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GE 2012 ANNUAL REPORT 119
notes to consolidated financial statements
CHANGES IN LEVEL 3 INSTRUMENTS FOR THE YEAR ENDED DECEMBER 31, 2011
(In millions)
Balance at
January 1,
2011
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,
2011
Net change
in unrealized
gains (losses)
relating to
instruments
still held at
December 31,
2011 (c)
Investment securities
Debt
U.S. corporate $3,199 $ 78 $(157) $ 235 $(183) $(112) $182 $ (7) $ 3,235 $ —
State and municipal 225 — — 12 — (8) — (152) 77 —
Residential
mortgage-backed 66 (3) 1 2 (5) (1) 71 (90) 41 —
Commercial
mortgage-backed 49 — — 6 — (4) 3 (50) 4 —
Asset-backed 2,540 (10) 61 2,157 (185) (11) 1 (513) 4,040 —
Corporate—non-U.S. 1,486 (47) (91) 25 (55) (118) 85 (81) 1,204 —
Government—non-U.S. 156 (100) 48 41 (1) (27) 107 (140) 84 —
U.S. government and
federal agency 210 — 43 500 — — — (500) 253 —
Retained interests 39 (28) 26 8 (5) (5) — — 35 —
Equity
Available-for-sale 24 — — — — — 4 (11) 17 —
Trading — — — — — — — — — —
Derivatives (d) (e) 265 151 2 (2) — (207) 150 10 369 130
Other 906 95 (9) 152 (266) (6) — (55) 817 34
Total $9,165 $136 $ (76) $3,136 $(700) $(499) $603 $(1,589) $10,176 $164
(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 $3 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.
Non-Recurring Fair Value Measurements
The following table represents non-recurring fair value amounts
(as measured at the time of the adjustment) for those assets
remeasured to fair value on a non-recurring basis during the
fiscal year and still held at December 31, 2012 and 2011. These
assets can include loans and long-lived assets that have been
reduced to fair value when they are held for sale, impaired loans
that have been reduced based on the fair value of the underlying
collateral, cost and equity method investments and long-lived
assets that are written down to fair value when they are impaired
and the remeasurement of retained investments in formerly
consolidated subsidiaries upon a change in control that results
in deconsolidation of a subsidiary, if we sell a controlling interest
and retain a noncontrolling stake in the entity. Assets that are
written down to fair value when impaired and retained invest-
ments are not subsequently adjusted to fair value unless further
impairment occurs.
Remeasured during the year ended December 31
2012 2011
(In millions) Level 2 Level 3 Level 2 Level 3
Financing receivables
and loans held for sale $ 366 $4,094 $ 158 $5,159
Cost and equity method
investments (a) 8 313 — 403
Long-lived assets,
including real estate 702 2,184 1,343 3,282
Total $1,076 $6,591 $1,501 $8,844
(a) Includes the fair value of private equity and real estate funds included in Level 3
of $84 million and $123 million at December 31, 2012 and 2011, respectively.
The following table represents the fair value adjustments to
assets measured at fair value on a non-recurring basis and still
held at December 31, 2012 and 2011.
Year ended December 31
(In millions) 2012 2011
Financing receivables and loans held for sale $ (595) $ (857)
Cost and equity method investments (a) (153) (274)
Long-lived assets, including real estate (b) (624) (1,424)
Total $(1,372) $(2,555)
(a) Includes fair value adjustments associated with private equity and real estate
funds of $(33) million and $(24) million during 2012 and 2011, respectively.
(b) Includes impairments related to real estate equity properties and investments
recorded in other costs and expenses of $218 million and $976 million during
2012 and 2011, respectively.