GE 2013 Annual Report Download - page 102

100 GE 2013 ANNUAL REPORT
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INSTALLMENT AND REVOLVING CREDIT
For our unsecured lending products, including the non-U.S. and
U.S. installment and revolving credit and non-U.S. auto portfolios,
we assess overall credit quality using internal and external credit
scores. Our internal credit scores imply a probability of default
that we consistently translate into three approximate credit
bureau equivalent credit score categories, including (a) 671 or
higher, which are considered the strongest credits; (b) 626 to 670,
which are considered moderate credit risk; and (c) 625 or less,
which are considered weaker credits.
Internal ratings translated
to approximate credit bureau
equivalent score
December 31 (In millions)
671 or
higher 626 to 670 625 or less
2013
Non-U.S. installment and
revolving credit $ 8,310 $ 2,855 $ 2,512
U.S. installment and revolving credit 36,723 11,101 8,030
Non-U.S. auto 1,395 373 286
2012
Non-U.S. installment and
revolving credit $ 10,228 $ 4,267 $ 3,321
U.S. installment and revolving credit 33,204 9,753 7,896
Non-U.S. auto 3,141 666 453
Of those fi nancing receivable accounts with credit bureau equiva-
lent scores of 625 or less at December 31, 2013, 97% relate to
installment and revolving credit accounts. These smaller-balance
accounts have an average outstanding balance less than one
thousand U.S. dollars and are primarily concentrated in our retail
card and sales fi nance receivables in the U.S. (which are often
subject to profi t and loss-sharing arrangements), and closed-end
loans outside the U.S., which minimizes the potential for loss in
the event of default. For lower credit scores, we adequately price
for the incremental risk at origination and monitor credit migra-
tion through our risk ratings process. We continuously adjust our
credit line underwriting management and collection strategies
based on customer behavior and risk profi le changes.
CONSUMER—OTHER
Secured lending in Consumer—Other comprises loans to small
and medium-sized enterprises predominantly secured by auto
and equipment, inventory fi nance and cash fl ow loans. We
develop our internal risk ratings for this portfolio in a manner
consistent with the process used to develop our Commercial
credit quality indicators, described above. We use the borrower’s
credit quality and underlying collateral strength to determine the
potential risk of loss from these activities.
At December 31, 2013, Consumer—Other fi nancing receiv-
ables of $6,137 million, $315 million and $501 million were rated
A, B and C, respectively. At December 31, 2012, Consumer—Other
fi nancing receivables of $6,873 million, $451 million and $746 mil-
lion were rated A, B and C, respectively.
Note 7.
Property, Plant and Equipment
December 31 (Dollars in millions)
Depreciable
lives—new
(In years) 2013 2012
ORIGINAL COST
GE
Land and improvements 8 (a) $ 707 $ 612
Buildings, structures and
related equipment 8–40 8,910 8,361
Machinery and equipment 4–20 25,323 24,090
Leasehold costs and
manufacturing plant
under construction 1–10 3,309 2,815
38,249 35,878
GECC (b)
Land and improvements,
buildings, structures and
related equipment 1–35
(a) 2,504 2,485
Equipment leased to others
Aircraft 20 50,337 49,954
Vehicles 1–20 14,656 15,952
Railroad rolling stock 4–50 4,636 4,180
Construction and manufacturing 1–30 2,916 3,055
All other 7–27 3,518 3,427
78,567 79,053
ELIMINATIONS (347) (363)
Total $ 116,469 $ 114,568
NET CARRYING VALUE
GE
Land and improvements $ 671 $ 582
Buildings, structures and
related equipment 4,205 4,003
Machinery and equipment 9,701 9,061
Leasehold costs and
manufacturing plant
under construction 2,997 2,387
17,574 16,033
GECC (b)
Land and improvements,
buildings, structures and
related equipment 1,025 999
Equipment leased to others
Aircraft
(c) 34,938 36,231
Vehicles 8,312 8,634
Railroad rolling stock 3,129 2,744
Construction and manufacturing 1,955 2,069
All other 2,248 2,290
51,607 52,967
ELIMINATIONS (354) (367)
Total $ 68,827 $ 68,633
(a) Depreciable lives exclude land.
(b) Included $1,353 million and $1,466 million of original cost of assets leased to GE
with accumulated amortization of $342 million and $451 million at December 31,
2013 and 2012, respectively.
(c) The GECAS business of GE Capital recognized impairment losses of $732 million
and $242 million in 2013 and 2012, respectively. These losses are recorded in the
caption “Other costs and expenses” in the Statement of Earnings to reflect
adjustments to fair value based on an evaluation of average current market
values (obtained from third parties) of similar type and age aircraft, which are
adjusted for the attributes of the specific aircraft under lease.