frm10q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549
 

FORM 10-Q

(Mark One)
 
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2008
 
OR
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ____ to ____
 
Commission file number 001-00035
 
GENERAL ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)

 
New York
  
14-0689340
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)
     
3135 Easton Turnpike, Fairfield, CT
  
06828-0001
(Address of principal executive offices)
  
(Zip Code)
 
(Registrant’s telephone number, including area code) (203) 373-2211
 
_______________________________________________
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer þ
 
Accelerated filer ¨
 
Non-accelerated filer ¨
 
Smaller reporting company ¨
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
 
There were 9,967,400,000 shares of common stock with a par value of $0.06 per share outstanding at March 31, 2008.
 

 
(1)
 

General Electric Company
 
Part I - Financial Information
  
Page
     
   
 
3
 
4
 
5
 
6
 
7
 
19
 
31
     
Part II - Other Information
    
     
 
31
 
32
 
33
 
Forward-Looking Statements
 
This document contains “forward-looking statements”- that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest and exchange rates and commodity and equity prices; the commercial and consumer credit environment; the impact of regulation and regulatory, investigative and legal actions; strategic actions, including acquisitions and dispositions; future integration of acquired businesses; future financial performance of major industries which we serve, including, without limitation, the air and rail transportation, energy generation, media, real estate and healthcare industries; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
 

 
(2)
 

Part I. Financial Information
 
Item 1. Financial Statements
 
Condensed Statement of Earnings
General Electric Company and consolidated affiliates
 
 
Three months ended March 31 (Unaudited)
  
 
Consolidated
  
GE
  
Financial
Services (GECS)
  
(In millions; per-share amounts in dollars)
2008
  
2007
  
2008
  
2007
  
2008
  
2007
  
                                     
Sales of goods
$
14,781
  
$
13,237
  
$
14,447
  
$
13,270
  
$
367
  
$
32
  
Sales of services
  
9,541
    
8,278
    
9,739
    
8,418
    
-
    
-
  
Other income
  
575
    
511
    
658
    
574
    
-
    
-
  
GECS earnings from continuing operations
  
-
    
-
    
2,466
    
3,424
    
-
    
-
  
GECS revenues from services
  
17,376
    
17,174
    
-
    
-
    
17,716
    
17,453
  
Total revenues
  
42,273
    
39,200
    
27,310
    
25,686
    
18,083
    
17,485
  
                                     
Cost of goods sold
  
11,908
    
10,589
    
11,623
    
10,630
    
317
    
25
  
Cost of services sold
  
6,085
    
5,257
    
6,283
    
5,398
    
-
    
-
  
Interest and other financial charges
  
6,530
    
5,578
    
602
    
533
    
6,179
    
5,245
  
Investment contracts, insurance losses and
                                    
insurance annuity benefits
  
804
    
860
    
-
    
-
    
848
    
930
  
Provision for losses on financing receivables
  
1,359
    
936
    
-
    
-
    
1,359
    
936
  
Other costs and expenses
  
10,235
    
9,597
    
3,552
    
3,427
    
6,812
    
6,240
  
Minority interest in net earnings of
                                    
consolidated affiliates
  
162
    
223
    
131
    
130
    
31
    
93
  
Total costs and expenses
  
37,083
    
33,040
    
22,191
    
20,118
    
15,546
    
13,469
  
                                     
Earnings from continuing operations
                                    
before income taxes
  
5,190
    
6,160
    
5,119
    
5,568
    
2,537
    
4,016
  
Provision for income taxes
  
(829
)
  
(1,232
)
  
(758
)
  
(640
)
  
(71
)
  
(592
)
Earnings from continuing operations
  
4,361
    
4,928
    
4,361
    
4,928
    
2,466
    
3,424
  
Loss from discontinued operations,
                                    
net of taxes
  
(57
)
  
(357
)
  
(57
)
  
(357
)
  
(71
)
  
(401
)
Net earnings
$
4,304
  
$
4,571
  
$
4,304
  
$
4,571
  
$
2,395
  
$
3,023
  
                                     
Per-share amounts
                                    
Per-share amounts - earnings from
                                    
continuing operations
                                    
Diluted earnings per share
$
0.44
  
$
0.48
                          
Basic earnings per share
$
0.44
  
$
0.48
                          
                                     
Per-share amounts - net earnings
                                    
Diluted earnings per share
$
0.43
  
$
0.44
                          
Basic earnings per share
$
0.43
  
$
0.44
                          
                                     
Dividends declared per share
$
0.31
  
$
0.28
                          

See accompanying notes. Separate information is shown for “GE” and “Financial Services (GECS).” Transactions between GE and GECS have been eliminated from the “Consolidated” columns.
 

 
(3)
 

Condensed Statement of Financial Position
General Electric Company and consolidated affiliates
 
 
Consolidated
  
GE
  
Financial
Services (GECS)
  
(In millions; except share amounts)
3/31/08
  
12/31/07
  
3/31/08
  
12/31/07
  
3/31/08
  
12/31/07
  
                                     
Cash and equivalents
$
15,291
  
$
15,747
  
$
5,084
  
$
6,702
  
$
10,827
  
$
9,455
  
Investment securities
  
45,622
    
45,428
    
404
    
343
    
45,226
    
45,093
  
Current receivables
  
21,729
    
22,259
    
14,496
    
15,093
    
-
    
-
  
Inventories
  
14,276
    
12,897
    
14,207
    
12,834
    
69
    
63
  
Financing receivables - net
  
409,763
    
377,660
    
-
    
-
    
417,930
    
385,604
  
Other GECS receivables
  
16,642
    
16,527
    
-
    
-
    
21,919
    
22,091
  
Property, plant and equipment (including
                                    
equipment leased to others) - net
  
79,210
    
77,895
    
14,357
    
14,142
    
64,853
    
63,753
  
Investment in GECS
  
-
    
-
    
57,719
    
57,676
    
-
    
-
  
Goodwill
  
83,132
    
81,116
    
55,994
    
55,689
    
27,138
    
25,427
  
Other intangible assets - net
  
15,937
    
16,178
    
11,528
    
11,633
    
4,409
    
4,545
  
All other assets
  
124,865
    
122,861
    
42,200
    
40,608
    
84,070
    
83,405
  
Assets of discontinued operations
  
7,423
    
6,769
    
66
    
66
    
7,357
    
6,703
  
Total assets
$
833,890
  
$
795,337
  
$
216,055
  
$
214,786
  
$
683,798
  
$
646,139
  
                                     
Short-term borrowings
$
201,157
  
$
195,101
  
$
3,832
  
$
4,106
  
$
198,735
  
$
192,421
  
Accounts payable, principally trade accounts
  
21,311
    
21,398
    
10,969
    
11,120
    
14,865
    
14,774
  
Progress collections and price adjustments accrued
  
11,579
    
9,885
    
11,927
    
10,374
    
-
    
-
  
Other GE current liabilities
  
19,874
    
18,916
    
20,033
    
18,916
    
-
    
-
  
Long-term borrowings
  
346,680
    
319,015
    
10,035
    
11,656
    
337,937
    
308,504
  
Investment contracts, insurance liabilities
                                    
and insurance annuity benefits
  
34,835
    
34,068
    
-
    
-
    
35,268
    
34,359
  
All other liabilities
  
62,001
    
59,419
    
33,448
    
32,859
    
28,632
    
26,625
  
Deferred income taxes
  
9,925
    
12,144
    
3,163
    
3,391
    
6,762
    
8,753
  
Liabilities of discontinued operations
  
2,294
    
1,828
    
235
    
302
    
2,059
    
1,526
  
Total liabilities
  
709,656
    
671,774
    
93,642
    
92,724
    
624,258
    
586,962
  
                                     
Minority interest in equity of consolidated affiliates
  
8,234
    
8,004
    
6,413
    
6,503
    
1,821
    
1,501
  
Common stock (9,967,400,000 and 9,987,599,000
                                    
shares outstanding at March 31, 2008 and
                                    
December 31, 2007, respectively)
  
669
    
669
    
669
    
669
    
1
    
1
  
Accumulated gains (losses) - net
                                    
Investment securities
  
(618
)
  
124
    
(618
)
  
124
    
(619
)
  
110
  
Currency translation adjustments
  
12,884
    
10,708
    
12,884
    
10,708
    
8,621
    
7,472
  
Cash flow hedges
  
(2,285
)
  
(668
)
  
(2,285
)
  
(668
)
  
(2,386
)
  
(727
)
Benefit plans
  
(1,730
)
  
(1,840
)
  
(1,730
)
  
(1,840
)
  
(92
)
  
(105
)
Other capital
  
26,176
    
26,100
    
26,176
    
26,100
    
12,578
    
12,574
  
Retained earnings
  
118,561
    
117,362
    
118,561
    
117,362
    
39,616
    
38,351
  
Less common stock held in treasury
  
(37,657
)
  
(36,896
)
  
(37,657
)
  
(36,896
)
  
-
    
-
  
                                     
Total shareowners’ equity
  
116,000
    
115,559
    
116,000
    
115,559
    
57,719
    
57,676
  
                                     
Total liabilities and equity
$
833,890
  
$
795,337
  
$
216,055
  
$
214,786
  
$
683,798
  
$
646,139
  

The sum of accumulated gains (losses) on investment securities, currency translation adjustments, cash flow hedges and benefit plans constitutes “Accumulated nonowner changes other than earnings,” and was $8,251 million and $8,324 million at March 31, 2008, and December 31, 2007, respectively.
 
