GE 2011 Annual Report Download - page 133

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GE 2011 ANNUAL REPORT 131
    
Guarantees
At December 31, 2011, we were committed under the following
guarantee arrangements beyond those provided on behalf of
VIEs. See Note 24.
• CREDIT SUPPORT. We have provided $5,184 million of credit sup-
port on behalf of certain customers or associated companies,
predominantly joint ventures and partnerships, using arrange-
ments such as standby letters of credit and performance
guarantees. These arrangements enable these customers
and associated companies to execute transactions or obtain
desired fi nancing arrangements with third parties. Should the
customer or associated company fail to perform under the
terms of the transaction or fi nancing arrangement, we would
be required to perform on their behalf. Under most such
arrangements, our guarantee is secured, usually by the asset
being purchased or fi nanced, or possibly by certain other
assets of the customer or associated company. The length of
these credit support arrangements parallels the length of the
related fi nancing arrangements or transactions. The liability
for such credit support was $51 million at December 31, 2011.
• INDEMNIFICATION AGREEMENTS. We have agreements that
require us to fund up to $165 million at December 31, 2011
under residual value guarantees on a variety of leased
equipment. Under most of our residual value guarantees,
our commitment is secured by the leased asset. The liabil-
ity for these indemnifi cation agreements was $27 million at
December 31, 2011.
In connection with the transfer of the NBCU business to
Comcast, we have provided guarantees, on behalf of NBCU
LLC, for the acquisition of sports programming that are trig-
gered only in the event NBCU LLC fails to meet its payment
commitments. At December 31, 2011, our indemnifi cation
under these arrangements was $9,290 million. This amount
was determined based on our current ownership share of
NBCU LLC and will change proportionately based on any
future changes to our ownership share. Comcast has agreed
to indemnify us for their proportionate ownership share of
NBCU LLC relating to our guarantees that existed prior to the
transfer of the NBCU business to Comcast of $1,311 million.
The liability for our NBCU LLC indemnifi cation agreements was
$181 million at December 31, 2011.
At December 31, 2011, we also had $2,185 million of other
indemnifi cation commitments, substantially all of which relate
to standard representations and warranties in sales of other
businesses or assets.
• CONTINGENT CONSIDERATION. These are agreements to provide
additional consideration to a buyer or seller in a business
combination if contractually specifi ed conditions related to
the acquisition or disposition are achieved. Adjustments to
the proceeds from our sale of GE Money Japan are further
discussed in Note 2. All other potential payments related to
contingent consideration are insignifi cant.
Our guarantees are provided in the ordinary course of business.
We underwrite these guarantees considering economic, liquidity
and credit risk of the counterparty. We believe that the likelihood
is remote that any such arrangements could have a signifi cant
adverse effect on our fi nancial position, results of operations or
liquidity. We record liabilities for guarantees at estimated fair
value, generally the amount of the premium received, or if we do
not receive a premium, the amount based on appraisal, observed
market values or discounted cash fl ows. Any associated expected
recoveries from third parties are recorded as other receivables,
not netted against the liabilities.
Note 26.
Supplemental Cash Flows Information
Changes in operating assets and liabilities are net of acquisitions
and dispositions of principal businesses.
Amounts reported in the “Proceeds from sales of discontinued
operations” and “Proceeds from principal business dispositions”
lines in the Statement of Cash Flows are net of cash disposed.
Amounts reported in the “Payments for principal businesses pur-
chased” line is net of cash acquired and included debt assumed
and immediately repaid in acquisitions.
Amounts reported in the “All other operating activities” line in the
Statement of Cash Flows consists primarily of adjustments to cur-
rent and noncurrent accruals and deferrals of costs and expenses,
adjustments for gains and losses on assets and adjustments to
assets. GECS had non-cash transactions related to foreclosed prop-
erties and repossessed assets totaling $865 million, $1,915 million
and $1,364 million in 2011, 2010 and 2009, respectively.