| þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] |
| o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] |
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Financial Statements: |
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| 4–9 | ||||||||
Supplemental Schedule: |
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| 10 | ||||||||
| All other schedules required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 are omitted as they are inapplicable or not required. | ||||||||
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| Consent of Independent Registered Public Accounting Firm | ||||||||
| 2006 | 2005 | |||||||
Investments, at fair value |
$ | 151,370,322 | $ | 131,569,936 | ||||
Receivables: |
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Employee contribution |
401,763 | 452,389 | ||||||
Employer contribution |
344,810 | 358,268 | ||||||
Accrued income |
57,474 | 54,107 | ||||||
Liability: |
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Excess employee contributions payable |
57,708 | — | ||||||
Net assets available for benefits, at fair value |
152,116,661 | 132,434,700 | ||||||
Adjustments from fair value to contract value for fully
benefit responsive contracts |
519,621 | 593,560 | ||||||
Net assets available for benefits |
$ | 152,636,282 | $ | 133,028,260 | ||||
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| 2006 | 2005 | |||||||
Additions to net assets attributed to: |
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Interest income |
$ | 986,754 | $ | 748,402 | ||||
Dividends |
5,583,623 | 3,581,988 | ||||||
Net appreciation in fair value of investments |
8,307,078 | 4,026,777 | ||||||
Contributions: |
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Rollover |
1,332,538 | 7,103,948 | ||||||
Employee |
13,723,175 | 11,899,318 | ||||||
Employer, net of forfeitures |
4,342,512 | 3,854,811 | ||||||
Total additions |
34,275,680 | 31,215,244 | ||||||
Deductions from net assets attributed to: |
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Benefits paid to participants |
14,648,859 | 14,964,604 | ||||||
Administrative expenses |
18,799 | 22,635 | ||||||
Total deductions |
14,667,658 | 14,987,239 | ||||||
Net increase in net assets before
transfer from other plan |
19,608,022 | 16,228,005 | ||||||
Transfer from other plan: |
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InVision Technologies, Inc. 401(k) Plan |
— | 24,519,121 | ||||||
Total transfer from other plan |
— | 24,519,121 | ||||||
Net increase in net assets available for benefits |
19,608,022 | 40,747,126 | ||||||
Net assets available for benefits: |
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Beginning of year |
133,028,260 | 92,281,134 | ||||||
End of year |
$ | 152,636,282 | $ | 133,028,260 | ||||
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| (1) | Description of the Plan | |
| The following description of the GE Security, Inc. 401(k) Retirement Plan (the Plan), a defined contribution plan, sponsored by GE Security, Inc. (formerly GE Interlogix, Inc.) (the Company or Employer or Plan administrator), is provided for general information purposes only. The Plan is subject to applicable provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Any employee of the Company who has attained the required ERISA age is eligible to participate in the Plan on the first day of the month after the employee’s three-month anniversary. The Plan is administered by the Company and advised by a committee whose members are appointed by the Board of Directors of the Company (the Plan Committee). The Company has entered into an agreement with New York Life Trust Company (the Trustee) who acts as the trustee and record keeper of the Plan’s assets. Participants should refer to the Plan document for complete information regarding the Plan’s definitions, benefits, eligibility and other matters. |
| (a) | Mergers and Related Amendments | ||
| On June 15, 2005, the InVision Technologies, Inc. 401(k) Plan with participant account balances of $24,519,121 was merged into the Plan. | |||
| The Plan sponsor of the InVision Technologies, Inc. 401(k) Plan is a wholly-owned subsidiary of GE Security, Inc. | |||
| (b) | Contributions | ||
| Each year, participants may elect to contribute pretax annual compensation, as defined by the Plan. For non-highly compensated employees, contributions are limited to an aggregate of 50% of the participant’s pretax annual compensation. Effective January 1, 2004, highly compensated employees are limited in their contributions to an aggregate of 20% of the participant’s pretax annual compensation. The total amount of participant pretax contribution is limited to $15,000 and $14,000 for 2006 and 2005, respectively. Participants may also contribute amounts representing distributions from other qualified plans or individual retirement accounts (IRAs) into the Plan, as specified in the plan document. | |||
| Matching contributions by the Company for the benefit of participants are discretionary. For 2006 and 2005, Company matching contributions were equal to 50% of each participant’s contributions, up to 6% of eligible compensation. The Company also has the option to make a discretionary profit-sharing contribution to the Plan, which is allocated to participants based on the participants’ relative compensation as defined by the Plan. During 2006 and 2005, the Company did not make a discretionary profit-sharing contribution to the Plan. | |||
| Participants who are age 50 or older before the close of the plan year may elect to make a catch-up contribution, subject to certain limitations under the Internal Revenue Code (IRC) ($5,000 and $4,000 per participant in 2006 and 2005, respectively). The Company does not match employee catch-up contributions. |
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| Employees who joined the Company as a result of the Company purchasing the assets of Edwards Systems Technology from SPX Corporation on March 22, 2005 were allowed to rollover their participant loans into the Plan from their previous plan, the SPX Retirement Savings and Stock Ownership Plan. As a result, for 2005, rollovers from the SPX Plan are included in the statement of changes in net assets available for benefits for the year ended December 31, 2005. |
| (c) | Participant Accounts | ||