See accompanying notes. Separate information is shown for “GE” and “Financial Services (GECS).” March 31, 2008, data are unaudited. Transactions between GE and GECS have been eliminated from the “Consolidated” columns.
 

 
(4)
 

Condensed Statement of Cash Flows
General Electric Company and consolidated affiliates
 
 
Three months ended March 31 (Unaudited)
  
 
Consolidated
  
GE
  
Financial
Services (GECS)
  
(In millions)
2008
  
2007
  
2008
  
2007
  
2008
  
2007
  
                                     
Cash flows - operating activities
                                    
Net earnings
$
4,304
  
$
4,571
  
$
4,304
  
$
4,571
  
$
2,395
  
$
3,023
  
Loss from discontinued operations
  
57
    
357
    
57
    
357
    
71
    
401
  
Adjustments to reconcile net earnings to cash
                                    
provided from operating activities
                                    
Depreciation and amortization of property,
                                    
plant and equipment
  
2,682
    
2,440
    
556
    
518
    
2,126
    
1,922
  
Net earnings from continuing operations retained by GECS
  
-
    
-
    
(1,336
)
  
448
    
-
    
-
  
Deferred income taxes
  
(969)
    
89
    
(352
)
  
11
    
(617
)
  
78
  
Decrease in GE current receivables
  
787
    
1,483
    
396
    
1,463
    
-
    
-
  
Increase in inventories
  
(1,381
)
  
(1,155
)
  
(1,375
)
  
(1,149
)
  
(6
)
  
(6
)
Increase (decrease) in accounts payable
  
(422
)
  
(800
)
  
125
    
(530
)
  
(450
)
  
(110
)
Increase in GE progress collections
  
1,412
    
680
    
1,553
    
680
    
-
    
-
  
Provision for losses on GECS financing receivables
  
1,359
    
936
    
-
    
-
    
1,359
    
936
  
All other operating activities
  
(1,487
)
  
(3,906
)
  
926
    
955
    
(2,269
)
  
(4,610
)
Cash from operating activities - continuing operations
  
6,342
    
4,695
    
4,854
    
7,324
    
2,609
    
1,634
  
Cash from operating activities - discontinued operations
  
449
    
247
    
-
    
50
    
449
    
197
  
Cash from operating activities
  
6,791
    
4,942
    
4,854
    
7,374
    
3,058
    
1,831
  
                                     
Cash flows - investing activities
                                    
Additions to property, plant and equipment
  
(3,733
)
  
(4,751
)
  
(894
)
  
(767
)
  
(2,955
)
  
(4,049
)
Dispositions of property, plant and equipment
  
3,212
    
2,715
    
-
    
-
    
3,212
    
2,715
  
Net increase in GECS financing receivables
  
(11,782
)
  
(1,211
)
  
-
    
-
    
(11,712
)
  
(1,082
)
Proceeds from sale of discontinued operations
  
203
    
-
    
203
    
-
    
-
    
-
  
Proceeds from principal business dispositions
  
4,305
    
1,131
    
-
    
29
    
4,305
    
1,102
  
Payments for principal businesses purchased
  
(12,759
)
  
(5,752
)
  
(107
)
  
(2,218
)
  
(12,652
)
  
(3,534
)
All other investing activities
  
(647
)
  
946
    
(35
)
  
134
    
(388
)
  
739
  
Cash used for investing activities - continuing operations
  
(21,201
)
  
(6,922
)
  
(833
)
  
(2,822
)
  
(20,190
)
  
(4,109
)
Cash used for investing activities - discontinued operations
  
(437
)
  
(254
)
  
-
    
(42
)
  
(437
)
  
(212
)
Cash used for investing activities
  
(21,638
)
  
(7,176
)
  
(833
)
  
(2,864
)
  
(20,627
)
  
(4,321
)
                                     
Cash flows - financing activities
                                    
Net increase (decrease) in borrowings (maturities of
                                    
90 days or less)
  
2,296
    
(8,691
)
  
(1,658
)
  
(1,677
)
  
3,847
    
(7,227
)
Newly issued debt (maturities longer than 90 days)
  
35,833
    
34,218
    
39
    
4,654
    
35,942
    
29,551
  
Repayments and other reductions (maturities longer
                                    
than 90 days)
  
(20,250
)
  
(15,195
)
  
(46
)
  
(50
)
  
(20,204
)
  
(15,145
)
Net dispositions (purchases) of GE shares for treasury
  
(864
)
  
53
    
(864
)
  
53
    
-
    
-
  
Dividends paid to shareowners
  
(3,110
)
  
(2,886
)
  
(3,110
)
  
(2,886
)
  
(1,130
)
  
(3,872
)
All other financing activities
  
498
    
(273
)
  
-
    
-
    
498
    
(273
)
Cash from (used for) financing activities - continuing operations
  
14,403
    
7,226
    
(5,639
)
  
94
    
18,953
    
3,034
  
Cash used for financing activities - discontinued operations
  
-
    
(8
)
  
-
    
(8
)
  
-
    
-
  
Cash from (used for) financing activities
  
14,403
    
7,218
    
(5,639
)
  
86
    
18,953
    
3,034
  
Increase (decrease) in cash and equivalents
  
(444
)
  
4,984
    
(1,618
)
  
4,596
    
1,384
    
544
  
Cash and equivalents at beginning of year
  
16,031
    
14,276
    
6,702
    
4,480
    
9,739
    
12,629
  
Cash and equivalents at March 31
  
15,587
    
19,260
    
5,084
    
9,076
    
11,123
    
13,173
  
Less cash and equivalents of discontinued operations at March 31
  
296
    
162
    
-
    
-
    
296
    
162
  
Cash and equivalents of continuing operations at March 31
$
15,291
  
$
19,098
  
$
5,084
  
$
9,076
  
$
10,827
  
$
13,011
  

See accompanying notes. Separate information is shown for “GE” and “Financial Services (GECS).” Transactions between GE and GECS have been eliminated from the “Consolidated” columns.
 

 
(5)
 

Summary of Operating Segments
General Electric Company and consolidated affiliates
 
 
Three months ended
March 31 (Unaudited)
  
(In millions)
2008
  
2007
  
             
Revenues
            
Infrastructure
$
14,960
  
$
12,202
  
Commercial Finance
  
8,566
    
8,031
  
GE Money
  
6,408
    
5,958
  
Healthcare
  
3,887
    
3,895
  
NBC Universal
  
3,584
    
3,484
  
Industrial
  
4,110
    
4,089
  
Total segment revenues
  
41,515
    
37,659
  
Corporate items and eliminations
  
758
    
1,541
  
Consolidated revenues
$
42,273
  
$
39,200
  
             
Segment profit(a)
            
Infrastructure
$
2,588
  
$
2,208
  
Commercial Finance
  
1,158
    
1,440
  
GE Money
  
995
    
1,223
  
Healthcare
  
528
    
637
  
NBC Universal
  
712
    
691
  
Industrial
  
300
    
358
  
Total segment profit
  
6,281
    
6,557
  
Corporate items and eliminations
  
(560
)
  
(456
)
GE interest and other financial charges
  
(602
)
  
(533
)
GE provision for income taxes
  
(758
)
  
(640
)
Earnings from continuing operations
  
4,361
    
4,928
  
Loss from discontinued operations, net of taxes
  
(57
)
  
(357
)
Consolidated net earnings
$
4,304
  
$
4,571
  
             

(a)
 
Segment profit always excludes the effects of principal pension plans, results reported as discontinued operations and accounting changes, and may exclude matters such as charges for restructuring; rationalization and other similar expenses; in-process research and development and certain other acquisition-related charges and balances; technology and product development costs; certain gains and losses from dispositions; and litigation settlements or other charges, responsibility for which preceded the current management team. Segment profit excludes or includes interest and other financial charges and income taxes according to how a particular segment’s management is measured - excluded in determining segment profit, which we sometimes refer to as “operating profit,” for Healthcare, NBC Universal, Industrial and the industrial businesses of the Infrastructure segment; included in determining segment profit, which we sometimes refer to as “net earnings,” for Commercial Finance, GE Money, and the financial services businesses of the Infrastructure segment (Aviation Financial Services, Energy Financial Services and Transportation Finance).
 
See accompanying notes to condensed, consolidated financial statements.

 

 
(6)
 

Notes to Condensed, Consolidated Financial Statements (Unaudited)
 
1.      The accompanying condensed, consolidated financial statements represent the consolidation of General Electric Company and all companies that we directly or indirectly control, either through majority ownership or otherwise. See note 1 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2007. That note discusses consolidation and financial statement presentation. As used in this report on Form 10-Q (Report) and in the Annual Report on Form 10-K, “GE” represents the adding together of all affiliated companies except General Electric Capital Services, Inc. (GECS or financial services), which is presented on a one-line basis; GECS consists of General Electric Capital Services, Inc. and all of its affiliates; and “Consolidated” represents the adding together of GE and GECS with the effects of transactions between the two eliminated. We have reclassified certain prior-period amounts to conform to the current-period’s presentation. Unless otherwise indicated, information in these notes to condensed, consolidated financial statements relates to continuing operations.
 
Accounting changes
 
On January 1, 2008, we adopted Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) 157, Fair Value Measurements, and SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities. See note 13.
 
