GE 2009 Annual Report Download - page 75

GE 2009 ANNUAL REPORT 73
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On January 1, 2007, we adopted amendments to ASC 740,
Income Taxes. Among other things, the amendments require
application of a “more likely than not” threshold to the recognition
and derecognition of tax positions and require recalculation of
returns on leveraged leases when there is a change in the timing
or projected timing of cash flows relating to income taxes asso-
ciated with such leases. The January 1, 2007 transition reduced
our retained earnings by $126 million, $49 million associated
with the application of a “more likely than not” threshold to the
recognition and derecognition of tax provisions and $77 million
with the recalculation of returns on leveraged leases. Of this
total, $89 million was a decrease in goodwill and $77 million was
a decrease in financing receivables — net, partially offset by a
$40 million decrease in income tax liabilities.
Note 2.
Assets and Liabilities of Businesses Held for Sale
and Discontinued Operations
Assets and Liabilities of Businesses Held for Sale
On December 3, 2009, we entered into an agreement with
Comcast Corporation to transfer the assets of the NBCU business
to a newly formed entity, which will consist of our NBCU busi-
nesses and Comcast Corporation’s cable networks, regional sports
networks, certain digital properties and certain unconsolidated
investments. Pursuant to the transaction, we will receive $6,500 mil-
lion in cash (subject to certain adjustments based on various
events between contract signing and closing) and will own a 49%
interest in the newly formed entity. The transaction is subject to
receipt of various regulatory approvals and is expected to close
within the next year.
We also entered into an agreement whereby we will acquire
approximately 38% of Vivendi’s interest in NBCU for $2,000 million
on September 26, 2010, if the transaction described above has not
yet closed. Provided the transaction subsequently closes, we will
acquire the remaining Vivendi NBCU interest for $3,578 million
and make an additional payment of $222 million related to the
previously purchased shares. If the entity formation transaction
closes before September 26, 2010, we will purchase Vivendi’s
entire ownership interest in NBCU (20%) for $5,800 million.
Prior to the sale, NBCU will borrow approximately $9,100 million
from third-party lenders and distribute the cash to us. We expect
to realize approximately $8,000 million in cash after debt reduction,
transaction fees and the buyout of the Vivendi interest in NBCU.
With respect to our 49% interest in the newly formed entity,
we will hold redemption rights which, if exercised, cause the
entity to purchase half of our ownership interest after 3.5 years
and the remaining half after 7 years subject to certain exceptions,
conditions and limitations. Our interest will also be subject to
call provisions which, if exercised, allow Comcast Corporation to
purchase our interest at specified times subject to certain excep-
tions. The redemption price for such transactions is determined
pursuant to a formula specified in the agreement.
We have classified the NBCU assets and liabilities of
$32,150 million and $5,751 million, respectively, as held for sale
at December 31, 2009. The major classes of assets are current
receivables ($2,136 million), property, plant and equipment — net
($1,805 million), goodwill and other intangible assets — net
($21,574 million) and all other assets ($6,514 million), including
film and television production costs of $4,507 million. The
major classes of liabilities are accounts payable ($398 million),
other current liabilities ($4,051 million) and all other liabilities
($1,300 million).
On November 12, 2009, we committed to sell our Security
business (within Enterprise Solutions), and expect to complete
this sale in early 2010. Assets and liabilities of $1,780 million and
$282 million, respectively, were classified as held for sale at
December 31, 2009.
On January 7, 2009, we exchanged our Consumer businesses
in Austria and Finland, the credit card and auto businesses in the
U.K., and the credit card business in Ireland for a 100% owner-
ship interest in Interbanca S.p.A., an Italian corporate bank. Assets
and liabilities of $7,887 million and $636 million, respectively,
were classified as held for sale at December 31, 2008; we recog-
nized a $184 million loss, net of tax, related to the classification
of the assets held for sale at the lower of carrying amount or
estimated fair value less costs to sell.
On December 24, 2008, we committed to sell a portion of our
Australian residential mortgage business, including certain under-
lying mortgage receivables, and completed this sale during the
first quarter of 2009. Assets of $2,669 million were classified as
held for sale at December 31, 2008 (liabilities were insignificant); we
recognized a $38 million loss, net of tax, related to the classifica-
tions of the assets held for sale at the lower of carrying amount
or estimated fair value less costs to sell.
Summarized financial information for businesses held for sale
is shown below.
December 31 (In millions) 2009 2008
ASSETS
Cash and equivalents $ — $ 35
Current receivables 2,188 —
Financing receivables — net —9,915
Property, plant and equipment — net 1,978 71
Goodwill 20,086 —
Other intangible assets — net 2,866 394
All other assets 6,621 —
Other 372 141
Assets of businesses held for sale $34,111 $10,556
LIABILITIES
Accounts payable $ 451 $ 89
Other GE current liabilities 4,139 —
All other liabilities 1,447 —
Other 55 547
Liabilities of businesses held for sale $ 6,092 $ 636
Discontinued Operations
Discontinued operations primarily comprised GE Money Japan
(our Japanese personal loan business, Lake, and our Japanese
mortgage and card businesses, excluding our investment in
GE Nissen Credit Co., Ltd.), our U.S. mortgage business (WMC) and
Plastics. Associated results of operations, financial position and
cash flows are separately reported as discontinued operations
for all periods presented.