GE 2005 Annual Report Download - page 56

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(56)
• Financial reporting quality, including clarity, completeness and transparency of all financial performance
communications.
GE Capital’ s ratings are supported contractually by a GE commitment to maintain the ratio of earnings to fixed
charges at a specified level as described below.
As of January 1, 2003, we extended a business-specific, market-based leverage to the performance
measurement of each of our financial services businesses. As a result, at January 1, 2003, debt of $12.5 billion
previously allocated to our financial services segments was allocated to Corporate items and eliminations. We refer
to this as “parent-supported debt.” As of December 31, 2004, $3.2 billion of such debt remained and was paid down
during the first quarter of 2005.
During 2005, GECS paid $3.9 billion of special dividends to GE, which was a portion of the proceeds from
the Genworth secondary public offerings.
During 2005, GE issued $1.5 billion of senior, unsecured three-year floating rate debt. The proceeds were
used primarily for repayment of maturing long-term debt. During 2005, GECS and GECS affiliates issued $58
billion of senior, unsecured long-term debt and $2 billion of subordinated debt. This debt was both fixed and
floating rate and was issued to institutional and retail investors in the U.S. and 15 other global markets. Maturities
for these issuances ranged from one to 40 years. We used the proceeds primarily for repayment of maturing long-
term debt, but also to fund acquisitions and organic growth. We anticipate that we will issue between $55 billion and
$65 billion of additional long-term debt during 2006, mostly to repay maturing long-term debt. The ultimate amount
we issue will depend on our needs and on the markets.
Following is the composition of GECS debt obligations excluding any asset-backed debt obligations, such
as debt of consolidated, liquidating securitization entities.
December 31 2005 2004
Senior notes and other long-term debt 57% 58 %
Commercial paper 26 25
Current portion of long-term debt 12 11
Other-bank and other retail deposits 5 6
Total
100% 100 %
We target a ratio for commercial paper of 25% to 35% of outstanding debt based on the anticipated composition of
our assets and the liquidity profile of our debt. GE Capital is the most widely held name in global commercial paper
markets.
We believe that alternative sources of liquidity are sufficient to permit an orderly transition from
commercial paper in the unlikely event of impaired access to those markets. Funding sources on which we would
rely would depend on the nature of such a hypothetical event, but include $57.2 billion of contractually committed
lending agreements with 75 highly-rated global banks and investment banks. Total credit lines extending beyond
one year increased $0.3 billion to $57.1 billion at December 31, 2005. See note 18.