2.      The condensed, consolidated financial statements and notes thereto are unaudited. These statements include all adjustments (consisting of normal recurring accruals) that we considered necessary to present a fair statement of our results of operations, financial position and cash flows. The results reported in these condensed, consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. It is suggested that these condensed, consolidated financial statements be read in conjunction with the financial statements and notes thereto included in our latest shareowners’ Annual Report on Form 10-K. We label our quarterly information using a calendar convention, that is, first quarter is labeled as ending on March 31, second quarter as ending on June 30, and third quarter as ending on September 30. It is our longstanding practice to establish interim quarterly closing dates using a fiscal calendar, which requires our businesses to close their books on either a Saturday or Sunday, depending on the business. The effects of this practice are modest and only exist within a reporting year. The fiscal closing calendar from 1993 through 2013 is available on our website, www.ge.com/secreports.
 
3.      Discontinued operations comprised our Japanese personal loan business (Lake), our U.S. mortgage business (WMC), Plastics, Advanced Materials, GE Life, Genworth Financial, Inc. (Genworth) and most of GE Insurance Solutions Corporation (GE Insurance Solutions). Associated results of operations, financial position and cash flows are separately reported as discontinued operations for all periods presented.
 
WMC
 
In December 2007, we completed the sale of our U.S. mortgage business. In connection with the transaction, certain contractual obligations and potential liabilities related to previously sold loans were retained. WMC revenues from discontinued operations were $5 million and $(453) million in the first quarters of 2008 and 2007, respectively. In total, WMC’s losses from discontinued operations, net of taxes, were $7 million and $380 million in the first quarters of 2008 and 2007, respectively.
 

 
(7)
 

Lake
 
In September 2007, we committed to a plan to sell our Lake business. We made the decision to sell this business upon determining that, despite restructuring, Japanese regulatory limits for interest charges on unsecured personal loans did not permit us to earn an acceptable return. We are actively pursuing a buyer and expect to complete the sale of this business by the end of the third quarter of 2008. Lake revenues from discontinued operations were $245 million and $302 million in the first quarters of 2008 and 2007, respectively. In total, Lake’s losses from discontinued operations, net of taxes, were $47 million and $19 million in the first quarters of 2008 and 2007, respectively.
 
Plastics and Advanced Materials
 
In August 2007, we completed the sale of our Plastics business to Saudi Basic Industries Corporation. Also, during the fourth quarter of 2006, we sold our Advanced Materials business. Plastics revenues from discontinued operations were $1,594 million in the first quarter of 2007. In total, Plastics and Advanced Materials earnings from discontinued operations, net of taxes, were $14 million and $44 million in the first quarters of 2008 and 2007, respectively.
 
Insurance
 
In total, loss from discontinued operations, net of taxes, was $17 million in the first quarter of 2008 and $2 million in the first quarter of 2007.
 
Summarized financial information for discontinued GE industrial operations is shown below.
 
 
Three months ended
March 31
  
(In millions)
2008
  
2007
  
             
Operations
            
Total revenues
$
-
  
$
1,594
  
             
Earnings from discontinued operations before income taxes
$
-
  
$
58
  
Income tax benefit
  
-
    
13
  
Earnings from discontinued operations before disposal, net of taxes
$
-
  
$
71
  
             
Disposal
            
Gain (loss) on disposal before income taxes
$
14
  
$
(35
)
Income tax benefit
  
-
    
8
  
Gain (loss) on disposal, net of taxes
$
14
  
$
(27
)
             
Earnings from discontinued operations, net of taxes(a)
$
14
  
$
44
  
             

(a)
The sum of GE industrial earnings from discontinued operations, net of taxes, and GECS loss from discontinued operations, net of taxes, on page 9 are reported as GE loss from discontinued operations, net of taxes, on the Condensed Statement of Earnings.

 

 
(8)
 

Assets of GE industrial discontinued operations were $66 million at both March 31, 2008, and December 31, 2007. Liabilities of GE industrial discontinued operations were $235 million and $302 million at March 31, 2008, and December 31, 2007, respectively, and primarily represent taxes payable and pension liabilities related to the sale of our Plastics business.
 
Summarized financial information for discontinued GECS operations is shown below.
 
 
Three months ended
March 31
  
(In millions)
2008
  
2007
  
             
Operations
            
Total revenues
$
250
  
$
(151
)
             
Loss from discontinued operations before income taxes
$
(100
)
$
(676
)
Income tax benefit
  
29
    
275
  
Loss from discontinued operations, net of taxes
$
(71
)
$
(401
)

 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Assets
            
Cash and equivalents
$
296
  
$
284
  
Financing receivables - net
  
5,751
    
5,138
  
Other
  
1,310
    
1,281
  
Assets of discontinued operations
$
7,357
  
$
6,703
  

 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Liabilities
            
Liabilities of discontinued operations
$
2,059
  
$
1,526
  

 
Assets and liabilities at March 31, 2008, and December 31, 2007, were primarily at our Lake business.
 

 
(9)
 

4.      GECS revenues from services are summarized in the following table.
 
 
Three months ended
March 31
  
(In millions)
2008
  
2007
  
             
Interest on loans
$
6,542
  
$
5,646
  
Equipment leased to others
  
3,810
    
3,763
  
Fees
  
1,366
    
1,509
  
Investment income(a)
  
898
    
1,710
  
Financing leases
  
1,163
    
1,138
  
Real estate investments
  
1,161
    
1,089
  
Premiums earned by insurance activities
  
542
    
551
  
Associated companies
  
469
    
425
  
Gross securitization gains
  
325
    
571
  
Other items
  
1,440
    
1,051
  
Total
$
17,716
  
$
17,453
  
             

(a)
Included gain on sale of Swiss Reinsurance Company common stock of $566 million during first quarter of 2007.

 
5.      We sponsor a number of pension and retiree health and life insurance benefit plans. Principal pension plans include the GE Pension Plan and the GE Supplementary Pension Plan. Principal retiree benefit plans generally provide health and life insurance benefits to employees who retire under the GE Pension Plan with 10 or more years of service. Other pension plans include the U.S. and non-U.S. pension plans with pension assets or obligations greater than $50 million. Smaller pension plans and other retiree benefit plans are not material individually or in the aggregate. The effect on operations of the pension plans follows.
 
 
Principal
Pension Plans
  
Other
Pension Plans
  
 
Three months ended
March 31
  
Three months ended
March 31
  
(In millions)
2008
  
2007
  
2008
  
2007
  
                         
Expected return on plan assets
$
(1,075
)
$
(986
)
$
(137
)
$
(120
)
Service cost for benefits earned
  
300
    
314
    
80
    
85
  
Interest cost on benefit obligation
  
661
    
605
    
124
    
111
  
Prior service cost amortization
  
81
    
47
    
3
    
2
  
Net actuarial loss amortization
  
54
    
176
    
19
    
41
  
Pension plans cost
$
21
  
$
156
  
$
89
  
$
119
  

 

 
(10)
 

The effect on operations of principal retiree health and life insurance plans follows.
 
 
Principal
Retiree Health and
Life Insurance Plans
  
 
Three months ended
March 31
  
(In millions)
2008
  
2007
  
             
Expected return on plan assets
$
(33
)
$
(31
)
Service cost for benefits earned
  
63
    
41
  
Interest cost on benefit obligation
  
198
    
113
  
Prior service cost amortization
  
168
    
71
  
Net actuarial loss amortization
  
9
    
2
  
Retiree benefit plans cost
$
405
  
$
196
  

 
6.      The balance of “unrecognized tax benefits,” the amount of related interest and penalties we have provided and what we believe to be the range of reasonably possible changes in the next 12 months, were:
 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Unrecognized tax benefits
$
6,219
  
$
6,331
  
Portion that, if recognized, would reduce tax expense and effective tax rate(a)
  
4,182
    
4,268
  
Accrued interest on unrecognized tax benefits
  
1,063
    
923
  
Accrued penalties on unrecognized tax benefits
  
94
    
77
  
Reasonably possible reduction to the balance of unrecognized tax benefits
            
in succeeding 12 months
  
0-1,500
    
0-1,500
  
Portion that, if recognized, would reduce tax expense and effective tax rate(a)
  
0-1,200
    
0-1,250
  
             

(a)
Some portion of such reduction might be reported as discontinued operations.

 
The IRS is currently auditing our consolidated income tax returns for 2003-2005. In addition, certain other U.S. tax deficiency issues and refund claims for previous years remain unresolved. It is reasonably possible that the 2003-2005 U.S. audit cycle will be completed during the next 12 months, which could result in a decrease in our balance of unrecognized tax benefits. We believe that there are no other jurisdictions in which the outcome of unresolved issues or claims is likely to be material to our results of operations, financial position or cash flows. We further believe that we have made adequate provision for all income tax uncertainties.
 

 
(11)
 

7.      GE’s authorized common stock consists of 13,200,000,000 shares having a par value of $0.06 each. Information related to the calculation of earnings per share follows.
 
