cost method
investments were each evaluated for impairment.
|
||||||
(e) |
Amounts
are stated at fair value in accordance with SFAS 133, Accounting
for Derivative Instruments and Hedging Activities,
as amended. We discuss types of derivative instruments and how we use them
in note 19.
|
||||||
(f) |
Included
$2,408 million in 2004 and $2,357 million in 2003 related to consolidated,
liquidating securitization entities.
|
2004 |
2003 |
||||||||||
December
31 (Dollars in millions) |
Amount |
Average
rate |
(a) |
Amount |
Average
rate |
(a) | |||||
|
|
|
|
||||||||
Commercial
paper |
|||||||||||
U.S.
|
|||||||||||
Unsecured |
$ |
55,644 |
2.23 |
% |
$ |
58,801 |
1.11 |
% | |||
Asset-backed(b) |
13,842 |
2.17 |
21,998 |
1.12 |
|||||||
Non-U.S. |
20,835 |
2.96 |
15,062 |
2.93 |
|||||||
Current
portion of long-term debt(c) |
37,426 |
4.22 |
38,333 |
3.36 |
|||||||
Other |
20,045 |
14,362 |
|||||||||
Total |
$ |
147,792 |
$ |
148,556 |
|||||||
(a) |
Based
on year-end balances and year-end local currency interest rates. Current
portion of long-term debt included the effects of interest rate and
currency swaps, if any, directly associated with the original debt
issuance. |
||||||||||
(b) |
Entirely
obligations of consolidated, liquidating securitization entities. See note
20. |
||||||||||
(c) |
Included
short-term borrowings by consolidated, liquidating securitization entities
of $756 million and $482 million at December 31, 2004 and 2003,
respectively. |
2004 |
|||||||||||
December
31 (Dollars in millions) |
Average
rate |
(a) |
Maturities |
2004 |
2003 |
||||||
|
|
|
|
||||||||
Senior
notes |
|||||||||||
Unsecured
|
3.85 |
% |
2006-2055 |
$ |
178,517 |
$ |
147,039 |
||||
Asset-backed(b) |
4.15 |
2006-2035 |
10,939 |
1,948 |
|||||||
Extendible
notes(c) |
2.40 |
2007-2009 |
14,258 |
12,591 |
|||||||
Subordinated
notes(d) |
7.42 |
2006-2014 |
820 |
963 |
|||||||
Total |
$ |
204,534 |
$ |
162,541 |
|||||||
(a) |
Based
on year-end balances and year-end local currency interest rates, including
the effects of interest rate and currency swaps, if any, directly
associated with the original debt issuance. | ||||||||||
(b) |
Asset-backed
senior notes are all issued by consolidated, liquidating securitization
entities as discussed in note 20. The amount related to AFIG, a 2004
acquisition, was $9,769 million. | ||||||||||
(c) |
Included
obligations of consolidated, liquidating securitization entities in the
amount of $267 million and $362 million at December 31, 2004 and 2003,
respectively. | ||||||||||
(d) |
At
year-end 2004 and 2003, $0.7 billion of subordinated notes were guaranteed
by GE. |
(In
millions) |
2005 |
2006 |
2007 |
2008 |
2009 |
|||||||||||
|
||||||||||||||||
|
$ |
37,426 |
(a) |
$ |
53,942 |
(b) |
$ |
28,990 |
$ |
20,852 |
$ |
26,602 |
||||
| ||||||||||||||||
(a) |
Floating
rate extendible notes of $244 million are due in 2005, but are extendible
at the investors’ option to a final maturity in 2008. Floating rate notes
of $482 million contain put options with exercise dates in 2005, but have
final maturity dates greater than 2010. |
|||||||||||||||
(b) |
Floating
rate extendible notes of $14.0 billion are due in 2006, but are extendible
at the investors’ option to a final maturity in 2007 ($12.0 billion) and
2009 ($2.0 billion). |
2004 |
2003 |
|||||||||
December
31 (Dollars in millions) |
Amount |
Average
rate |
Amount |
|||||||
Short-term(a) |
$ |
85,359 |
2.54 |
% |
$ |
82,621 |
||||
Long-term
(including current portion) |
||||||||||
Fixed
rate(b) |
$ |
156,129 |
4.56 |
% |
$ |
134,935 |
||||
Floating
rate |
110,838 |
3.06 |
93,541 |
|||||||
Total
long-term |
$ |
266,967 |
$ |
228,476 |
||||||
(a) |
Included
commercial paper and other short-term debt.
|
|||||||||
(b) |
Included
fixed-rate borrowings and $23.1 billion ($27.2 billion in 2003) notional
long-term interest rate swaps that effectively convert the floating-rate
nature of short-term borrowings to fixed rates of
interest. |
December
31 (In millions) |
2004 |
2003 |
|||||
|
|
||||||
Investment
contracts and universal life benefits |
$ |
60,876 |
$ |
61,027 |
|||
Life
insurance benefits(a) |
26,872 |
24,240 |
|||||
Unpaid
claims and claims adjustment expenses(b) |
3,569 |
3,232 |
|||||
Unearned
premiums |
3,689 |
3,871 |
|||||
Separate
accounts (see note 10) |
8,884 |
8,243 |
|||||
Total |
$ |
103,890 |
$ |
100,613 |
|||
(a)
|
Life
insurance benefits are accounted for mainly by a net-level-premium method
using estimated yields generally ranging from 2.0% to 7.5% in 2004 and
1.2% to 7.5% in 2003.
|
||||||
(b)
|
Principally
property and casualty reserves amounting to $0.7 billion and $0.6 billion
at December 31, 2004 and 2003, respectively. Included amounts for both
reported and IBNR claims, reduced by anticipated salvage and subrogation
recoveries. Estimates of liabilities are reviewed and updated continually,
with changes in estimated losses reflected in operations.
|
(In
millions) |
2004 |
2003 |
2002 |
||||||
|
|
|
|||||||
Balance
at January 1 - gross |
$ |
3,232 |
$ |
4,604 |
$ |
4,299 |
|||
Less
reinsurance recoverables |
(408 |
) |
(604 |
) |
(557 |
) | |||
Balance
at January 1 - net |
2,824 |
4,000 |
3,742 |
||||||
|
|||||||||
Claims
and expenses incurred |
|||||||||
Current
year |
2,085 |
2,257 |
3,818 |
||||||
Prior
years |
(124 |
) |
(112 |
) |
(145 |
) | |||
Claims
and expenses paid |
|||||||||
Current
year |
(1,035 |
) |
(1,394 |
) |
(2,069 |
) | |||
Prior
years |
(821 |
) |
(847 |
) |
(1,336 |
) | |||
Other |
(293 |
) |
(1,080 |
) |
(10 |
) | |||
Balance
at December 31 - net |
2,636 |
2,824 |
4,000 |
||||||
Add
reinsurance recoverables |
933 |
408 |
604 |
||||||
Balance
at December 31 - gross |
$ |
3,569 |
$ |
3,232 |
$ |
4,604 |
December
31 (In millions) |
2004 |
2003 |
||||
|
|
|||||
Mortgage
insurance risk in force |
$ |
194,600 |
$ |
146,627 |
||
Credit
life insurance risk in force |
29,500 |
25,728 |
||||
Less
reinsurance |
(2,292 |
) |
(2,207 |
) | ||
Total |
$ |
221,808 |
$ |
170,148 |
(In
millions) |
2004 |
2003 |
2002 |
||||||
|
|
|
|||||||
Current
tax expense (benefit) |
$ |
3,087 |
$ |
907 |
$ |
(317 |
) | ||
Deferred
tax expense (benefit) from temporary differences |
(1,346 |
) |
836 |
1,309 |
|||||
$ |
1,741 |
$ |
1,743 |
$ |
992 |
2004 |
2003 |
2002 |
||||
U.S.
