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74 GE 2009 ANNUAL REPORT
    
GE Money Japan
During the third quarter of 2007, we committed to a plan to sell
Lake upon determining that, despite restructuring, Japanese
regulatory limits for interest charges on unsecured personal loans
did not permit us to earn an acceptable return. During the third
quarter of 2008, we completed the sale of GE Money Japan,
which included Lake, along with our Japanese mortgage and card
businesses, excluding our investment in GE Nissen Credit Co., Ltd.
As a result, we recognized an after-tax loss of $908 million in
2007 and an incremental loss in 2008 of $361 million. GE Money
Japan revenues from discontinued operations were $1 million,
$763 million and $1,307 million in 2009, 2008 and 2007, respec-
tively. In total, GE Money Japan losses from discontinued operations,
net of taxes, were $158 million, $651 million and $1,220 million
in 2009, 2008 and 2007, respectively.
WMC
During the fourth quarter of 2007, we completed the sale of
our U.S. mortgage business. In connection with the transaction,
WMC retained certain obligations related to loans sold prior to
the disposal of the business, including WMC’s contractual obliga-
tions to repurchase previously sold loans as to which there was an
early payment default or with respect to which certain contractual
representations and warranties were not met. Reserves related
to these obligations were $205 million at December 31, 2009,
and $244 million at December 31, 2008. The amount of these
reserves is based upon pending and estimated future loan repur-
chase requests, the estimated percentage of loans validly tendered
for repurchase, and our estimated losses on loans repurchased.
Based on our historical experience, we estimate that a small
percentage of the total loans we originated and sold will be
tendered for repurchase, and of those tendered, only a limited
amount will qualify as “validly tendered,” meaning the loans sold
did not satisfy specified contractual obligations. The amount of
our current reserve represents our best estimate of losses with
respect to our repurchase obligations. However, actual losses
could exceed our reserve amount if actual claim rates, valid
tenders or losses we incur on repurchased loans are higher than
historically observed. WMC revenues from discontinued operations
were $2 million, $(71) million and $(1,424) million in 2009, 2008
and 2007, respectively. In total, WMC’s loss from discontinued
operations, net of taxes, was $1 million, $41 million and $987 mil-
lion in 2009, 2008 and 2007, respectively.
GE industrial earnings (loss) from discontinued operations, net
of taxes, were $(18) million, $40 million and $1,867 million in 2009,
2008 and 2007, respectively.
Assets of GE industrial discontinued operations were $50 mil-
lion and $64 million at December 31, 2009 and 2008, respectively.
Liabilities of GE industrial discontinued operations were $163 mil-
lion and $189 million at December 31, 2009 and 2008, respectively,
and primarily represent taxes payable and pension liabilities related
to the sale of our Plastics business in 2007.
Summarized financial information for discontinued GECS
operations is shown below.
(In millions) 2009 2008 2007
OPERATIONS
Total revenues $ (4) $ 692 $ (117)
Loss from discontinued operations
before income taxes $(126) $ (571) $(2,225)
Income tax benefit 36 212 981
Loss from discontinued operations,
net of taxes $ (90) $ (359) $(1,244)
DISPOSAL
Loss on disposal before income taxes $(178) $(1,479) $(1,510)
Income tax benefit 93 1,119 638
Loss on disposal, net of taxes $ (85) $ (360) $ (872)
Loss from discontinued operations,
net of taxes (a) $(175) $ (719) $(2,116)
(a) The sum of GE industrial earnings (loss) from discontinued operations, net of taxes,
and GECS earnings (loss) from discontinued operations, net of taxes, are reported
as GE industrial earnings (loss) from discontinued operations, net of taxes, on the
Statement of Earnings.
December 31 (In millions) 2009 2008
ASSETS
Cash and equivalents $ 184 $ 180
All other assets 12 19
Other 1,274 1,460
Assets of discontinued operations $1,470 $1,659
LIABILITIES
Liabilities of discontinued operations $1,138 $ 1,243
Assets at December 31, 2009 and 2008, primarily comprised a
deferred tax asset for a loss carryforward, which expires in 2015,
related to the sale of our GE Money Japan business.