 
Three months ended March 31
  
 
2008
  
2007
  
(In millions; per-share amounts in dollars)
Diluted
  
Basic
  
Diluted
  
Basic
  
                         
Consolidated
                        
Earnings from continuing operations for
                        
per-share calculation(a)
$
4,361
  
$
4,361
  
$
4,928
  
$
4,928
  
Loss from discontinued operations
                        
for per-share calculation
$
(57
)
$
(57
)
$
(357
)
$
(357
)
Net earnings available for per-share calculation
$
4,304
  
$
4,304
  
$
4,571
  
$
4,571
  
                         
Average equivalent shares
                        
Shares of GE common stock outstanding
  
9,978
    
9,978
    
10,284
    
10,284
  
Employee compensation-related shares,
                        
including stock options
  
28
    
-
    
33
    
-
  
Total average equivalent shares
  
10,006
    
9,978
    
10,317
    
10,284
  
                         
Per-share amounts
                        
Earnings from continuing operations
$
0.44
  
$
0.44
  
$
0.48
  
$
0.48
  
Loss from discontinued operations
$
(0.01
)
$
(0.01
)
$
(0.03
)
$
(0.03
)
Net earnings
$
0.43
  
$
0.43
  
$
0.44
  
$
0.44
  
                         

(a)
Including dividend equivalents.

 
Earnings-per-share amounts are computed independently for earnings from continuing operations, loss from discontinued operations and net earnings. As a result, the sum of per-share amounts from continuing operations and discontinued operations may not equal the total per-share amounts for net earnings.
 
8.      Inventories consisted of the following.
 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Raw materials and work in process
$
8,971
  
$
7,893
  
Finished goods
  
5,379
    
5,088
  
Unbilled shipments
  
544
    
539
  
   
14,894
    
13,520
  
Less revaluation to LIFO
  
(618
)
  
(623
)
Total
$
14,276
  
$
12,897
  

 

 
(12)
 

9.      GECS financing receivables - net, consisted of the following.
 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Loans, net of deferred income
$
346,803
  
$
314,918
  
Investment in financing leases, net of deferred income
  
75,568
    
75,015
  
   
422,371
    
389,933
  
Less allowance for losses
  
(4,441
)
  
(4,329
)
Financing receivables - net(a)
$
417,930
  
$
385,604
  
             

(a)
Included $9,365 million and $9,708 million related to consolidated, liquidating securitization entities at March 31, 2008, and December 31, 2007, respectively.

 
10.    Property, plant and equipment (including equipment leased to others) - net, consisted of the following.
 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Original cost
$
122,680
  
$
119,603
  
Less accumulated depreciation and amortization
  
(43,470
)
  
(41,708
)
Property, plant and equipment (including equipment leased to others) - net
$
79,210
  
$
77,895
  

 
11.    Goodwill and other intangible assets - net, consisted of the following.
 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Goodwill
$
83,132
  
$
81,116
  
             
Other intangible assets
            
Intangible assets subject to amortization
$
13,542
  
$
13,823
  
Indefinite-lived intangible assets(a)
  
2,395
    
2,355
  
Total
$
15,937
  
$
16,178
  
             

(a)
Indefinite-lived intangible assets principally comprised trademarks, tradenames and U.S. Federal Communications Commission licenses.

 

 
(13)
 

Changes in goodwill balances follow.
 
(In millions)
Balance
1/1/08
  
Acquisitions/
purchase
accounting
adjustments
  
Dispositions, currency
exchange
and other
  
Balance
3/31/08
  
                                 
Infrastructure
$
17,117
    
$
258
      
$
190
    
$
17,565
  
Commercial Finance
  
14,621
      
650
        
338
      
15,609
  
GE Money
  
10,273
      
-
        
417
      
10,690
  
Healthcare
  
14,827
      
50
        
39
      
14,916
  
NBC Universal
  
18,733
      
15
        
1
      
18,749
  
Industrial
  
5,545
      
22
        
36
      
5,603
  
Total
$
81,116
    
$
995
      
$
1,021
    
$
83,132
  

 
Goodwill balances increased $1,240 million as a result of the weaker U.S. dollar and $823 million from new acquisitions in 2008. The largest goodwill balance increases from acquisitions arose from the purchase of Merrill Lynch Capital ($520 million at Commercial Finance) and CDM Resource Management, Ltd. ($211 million at Infrastructure). During 2008, the goodwill balance increased by $172 million related to purchase accounting adjustments to prior-year acquisitions. The largest such adjustments were increases of $79 million and $60 million associated with the 2007 acquisitions of Regency Energy Partners LP by Infrastructure and Trustreet Properties, Inc. by Commercial Finance, respectively.
 
Intangible assets subject to amortization
 
 
At
  
 
3/31/08
  
12/31/07
  
(In millions)
Gross
carrying
amount
  
Accumulated
amortization
  
Net
  
Gross
carrying
amount
  
Accumulated
amortization
  
Net
  
                                             
Customer-related
$
6,563
    
$
(1,587
)
  
$
4,976
  
$
6,711
    
$
(1,565
)
  
$
5,146
  
Patents, licenses and trademarks
  
5,583
      
(2,010
)
    
3,573
    
5,163
      
(1,684
)
    
3,479
  
Capitalized software
  
6,609
      
(3,867
)
    
2,742
    
6,430
      
(3,694
)
    
2,736
  
Lease valuations
  
1,789
      
(396
)
    
1,393
    
1,909
      
(376
)
    
1,533
  
Present value of future profits
  
826
      
(379
)
    
447
    
818
      
(364
)
    
454
  
All other
  
704
      
(293
)
    
411
    
786
      
(311
)
    
475
  
Total
$
22,074
    
$
(8,532
)
  
$
13,542
  
$
21,817
    
$
(7,994
)
  
$
13,823
  

 
Consolidated amortization related to intangible assets subject to amortization was $530 million and $439 million for the quarters ended March 31, 2008 and 2007, respectively.
 
During the first quarter of 2008, we recorded additions to intangible assets subject to amortization of $211 million. The components of finite-lived intangible assets acquired during the period and their respective weighted-average useful lives are: $26 million - Customer-related (17.2 years); $36 million - Patents, licenses and trademarks (10.5 years); $109 million - Capitalized software (4.3 years); and $40 million - All other (7.1 years).
 

 
(14)
 

12.    GECS borrowings are summarized in the following table.
 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Short-term borrowings
            
             
Commercial paper
            
U.S.
            
Unsecured
$
76,605
  
$
72,392
  
Asset-backed(a)
  
4,400
    
4,775
  
Non-U.S.
  
25,328
    
28,711
  
Current portion of long-term debt(b)
  
56,935
    
56,302
  
Bank deposits(c)
  
14,272
    
11,486
  
GE Interest Plus notes(d)
  
10,193
    
9,590
  
Other
  
11,002
    
9,165
  
Total
  
198,735
    
192,421
  
             
Long-term borrowings
            
             
Senior notes
            
Unsecured
  
313,409
    
283,099
  
Asset-backed(e)
  
5,468
    
5,528
  
Extendible notes
  
7,330
    
8,500
  
Subordinated notes(f)(g)
  
11,730
    
11,377
  
Total
  
337,937
    
308,504
  
Total borrowings
$
536,672
  
$
500,925
  
             

(a)
 
Entirely obligations of consolidated, liquidating securitization entities. See note 9.
 
(b)
 
Included $814 million and $1,106 million of asset-backed senior notes, issued by consolidated, liquidating securitization entities at March 31, 2008, and December 31, 2007, respectively.
 
(c)
 
Included $11,772 million and $10,789 million of deposits in non-U.S. banks at March 31, 2008, and December 31, 2007, respectively.
 
(d)
 
Entirely variable denomination floating rate demand notes.
 
(e)
 
Included $3,324 million and $3,410 million of asset-backed senior notes, issued by consolidated, liquidating securitization entities at March 31, 2008, and December 31, 2007, respectively. See note 9.
 
(f)
 
Included $750 million of subordinated notes guaranteed by GE at March 31, 2008, and December 31, 2007.
 
(g)
Included $8,332 million and $8,064 million of subordinated debentures receiving rating agency equity credit at March 31, 2008, and December 31, 2007, respectively.

 
13.    Effective January 1, 2008, we adopted SFAS 157, Fair Value Measurements, for all financial instruments and non-financial instruments accounted for at fair value on a recurring basis. SFAS 157 establishes a new framework for measuring fair value and expands related disclosures. Broadly, the SFAS 157 framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. SFAS 157 establishes market or observable inputs as the preferred source of values, followed by assumptions based on hypothetical transactions in the absence of market inputs.
 

 
(15)
 

The valuation techniques required by SFAS 157 are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. These two types of inputs create the following fair value hierarchy:
 
 
Level 1 -
Quoted prices for identical instruments in active markets.
 
 
Level 2 -
Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
 
 
Level 3 -
Significant inputs to the valuation model are unobservable.
 
We maintain policies and procedures to value instruments using the best and most relevant data available. In addition, we have risk management teams that review valuation, including independent price validation for certain instruments. Further, in other instances, we retain independent pricing vendors to assist in valuing certain instruments.
 
The following section describes the valuation methodologies we use to measure different financial instruments at fair value.
 
Investments in debt and equity securities
 
When available, we use quoted market prices to determine the fair value of investment securities, and they are included in Level 1. When quoted market prices are unobservable, we use quotes from independent pricing vendors based on recent trading activity and other relevant information including market interest rate curves, referenced credit spreads and estimated prepayment rates where applicable. These investments are included in Level 2 and primarily comprise our portfolio of corporate fixed income, government, mortgage and asset-backed securities. Retained interests in securitizations are valued using a discounted cash flow model that considers the underlying structure of the securitization and estimated net credit exposure, prepayment assumptions, discount rates and expected life. Investment securities priced using non-binding broker quotes and retained interests are included in Level 3.
 