federal statutory income tax rate |
35.0 |
% |
35.0 |
% |
35.0 |
% |
Reduction
in rate resulting from: |
||||||
Tax-exempt
income |
(0.9 |
) |
(1.4 |
) |
(2.0 |
) |
Tax
on global activities including exports |
(14.2 |
) |
(10.8 |
) |
(13.4 |
) |
Kidder
Peabody tax settlement |
- |
- |
(2.2 |
) | ||
Insurance
tax settlement |
- |
- |
(2.0 |
) | ||
Fuels
credits |
(1.3 |
) |
(1.2 |
) |
(1.9 |
) |
All
other - net |
(1.2 |
) |
(2.7 |
) |
(0.4 |
) |
(17.6 |
) |
(16.1 |
) |
(21.9 |
) | |
Actual
income tax rate |
17.4 |
% |
18.9 |
% |
13.1 |
% |
December
31 (In millions) |
2004 |
2003 |
||||
Assets |
||||||
Allowance
for losses |
$ |
2,244 |
$ |
2,024 |
||
Insurance
reserves |
730 |
619 |
||||
Cash
flow hedges |
866 |
887 |
||||
AMT
credit carryforward |
203 |
351 |
||||
Other
- net |
4,505 |
5,226 |
||||
Total
deferred income tax assets |
8,548 |
9,107 |
||||
Liabilities |
||||||
Financing
leases |
9,563 |
9,815 |
||||
Operating
leases |
3,625 |
3,494 |
||||
Deferred
acquisition costs |
1,052 |
1,233 |
||||
Other
- net |
4,578 |
5,269 |
||||
Total
deferred income tax liabilities |
18,818 |
19,811 |
||||
Net
deferred income tax liability |
$ |
10,270 |
$ |
10,704 |
December
31 (In millions) |
2004 |
2003 |
|||||
Minority
interest in consolidated affiliates |
|||||||
Genworth
Financial, Inc.(a) |
$ |
3,778 |
$ |
- |
|||
Others(b) |
1,009 |
671 |
|||||
Minority
interest in preferred stock(c) |
|||||||
GE
Capital affiliates |
1,318 |
1,841 |
|||||
$ |
6,105 |
$ |
2,512 |
||||
(a)
|
Resulted
from the sale of approximately 30% of the common shares of our previously
wholly-owned subsidiary.
|
||||||
(b) |
Included
minority interest in consolidated, liquidating securitization entities,
partnerships and common shares of consolidated affiliates.
|
||||||
(c)
|
The
preferred stock primarily pays cumulative dividends at variable rates.
Dividend rates in local currency on the preferred stock ranged from 0.99%
to 5.46% during 2004 and 0.98% to 5.65% during 2003.
|
(In
millions) |
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
|||||||
Total
shareowner’s equity at December 31 |
$ |
53,958 |
$ |
46,692 |
$ |
40,126 |
||||
Cumulative
preferred stock issued |
$ |
3 |
$ |
3 |
$ |
3 |
||||
Common
stock issued |
$ |
56 |
$ |
56 |
$ |
54 |
||||
Accumulated
nonowner changes other than earnings |
||||||||||
Balance
at January 1 |
$ |
2,602 |
$ |
(1,303 |
) |
$ |
(1,689 |
) | ||
Investment
securities - net of deferred taxes of $(105), $375 |
||||||||||
and
$739 |
(464 |
) |
622 |
1,429 |
||||||
Currency
translation adjustments - net of deferred taxes |
||||||||||
of
$(1,277) $(1,372) and $(12) |
2,296 |
3,146 |
(32 |
) | ||||||
Cash
flow hedges - net of deferred taxes |
||||||||||
of
$(257), $(412) and $(547) |
(340 |
) |
(742 |
) |
(1,741 |
) | ||||
Minimum
pension liabilities - net of deferred taxes |
||||||||||
of
$(33), $(4) and $(14) |
(93 |
) |
(9 |
) |
(22 |
) | ||||
Reclassification
adjustments |
||||||||||
Investment
securities - net of deferred taxes of $(70), |
||||||||||
$(56)
and $(8) |
(131 |
) |
(105 |
) |
(15 |
) | ||||
Currency
translation adjustments |
- |
4 |
- |
|||||||
Cash
flow hedges - net of deferred taxes |
||||||||||
of
$308, $551 and $126 |
543 |
989 |
767 |
|||||||
Balance
at December 31 |
$ |
4,413 |
$ |
2,602 |
$ |
(1,303 |
) | |||
Additional
paid-in capital |
||||||||||
Balance
at January 1 |
$ |
14,196 |
$ |
14,192 |
$ |
9,710 |
||||
Contributions(a) |
343 |
6 |
4,482 |
|||||||
Common
stock issued |
- |
(2 |
) |
- |
||||||
Balance
at December 31 |
$ |
14,539 |
$ |
14,196 |
$ |
14,192 |
||||
Retained
earnings |
||||||||||
Balance
at January 1 |
$ |
29,835 |
$ |
27,180 |
$ |
23,661 |
||||
Net
earnings |
8,260 |
7,127 |
5,539 |
|||||||
Dividends(a) |
(3,148 |
) |
(4,472 |
) |
(2,020 |
) | ||||
Balance
at December 31 |
$ |
34,947 |
$ |
29,835 |
$ |
27,180 |
||||
(a) |
Total
dividends and other transactions with the shareowner reduced equity by
$2,805 million and $4,466 million in 2004 and 2003, respectively, and
increased equity by $2,462 million in 2002.
