GE 2008 Annual Report Download - page 76

Download and view the complete annual report

Please find page 76 of the 2008 GE annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

74 ge 2008 annual report
notes to consolidated financial statements
NET INVESTMENT IN FINANCING LEASES
Total financing leases Direct financing leases(a) Leveraged leases (b)
December 31 (In millions) 2008 2007 2008 2007 2008 2007
Total minimum lease payments receivable $ 81,115 $ 92,137 $63,309 $ 72,399 $ 17,806 $ 19,738
Less principal and interest on third-party nonrecourse debt (12,720) (14,102) ——(12,720) (14,102)
Net rentals receivable 68,395 78,035 63,309 72,399 5,086 5,636
Estimated unguaranteed residual value of leased assets 10,255 10,306 7,425 7,500 2,830 2,806
Less deferred income (11,072) (13,326) (8,733) (10,650) (2,339) (2,676)
Investment in financing leases, net of deferred income 67,578 75,015 62,001 69,249 5,577 5,766
Less amounts to arrive at net investment
Allowance for losses (498) (571) (440) (559) (58) (12)
Deferred taxes (7,317) (7,089) (3,082) (2,654) (4,235) (4,435)
Net investment in financing leases $ 59,763 $ 67,355 $58,479 $ 66,036 $ 1,284 $ 1,319
(a) Included $824 million and $802 million of initial direct costs on direct financing leases at December 31, 2008 and 2007, respectively.
(b) Included pre-tax income of $268 million and $412 million and income tax of $106 million and $156 million during 2008 and 2007, respectively. Net investment credits
recognized on leveraged leases during 2008 and 2007 were inconsequential.
Details of GECS financing receivables— net follow.
December 31 (In millions) 2008 2007
COMMERCIAL LENDING AND LEASING (CLL)
Equipment and leasing and other $ 99,769 $ 96,817
Commercial and industrial 64,332 58,863
164,101 155,680
GE MONEY
Non-U.S. residential mortgages (a) 59,595 73,042
Non-U.S. installment and revolving credit 24,441 34,669
U.S. installment and revolving credit 27,645 27,914
Non-U.S. auto 18,168 27,368
Other 9,244 10,198
139,093 173,191
REAL ESTATE 46,735 32,228
ENERGY FINANCIAL SERVICES 8,392 7,898
GE COMMERCIAL AVIATION SERVICES (GECAS)
(b) 15,429 14,197
OTHER (c) 4,031 5,111
377,781 388,305
Less allowance for losses (5,325) (4,238)
Total $372,456 $384,067
(a) At December 31, 2008, net of credit insurance, approximately 26% of this portfolio
comprised loans with introductory, below market rates that are scheduled to adjust
at future dates; with high loan-to-value ratios at inception; whose terms permitted
interest-only payments; or whose terms resulted in negative amortization. At the
origination date, loans with an adjustable rate were underwritten to the reset value.
(b) Included loans and financing leases of $13,078 million and $11,685 million at
December 31, 2008 and 2007, respectively, related to commercial aircraft at
Aviation Financial Services.
(c) Included loans and financing leases of $4,031 million and $5,106 million at
December 31, 2008 and 2007, respectively, related to certain consolidated, liqui-
dating securitization entities.
GECS financing receivables include both loans and financing
leases. Loans represent transactions in a variety of forms, includ-
ing revolving charge and credit, mortgages, installment loans,
intermediate-term loans and revolving loans secured by business
assets. The portfolio includes loans carried at the principal
amount on which finance charges are billed periodically, and
loans carried at gross book value, which includes finance charges.
Investment in financing leases consists of direct financing
and leveraged leases of aircraft, railroad rolling stock, autos, other
transportation equipment, data processing equipment, medical
equipment, commercial real estate and other manufacturing,
power generation, and commercial equipment and facilities.
For federal income tax purposes, the leveraged leases and the
majority of the direct financing leases are leases in which GECS
depreciates the leased assets and is taxed upon the accrual of
rental income. Certain direct financing leases are loans for federal
income tax purposes. For these transactions, GECS is taxable
only on the portion of each payment that constitutes interest,
unless the interest is tax-exempt (e.g., certain obligations of state
governments).
Investment in direct financing and leveraged leases represents
net unpaid rentals and estimated unguaranteed residual values
of leased equipment, less related deferred income. GECS has no
general obligation for principal and interest on notes and other
instruments representing third-party participation related to lev-
eraged leases; such notes and other instruments have not been
included in liabilities but have been offset against the related
rentals receivable. The GECS share of rentals receivable on lever-
aged leases is subordinate to the share of other participants who
also have security interests in the leased equipment.
For federal income tax purposes, GECS is entitled to deduct
the interest expense accruing on nonrecourse financing related
to leveraged leases.