Private equity investments held in investment company affiliates are initially valued at cost. Valuations are reviewed at the end of each quarter utilizing available market data to determine whether or not any fair value adjustments are necessary. Such market data include comparable public company trading multiples. Unobservable inputs include company-specific fundamentals and other third party transactions in that security. Our valuation methodology for private equity investments is applied consistently and these investments are generally included in Level 3.
 

 
(16)
 


Derivatives
 
We use closing prices for derivatives included in Level 1, which are traded either on exchanges or liquid over-the-counter markets. The remainder of the derivatives portfolio is valued using internal models, most of which are primarily based on market observable inputs including interest rate curves and both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2 primarily represent interest rate swaps, cross-currency swaps and foreign currency and commodity forward and option contracts. Derivative assets and liabilities included in Level 3 primarily represent interest rate products that contain embedded optionality or prepayment features.
 
Loans
 
When available, we use observable market data, including pricing on recent closed market transactions, to value loans which are included in Level 2. When this data is unobservable, we use valuation methodologies using current market interest rate data adjusted for inherent credit risk and such loans are included in Level 3. When appropriate, loans are valued using collateral values as a practical expedient.
 
Effective January 1, 2008, we adopted SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities. Upon adoption, we elected to report $172 million of commercial mortgage loans at fair value in order to have them on the same accounting basis (measured at fair value through earnings) as the derivatives economically hedging these loans.
 
The following table presents our assets and liabilities measured at fair value on a recurring basis at March 31, 2008. Included in the table are investment securities of $23,294 million, primarily supporting obligations to annuitants and policyholders in our run-off insurance businesses and $11,287 million supporting obligations to holders of guaranteed investment contracts. Such securities are primarily investment grade. In addition, the table includes $5,049 million and $5,924 million of derivative assets and liabilities, respectively, with highly rated counterparties, primarily used for risk management purposes. Also included are retained interests in securitizations totaling $5,854 million.
 
March 31, 2008
(In millions)
  
Level 1
    
Level 2
    
Level 3
    
FIN 39
netting
(a)
  
Net
balance
                             
Assets
                            
Investment securities
$
1,605
  
$
31,178
  
$
12,839
  
$
–
  
$
45,622
Derivatives
  
–
    
8,037
    
835
    
(3,823
)
  
5,049
Other(b)
  
1
    
398
    
1,355
    
–
    
1,754
Total
$
1,606
  
$
39,613
  
$
15,029
  
$
(3,823
)
$
52,425
                             
Liabilities
                            
Derivatives
$
3
  
$
9,695
  
$
71
  
$
(3,845
)
$
5,924
Other(c)
  
–
    
1,847
    
–
    
–
    
1,847
Total
$
3
  
$
11,542
  
$
71
  
$
(3,845
)
$
7,771
                             

(a)
 
FASB Interpretation (FIN) 39, Offsetting of Amounts Related to Certain Contracts, permits the netting of derivative receivables and derivative payables when a legally enforceable master netting agreement exists. Includes fair value adjustments related to our own and counterparty credit risk.
 
(b)
 
Includes private equity investments and loans designated under the fair value option.
 
(c)
Primarily represents the liability associated with certain of our deferred incentive compensation plans accounted for in accordance with EITF Issue 97-14, Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested.

 

 
(17)
 

The following table presents the changes in Level 3 instruments measured on a recurring basis for the three months ended March 31, 2008. The majority of our Level 3 balances consist of investment securities classified as available-for-sale with changes in fair value recorded in equity.
 
Changes in Level 3 instruments
 
(In millions)
1/1/08
  
Net
realized/
unrealized
gains
(losses)
included in
earnings(a)
  
Net realized/
unrealized
gains (losses)
included in
accumulated
nonowner
changes
other than
earnings
  
Purchases,
issuances
and
settlements
  
3/31/08
    
Net
change in
unrealized
gains
(losses)
relating to
instruments
still held
at 3/31/08(b)
                                       
Investment securities
$
12,559
  
$
83
  
$
(175
)
$
372
  
$
12,839
    
$
(38
)
Derivatives(c)(d)
  
265
    
507
    
54
    
(51
)
  
775
      
484
  
Other
  
1,330
    
(27
)
  
33
    
19
    
1,355
      
(13
)
Total
$
14,154
  
$
563
  
$
(88
)
$
340
  
$
14,969
    
$
433
  
                                       

Transfers between Level 2 and 3 are considered to occur at the beginning of a quarter and therefore, no transfers occurred during the first quarter.
 
(a)
 
Earnings effects are primarily included in the “GECS revenues from services” and “Interest and other financial charges” captions in the Condensed Statement of Earnings.
 
(b)
 
Represents the amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities classified as Level 3 that are still held at March 31, 2008.
 
(c)
 
Earnings from Derivatives were more than offset by $380 million in losses from related derivatives included in Level 2 and $148 million in losses from qualifying fair value hedges.
 
(d)
Represents derivative assets net of derivative liabilities and includes cash accruals of $11 million not reflected in the fair value hierarchy table.

 
Certain assets measured at fair value on a non-recurring basis, and therefore not included in the preceding tables, were $560 million included in Level 2 and $4,366 million included in Level 3. We recognized $155 million of losses related to non-recurring fair value measurements of loans, and $69 million of other-than-temporary impairments of cost and equity method investments, including $59 million related to FGIC Corporation (FGIC) common stock, during the first three months of 2008.
 
 

 
(18)
 

14.    A summary of increases (decreases) in shareowners’ equity that did not result directly from transactions with shareowners, net of income taxes, follows.
 
 
Three months ended
March 31
  
(In millions)
2008
  
2007
  
             
Net earnings
$
4,304
  
$
4,571
  
Investment securities - net
  
(742
)
  
(302
)
Currency translation adjustments - net
  
2,176
    
(50
)
Cash flow hedges - net
  
(1,617
)
  
56
  
Benefit plans - net
  
110
    
235
  
Total
$
4,231
  
$
4,510
  

 
15.    The following table represents assets in off-balance sheet securitization entities.
 
 
At
  
(In millions)
3/31/08
  
12/31/07
  
             
Receivables secured by
            
Equipment
$
6,689
  
$
6,552
  
Commercial real estate
  
9,084
    
9,244
  
Residential real estate
  
212
    
204
  
Other assets
  
12,505
    
12,880
  
Credit card receivables
  
23,179
    
22,793
  
Trade receivables
  
2,311
    
2,036
  
Total securitized assets(a)(b)
$
53,980
  
$
53,709
  
             

(a)
 
At March 31, 2008, and December 31, 2007, liquidity support amounted to $2,728 million and $2,810 million, respectively. Credit support amounted to $2,732 million and $2,804 million at March 31, 2008, and December 31, 2007, respectively.
 
(b)
Liabilities for recourse obligations related to off-balance sheet assets were $2 million at both March 31, 2008, and December 31, 2007.

 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
A. Results of Operations
 
General Electric Company’s consolidated financial statements represent the combination of the industrial manufacturing and product services businesses of General Electric Company (GE) and the financial services businesses of General Electric Capital Services, Inc. (GECS or financial services).
 
In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial information but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered “non-GAAP financial measures” under the U.S. Securities and Exchange Commission (SEC) rules. For such measures, we have provided supplemental explanations and reconciliations in Exhibit 99 to this report on Form 10-Q.
 

 
(19)
 

Unless otherwise indicated, we refer to captions such as revenues and earnings from continuing operations simply as “revenues” and “earnings” throughout this Management’s Discussion and Analysis. Similarly, discussion of other matters in our condensed, consolidated financial statements relates to continuing operations unless otherwise indicated.
 
Overview
 
General Electric Company’s earnings from continuing operations decreased 12% to $4.361 billion in the first quarter of 2008 compared with $4.928 billion in 2007. Earnings per share (EPS) from continuing operations were $0.44 in the first quarter of 2008, down 8% from last year’s $0.48.
 
Loss from discontinued operations, net of taxes, was $0.1 billion for the first quarter of 2008 compared with $0.4 billion for the same period in 2007, including the results of our Japanese personal loan business (Lake), our U.S. mortgage business (WMC), Plastics, Advanced Materials, most of GE Insurance Solutions Corporation (GE Insurance Solutions), GE Life and Genworth Financial, Inc. (Genworth).
 
Net earnings decreased 6% to $4.304 billion and EPS decreased 2% to $0.43 in the first quarter of 2008 compared with $4.571 billion and $0.44 per share, respectively, in 2007.
 
Revenues of $42.3 billion in the first quarter of 2008 were 8% higher than in the corresponding period of 2007, reflecting the effects of acquisitions and dispositions and the weaker U.S. dollar. Industrial sales increased 12% to $24.2 billion, reflecting organic growth, the effects of acquisitions and the weaker U.S. dollar. Sales of product services (including sales of spare parts and related services) grew 12% to $8.0 billion in the first quarter of 2008. Financial services revenues increased 3% over the comparable period of last year to $18.1 billion, reflecting the effects of acquisitions and dispositions and the weaker U.S. dollar, partially offset by organic revenue declines, including the 2007 gain on sale of Swiss Reinsurance Company (Swiss Re) common stock.
 