|
For
the years ended December 31 (In millions) |
2004 |
2003 |
2002 |
||||||
All
other operating activities |
|
||||||||
Proceeds
from assets held for sale |
$ |
84 |
$ |
1,168 |
$ |
25 |
|||
Amortization
of intangible assets |
669 |
852 |
1,502 |
||||||
Realized
gains on sale of investment securities |
(201 |
) |
(161 |
) |
(23 |
) | |||
Other(a) |
253 |
(447 |
) |
(49 |
) | ||||
$ |
805 |
$ |
1,412 |
$ |
1,455 |
||||
Net
increase in financing receivables |
|||||||||
Increase
in loans to customers |
$ |
(340,747 |
) |
$ |
(261,039 |
) |
$ |
(205,634 |
) |
Principal
collections from customers - loans |
305,374 |
235,434 |
181,604 |
||||||
Investment
in equipment for financing leases |
(22,048 |
) |
(22,167 |
) |
(19,382 |
) | |||
Principal
collections from customers - financing leases |
19,238 |
18,406 |
15,319 |
||||||
Net
change in credit card receivables |
(7,983 |
) |
(11,379 |
) |
(19,843 |
) | |||
Sales
of financing receivables |
31,214 |
36,009 |
29,651 |
||||||
|
$ |
(14,952 |
) |
$ |
(4,736 |
) |
$ |
(18,285 |
) |
All
other investing activities |
|
| |||||||
Purchases
of securities by insurance and annuity businesses |
$ |
(19,889 |
) |
$ |
(27,777 |
) |
$ |
(46,148 |
) |
Dispositions
and maturities of securities by insurance and annuity
businesses |
17,438 |
25,760 |
37,219 |
||||||
Proceeds
from principal business dispositions |
472 |
3,193 |
- |
||||||
Other |
196 |
(1,935 |
) |
(3,439 |
) | ||||
|
$ |
(1,783 |
) |
$ |
(759 |
) |
$ |
(12,368 |
) |
Newly
issued debt having maturities longer than 90 days |
|||||||||
Short-term
(91 to 365 days) |
$ |
1,504 |
$ |
1,576 |
$ |
1,796 |
|||
Long-term
(longer than one year) |
59,925 |
57,471 |
93,026 |
||||||
Proceeds
- nonrecourse, leveraged lease |
319 |
791 |
1,222 |
||||||
|
$ |
61,748 |
$ |
59,838 |
$ |
96,044 |
|||
Repayments
and other reductions of debt having maturities
longer
than 90 days |
|||||||||
Short-term
(91 to 365 days) |
$ |
(41,085 |
) |
$ |
(38,696 |
) |
$ |
(32,950 |
) |
Long-term
(longer than one year) |
(3,378 |
) |
(3,650 |
) |
(5,297 |
) | |||
Principal
payments - nonrecourse, leveraged lease |
(652 |
) |
(782 |
) |
(339 |
) | |||
|
$ |
(45,115 |
) |
$ |
(43,128 |
) |
$ |
(38,586 |
) |
All
other financing activities |
| ||||||||
Proceeds
from sales of investment contracts |
$ |
17,938 |
$ |
9,337 |
$ |
7,806 |
|||
Redemption
of investment contracts |
(20,350 |
) |
(9,267 |
) |
(6,556 |
) | |||
Capital
contributions from GE Capital Services |
- |
- |
4,500 |
||||||
Cash
received upon assumption of insurance liabilities |
- |
- |
2,406 |
||||||
|
$ |
(2,412 |
) |
$ |
70 |
$ |
8,156 |
(a) |
As
restated. |
For
the years ended
December
31 (In millions) |
Total
revenues |
Intersegment
revenues |
External
revenues |
||||||||||||||||||||||||
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
2004 |
2003 |
2002 |
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
|||||||||||||||||||
Commercial
Finance |
$ |
23,000 |
$ |
20,497 |
$ |
19,302 |
$ |
162 |
$ |
146 |
$ |
74 |
$ |
22,838 |
$ |
20,351 |
$ |
19,228 |
|||||||||
Consumer
Finance |
15,725 |
12,734 |
9,833 |
13 |
17 |
12 |
15,712 |
12,717 |
9,821 |
||||||||||||||||||
Equipment
& |
|||||||||||||||||||||||||||
Other
Services |
9,692 |
5,476 |
5,679 |
(221 |
) |
(191 |
) |
(94 |
) |
9,913 |
5,667 |
5,773 |
|||||||||||||||
Insurance |
11,433 |
14,663 |
14,021 |
46 |
28 |
8 |
11,387 |
14,635 |
14,013 |
||||||||||||||||||
Total |
$ |
59,850 |
$ |
53,370 |
$ |
48,835 |
$ |
- |
$ |
- |
$ |
- |
$ |
59,850 |
$ |
53,370 |
$ |
48,835 |
Depreciation
and amortization |
Provision
for income taxes |
|||||||||||||||||
For
the years ended December 31 (In millions) |
2004 |
2003 |
2002 |
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
||||||||||||
Commercial
Finance |
$ |
3,773 |
$ |
3,403 |
$ |
3,080 |
$ |
1,015 |
$ |
778 |
$ |
769 |
||||||
Consumer
Finance |
334 |
276 |
232 |
442 |
485 |
457 |
||||||||||||
Equipment
& Other Services |
1,995 |
1,126 |
1,036 |
20 |
(282 |
) |
(603 |
) | ||||||||||
Insurance |
256 |
466 |
399 |
264 |
762 |
369 |
||||||||||||
Total |
$ |
6,358 |
$ |
5,271 |
$ |
4,747 |
$ |
1,741 |
$ |
1,743 |
$ |
992 |
Interest
on time sales and loans |
Interest
expense |
|||||||||||||||||
For
the years ended December 31 (In millions) |
2004 |
2003 |
2002 |
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
||||||||||||
Commercial
Finance |
$ |
5,825 |
$ |
5,587 |
$ |
5,212 |
$ |
6,022 |
$ |
5,780 |
$ |
5,965 |
||||||
Consumer
Finance |
11,856 |
10,445 |
7,957 |
3,560 |
2,683 |
2,105 |
||||||||||||
Equipment
& Other Services |
698 |
576 |
109 |
1,292 |
(a) |
1,168 |
(a) |
1,084 |
||||||||||
Insurance |
377 |
495 |
445 |
284 |
368 |
325 |
||||||||||||
Total |
$ |
18,756 |
$ |
17,103 |
$ |
13,723 |
$ |
11,158 |
$ |
9,999 |
$ |
9,479 |
Assets
At
December 31 |
Buildings
and equipment
additions(b)
For
the years ended December 31 |
||||||||||||||||||
(In
millions) |
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
2004 |
2003 |
2002 |
|||||||||||||
Commercial
Finance(c) |
$ |
232,411 |
$ |
214,811 |
$ |
201,653 |
$ |
7,222 |
$ |
7,062 |
$ |
8,702 |
|||||||
Consumer
Finance(c) |
150,531 |
105,935 |
75,885 |
217 |
191 |
221 |
|||||||||||||
Equipment
& Other Services(c) |
60,146 |
67,832 |
30,697 |
3,215 |
1,148 |
2,418 |
|||||||||||||
Insurance |
123,797 |
118,195 |
131,199 |
9 |
11 |
41 |
|||||||||||||
Total |
$ |
566,885 |
$ |
506,773 |
$ |
439,434 |
$ |
10,663 |
$ |
8,412 |
$ |
11,382 |
|||||||
(a) |
Included
$530 million in 2004 and $386 million in 2003 related to consolidated,
liquidating securitization entities.
|
||||||||||||||||||
(b) |
Additions
to buildings and equipment include amounts relating to principal
businesses purchased.
