GE 2005 Annual Report Download - page 51

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GECS additions to property, plant and equipment were $11.6 billion and $10.7 billion during 2005 and
2004, respectively, primarily reflecting additions of commercial aircraft at the Aviation Financial Services business
of Infrastructure and vehicles at Commercial Finance and the Equipment Services business of Industrial.
INTANGIBLE ASSETS were $81.7 billion at year-end 2005, up from $78.5 billion at year-end 2004. GE
intangibles increased $3.1 billion from $54.7 billion at the end of 2004, principally as a result of goodwill and other
intangibles related to the Edwards Systems Technology acquisition by Industrial, the Ionics, Inc. acquisition by
Infrastructure and the acquisitions of an additional interest in MSNBC and the previously outstanding minority
interest in VUE by NBC Universal. GECS intangibles increased $0.2 billion to $23.9 billion at December 31, 2005,
resulting from goodwill associated with acquisitions partially offset by the recently strengthening U.S. dollar and
purchase accounting adjustments. See note 16.
ALL OTHER ASSETS totaled $87.4 billion at year-end 2005, a decrease of $2.1 billion, reflecting NBC Universal
settling obligations related to preferred interests previously issued by VUE and dispositions affecting real estate,
partially offset by increases in assets held for sale. See notes 16 and 17.
CONSOLIDATED BORROWINGS amounted to $370.4 billion at December 31, 2005, compared with $365.1
billion at the end of 2004.
GE total borrowings were $10.2 billion at year-end 2005 ($1.1 billion short term, $9.1 billion long term)
compared with $11.0 billion at December 31, 2004. GE total debt at the end of 2005 equaled 8.1% of total capital
compared with 9.0% at the end of 2004.
GECS borrowings amounted to $362.1 billion at December 31, 2005, of which $157.7 billion is due in
2006 and $204.4 billion is due in subsequent years. Comparable amounts at the end of 2004 were $355.5 billion in
total, $154.3 billion due within one year and $201.2 billion due thereafter. Included in GECS total borrowings were
borrowings of consolidated, liquidating securitization entities amounting to $16.8 billion and $25.8 billion at
December 31, 2005 and 2004, respectively. A large portion of GECS borrowings ($97.4 billion and $96.9 billion at
the end of 2005 and 2004, respectively) was issued in active commercial paper markets that we believe will continue
to be a reliable source of short-term financing. The average remaining terms and interest rates of GE Capital
commercial paper were 45 days and 4.09% at the end of 2005, compared with 42 days and 2.39% at the end of 2004.
The GE Capital ratio of debt to equity was 7.09 to 1 at the end of 2005 and 6.46 to 1 at the end of 2004. See note 18.
EXCHANGE RATE AND INTEREST RATE RISKS are managed with a variety of straightforward techniques,
including match funding and selective use of derivatives. We use derivatives to mitigate or eliminate certain
financial and market risks because we conduct business in diverse markets around the world and local funding is not
always efficient. In addition, we use derivatives to adjust the debt we are issuing to match the fixed or floating
nature of the assets we are acquiring. We apply strict policies to manage each of these risks, including prohibitions
on derivatives trading, derivatives market-making or other speculative activities. Following is an analysis of the
potential effects of changes in interest rates and currency exchange rates using so-called “shock” tests that model
effects of shifts in rates. These are not forecasts.