GE 2013 Annual Report Download - page 63

’   
GE 2013 ANNUAL REPORT 61
basis as a result of this fi nancial support. GECC currently does not
pay GE for this support.
On March 28, 1991, GE entered into an agreement with GECC
to make payments to GECC, constituting additions to pre-tax
income under the agreement (which increases equity), to the
extent necessary to cause the ratio of earnings to fi xed charges
of GECC and consolidated affi liates (determined on a consoli-
dated basis) to be not less than 1.10:1 for the period, as a single
aggregation, of each GECC fi scal year commencing with fi scal
year 1991. GECC’s ratio of earnings to fi xed charges was 1.76:1 for
2013. No payment is required in 2013 pursuant to this agreement.
In addition, in connection with certain subordinated deben-
tures of GECC that may be classifi ed as equity (hybrid debt),
during events of default or interest deferral periods under such
subordinated debentures, GECC has agreed not to declare or pay
any dividends or distributions or make certain other payments
with respect to its capital stock, and GE has agreed to promptly
return any payments made to GE in violation of this agree-
ment. There were $7.7 billion of such debentures outstanding at
December 31, 2013. See Note 10.
Statements of Changes in Shareowners’ Equity and
Comprehensive Income
An analysis of changes in the elements of shareowners’ equity, as
presented in the Statements of Changes in Shareowners’ Equity
and Comprehensive Income, follows.
GE shareowners’ equity increased by $7.5 billion in 2013, com-
pared with an increase of $6.6 billion in 2012 and a decrease of
$2.5 billion in 2011.
Net earnings increased GE shareowners’ equity by $13.1 bil-
lion, $13.6 billion and $14.2 billion, partially offset by dividends
declared of $8.1 billion, $7.4 billion and $7.5 billion (including
$0.8 billion related to our preferred stock redemption) in 2013,
2012 and 2011, respectively.
Elements of AOCI increased shareowners’ equity by $11.1 bil-
lion in 2013, compared with an increase of $3.7 billion in 2012
and a decrease of $6.1 billion in 2011. The components of these
changes are as follows:
• Changes in AOCI related to benefi t plans increased shareown-
ers’ equity by $11.3 billion in 2013, primarily refl ecting higher
discount rates used to measure postretirement benefi t obliga-
tions, higher investment returns and amortization of actuarial
losses and prior service costs out of AOCI. This compared
with an increase of $2.3 billion and a decrease of $7.0 billion
in 2012 and 2011, respectively. The increase in 2012 primarily
refl ected amortization of actuarial losses and prior service
costs out of AOCI, higher investment returns and changes to
our principal retiree benefi t plans, partially offset by lower
discount rates. The decrease in 2011 primarily refl ected lower
discount rates and lower investment returns, partially offset
by amortization of actuarial losses and prior service costs out
of AOCI. Further information about changes in benefi t plans is
provided in Note 12.
• Changes in AOCI related to the fair value of derivatives des-
ignated as cash fl ow hedges increased shareowners’ equity
by $0.5 billion in 2013, primarily refl ecting higher fair value of
cross currency hedges, partially offset by releases from AOCI
contemporaneous with the earnings effects of the related
hedged items. Cash fl ow hedges increased shareowners’
equity by $0.5 billion and $0.1 billion in 2012 and 2011, respec-
tively. Further information about the fair value of derivatives is
provided in Note 22.
• Changes in AOCI related to investment securities decreased
shareowners’ equity by $0.4 billion in 2013, refl ecting the
effects of higher interest rates, partially offset by adjustments
to refl ect the effect of lower unrealized gains on insurance-
related assets and equity. Investment securities increased
shareowners’ equity by $0.7 billion and $0.6 billion in 2012 and
2011, respectively, refl ecting the effects of lower interest rates
and improved market conditions on U.S. corporate debt secu-
rities, partially offset by adjustments to refl ect the effect of
the unrealized gains on insurance-related assets and equity.
Further information about investment securities is provided
in Note 3.
• Changes in AOCI related to currency translation adjustments
decreased shareowners’ equity by $0.3 billion in 2013 and
increased shareowners’ equity by $0.3 billion and $0.2 billion
in 2012 and 2011, respectively. Changes in currency transla-
tion adjustments refl ect the effects of changes in currency
exchange rates on our net investment in non-U.S. subsidiaries
that have functional currencies other than the U.S. dollar. At
year-end 2013, the U.S. dollar weakened against the euro and
the pound sterling and strengthened against the Japanese
yen and the Australian dollar resulting in increases in cur-
rency translation adjustments that were more than offset by
releases from AOCI related to dispositions. At year-end 2012,
the U.S. dollar weakened against most major currencies,
including the pound sterling and the euro, and strengthened
against the Japanese yen resulting in increases in currency
translation adjustments that were partially offset by releases
from AOCI related to dispositions. At year-end 2011, the dol-
lar strengthened against most major currencies, including
the pound sterling and the euro and weakened against the
Australian dollar and the Japanese yen.
Noncontrolling interests included in shareowners’ equity
increased $0.8 billion and $3.7 billion in 2013 and 2012, respec-
tively, principally as a result of the issuances of preferred stock by
GECC. Noncontrolling interests decreased by $3.6 billion in 2011,
principally as a result of dispositions.
Statement of Cash Flows—Overview from 2011 through 2013
Consolidated cash and equivalents were $88.6 billion
at December 31, 2013, an increase of $11.3 billion from
December 31, 2012. Cash and equivalents totaled $77.3 billion
at December 31, 2012, a decrease of $7.2 billion from
December 31, 2011.