|
||||||||||||||||||
(c) |
Total
assets of the Commercial Finance, Consumer Finance and Equipment &
Other Services segments at December 31, 2004, include investments in and
advances to non-consolidated affiliates of $8,506 million, $2,180 million
and $776 million, respectively, which contributed approximately $436
million, $65 million and $82 million, respectively, to segment pre-tax
income for the year ended December 31, 2004. |
December
31 (In millions) |
2004 |
2003 |
||||
Cash
flow hedges |
||||||
Ineffectiveness |
$ |
3 |
$ |
(18 |
) | |
Amounts
excluded from the measure of effectiveness |
(6 |
) |
- |
|||
|
||||||
Fair
value hedges |
||||||
Ineffectiveness |
13 |
1 |
||||
Amounts
excluded from the measure of effectiveness |
3 |
- |
|
Credit
rating | |||
|
Moody’s |
S&P | ||
Foreign
exchange forwards and other derivatives less than one year |
P-1 |
A-1 | ||
All
derivatives between one and five years |
Aa3(a) |
AA-(a) | ||
All
derivatives greater than five years |
Aaa(a) |
AAA(a) | ||
(a) |
Counterparties
that have an obligation to provide collateral to cover credit exposure in
accordance with a credit support agreement must have a minimum A3/A-
rating. |
(In
millions) |
Exposure |
||||||||
Greater
than one year |
|||||||||
Less
than
one
year |
With
collateral |
Without
collateral |
|||||||
Minimum
rating |
|||||||||
Aaa/AAA |
$ |
150 |
$ |
100 |
|
$ |
75 |
||
Aa3/AA- |
150 |
50 |
50 |
||||||
A3/A- |
150 |
5 |
Not
allowed |
2004 |
2003 | ||||||||||||||||||
Assets
(liabilities) |
Assets
(liabilities) | ||||||||||||||||||
December
31 (In millions) |
Notional
amount |
Carrying
amount
(net) |
Estimated
fair
value |
Notional
amount |
Carrying
amount
(net) |
Estimated
fair
value | |||||||||||||
Assets
|
|||||||||||||||||||
Time
sales and loans(f) |
$ |
(a) |
$ |
214,307 |
$ |
216,014 |
$ |
(a) |
$ |
182,546 |
$ |
182,078 |
|||||||
Other
commercial and |
|||||||||||||||||||
residential
mortgages |
(a) |
10,604 |
10,823 |
(a) |
8,759 |
9,085 |
|||||||||||||
Other
financial instruments |
(a) |
2,941 |
3,153 |
(a) |
2,472 |
2,473 |
|||||||||||||
Liabilities
|
|||||||||||||||||||
Borrowings(b)(c)(f)
|
(a) |
(352,326 |
) |
(361,521 |
) |
(a) |
(311,097 |
) |
(322,037 |
) | |||||||||
Investment
contract benefits |
(a) |
(32,027 |
) |
(32,071 |
) |
(a) |
(32,718 |
) |
(32,525 |
) | |||||||||
Insurance
- financial |
|||||||||||||||||||
guarantees
and credit |
|||||||||||||||||||
life(d) |
221,808 |
(3,575 |
) |
(3,575 |
) |
170,148 |
(3,928 |
) |
(3,928 |
) | |||||||||
Other
firm commitments |
|||||||||||||||||||
Ordinary
course of business |
|||||||||||||||||||
lending
commitments |
|||||||||||||||||||
Fixed
rate |
2,503 |
- |
- |
2,158 |
- |
- |
|||||||||||||
Variable
rate |
8,156 |
- |
- |
8,923 |
- |
- |
|||||||||||||
Unused
revolving credit lines(e) |
|||||||||||||||||||
Commercial |
|||||||||||||||||||
Fixed
rate |
1,210 |
- |
- |
896 |
- |
- |
|||||||||||||
Variable
rate |
21,411 |
- |
- |
15,953 |
- |
- |
|||||||||||||
Consumer
- principally |
|||||||||||||||||||
credit
cards |
|||||||||||||||||||
Fixed
rate |
141,965 |
- |
- |
107,892 |
- |
- |
|||||||||||||
Variable
rate |
200,219 |
- |
- |
131,106 |
- |
- |
|||||||||||||
(a)
|
These
financial instruments do not have notional amounts.
|
||||||||||||||||||
(b)
|
Included
effects of interest rate swaps and cross currency swaps.
|
||||||||||||||||||
(c)
|
See
note 11.
|
||||||||||||||||||
(d)
|
See
note 12.
|
||||||||||||||||||
(e) |
Excluded
inventory financing arrangements, which may be withdrawn at our option, of
$8.9 billion and $4.2 billion as of December 31, 2004 and 2003,
respectively. |
||||||||||||||||||
(f) |
As
restated. |
December
31 (In millions) |
2004
(Restated) |
2003
(Restated) |
||||
Receivables
secured by: |
||||||
Equipment |
$ |
13,673 |
$ |
15,638 |
||
Commercial
real estate |
14,123 |
15,232 |
||||
Residential
real estate - AFIG |
9,094 |
- |
||||
Other
assets |
11,723 |
9,119 |
||||
Credit
card receivables |
7,075 |
8,581 |
||||
Total
securitized assets |
$ |
55,688 |
$ |
48,570 |
December
31 (In millions) |
2004
(Restated) |
2003
(Restated) |
|||||
Off-balance
sheet(a)(b) |
$ |
28,950 |
$ |
21,894 |
|||
On-balance
sheet - AFIG |
9,094 |
-
|
|||||
On-balance
sheet - other(c) |
17,644 |
26,676 |
|||||
Total
securitized assets |
$ |
55,688 |
$ |
48,570 |
|||
(a) |
At
December 31, 2004 and 2003, liquidity support amounted to $2,100 million
and $2,900 million, respectively. These amounts are net of $2,900 million
and $1,000 million, respectively, participated or deferred beyond one
year. Credit support amounted to $5,000 million and $3,900 million at
December 31, 2004 and 2003, respectively. | ||||||
(b) |
Liabilities
for recourse obligations related to off-balance sheet assets were $0.1
billion at both December 31, 2004 and 2003. | ||||||
(c) |
At
December 31, 2004 and 2003, liquidity support amounted to $14,400 million
and $18,400 million, respectively. These amounts are net of $1,200 million
and $5,300 million, respectively, participated or deferred beyond one
year. Credit support amounted to $6,900 million and $8,600 million at
December 31, 2004 and 2003, respectively. |
December
31 (In millions) |
2004
(Restated) |
2003
(Restated) |
||||
Investment
securities |
$ |
1,147 |
$ |
1,566 |
||
Financing
receivables - net (note 5)(a) |
22,848 |
22,085 |
||||
Other
assets |
2,408 |
2,357 |
||||
Other,
principally insurance receivables |
335 |
668 |
||||
Total |
$ |
26,738 |
$ |
26,676 |
||
(a)
Included $9,094 million related to AFIG. |
December
31 (In millions) |
2004 |
2003 |
|||||
Retained
interests |
$ |
3,288 |
$ |
2,417 |
|||
Servicing
assets(a) |
33 |
150 |
|||||
Recourse
liability |
(64 |
) |
(75 |
) | |||
Total |
$ |
3,257 |
$ |
2,492 |
|||
|
|||||||
(a) |
2003
included $115 million of mortgage servicing rights sold in
2004.
