GE 2005 Annual Report Download - page 139

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• LIQUIDITY SUPPORT. Liquidity support provided to holders of certain variable rate bonds issued by
municipalities amounted to $2,510 million at December 31, 2005. 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 and our existing liquidity support will decrease $1,437 million in 2006 and
the remaining $1,073 million by the end of 2008 as the underlying variable rate bonds reach their maturity date.
We are currently not providing any such new liquidity facilities.
• CREDIT SUPPORT. We have provided $7,227 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 $268 million at December 31, 2005.
• INDEMNIFICATION AGREEMENTS. These are agreements that require us to fund up to $711 million
under residual value guarantees on a variety of leased equipment and $229 million of other indemnification
commitments arising primarily 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 $69 million at December 31, 2005.
• 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, 2005, we had recognized liabilities for estimated payments amounting to $27 million of our total
exposure of $434 million.
At year-end 2005, NBC Universal had $11,595 million of commitments to acquire film and broadcast material and
the rights to broadcast television programs, including U.S. television rights to future Olympic Games and National
Football League (NFL) games, contractual commitments under various creative talent arrangements and
commitments under long-term television station affiliation agreements that require payments through 2014.
Our guarantees are provided in the ordinary course of business. We underwrite these guarantees
considering economic, liquidity and credit risk of the counterparty. We believe that the likelihood is remote that any
such arrangements could have a significant adverse effect on our financial position, results of operations or liquidity.
We record liabilities for guarantees at estimated fair value, generally the amount of the premium received, or if we
do not receive a premium, the amount based on appraisal, observed market values or discounted cash flows. Any
associated recoveries from third parties are recorded as other receivables; not netted against the liabilities.