GE 2005 Annual Report Download - page 118

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(118)
Committed credit lines totaling $57.2 billion had been extended to us by 75 banks at year-end 2005. Included in this
amount was $47.7 billion provided directly to GECS and $9.5 billion provided by 19 banks to GE, to which GECS
also has access. The GECS lines include $27.4 billion of revolving credit agreements under which we can borrow
funds for periods exceeding one year. The remaining $29.8 billion are 364-day lines of which $29.7 billion contain a
term-out feature that allows GE or GECS to extend the borrowings for one year from the date of expiration of the
lending agreement. We pay banks for credit facilities, but compensation amounts were insignificant in each of the
past three years.
INTEREST RATE AND CURRENCY RISK is managed through the direct issuance of debt or use of derivatives.
We take positions in view of anticipated behavior of assets, including prepayment behavior. We use a variety of
instruments, including interest rate and currency swaps and currency forwards, to achieve our interest rate
objectives. The following table shows GECS borrowing positions considering the effects of swaps of currencies and
interest rates.
GECS EFFECTIVE BORROWINGS (INCLUDING SWAPS) (Restated)
2005
(Restated)
2004
(Restated)
December 31 (Dollars in millions) Amount Average rate Amount
Short-term(a) $115,880 3.99 % $ 116,762
Long-term (including current portion)
Fixed rate $145,428 4.51 % $ 134,259
Floating rate 100,761 4.29
104,480
Total long-term $246,189 $ 238,739
(a) Included commercial paper and other short-term debt.
At December 31, 2005, interest rate swap maturities ranged from 2006 to 2041.
The following table provides additional information about derivatives designated as hedges of borrowings in
accordance with SFAS 133.
DERIVATIVE FAIR VALUES BY ACTIVITY/INSTRUMENT (Restated)
December 31 (In millions)
2005
(Restated)
2004
(Restated)
Cash flow hedges $726
$254
Fair value hedges (39 ) 1,864
Total $687
$2,118
Interest rate swaps $ (423 ) $(76)
Currency swaps 1,110
2,194
Total $687
$2,118
At December 31, 2005, approximately 82% of our interest rate swaps related to borrowings were exempt from
ongoing tests of their effectiveness as hedges. We regularly assess the effectiveness of all other hedge positions
using a variety of techniques, including cumulative dollar offset and regression analysis depending on which method
was selected at inception of the respective hedge. See note 27.