|
• |
Retained
interests
When we securitize receivables, we determine fair value based on
discounted cash flow models that incorporate, among other things,
assumptions including loan pool credit losses, prepayment speeds and
discount rates. These assumptions are based on our experience, market
trends and anticipated performance related to the particular assets
securitized. Subsequent to recording retained interests, we review
recorded values quarterly in the same manner and using current
assumptions. We recognize impairments when carrying amounts exceed current
fair values. |
• |
Servicing
assets
Following a securitization transaction, we retain responsibility for
servicing the receivables, and are therefore entitled to an ongoing fee
based on the outstanding principal balances of the receivables. Servicing
assets are primarily associated with residential mortgage loans. Their
value is subject to credit, prepayment and interest rate risk.
|
• |
Recourse
liability
Certain transactions require credit support agreements. As a result, we
provide for expected credit losses under these agreements and such amounts
approximate fair value. |
(Dollars
in millions) |
Equipment |
Commercial
real
estate |
Other
assets |
Credit
card
receivables |
||||||||
2004 |
||||||||||||
Cash
proceeds from securitization |
$ |
5,367 |
$ |
4,093 |
$ |
- |
$ |
8,121 |
||||
Proceeds
from collections |
||||||||||||
reinvested
in new receivables |
- |
- |
21,389 |
5,208 |
||||||||
Cash
received on retained interest |
107 |
58 |
128 |
1,788 |
||||||||
Weighted
average lives (in months) |
37 |
68 |
- |
7 |
||||||||
Assumptions
as of sale date(a) |
||||||||||||
Discount
rate |
8.2 |
% |
13.0 |
% |
- |
12.2 |
% | |||||
Prepayment
rate |
9.1 |
% |
11.2 |
% |
- |
14.9 |
% | |||||
Estimate
of credit losses |
1.9 |
% |
1.1 |
% |
- |
8.9 |
% |
(Dollars
in millions) |
Equipment |
Commercial
real
estate |
Other
assets |
Credit
card
receivables |
|||||||||
2003 |
|||||||||||||
Cash
proceeds from securitization |
$ |
5,416 |
$ |
3,082 |
$ |
2,009 |
$ |
- |
|||||
Proceeds
from collections |
|||||||||||||
reinvested
in new receivables |
- |
- |
14,047 |
10,685 |
|||||||||
Weighted
average lives (in months) |
29 |
72 |
106 |
7 |
|||||||||
Assumptions
as of sale date(a) |
|||||||||||||
Discount
rate |
6.6 |
% |
11.5 |
% |
6.4 |
% |
11.2 |
% | |||||
Prepayment
rate |
10.1 |
% |
10.8 |
% |
4.6 |
% |
15.0 |
% | |||||
Estimate
of credit losses |
1.6 |
% |
1.6 |
% |
0.2 |
% |
10.8 |
% | |||||
|
|||||||||||||
Cash
receipts related to servicing and other sources were less than $300
million in 2004. |
|||||||||||||
(a) |
Based
on weighted averages. |
(Dollars
in millions) |
Equipment |
Commercial
real
estate |
Other
assets |
Credit
card
receivables |
|||||||||
Discount
rate(a) |
7.3 |
% |
8.3 |
% |
6.7 |
% |
11.3 |
% | |||||
Effect
of: |
|||||||||||||
10%
Adverse change |
$
|
(10 |
) |
$ |
(11 |
) |
$ |
(19 |
) |
$ |
(9 |
) | |
20%
Adverse change |
(20 |
) |
(21 |
) |
(37 |
) |
(17 |
) | |||||
Prepayment
rate(a) |
9.4 |
% |
3.6 |
% |
1.1 |
% |
12.2 |
% | |||||
Effect
of: |
|||||||||||||
10%
Adverse change |
$ |
(6 |
) |
$ |
(4 |
) |
$ |
(9 |
) |
$ |
(35 |
) | |
20%
Adverse change |
(12 |
) |
(9 |
) |
(19 |
) |
(65 |
) | |||||
Estimate
of credit losses(a) |
1.8 |
% |
0.5 |
% |
0.5 |
% |
8.0 |
% | |||||
Effect
of: |
|||||||||||||
10%
Adverse change |
$ |
(11 |
) |
$ |
(4 |
) |
$ |
- |
$ |
(34 |
) | ||
20%
Adverse change |
(23 |
) |
(8 |
) |
(2 |
) |
(67 |
) | |||||
Remaining
weighted |
|||||||||||||
average
lives (in months) |
35 |
108 |
62 |
8 |
|||||||||
Net
credit losses |
$ |
54 |
$ |
7 |
$ |
25 |
$ |
465 |
|||||
Delinquencies |
78 |
38 |
10 |
256 |
|||||||||
(a)
|
Based
on weighted averages.
|
• |
Liquidity
support
Liquidity support provided to holders of certain variable rate bonds
issued by municipalities amounted to $3,612 million at December 31, 2004.
If holders elect to sell supported bonds that cannot be remarketed, we are
obligated to repurchase them at par. If called upon, our position would be
secured by the repurchased bonds. While we hold any such bonds, we would
receive interest payments from the municipalities at a rate that is in
excess of the stated rate on the bond. To date, we have not been required
to perform under such arrangements. In addition, we are currently not
providing any new liquidity facilities. |
• |
Credit
support
We have provided $5,617 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 our 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 but 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 $72 million at
December 31, 2004. |
• |
Indemnification
agreements
These are agreements that require us to fund up to $605 million under
residual value guarantees on a variety of leased equipment and $156
million of other indemnification commitments arising from sales of
businesses or assets. Under most of our residual value guarantees, our
commitment is secured by the leased asset at termination of the lease. The
liability for these indemnification agreements was $59 million at December
31, 2004. |
• |
Contingent
consideration
These are agreements to provide additional consideration in a business
combination to the seller if contractually specified conditions related to
the acquired entity are achieved. At December 31, 2004, we had recognized
no liabilities for our total exposure of $232
million. |
First
quarter |
Second
quarter |
Third
quarter |
Fourth
quarter |
|||||||||||||||||||||
(In
millions) |
2004
(Restated) |
2003
(Restated) |
2004
(Restated) |
2003
(Restated) |
2004
(Restated) |
2003
(Restated) |
2004
(Restated) |
2003
(Restated) |
||||||||||||||||
Total
revenues |
$ |
14,447 |
$ |
12,602 |
$ |
13,882 |
$ |
13,605 |
$ |
14,720 |
$ |
13,378 |
$ |
16,801 |
$ |
13,785 |
||||||||
Earnings
before income taxes |
2,281 |
2,390 |
1,573 |
2,655 |
2,943 |
1,837 |
3,204 |
2,327 |
||||||||||||||||
Provision
for income taxes |
(502 |
) |
(485 |
) |
(170 |
) |
(601 |
) |
(673 |
) |
(282 |
) |
(396 |
) |
(375 |
) | ||||||||
Earnings
before accounting |
||||||||||||||||||||||||
changes
|
1,779 |
1,905 |
1,403 |
2,054 |
2,270 |
1,555 |
2,808 |
1,952 |
||||||||||||||||
Cumulative
effect of
accounting
changes |
- |
- |
- |
- |
- |
(339 |
) |
- |
- |
|||||||||||||||
Net
earnings |
$ |
1,779 |
$ |
1,905 |
$ |
1,403 |
$ |
2,054 |
$ |
2,270 |
$ |
1,216 |
$ |
2,808 |
$ |
1,952 |
· |
The
first errors were in accounting for interest rate and currency swaps at
GECC that included fees paid or received at inception. These swaps related
to about 14% of our overall borrowings at January 1, 2001, and about 6% of
our overall borrowings at December 31, 2004. Our initial accounting viewed
these fees as immaterial. KPMG LLP, our independent registered public
accounting firm, reviewed this initial accounting in connection with their
2001 audit. In 2003, we discontinued use of such swaps, except for one
immaterial transaction, but continued the previous accounting for those
already in place. Because of the swap fees, however, the fair values of
the swaps were not zero at inception as required by SFAS 133 and,
accordingly, we were required to, but did not, test periodically for
effectiveness. |
· |
The
second errors arose from a hedge accounting position related to a
portfolio of assets consolidated by GECC in July 2003 at implementation of
Financial Accounting Standards Board Interpretation No. (FIN) 46,
Consolidation
of Variable Interest Entities.