Overall, acquisitions contributed $2.3 billion and $1.3 billion to consolidated revenues in the first quarters of 2008 and 2007, respectively. Our consolidated earnings in the first quarters of 2008 and 2007 included approximately $0.1 billion and an insignificant amount, respectively, from acquired businesses. We integrate acquisitions as quickly as possible. Only revenues and earnings from the date we complete the acquisition through the end of the fourth following quarter are attributed to such businesses. Dispositions also affected our operations through higher revenues of $0.3 billion in the first quarter of 2008 and lower revenues of $0.9 billion in the first quarter of 2007. The effect of dispositions on earnings was an increase of $0.3 billion in the first quarter of 2008 and was insignificant in the first quarter of 2007.
 
The most significant acquisitions affecting first quarter 2008 results were Smiths Aerospace Group Ltd.; Vetco Gray; and Regency Energy Partners LP at Infrastructure; Merrill Lynch Capital; Sanyo Electric Credit Co., Ltd.; Diskont und Kredit AG and Disko Leasing GmbH (DISKO) and ASL Auto Service-Leasing GmbH (ASL), the leasing businesses of KG Allgemeine Leasing GmbH & Co.; and Trustreet Properties, Inc. at Commercial Finance.
 

 
(20)
 

Segment Operations
 
Operating segments comprise our six businesses focused on the broad markets they serve: Infrastructure, Commercial Finance, GE Money, Healthcare, NBC Universal and Industrial. For segment reporting purposes, certain GECS businesses including Aviation Financial Services, Energy Financial Services and Transportation Finance are reported in the Infrastructure segment because Infrastructure actively manages such businesses and reports their results for internal performance measurement purposes.
 
Segment profit is determined based on internal performance measures used by the Chief Executive Officer to assess the performance of each business in a given period. In connection with that assessment, the Chief Executive Officer may exclude matters such as charges for restructuring; rationalization and other similar expenses; in-process research and development and certain other acquisition-related charges and balances; technology and product development costs; certain gains and losses from dispositions; and litigation settlements or other charges, responsibility for which preceded the current management team.
 
Segment profit always excludes the effects of principal pension plans, results reported as discontinued operations and accounting changes. Segment profit excludes or includes interest and other financial charges and income taxes according to how a particular segment’s management is measured - excluded in determining segment profit, which we sometimes refer to as “operating profit,” for Healthcare, NBC Universal, Industrial and the industrial businesses of the Infrastructure segment; included in determining segment profit, which we sometimes refer to as “net earnings,” for Commercial Finance, GE Money, and the financial services businesses of the Infrastructure segment (Aviation Financial Services, Energy Financial Services and Transportation Finance).
 
We have reclassified certain prior-period amounts to conform to the current-period’s presentation. In addition to providing information on segments in their entirety, we have also provided supplemental information for certain businesses within the segments.
 

 
(21)
 

Infrastructure
 
 
Three months ended
March 31
        
 (In millions)
2008
  
2007
        
                   
Revenues
$
14,960
  
$
12,202
        
                   
Segment profit
$
2,588
  
$
2,208
        
                   
Revenues
                  
Aviation
$
4,320
  
$
3,451
        
Aviation Financial Services
  
1,231
    
1,249
        
Energy
  
5,640
    
4,667
        
Energy Financial Services
  
770
    
324
        
Oil & Gas
  
1,535
    
1,148
        
Transportation
  
1,148
    
1,128
        
                   
Segment profit
                  
Aviation
$
775
  
$
699
        
Aviation Financial Services
  
387
    
388
        
Energy
  
907
    
689
        
Energy Financial Services
  
145
    
101
        
Oil & Gas
  
161
    
102
        
Transportation
  
254
    
214
        

 
Infrastructure revenues increased 23%, or $2.8 billion, in the first quarter of 2008 on higher volume ($1.9 billion), the weaker U.S. dollar ($0.2 billion) and higher prices ($0.2 billion) at the industrial businesses of the segment. The increase in volume reflected the effects of acquisitions at Aviation and Oil & Gas; increased sales of thermal and wind equipment and services at Energy; military and commercial engines at Aviation; and services at Oil & Gas. The effects of the weaker U.S. dollar were primarily at Oil & Gas and Energy, while higher prices were principally at Energy. Revenues also increased as a result of financial services’ acquisitions ($0.4 billion), primarily at Energy Financial Services.
 
Segment profit rose 17%, or $0.4 billion, as higher volume ($0.4 billion) and higher prices ($0.2 billion) were partially offset by higher material and other costs ($0.2 billion) at the industrial businesses of the segment. The increase in volume primarily related to Aviation and Energy.
 

 
(22)
 

Commercial Finance
 
 
Three months ended
March 31
        
(In millions)
2008
  
2007
        
                   
Revenues
$
8,566
  
$
8,031
        
                   
Segment profit
$
1,158
  
$
1,440
        
                   
                   
 
At
  
 (In millions)
3/31/08
  
3/31/07
  
12/31/07
  
                   
Total assets
$
336,991
  
$
264,976
  
$
310,412
  
                   
                   
 
Three months ended
March 31
        
 (In millions)
2008
  
2007
        
                   
Revenues
                  
Capital Solutions
$
3,634
  
$
3,363
        
Real Estate
  
1,883
    
1,615
        
                   
Segment profit
                  
Capital Solutions
$
400
  
$
395
        
Real Estate
  
476
    
564
        
                   
                   
 
At
  
 (In millions)
3/31/08
  
3/31/07
  
12/31/07
  
                   
Assets
                  
Capital Solutions
$
129,405
  
$
108,768
  
$
122,527
  
Real Estate
  
86,605
    
59,405
    
79,285
  

 
Commercial Finance revenues increased 7% and net earnings decreased 20% compared with the first quarter of 2007. Revenues for the first quarters of 2008 and 2007 included $0.6 billion and $0.2 billion from acquisitions, respectively, and in 2008 were reduced by $0.1 billion as a result of dispositions. Revenues for the quarter also increased $0.2 billion compared with the first quarter of 2007 as a result of the weaker U.S. dollar ($0.4 billion), partially offset by organic revenue declines ($0.1 billion). Net earnings decreased by $0.3 billion in the first quarter of 2008, resulting from core declines ($0.4 billion) and lower investment income ($0.1 billion), partially offset by acquisitions ($0.1 billion) and the weaker U.S. dollar ($0.1 billion). These results included higher mark-to-market losses and other-than-temporary impairments ($0.3 billion), and lower asset sales, primarily in real estate ($0.1 billion). Also affecting these results were Genpact mark-to-market gains ($0.4 billion) largely offset by the absence of the effects of the 2007 SES transaction.
 

 
(23)
 

Real Estate assets at March 31, 2008, increased $7.3 billion, or 9%, from December 31, 2007, of which $1.1 billion was real estate investments, up 3%. During the first quarter of 2008, we sold real estate assets with a book value totaling $1.7 billion which resulted in net earnings of $0.5 billion. Real Estate net earnings declined $0.1 billion compared to first quarter 2007, primarily as a result of a $0.1 billion, or 12%, decrease in net earnings from sale of real estate investments. This decline resulted from increasingly difficult market conditions experienced in the first quarter of 2008. In the normal course of our business operations, we sell certain real estate equity investments when it is economically advantageous for us to do so. However, as real estate values are affected by certain forces beyond our control (e.g., market fundamentals and demographic conditions), it is difficult to predict with certainty the level of future sales or sales prices.
 
GE Money
 
 
Three months ended
March 31
        
(In millions)
2008
  
2007
        
                   
Revenues
$
6,408
  
$
5,958
        
                   
Segment profit
$
995
  
$
1,223
        
                   
                   
(In millions)
At
  
 
3/31/08
  
3/31/07
  
12/31/07
  
                   
Total assets
$
218,111
  
$
179,689
  
$
210,952
  

 
GE Money revenues increased 8% and net earnings decreased 19% compared with the first quarter of 2007. Revenues for the first quarter of 2008 included $0.1 billion from acquisitions and $0.4 billion from the sale of our Corporate Payment Services (CPS) business. Revenues for the quarter also decreased slightly compared with the first quarter of 2007 as a result of organic revenue declines ($0.4 billion), partially offset by the weaker U.S. dollar ($0.3 billion). The decrease in net earnings resulted primarily from lower securitization income ($0.3 billion), including declines in fair value of retained interests in securitizations ($0.1 billion), and core declines ($0.3 billion), including lower results in the U.S. reflecting the effects of higher delinquencies ($0.1 billion). These decreases were partially offset by the gain on the sale of our CPS business ($0.2 billion) and growth in lower-taxed earnings from global operations ($0.1 billion).
 
Healthcare revenues of $3.9 billion in the first quarter of 2008 were flat compared with the first quarter of 2007, as lower prices ($0.1 billion) and lower volume ($0.1 billion) were offset by the weaker U.S. dollar ($0.2 billion). Increased sales in the international diagnostic imaging, clinical systems and life sciences businesses were more than offset by price pressures, effects of the Deficit Reduction Act on U.S. equipment sales and continued industry pressure in the U.S. on capital spending. Operating profit of $0.5 billion in 2008 was down 17% compared with the first quarter of 2007, as lower prices ($0.1 billion) and higher labor and other costs ($0.1 billion) were partially offset by the effects of productivity ($0.1 billion).
 

 
(24)
 

NBC Universal revenues of $3.6 billion increased 3%, or $0.1 billion, in the first quarter of 2008, as higher revenues for cable ($0.2 billion) and film ($0.1 billion) were partially offset by lower gains from certain strategic actions ($0.2 billion). Segment profit of $0.7 billion also increased 3% as higher earnings from cable ($0.1 billion) and film were partially offset by lower gains from strategic actions ($0.1 billion).
 
