GE 2009 Annual Report Download - page 48

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46 GE 2009 ANNUAL REPORT
OTHER GECS RECEIVABLES totaled $18.8 billion at December 31,
2009, and $18.6 billion at December 31, 2008, and consisted
primarily of amounts due from GE (generally related to material
procurement programs of $2.5 billion and $3.0 billion at
December 31, 2009 and 2008, respectively), amounts due from
Qualified Special Purpose Entities (QSPEs), insurance receivables,
nonfinancing customer receivables, amounts accrued from
investment income, amounts due under operating leases and
various sundry items.
PROPERTY, PLANT AND EQUIPMENT totaled $69.2 billion at
December 31, 2009, down $9.3 billion from 2008, primarily reflect-
ing the deconsolidation of PTL and the classification of NBCU
and our Security business as held for sale. GE property, plant
and equipment consisted of investments for its own productive
use, whereas the largest element for GECS was equipment
provided to third parties on operating leases. Details by category
of investment are presented in Note 7.
GE additions to property, plant and equipment totaled
$2.4 billion and $3.0 billion in 2009 and 2008, respectively. Total
expenditures, excluding equipment leased to others, for the past
five years were $13.9 billion, of which 38% was investment for
growth through new capacity and product development; 28% was
investment in productivity through new equipment and process
improvements; and 34% was investment for other purposes
such as improvement of research and development facilities and
safety and environmental protection.
GECS additions to property, plant and equipment were
$6.4 billion and $13.3 billion during 2009 and 2008, respectively,
primarily reflecting acquisitions and additions of commercial
aircraft at the GECAS business of Capital Finance.
GOODWILL AND OTHER INTANGIBLE ASSETS totaled $65.6 billion
and $11.9 billion, respectively, at December 31, 2009. Goodwill
decreased $16.2 billion from 2008, primarily from dispositions
(including the classification of NBCU and our Security business as
held for sale) and the PTL deconsolidation, partially offset by the
effects of the weaker U.S. dollar and acquisitions, including BAC
and Interbanca S.p.A. by Capital Finance and Airfoils Technologies
International — Singapore Pte. Ltd. (ATI — Singapore) at Technology
Infrastructure. Other intangible assets decreased $3.0 billion
from 2008, primarily from dispositions and amortization expense.
See Note 8.
ALL OTHER ASSETS totaled $103.4 billion at December 31, 2009,
a decrease of $3.5 billion, reflecting the classification of NBCU as
held for sale and decreases in the fair value of derivative instru-
ments, partially offset by a $5.8 billion equity method investment
in PTL following our partial sale in the first quarter of 2009 and
increases in contract costs and estimated earnings. We recognized
other-than-temporary impairments of cost and equity method
investments of $0.9 billion and $0.5 billion in 2009 and 2008,
respectively. See Note 9.
Included in other assets are Real Estate equity investments of
$32.2 billion and $32.8 billion at December 31, 2009 and 2008,
respectively. Our portfolio is diversified, both geographically and
by asset type. However, the global real estate market is subject to
periodic cycles that can cause significant fluctuations in market
value. Throughout the year, these markets have been increasingly
affected by rising unemployment, a slowdown in general business
activity and continued challenging conditions in the credit markets.
We expect these markets will continue to be affected while the
economic environment remains challenging.
We review the estimated values of our commercial real estate
investments semi-annually. As of our most recent estimate per-
formed in 2009, the carrying value of our Real Estate investments
exceeded their estimated value by about $7 billion. The estimated
value of the portfolio reflects the continued deteriorating real
estate values and market fundamentals, including reduced market
occupancy rates and market rents as well as the effects of lim-
ited real estate market liquidity. Given the current and expected
challenging market conditions, there continues to be risk and
uncertainty surrounding commercial real estate values and our
unrealized loss on real estate equity properties may continue to
increase. Declines in estimated value of real estate below carrying
amount result in impairment losses when the aggregate undis-
counted cash flow estimates used in the estimated value
measurement are below the carrying amount. As such, estimated
losses in the portfolio will not necessarily result in recognized
impairment losses. When we recognize an impairment, the
impairment is measured based upon the fair value of the under-
lying asset which is based upon current market data, including
current capitalization rates. During 2009, Real Estate recognized
pre-tax impairments of $0.8 billion in its real estate investments,
compared with $0.3 billion for the comparable period in 2008.
Continued deterioration in economic and market conditions may
result in further impairments being recognized.
Contract costs and estimated earnings reflect revenues
earned in excess of billings on our long-term contracts to con-
struct technically complex equipment (such as power generation,
aircraft engines and aeroderivative units) and long-term product
maintenance or extended warranty arrangements. Our total
contract costs and estimated earnings balances at December 31,
2009 and 2008, were $7.4 billion and $6.0 billion, respectively,
reflecting the timing of billing in relation to work performed, as well
as changes in estimates of future revenues and costs. Our total
contract costs and estimated earnings balance at December 31,
2009, primarily related to customers in our Energy, Aviation and
Transportation businesses. Further information is provided in the
Critical Accounting Estimates section.