This portfolio included assets equal to 2% and 1% of GE’s total assets at
consolidation and at December 31, 2004, respectively. We entered into
interest rate swaps in 2003 to adjust the economic yield on these
newly-consolidated fixed-rate assets from a fixed to a floating rate.
Adhering to our hedge documentation at the 2003 inception of these swaps,
we did not perform subsequent periodic testing of their effectiveness. We
determined as a result of the internal audit that the prepayment penalties
in the underlying assets, which penalties had not been identified by us or
KPMG LLP at implementation, were not appropriately mirrored in the
associated swaps, as required in order to avoid periodic testing of
effectiveness under SFAS 133. Accordingly, periodic effectiveness testing
was required under SFAS 133 for these swaps.
|
· |
In
the course of the internal audit, GE's internal audit staff also
identified other errors under SFAS 133 with respect to other aspects of
certain swaps and other derivative instruments. Adjustments to correct the
accounting for these transactions also are included in our restated
results of operations. We do not believe these other adjustments are
material, individually or in the aggregate, to our financial position or
our results of operations for any reported
period. |
· |
a
failure to ensure the correct application of SFAS 133 when certain
derivative transactions were entered into at GECC prior to August 2003 and
failure to correct that error subsequently. |
· |
improving
training, education and accounting reviews designed to ensure that all
relevant personnel involved in derivatives transactions understand and
apply hedge accounting in compliance with SFAS 133; and
|
· |
retesting
our internal financial controls with respect to the types of hedging
transactions affected by the restatement to ensure compliance with SFAS
133. |
· |
a
failure to ensure the correct application of SFAS 133 when certain
derivative transactions were entered into at GECC prior to August 2003 and
failure to correct that error subsequently. |
/s/
Dennis D. Dammerman |
/s/
James A. Parke | |
Dennis
D. Dammerman
Chairman
of the Board |
James
A. Parke
Vice
Chairman and Chief Financial Officer | |
| ||
May
5, 2005 |
(In
millions) |
2004 |
2003 |
||||
Type
of fees |
||||||
Audit
fees |
$ |
28.0 |
$ |
20.8 |
||
Audit-related
fees |
7.2 |
7.6 |
||||
Tax
fees |
3.7 |
5.7 |
||||
All
other fees |
- |
0.5 |
||||
$ |
38.9 |
$ |
34.6 |
(a) 1.
|
Financial
Statements | |
| ||
Included
in Part II of this report: | ||
| ||
Report
of Independent Registered Public Accounting Firm
Statement
of Earnings for each of the years in the three-year period ended December
31, 2004
Statement
of Changes in Shareowner’s Equity for each of the years in the three-year
period
ended
December 31, 2004
Statement
of Financial Position at December 31, 2004 and 2003
Statement
of Cash Flows for each of the years in the three-year period ended
December 31, 2004
Notes
to Consolidated Financial Statements |
Incorporated
by reference: | |||
| |||
The
consolidated financial statements of General Electric Company, set forth
in Amendment No.1 to the Annual Report on Form 10-K/A of General
Electric Company (S.E.C. File No. 001-00035) for the year ended December
31, 2004 (pages 23 through 129) and Exhibit 12 (Ratio of Earnings to Fixed
Charges) of General Electric Company. | |||
| |||
(a) 2.
|
Financial
Statement Schedules | ||
Schedule
I |
Condensed
financial information of registrant. | ||
All
other schedules are omitted because of the absence of conditions under
which they are required or because the required information is shown in
the financial statements or notes thereto. |
(a) 3.
|
Exhibit
Index | ||
| |||
The
exhibits listed below, as part of Form 10-K/A, are numbered in conformity
with the numbering used in Item 601 of Regulation S-K of the Securities
and Exchange Commission. | |||
| |||
Exhibit
Number |
Description | ||
2
(a) |
Agreement
and Plan of Merger dated June 25, 2001, between GECC and GECS Merger Sub,
Inc. (Incorporated by reference to Exhibit 2.1 of GECC’s Current Report on
Form 8-K dated as of July 3, 2001). | ||
| |||
3
(i) |
A
complete copy of the Certificate of Incorporation of GECC as last amended
on November 23, 2004 and currently in effect, consisting of the following:
(a) the Restated Certificate of Incorporation of GECC as in effect
immediately prior to the filing of a Certificate of Amendment on August 7,
2002 (Incorporated by reference to Exhibit 3(i) of the GECC’s Form 10-K
Report for the year ended December 31, 2001); and (b) a Certificate of
Amendment filed with the Office of the Secretary of State, State of
Delaware on August 7, 2002 (Incorporated by reference to Exhibit 3(i) to
GECC’s Post-Effective Amendment No. 1 to Registration Statement on Form
S-3, File No. 333-100527); (c) a Certificate of Amendment filed with the
Office of the Secretary of State, State of Delaware on January 27, 2003
(Incorporated by reference to Exhibit 3(i) to GECC’s Post-Effective
Amendment No. 1 to Registration Statement on Form S-3, File No.
333-100527); and (d) a Certificate of Amendment filed with the Office of
the Secretary of State, State of Delaware on November 23, 2004.* GECC’s
Certificate of Merger filed with the Office of the Secretary of State,
State of Delaware on June 29, 2001 (Incorporated by reference to Exhibit
2(a) of GECC's Form 10-K Report for the year ended December 31,
2001). | ||
| |||
3
(ii) |
A
complete copy of the By-Laws of GECC as last amended on September 19,
2002, and currently in effect (Incorporated by reference to Exhibit 3(ii)
of GECC’s Post-Effective Amendment No. 1 to Registration Statement of Form
S-3, File No. 333-100527). | ||
|
4
(a) |
Amended
and Restated General Electric Capital Corporation 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). | ||
| |||
4
(b) |
Third
Amended and Restated Indenture dated as of February 27, 1997 between GECC
and JPMorgan Chase Bank, N.A., (formerly known as The Chase Manhattan
Bank) as successor trustee (Incorporated by reference to Exhibit 4(c) to
GECC’s Registration Statement on Form S-3, File No.
333-59707). | ||
| |||
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). | ||
| |||
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). | ||
| |||
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 Post-Effective Amendment
No. 1 to GECC’s Registration Statement on Form S-3, File No.