Industrial
 
 
Three months ended
March 31
        
(In millions)
2008
  
2007
        
                   
Revenues
$
4,110
  
$
4,089
        
                   
Segment profit
$
300
  
$
358
        
                   
Revenues
                  
Consumer & Industrial
$
3,026
  
$
3,065
        
Enterprise Solutions
  
1,105
    
1,024
        
                   
Segment profit
                  
Consumer & Industrial
$
147
  
$
224
        
Enterprise Solutions
  
154
    
134
        

 
Industrial revenues were flat in the first quarter of 2008 compared with the first quarter of 2007, as lower volume ($0.1 billion) was partially offset by the weaker U.S. dollar ($0.1 billion). The decrease in volume at Consumer & Industrial, reflecting tightened spending in the U.S. appliance market, was partially offset by increases in volume at Enterprise Solutions. The effects of the weaker U.S. dollar were at both Consumer & Industrial and Enterprise Solutions.
 
Segment profit decreased 16%, or $0.1 billion, in the first quarter of 2008 reflecting higher material and other costs ($0.1 billion), primarily at Consumer & Industrial.
 
Discontinued Operations
 
 
Three months ended
March 31
        
(In millions)
2008
  
2007
        
                   
Loss from discontinued operations, net of taxes
$
(57
)
$
(357
)
      

 
Discontinued operations comprised Lake, WMC, Plastics, Advanced Materials, GE Insurance Solutions, GE Life, and Genworth. Results of these businesses are reported as discontinued operations for all periods presented.
 
Loss from discontinued operations, net of taxes, for the first quarter of 2008, primarily reflected the loss from operations at Lake.
 

 
(25)
 

Loss from discontinued operations, net of taxes, for the first quarter of 2007, primarily reflected the loss from operations at WMC ($0.4 billion).
 
For additional information related to discontinued operations, see note 3.
 
Corporate items and eliminations revenues in the first quarter of 2008 decreased $0.8 billion because of the lack of current-year counterparts to the gains on sale of Swiss Re common stock ($0.6 billion) and GE Modular Space ($0.1 billion), and lower revenues of insurance activities ($0.1 billion). Corporate items and eliminations costs increased by $0.1 billion reflecting an increase in tax provision at GECS ($0.1 billion) and the lack of a current-year counterpart to the gain on sale of Swiss Re common stock ($0.3 billion), partially offset by lower pension costs ($0.1 billion) and the lack of a current-year counterpart to a charge for an asbestos-related legal ruling ($0.2 billion) (GECS amounts on an after-tax basis).
 
Certain amounts included in Corporate items and eliminations cost are not allocated to GE operating segments because they are excluded from the measurement of their operating performance for internal purposes. In the first quarter of 2008, these included $0.1 billion at each of Industrial, Infrastructure and NBC Universal, primarily restructuring, technology and product development costs and certain gains and losses from dispositions; and $(0.1) billion at GE Money for certain gains from dispositions (GECS amounts on an after-tax basis).
 
B. Statement of Financial Position
 
Overview of Financial Position
 
Major changes in our financial position resulted from the following:
 
·  
During the first quarter of 2008, we completed the acquisition of Merrill Lynch Capital.
 
·  
The U.S. dollar was weaker at March 31, 2008, than at December 31, 2007, increasing the translated levels of our non-U.S. dollar assets and liabilities.
 
Consolidated assets were $833.9 billion at March 31, 2008, an increase of $38.6 billion from December 31, 2007. GE assets increased $1.3 billion, and financial services assets increased $37.7 billion, including the effects of the weaker U.S. dollar ($18.1 billion).
 
GE assets were $216.1 billion at March 31, 2008, a $1.3 billion increase from December 31, 2007. The increase reflects a $1.6 billion increase in all other assets and a $1.4 billion increase in inventories, partially offset by a $1.6 billion decrease in cash and equivalents.
 
Financial services assets were $683.8 billion at March 31, 2008. The $37.7 billion increase from December 31, 2007, was primarily attributable to increases in financing receivables - net of $32.3 billion, goodwill of $1.7 billion, cash and equivalents of $1.4 billion and property, plant and equipment (including equipment leased to others) - net of $1.1 billion.
 
Consolidated liabilities of $709.7 billion at March 31, 2008, were $37.9 billion higher than the year-end 2007 balance. GE liabilities increased $0.9 billion, while financial services liabilities increased $37.3 billion.
 

 
(26)
 

GE liabilities were $93.6 billion at March 31, 2008. During the first quarter of 2008, short-term borrowings decreased $0.3 billion to $3.8 billion and long-term borrowings decreased $1.6 billion to $10.0 billion. The ratio of borrowings to total capital invested for GE at the end of the first quarter was 10.2% compared with 11.4% at the end of last year and 10.6% at March 31, 2007.
 
Financial services liabilities increased $37.3 billion from year-end 2007 to $624.3 billion reflecting increases in total borrowings of $35.7 billion and all other liabilities of $2.0 billion, partially offset by a decrease in deferred income taxes of $2.0 billion.
 
Consolidated cash and equivalents were $15.3 billion at March 31, 2008, a decrease of $0.5 billion during the first quarter of 2008. Cash and equivalents amounted to $19.1 billion at March 31, 2007, an increase of $5.0 billion from December 31, 2006. GE cash from operating activities (CFOA) is a useful measure of performance for our non-financial services businesses and totaled $4.9 billion in the first quarter of 2008 and $7.3 billion in the first quarter of 2007. This decrease reflects the lack of a current-year counterpart to last year’s $2.7 billion GECS special dividend as described below.
 
With respect to GE CFOA, we believe that it is useful to supplement our GE Condensed Statement of Cash Flows and to examine in a broader context the business activities that provide and require cash.
 
 
Three months ended
March 31
  
(In billions)
2008
  
2007
  
             
Operating cash collections
$
26.4
  
$
23.4
  
Operating cash payments
  
(22.6
)
  
(20.0
)
Cash dividends from GECS
  
1.1
    
3.9
  
GE cash from operating activities
$
4.9
  
$
7.3
  

 
The most significant source of cash in CFOA is customer-related activities, the largest of which is collecting cash following a product or services sale. GE operating cash collections increased by $3.0 billion during the first quarter of 2008. This increase is consistent with the changes in comparable GE operating segment revenues. Analyses of operating segment revenues discussed in the preceding Segment Operations section are the best way of understanding their customer-related CFOA.
 
The most significant operating use of cash is to pay our suppliers, employees, tax authorities and others for the wide range of material and services necessary in a diversified global organization. GE operating cash payments increased in the first three months of 2008 by $2.6 billion, comparable to the increase in GE total costs and expenses.
 
Dividends from GECS represented distribution of a portion of GECS retained earnings, including proceeds from certain business sales, and are distinct from cash from continuing operating activities within the financial services businesses, which increased in the first quarter of 2008 by $1.0 billion to $2.6 billion. The amounts we show in CFOA are the total dividends, including normal dividends as well as any special dividends from excess capital, primarily resulting from GECS business sales. There were no special dividends paid by GECS to GE in the first quarter of 2008, compared with $2.7 billion in the first quarter of 2007.
 

 
(27)
 

Based on past performance and current expectations, in combination with the financial flexibility that comes with a strong balance sheet and the highest credit ratings, we believe that we are in a sound position to grow dividends, continue to execute on our $15 billion share repurchase program and continue making selective investments for long-term growth.
 
Effective January 1, 2008, we adopted Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) 157, Fair Value Measurements, for all financial instruments and non-financial instruments accounted for at fair value on a recurring basis. Adoption of SFAS 157 did not have a material effect on our financial position or results of operations. Illiquidity in the credit markets experienced during the first three months of this year contributed to the amount of our reported Level 3 instruments, primarily in our available-for-sale investment portfolios. At March 31, 2008, the aggregate amount of instruments requiring fair value measurement on a recurring basis included in Level 3 represented approximately 1% of the aggregate amount of consolidated assets and liabilities. Of the aggregate amount of total financial instruments requiring recurring fair value measurement, approximately 25% are included in Level 3. The amount we report in Level 3 in future periods will be directly affected by market conditions. See Note 13 for further information related to the adoption of SFAS 157.
 
C. Financial Services Portfolio Quality
 
Investment securities comprise mainly investment-grade debt securities supporting obligations to annuitants and policyholders in our run-off insurance businesses and holders of guaranteed investment contracts. Investment securities were $45.2 billion at March 31, 2008, compared with $45.1 billion at December 31, 2007. Of the amount at March 31, 2008, we held residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities with estimated fair values of $5.8 billion and $2.8 billion, respectively. Such amounts included unrealized losses of $0.6 billion and $0.2 billion, respectively. At March 31, 2008, of the RMBS amount, we had approximately $1.8 billion of exposure to subprime credit, primarily supporting our guaranteed investment contracts. Monoline insurers (Monolines) provide credit enhancement for certain of our investment securities. At March 31, 2008, our investment securities insured by Monolines amounted to $3.5 billion, including $1.4 billion of our $1.8 billion subprime exposure. Several of the monoline insurers have been downgraded by the rating agencies. However, we underwrite our investments based on the underlying credit of the issuer.
 
