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118 GE 2012 ANNUAL REPORT
notes to consolidated financial statements
The following tables present the changes in Level 3 instruments measured on a recurring basis for the years ended December 31, 2012
and 2011, respectively. The majority of our Level 3 balances consist of investment securities classified as available-for-sale with changes
in fair value recorded in shareowners’ equity.
CHANGES IN LEVEL 3 INSTRUMENTS FOR THE YEAR ENDED DECEMBER 31, 2012
(In millions)
Balance at
January 1,
2012
Net realized/
unrealized
gains (losses)
included in
earnings (a)
Net realized/
unrealized
gains (losses)
included in
accumulated
other
comprehensive
income Purchases Sales Settlements
Transfers
into Level 3 (b)
Transfers
out of
Level 3 (b)
Balance at
December 31,
2012
Net change
in unrealized
gains (losses)
relating to
instruments
still held at
December 31,
2012 (c)
Investment securities
Debt
U.S. corporate $ 3,235 $ 66 $ 32 $ 483 $(214) $(110) $299 $(200) $ 3,591 $ —
State and municipal 77 — 10 16 — (1) 78 (103) 77 —
Residential
mortgage-backed 41 (3) 1 6 — (3) 135 (77) 100 —
Commercial
mortgage-backed 4 — (1) — — — 6 (3) 6 —
Asset-backed 4,040 1 (25) 1,490 (502) — 25 (6) 5,023 —
Corporate—non-U.S. 1,204 (11) 19 341 (51) (172) 24 (136) 1,218 —
Government—non-U.S. 84 (33) 38 65 (72) (40) — — 42 —
U.S. government and
federal agency 253 — 24 — — — — — 277 —
Retained interests 35 (1) (3) 16 (6) (12) 54 — 83 —
Equity
Available-for-sale 17 — (1) 3 (3) (1) 2 (4) 13 —
Trading —— ———— — — — —
Derivatives (d) (e) 369 29 (1) (1) — (112) 190 (58) 416 160
Other 817 50 2 159 (137) — — (92) 799 43
Total $10,176 $ 98 $ 95 $2,578 $(985) $(451) $813 $(679) $11,645 $203
(a) Earnings effects are primarily included in the “GECC 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 out of Level 3 were a result of increased use of quotes from independent
pricing vendors based on recent trading activity.
(c) Represented the amount of unrealized gains or losses for the period included in earnings.
(d) Represented derivative assets net of derivative liabilities and included cash accruals of $2 million not reflected in the fair value hierarchy table.
(e) Gains (losses) included in net realized/unrealized gains (losses) included in earnings were offset by the earnings effects from the underlying items that were economically
hedged. See Note 22.