GE 2015 Annual Report Download - page 218

FINANCIAL STATEMENTS FINANCIAL INSTRUMENTS
190 GE 2015 FORM 10-K
Assets and liabilities that are reflected in the accompanying financial statements at fair value are not included in the above disclosures;
such items include cash and equivalents, investment securities and derivative financial instruments.
Additional information about Notional Amounts of Loan Commitments follows.
NOTIONAL AMOUNTS OF LOAN COMMITMENTS
December 31 (In millions) 2015 2014
Ordinary course of business lending commitments(a) $ 531 $ 762
Unused revolving credit lines Commercial 279 282
(a) Excluded investment commitments of $782 million and $812 million at December 31, 2015 and 2014, respectively.
SECURITIES REPURCHASE AND REVERSE REPURCHASE ARRANGEMENTS
Our issuances of securities repurchase agreements are insignificant and are limited to activities at certain of our foreign banks primarily
for purposes of liquidity management. Any such agreements are reported in short-term borrowings on the financial statements. No
repurchase agreements were accounted for as off-book financing and we do not engage in securities lending transactions. At
December 31, 2015, we were party to no repurchase agreements.
We also enter into reverse securities repurchase agreements, primarily for short-term investment with maturities of 90 days or less. At
December 31, 2015, we were party to reverse repurchase agreements totaling $11.3 billion, which were reported in cash and
equivalents on the financial statements. Under these reverse securities repurchase agreements, we typically lend available cash at a
specified rate of interest and hold U.S. or highly-rated European government securities as collateral during the term of the agreement.
Collateral value is in excess of amounts loaned under the agreements. 
DERIVATIVES AND HEDGING
In this section, we explain how we use derivatives to manage our risks and how these financial instruments are reflected in our financial
statements. Our use of derivatives relates solely to risk management; we do not use derivatives for speculation. As discussed
elsewhere in this report, we are executing a plan to reduce the size and scope of our financial services business, with the intention of
principally retaining those activities that support our industrial businesses. The affected businesses have either been sold or are held for
sale and are presented as discontinued operations in our financial statements as of December 31, 2015. As a result of these actions,
the significance of financial services hedging activity will diminish significantly in the future.
RISK MANAGEMENT STRATEGY
In our industrial businesses, we buy, manufacture and sell components and products across global markets. These activities expose us
to changes in foreign currency exchange rates and commodity prices, which can adversely affect revenues earned and costs of
operating our industrial businesses. When the currency in which we sell equipment differs from the primary currency of one of our
industrial businesses (known as its functional currency) and the exchange rate fluctuates, it will affect the revenue we earn on the sale.
These sales and purchase transactions also create receivables and payables denominated in foreign currencies, which expose us to
foreign currency gains and losses based on changes in exchange rates. Changes in the price of a raw material that we use in
manufacturing can affect the cost of manufacturing. We use derivatives to mitigate or eliminate these exposures.
With respect to our ongoing financial services activities, our key exposures relate to interest rate and currency risk. To the extent
feasible, we seek to ensure that the characteristics of the debt we have issued align with the assets being funded. The form (fixed rate
or floating rate) and currency denomination of the debt we issue depends on a number of considerations, the most important of which
are market factors (demand, pricing, etc.) that affect the economics of the issuance. If the form and currency denomination of the debt
does not match the assets being funded, we typically execute derivatives to meet this objective within defined limits.
190 GE 2015 FORM 10-K