GE 2008 Annual Report Download - page 95

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ge 2008 annual report 93
notes to consolidated financial statements
The following table presents the changes in Level 3 instruments measured on a recurring basis for the year ended December 31, 2008.
The majority of our Level 3 balances consist of investment securities classified as available-for-sale with changes in fair value recorded
in equity.
CHANGES IN LEVEL 3 INSTRUMENTS FOR THE YEAR ENDED DECEMBER 31, 2008
Net realized/ Net change
unrealized in unrealized
gains (losses) gains (losses)
Net realized/ included in relating to
unrealized accumulated instruments
gains (losses) nonowner Purchases, Transfers in still held at
included changes other issuances and and/or out December 31, December 31,
(In millions) January 1, 2008 in earnings (a) than earnings settlements of Level 3(b) 2008 2008 (c)
Investment securities $12,447 $ 430 $(1,586) $ 671 $ 994 $12,956 $ 7
Derivatives (d) (e) 265 866 141 (256) (13) 1,003 636
Other 1,330 (157) (29) (90) 51 1,105 (165)
Total $14,042 $1,139 $(1,474) $ 325 $1,032 $15,064 $ 478
(a) Earnings effects are primarily included in the “GECS revenues from services” and “Interest and other financial charges” captions in the Statement of Earnings.
(b) Transfers in and out of Level 3 are considered to occur at the beginning of the period. Transfers into Level 3 were a result of increased use of non-binding broker quotes that
could not be validated with other market observable data, resulting from continued deterioration in the credit markets.
(c) Represented the amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities
classified as Level 3 that are still held at December 31, 2008.
(d) Earnings from Derivatives were partially offset by $760 million in losses from related derivatives included in Level 2 and $4 million in losses from underlying debt obligations in
qualifying fair value hedges.
(e) Represented derivative assets net of derivative liabilities and included cash accruals of $27 million not reflected in the fair value hierarchy table.
Certain assets that are carried on our Statement of Financial
Position at historical cost, require fair value charges to earnings
when they are deemed to be impaired. As these impairment
charges are non-recurring, they are not included in the preced-
ing tables.
Included in this category are certain loans that have been
reduced for the fair value of their underlying collateral when
deemed impaired, and cost and equity method investments that
are written down to fair value when their declines are determined
to be other-than-temporary. At December 31, 2008, these amounts
were $48 million identified as Level 2 and $3,145 million identified
as Level 3. Of assets still held at December 31, 2008, we recognized
$587 million, pre-tax, of losses related to non-recurring fair value
measurements of loans, and $495 million, pre-tax, of other-than-
temporary impairments of cost and equity method investments
during 2008.