GE 2014 Annual Report Download - page 220

200 GE 2014 FORM 10-K
FINANCIAL STATEMENTS FAIR VALUE MEASUREMENTS
LEVEL 3 MEASUREMENTS - SIGNIFICANT UNOBSERVABLE INPUTS
Range
(Dollars in millions) Fair value Valuation technique Unobservable inputs (weighted average)
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December 31, 2014
Recurring fair value measurements
Investment securities – Debt
U.S. corporate $ 980 Income approach Discount rate(a) 1.5%-14.8% (6.6%)
State and municipal 481 Income approach Discount rate(a) 1.9%-5.9% (2.8%)
Asset-backed 7,554 Income approach Discount rate(a) 2.2%-12.4% (5.0%)
Corporate – non-U.S. 724 Income approach Discount rate(a) 0.4%-14.7% (7.6%)
Other financial assets 165 Income approach, EBITDA multiple 5.4X-9.1X (7.7X)
Market comparables Discount rate(a) 4.2%-4.7% (4.3%)
Capitalization rate(b) 6.5%-7.8% (7.7%)
Non-recurring fair value measurements
Financing receivables and $ 666 Income approach, Capitalization rate(b) 6.9%-11.0% (7.8%)
loans held for sale Business enterprise EBITDA multiple 4.3X-6.5X (6.2X)
value
Cost and equity method investments 346 Income approach, Discount rate(a) 8.0%-10.0% (9.4%)
Business enterprise Capitalization rate(b) 6.4%-6.4% (6.4%)
value, Market comparables EBITDA multiple 1.8X-10.5X (7.0X)
Long-lived assets, including real estate 932 Income approach Capitalization rate(b) 6.3%-15.3% (6.8%)
Discount rate(a) 2.0%-19.0% (6.8%)
December 31, 2013
Recurring fair value measurements
Investment securities – Debt
U.S. corporate $ 898 Income approach Discount rate(a) 1.5%-13.3% (6.5%)
Asset-backed 6,854 Income approach Discount rate(a) 1.2%-10.5%(3.7%)
Corporate – non-U.S. 819 Income approach Discount rate(a) 1.4%-46.0%(15.1%)
Other financial assets 381 Income approach, WACC(c) 9.3%-9.3% (9.3%)
Market comparables EBITDA multiple 5.4X-12.5X(9.5X)
Discount rate(a) 5.2%-8.8%(5.3%)
Capitalization rate(b) 6.3%-7.5%(7.2%)
Non-recurring fair value measurements
Financing receivables and $ 1,937 Income approach, Capitalization rate(b) 5.5%-16.7%(8.0%)
loans held for sale Business enterprise EBITDA multiple 4.3X-5.5X(4.8X)
value Discount rate(a) 6.6%-6.6% (6.6%)
Cost and equity method investments 102 Income approach, Discount rate(a) 5.7%-5.9%(5.8%)
Market comparables Capitalization rate(b) 8.5%-10.6% (10.0%)
WACC(c) 9.3%-9.6%(9.4%)
EBITDA multiple 7.1X-14.5X(11.3X)
Revenue multiple 2.2X-12.6X(9.4X)
Long-lived assets, including real estate 694 Income approach Capitalization rate(b) 5.4%-14.5%(7.8%)
Discount rate(a) 4.0%-23.0%(9.0%)
(a) Discount rates are determined based on inputs that market participants would use when pricing investments, including credit and liquidity risk. An increase in the
discount rate would result in a decrease in the fair value.
(b) Represents the rate of return on net operating income that is considered acceptable for an investor and is used to determine a property’s capitalized value. An increase
in the capitalization rate would result in a decrease in the fair value.
(c) Weighted average cost of capital (WACC).
At December 31, 2014 and 2013, other Level 3 recurring fair value measurements of $2,694 million and $2,816 million,
respectively, and non-recurring measurements of $1,035 million and $1,460 million, respectively, are valued using non-binding
broker quotes or other third-party sources. At December 31, 2014 and 2013, other recurring fair value measurements of $267
million and $327 million, respectively, and non-recurring fair value measurements of $108 million and $571 million,
respectively, were individually insignificant and utilize a number of different unobservable inputs not subject to meaningful
aggregation.