We regularly review investment securities for other-than-temporary impairment based on criteria that include the extent to which cost exceeds market value, the duration of that market decline, our intent and ability to hold to recovery and the financial health and specific prospects for the issuer. Of securities with unrealized losses at March 31, 2008, $0.2 billion was at risk of being charged to earnings in the next 12 months. Continued uncertainty in the capital markets may cause increased levels of losses. Other-than-temporary impairment losses were $0.2 billion for the first three months of 2008, compared with an insignificant amount in 2007. Investments in retained interests decreased by $0.1 billion in the first three months of 2008 reflecting declines in fair value accounted for in accordance with SFAS 155, Accounting for Certain Hybrid Financial Instruments, that became effective at the beginning of 2007.
 

 
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Financing receivables is our largest category of assets and represents one of our primary sources of revenues. The portfolio of financing receivables, before allowance for losses, was $422.4 billion at March 31, 2008, and $389.9 billion at December 31, 2007. The related allowance for losses at March 31, 2008, amounted to $4.4 billion, compared with $4.3 billion at December 31, 2007, representing our best estimate of probable losses inherent in the portfolio. A discussion of the quality of certain elements of the financing receivables portfolio follows. For purposes of that discussion, “delinquent” receivables are those that are 30 days or more past due; and “nonearning” receivables are those that are 90 days or more past due (or for which collection has otherwise become doubtful).
 
Financing receivables, before allowance for losses, increased $32.4 billion from December 31, 2007, primarily as a result of core growth ($15.0 billion), acquisitions ($12.7 billion) and the weaker U.S. dollar ($13.3 billion), partially offset by securitization and sales ($9.0 billion) and dispositions ($3.3 billion). Related nonearning receivables were $6.2 billion (1.5% of outstanding receivables) at March 31, 2008, compared with $5.5 billion (1.4% of outstanding receivables) at year-end 2007. Nonearning receivables excludes loans held for sale.
 
Delinquency rates on managed Commercial Finance equipment loans and leases and managed GE Money financing receivables follow.
 
   
Delinquency rates at
  
   
3/31/08
(a)
  
12/31/07
    
3/31/07
  
                   
Commercial Finance
  
1.36
%
    
1.21
%
    
1.26
%
  
GE Money
  
5.64
      
5.36
      
5.22
    
U.S.
  
5.75
      
5.52
      
4.72
    
Non-U.S.
  
5.61
      
5.30
      
5.40
    
                         

(a)
Subject to update.

 
Delinquency rates at Commercial Finance increased from December 31, 2007, and March 31, 2007, to March 31, 2008, primarily as a result of deterioration in our U.S. commercial middle market and certain European portfolios.
 
Delinquency rates at GE Money increased from December 31, 2007, and March 31, 2007, to March 31, 2008, primarily as a result of continued deterioration in our U.S. portfolio and the effects of tighter credit conditions in our secured financing business in the U.K. This liquidity-challenged environment in which GE Money operates continues to cause issues for some of its U.S. customers, and U.S. delinquencies continue to increase. In response, GE Money will continue to tighten underwriting standards related to the U.S. consumer and will continue its process of regularly reviewing and adjusting reserve levels in response to when it is probable that losses have been incurred in the portfolio. This environment may result in higher provisions for loan losses and could adversely affect results of operations at GE Money.
 

 
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Other assets comprise mainly real estate investments, equity and cost method investments and assets held for sale. Other assets totaled $84.1 billion at March 31, 2008, compared with $83.4 billion at December 31, 2007. Of the amount at March 31, 2008, we had cost method investments totaling $2.9 billion. Cost method investments include our investment in preferred and common stock, $0.3 billion and an insignificant amount, respectively, of FGIC Corporation (FGIC), a monoline credit insurer. During 2008, credit rating agencies downgraded FGIC; following the downgrades, various alternatives were being considered. During the first quarter of 2008, we recognized an other-than-temporary impairment on FGIC common stock, which is reflected at fair value at March 31, 2008. We continue to monitor our investment in FGIC closely, including review for further impairment.
 
D. Borrowings
 
During the first quarter of 2008, GECS and GECS affiliates issued $34.6 billion of senior, unsecured long-term debt. This debt was both fixed and floating rate and was issued to institutional and retail investors in the U.S. and 14 other global markets.  Maturities for these issuances ranged from one to 30 years. We used the proceeds primarily for repayment of maturing long-term debt, but also to fund acquisitions and organic growth. We anticipate that we will issue approximately $45 billion of additional long-term debt during the remainder of 2008, mostly to repay maturing long-term debt. The ultimate amount we issue will depend on our needs and on the markets.
 
Interest rate and currency risk is managed through the direct issuance of debt or use of derivatives. During the first quarter of 2008, the fair value of derivatives designated as cash flow hedges of floating rate borrowings were negatively affected by lower interest rates, which resulted in lower reported shareowners’ equity. Additionally, derivatives designated as fair value hedges of fixed rate borrowings were positively affected by lower interest rates, which resulted in a higher reported borrowings balance.
 
E. New Accounting Standards
 
On December 4, 2007, the FASB issued SFAS 141R, Business Combinations, which we will adopt on January 1, 2009. This standard will significantly change the accounting for business acquisitions both during the period of the acquisition and in subsequent periods. Among the more significant changes in the accounting for acquisitions are the following:
 
·  
Transaction costs will generally be expensed. Certain such costs are presently treated as costs of the acquisition.
 
·  
In-process research and development (IPR&D) will be accounted for as an asset, with the cost recognized as the research and development is realized or abandoned. IPR&D is presently expensed at the time of the acquisition.
 
·  
Contingencies, including contingent consideration, will generally be recorded at fair value with subsequent adjustments recognized in operations. Contingent consideration is presently accounted for as an adjustment of purchase price.
 
·  
Decreases in valuation allowances on acquired deferred tax assets will be recognized in operations. Such changes previously were considered to be subsequent changes in consideration and were recorded as decreases in goodwill.
 
Generally, the effects of SFAS 141R will depend on future acquisitions.
 

 
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On December 4, 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, which we will adopt on January 1, 2009. This standard will significantly change the accounting and reporting related to noncontrolling interests in a consolidated subsidiary. After adoption, noncontrolling interests ($8.2 billion and $8.0 billion at March 31, 2008, and December 31, 2007, respectively) will be classified as shareowners’ equity, a change from its current classification between liabilities and shareowners’ equity. Earnings attributable to minority interests ($0.2 billion in both the first quarter of 2008 and 2007) will be included in net earnings, although such earnings will continue to be deducted to measure earnings per share. Purchases and sales of minority interests will be reported in equity, deferring, perhaps permanently, our recognition of the economic gain or loss on partial dispositions. Gains on sales of minority interests that would not have been in net earnings under SFAS 160 amounted to $0.1 billion and an insignificant amount in the first quarters of 2008 and 2007, respectively.
 
Item 4. Controls and Procedures
 
Under the direction of our Chief Executive Officer and Chief Financial Officer, we evaluated our disclosure controls and procedures and internal control over financial reporting and concluded that (i) our disclosure controls and procedures were effective as of March 31, 2008, and (ii) no change in internal control over financial reporting occurred during the quarter ended March 31, 2008, that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting.
 
 
Part II. Other Information
 
 
Item 2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
 
Period(a)
  
Total number
of shares
purchased(b)
  
Average
price paid
per share
  
Total number of
shares purchased as
part of our share
repurchase program(c)
  
Approximate dollar
value of shares that
may yet be purchased
under our share
repurchase program
  
(Shares in thousands)
                                
                                 
2008
                                
January
    
9,172
      
$35.10
      
9,058
          
February
    
9,700
      
$34.18
      
9,614
          
March
    
16,064
      
$35.82
      
13,414
          
Total
    
34,936
      
$35.17
      
32,086
      
$13.8 billion
  
                                 

(a)
 
Information is presented on a fiscal calendar basis, consistent with our quarterly financial reporting.
 
(b)
 
This category includes 2,850 thousand shares repurchased from our various benefit plans, primarily the GE Savings and Security Program (the S&SP). Through the S&SP, a defined contribution plan with Internal Revenue Service Code 401(k) features, we repurchase shares resulting from changes in investment options by plan participants.
 
(c)
This balance represents the number of shares that were repurchased through the 2007 GE Share Repurchase Program (the Program) under which we are authorized to repurchase up to $15 billion of our common stock through 2010. The Program is flexible and shares are acquired with a combination of borrowings and free cash flow from the public markets and other sources, including GE Stock Direct, a stock purchase plan that is available to the public. As major acquisitions or other circumstances warrant, we modify the frequency and amount of share repurchases under the Program.

 

 
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Item 6. Exhibits
 
Exhibit 11 
 
Computation of Per Share Earnings*.
 
Exhibit 12
 
Computation of Ratio of Earnings to Fixed Charges.
 
Exhibit 31(a)
 
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended.
 
Exhibit 31(b)
 
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended.
 
Exhibit 32
 
Certification Pursuant to 18 U.S.C. Section 1350.
 
Exhibit 99
 
Financial Measures That Supplement Generally Accepted Accounting Principles.
 
 
*
 
Data required by Statement of Financial Accounting Standards 128, Earnings per Share, is provided in note 7 to the condensed, consolidated financial statements in this report.
 

 

 
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Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 

 
   
General Electric Company
(Registrant)
 
 
  
April 25, 2008
  
/s/ Walter F. Ielusic
  
Date
  
Walter F. Ielusic
Vice President and Acting Chief Accounting Officer
Duly Authorized Officer and Principal Accounting Officer
  

 

 
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