GE 2012 Annual Report Download - page 135

GE 2012 ANNUAL REPORT 133
notes to consolidated financial statements
Prior to June 30, 2012, the largest unconsolidated VIE with
which we were involved was Penske Truck Leasing Co., L.P. (PTL),
a joint venture and limited partnership formed in 1988 between
Penske Truck Leasing Corporation (PTLC) and GE. PTLC is the sole
general partner of PTL and an indirect wholly-owned subsidiary
of Penske Corporation. PTL is engaged in truck leasing and sup-
port services, including full-service leasing, dedicated logistics
support and contract maintenance programs, as well as rental
operations serving commercial and consumer customers. Our
direct and indirect interest in PTL is accounted for using the
equity method. During the second quarter of 2012, PTL effected
a recapitalization and subsequently acquired third-party financ-
ing which, through the fourth quarter of 2012, was used to
repay $5,392 million of its outstanding debt owed to GECC. At
December 31, 2012, our direct and indirect investment in PTL
of $2,080 million primarily comprised partnership interests of
$825 million and loans and advances of $1,218 million. During the
first quarter of 2013, PTL repaid all of its outstanding debt owed
to GECC.
Our largest exposure to any single unconsolidated VIE at
December 31, 2012 is an investment in asset-backed securities
issued by a senior secured loan fund, which invests in high qual-
ity senior secured debt of various middle-market companies
($5,030 million). Other significant unconsolidated VIEs include
investments in real estate entities ($2,639 million), which gen-
erally consist of passive limited partnership investments in
tax-advantaged, multi-family real estate and investments in vari-
ous European real estate entities; and exposures to joint ventures
that purchase factored receivables ($2,218 million). The vast
majority of our other unconsolidated entities consist of passive
investments in various asset-backed financing entities.
The classification of our variable interests in these entities in
our financial statements is based on the nature of the entity and
the type of investment we hold. Variable interests in partnerships
and corporate entities are classified as either equity method or
cost method investments. In the ordinary course of business, we
also make investments in entities in which we are not the pri-
mary beneficiary but may hold a variable interest such as limited
partner interests or mezzanine debt investments. These invest-
ments are classified in two captions in our financial statements:
“All other assets” for investments accounted for under the equity
method, and “Financing receivables—net” for debt financing pro-
vided to these entities. Our investments in unconsolidated VIEs at
December 31, 2012 and December 31, 2011 follow.
December 31 (In millions) PTL All other Total
2012
Other assets and investment
securities $2,080 $ 7,947 $10,027
Financing receivables—net — 2,654 2,654
Total investments 2,080 10,601 12,681
Contractual obligations to
fund investments or
guarantees 140 2,468 2,608
Revolving lines of credit —4141
Total $2,220 $13,110 $15,330
2011
Other assets and investment
securities $7,038 $ 6,954 $13,992
Financing receivables—net — 2,507 2,507
Total investments 7,038 9,461 16,499
Contractual obligations to
fund investments or
guarantees 600 2,253 2,853
Revolving lines of credit 1,356 92 1,448
Total $8,994 $11,806 $20,800
In addition to the entities included in the table above, we also
hold passive investments in RMBS, CMBS and ABS issued by VIEs.
Such investments were, by design, investment grade at issuance
and held by a diverse group of investors. Further information
about such investments is provided in Note 3.