333-100527). | ||
| |||
4
(f) |
Fifth
Amended and Restated Fiscal and Paying Agency Agreement among GECC, GE
Capital Australia Funding Pty Ltd, GE Capital European Funding, GE Capital
Canada Funding Company, GE Capital UK Funding and JPMorgan Chase Bank,
N.A., J.P. Morgan Bank Luxembourg, S.A. and J.P. Morgan Bank (Ireland)
p.l.c. dated as of May 21, 2004 (Incorporated by reference to Exhibit 4(f)
to General Electric Capital Services, Inc.’s Form 10-K Report for the year
ended December 31, 2004). | ||
| |||
4
(g) |
Form
of Global Medium-Term Note, Series A, Fixed Rate Registered Note
(Incorporated by reference to Exhibit 4(m) to GECC’s Registration
Statement on Form S-3, File No. 333-100527). | ||
| |||
4
(h) |
Form
of Global Medium-Term Note, Series A, Floating Rate Registered Note
(Incorporated by reference Exhibit 4(n) to GECC’s Registration Statement
on Form S-3, File No. 333-100527). | ||
| |||
4
(i) |
Form
of Euro Medium-Term Note and Debt Security - Permanent Global Fixed Rate
Bearer Note (Incorporated by reference to Exhibit 4(i) to General Electric
Capital Services, Inc.'s Form 10-K Report for the year ended December 31,
2004). | ||
| |||
4
(j) |
Form
of Euro Medium-Term Note and Debt Security - Permanent Global Floating
Rate Bearer Note (Incorporated by reference to Exhibit 4(j) to General
Electric Capital Services, Inc.’s Form 10-K Report for the year ended
December 31, 2004). |
4
(k) |
Form
of Euro Medium-Term Note and Debt Security - Temporary Global Fixed Rate
Bearer Note (Incorporated by reference to Exhibit 4(k) to General Electric
Capital Services, Inc.’s Form 10-K Report for the year ended December 31,
2004). | ||
| |||
4
(l) |
Form
of Euro Medium-Term Note and Debt Security - Temporary Global Floating
Rate Bearer Note (Incorporated by reference to Exhibit 4(l) to General
Electric Capital Services, Inc.’s Form 10-K Report for the year ended
December 31, 2004). | ||
| |||
4
(m) |
Form
of Euro Medium-Term Note and Debt Security - Definitive Fixed Rate Bearer
Note (Incorporated by reference to Exhibit 4(m) to General Electric
Capital Services, Inc.’s Form 10-K Report for the year ended December 31,
2004). | ||
| |||
4
(n) |
Form
of Euro Medium-Term Note and Debt Security - Definitive Floating Rate
Bearer Note (Incorporated by reference to Exhibit 4(n) to General Electric
Capital Services, Inc.’s Form 10-K Report for the year ended December 31,
2004). | ||
| |||
4
(o) |
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 all subsidiaries for which consolidated or
unconsolidated financial statements are required to be filed (Incorporated
by reference to Exhibit 4(o) to GECC’s Form 10-K Report for the year ended
December 31, 2004). | ||
| |||
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.* | ||
| |||
23
(ii) |
Consent
of KPMG LLP.* | ||
| |||
24 |
Power
of Attorney (Incorporated by reference to Exhibit 24 to GECC’s Form 10-K
Report for the year ended December 31, 2004). | ||
| |||
31(a) |
Certification
Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange
Act of 1934, as amended.* | ||
| |||
31(b) |
Certification
Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange
Act of 1934, as amended.* | ||
| |||
32 |
Certification
Pursuant to 18 U.S.C. Section 1350.* | ||
|
99
(a) |
Income
Maintenance Agreement dated March 28, 1991, between General Electric
Company and General Electric Capital Corporation. (Incorporated by
reference to Exhibit 99(h) to GECC’s Registration Statement on Form S-3,
File No. 333-100527). | ||
| |||
99
(b) |
The
consolidated financial statements of General Electric Company, set forth
in the Annual Report on Form 10-K of General Electric Company (S.E.C. File
No. 001-00035) for the year ended December 31, 2004, (pages 45 through
113) and Exhibit 12 (Ratio of Earnings to Fixed Charges) of General
Electric Company. | ||
| |||
99
(c) |
Letter,
dated February 4, 1999, from Dennis D. Dammerman of General Electric
Company to Denis J. Nayden of General Electric Capital Corporation
pursuant to which General Electric Company agrees to provide additional
equity to General Electric Capital Corporation in conjunction with certain
redemptions by General Electric Capital Corporation of shares of its
Variable Cumulative Preferred Stock. (Incorporated by reference to Exhibit
99 (g) to General Electric Capital Corporation’s Post-Effective Amendment
No. 1 to Registration Statement on Form S-3, File No.
333-59707). | ||
| |||
* Filed
electronically herewith. |
For
the years ended December 31 (In millions) |
2004
(Restated) |
2003
(Restated) |
2002
(Restated) |
||||||
Revenues |
$ |
6,408 |
$ |
5,575 |
$ |
5,445 |
|||
Expenses |
|||||||||
Interest
|
4,526 |
4,042 |
5,110 |
||||||
Operating
and administrative |
3,284 |
3,036 |
2,363 |
||||||
Provision
for losses on financing receivables |
687 |
504 |
415 |
||||||
Depreciation
and amortization |
447 |
419 |
506 |
||||||
Total
expenses |
8,944 |
8,001 |
8,394 |
||||||
Loss
before income taxes and equity in earnings of affiliates |
(2,536 |
) |
(2,426 |
) |
(2,949 |
) | |||
Income
tax benefit |
705 |
625 |
853 |
||||||
Equity
in earnings of affiliates |
10,091 |
9,267 |
8,650 |
||||||
Cumulative
effect of accounting changes |
- |
(339 |
) |
(1,015 |
) | ||||
Net
earnings |
8,260 |
7,127 |
5,539 |
||||||
Dividends
|
(3,148 |
) |
(4,472 |
) |
(2,020 |
) | |||
Retained
earnings at January 1 |
29,835 |
27,180 |
23,661 |
||||||
Retained
earnings at December 31 |
$ |
34,947 |
$ |
29,835 |
$ |
27,180 |
|||
The
notes to condensed financial statements on page 97 are an integral part of
these statements. |
At
December 31 (In millions) |
2004
(Restated) |
2003
(Restated) |
||||
Assets |
||||||
Cash
and equivalents |
$ |
280 |
$ |
3,693 |
||
Investment
securities |
4,426 |
4,814 |
||||
Financing
receivables - net |
51,023 |
50,817 |
||||
Investment
in and advances to affiliates |
232,172 |
202,025 |
||||
Buildings
and equipment - net |
3,924 |
4,801 |
||||
Other
assets |
13,112 |
13,606 |
||||
Total
assets |
$ |
304,937 |
$ |
279,756 |
||
Liabilities
and equity |
||||||
Borrowings
|
$ |
239,122 |
$ |
221,005 |
||
Other
liabilities |
5,192 |
8,043 |
||||
Deferred
income taxes |
6,665 |
4,016 |
||||
Total
liabilities |
250,979 |
233,064 |
||||
Variable
cumulative preferred stock, $100 par value, liquidation
preference
$100,000
per share (33,000 shares authorized; 26,000 shares issued
and
outstanding at December 31, 2004 and 2003) |
3 |
3 |
||||
Common
stock, $14 par value (4,166,000 shares authorized at
December
31, 2004 and 2003, and 3,985,403
shares issued
and outstanding at December 31, 2004 and 2003) |
56 |
56 |
||||
Accumulated
gains (losses) - net |
||||||
Investment
securities |
974 |
1,569 |
||||
Currency
translation adjustments |
4,844 |
2,548 |
||||
Cash
flow hedges |
(1,281 |
) |
(1,484 |
) | ||
Minimum
pension liabilities |
(124 |
) |
(31 |
) | ||
Additional
paid-in capital |
14,539 |
14,196 |
||||
Retained
earnings |
34,947 |
29,835 |
||||
Total
shareowner's equity |
53,958 |
46,692 |
||||
Total
liabilities and equity |
$ |
304,937 |
$ |
279,756 |
||
The
sum of accumulated gains (losses) on investment securities, currency
translation adjustments, cash flow hedges and minimum pension liabilities
constitutes “Accumulated nonowner changes other than earnings,” and was
$4,413 million and $2,602 million at year-end 2004 and 2003,
respectively. |
| |||||
|
||||||
The
notes to condensed financial statements on page 97 are an integral part of
these statements. |
For
the years ended December 31 (In millions) |
2004 |
2003 |
2002 |
||||||
Cash
flows -
operating activities |
$ |
231 |
$ |
(2,943 |
) |
$ |
(1,354 |
) | |
Cash
flows -
investing activities |
|||||||||
Increase
in loans to customers |
(141,213 |
) |
(140,053 |
) |
(127,423 |
) | |||
Principal
collections from customers -
loans
|
141,022 |
142,687 |
121,687 |
||||||
Investment
in equipment for financing leases |
(3,550 |
) |
(5,274 |
) |
(3,052 |
) | |||
Principal
collections from customers -
financing leases |
4,172 |
6,359 |
3,537 |
||||||
Net
change in credit card receivables |
(66 |
) |
(22 |
) |
(107 |
) | |||
Additions
to buildings and equipment |
(594 |
) |
(1,687 |
) |
(1,941 |
) | |||
Dispositions
of buildings and equipment |
1,102 |
1,016 |
495 |
||||||
Payments
for principal businesses purchased |
(13,888 |
) |
(10,537 |
) |
(12,300 |
) | |||
Proceeds
from principal business dispositions |
472 |
3,193 |
- |
||||||
Decrease
(increase) in investment in and advances to affiliates |
(6,053 |
) |
4,817 |
(4,574 |
) | ||||
All
other investing activities |
374 |
(4,074 |
) |
4,846 |
|||||
Cash
used for investing activities |
(18,222 |
) |
(3,575 |
) |
(18,832 |
) | |||
Cash
flows -
financing activities |
|||||||||
Net
increase (decrease) in borrowings (maturities of 90 days or less)
|
8,680 |
(2,189 |
) |
(60,339 |
) | ||||
Newly
issued debt: |
|||||||||
Short-term
(91-365 days) |
1,504 |
1,576 |
2,457 |
||||||
Long-term
senior |
41,606 |
47,999 |
80,319 |
||||||
Non-recourse,
leveraged lease |
206 |
80 |
785 |
||||||
Repayments
and other debt reductions: |
|||||||||
Short-term
|
(33,912 |
) |
(31,811 |
) |
(4,967 |
) | |||
Long-term
senior |
- |
(694 |
) |
(581 |
) | ||||
Non-recourse,
leveraged lease |
(358 |
) |
(417 |
) |
(548 |
) | |||
Dividends
paid to shareowner |
(3,148 |
) |
(4,472 |
) |
(2,020 |
) | |||
Capital
contributions from GE Capital Services |
- |
- |
4,500 |
||||||
Cash
from financing activities |
14,578 |
10,072 |
19,606 |
||||||
Increase
(decrease) in cash and equivalents during year |
(3,413 |
) |
3,554 |
(580 |
) | ||||
Cash
and equivalents at beginning of year |
3,693 |
139 |
719 |
||||||
Cash
and equivalents at end of year |
$ |
280 |
$ |
3,693 |
$ |
139 |
|||
The
notes to condensed financial statements on page 97 are an integral part of
these statements. |
(Dollars
in millions) |
2004
Average
rate(a)
(Restated) |
Maturities |
2004
(Restated) |
2003
(Restated) | ||||||
Senior
notes |
3.96 |
% |
2006-2055 |
$ |
131,153 |
$ |
119,028 | |||
Extendible
notes(c) |
2.41 |
% |
2007-2009 |
13,991 |
12,000 | |||||
Subordinated
notes(b) |
8.04 |
% |
2006-2012 |
698 |
698 | |||||
$ |
145,842 |
$ |
131,726 | |||||||
(a) |
Based
on year-end balances and year-end local currency interest rates, including
the effects of interest rate and currency swaps, if any, directly
associated with the original debt issuance. | |||||||||
(b) |
At
year-end 2004 and 2003, $0.7 billion of subordinated notes were guaranteed
by GE. | |||||||||
(c) |
Floating
rate extendible notes of $14.0 billion are due in 2006, but are extendible
at the investors’ option to a final maturity in 2007 ($12.0 billion) and
2009 ($2.0 billion). |
General
Electric Capital Corporation | ||
| ||
May
6, 2005 |
By: /s/
Dennis D. Dammerman | |
|
(Dennis
D. Dammerman) | |
|
Chairman
of the Board |
Signature |
Title |
Date | |||
|
|||||
Dennis
D. Dammerman* |
Chairman
of the Board |
May
6, 2005 | |||
(Principal
Executive Officer) |
|||||
|
|||||
James
A. Parke* |
Vice
Chairman and |
May
6, 2005 | |||
Chief
Financial Officer
(Principal
Financial Officer) |
|||||
|
|||||
/s/
Philip D. Ameen |
Senior
Vice President and Controller |
May
6, 2005 | |||
Philip
D. Ameen |
(Principal
Accounting Officer) |
||||
|
|||||
CHARLES
E. ALEXANDER* |
Director |
||||
DAVID
L. CALHOUN* |
Director |
||||
JAMES
A. COLICA* |
Director |
||||
PAMELA
DALEY* |
Director |
||||
DENNIS
D. DAMMERMAN* |
Director |
||||
BRACKETT
B. DENNISTON* |
Director |
||||
ARTHUR
H. HARPER* |
Director |
||||
JEFFREY
R. IMMELT* |
Director |
||||
JOHN
H. MYERS* |
Director |
||||
MICHAEL
A. NEAL* |
Director |
||||
DAVID
R. NISSEN* |
Director |
||||
JAMES
A. PARKE* |
Director |
||||
RONALD
R. PRESSMAN* |
Director |
||||
JOHN
M. SAMUELS* |
Director |
||||
KEITH
S. SHERIN* |
Director |
||||
ROBERT
C. WRIGHT* |
Director |
||||
|
|||||
A
MAJORITY OF THE BOARD OF DIRECTORS |
|||||
|
|||||
*By: |
/s/
Philip D. Ameen |
May
6, 2005 | |||
(Philip
D. Ameen)
Attorney-in-fact |