| Participants direct the investment of their contributions among 11 mutual funds, a money market fund, a pooled separate account, and General Electric Company common stock. The allocation of a participant’s contributions to these investment funds is selected by the participant and may be changed daily. Each participant’s account is credited with the participant’s contributions, a share of Company matching and discretionary profit-sharing contributions, and the Plan’s earnings or losses, net of administrative expenses. Allocation of investment income or losses is based on the value of the participant’s account at the close of each day. | |||
| (d) | Vesting | ||
| Participants are vested immediately in their contributions, Company contributions (except as noted below) and related net investment earnings. Forfeitures of nonvested Company employer matching contributions are used to reduce future Company contributions. During 2006 and 2005, forfeitures totaling approximately $71,100 and $67,000, respectively, were used to reduce employer contributions. At December 31, 2006 and 2005, forfeitures totaling approximately $10,200 and $71,000, respectively, were available to reduce future contributions. Balances transferred prior to 2000 into the Plan from the Aritech Corporation Employee Stock Ownership Plan vest as follows: |
| Vested | ||||
| Years of service | percentage | |||
Less than 3 years |
— | % | ||
3 years but less than 4 |
20 | |||
4 years but less than 5 |
40 | |||
5 years but less than 6 |
60 | |||
6 years but less than 7 |
80 | |||
7 years and thereafter |
100 | |||
| (e) | Participant Loans | ||
| A participant may borrow from his or her account a minimum of $500 up to a maximum equal to the lesser of $50,000 reduced by the highest outstanding loan balance in the participant’s account during the prior 12-month period or 50% of the participant’s vested account balance. Loan terms range from one to five years or up to 15 years for the purchase of a primary residence. The loans are secured by the balance in the participant’s account and bear interest at a rate commensurate with prevailing rates as determined by the Plan administrator. Interest rates range from 4.0% to 11.8% on loans outstanding at December 31, 2006. Principal and interest is paid ratably through biweekly payroll deductions. Loan administration charges are charged to the participant’s account electing the loan. |
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| (f) | Payments of Benefits | ||
| Distributions to participants may be made upon death, retirement or termination of employment. Participants may elect payment in a lump sum or in the form of an annuity or in-kind distribution of General Electric Company common stock as described in the Plan document. Distributions are also permitted for reasons of proven financial hardship as outlined in the Plan document. Participant benefit payments may be subject to federal income tax. | |||
| (g) | Voting Rights | ||
| Each participant is entitled to exercise voting rights attributable to the shares of GE Company stock allocated to his or her account and is notified by the Trustee prior to the time that such rights are to be exercised. The Trustee is responsible for following the voting instructions that have been given by the participant. If the participant does not instruct the Trustee with regard to a voting decision, the shares are voted as instructed by the Company. | |||
| (h) | Plan Termination | ||
| Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become or remain 100% vested in their accounts. |
| (2) | Summary of Significant Accounting Policies |
| (a) | Basis of Accounting | ||
| The accompanying financial statements have been prepared using the accrual basis of accounting. | |||
| (b) | New Accounting Policies | ||
| As described in financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit – Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined – Contribution Health and Welfare and Pension Plans (the “FSP”), investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit responsive investment contracts because the contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. As required by the FSP, the Statement of Net Assets Available for Benefits presents the fair value of the investment contracts from fair value to contract value. Prior year balances have been reclassified accordingly. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis | |||
| The Plan has adopted the financial statement presentation and disclosure requirements effective December 31, 2006 and retroactively restated the Statement of Net Assets for the periods presented. |
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| The effect of adopting the FSP had no impact on net assets, which have historically been presented at contract value. |
| (c) | Investment Valuation and Income Recognition | ||
| The General Electric Company common stock and mutual funds are valued based on quoted market prices. Purchases and sales of securities are recorded on a trade-date basis. Participant loans are valued at the unpaid principal balance. Interest and dividend income is recorded as earned on an accrual basis. | |||
| The Plan also holds an investment in a pooled separate account that is fully benefit-responsive. This investment is reported at contract value in the financial statements, which represents contributions made to the account, plus earnings on the underlying investment, less participant withdrawals and administrative expenses. Recording such investments at contract value rather than fair value, to the extent that they are fully-benefit responsive, is in accordance with the FSP discussed above. The fair value of the fully benefit responsive investment contracts are calculated using a discounting method developed by the trustee. The average yield for 2006 and 2005 was 4.16% and 3.89%, respectively. For the years ended December 31, 2006 and 2005, the average yield credited to participants in the Plan was 4.12% and 3.84%, respectively. There were no valuation reserves recorded that were associated with the pooled separate account in 2006 and 2005. Interest is credited daily to the account and is guaranteed to be not less than 0% before any deduction for expenses. | |||
| On December 31, 2000, the Plan received benefit-responsive investments in guaranteed insurance contracts in conjunction with the merger of the Interactive Technologies, Inc. 401(k) Investment Plan (the ITI Plan merger). The contracts are included in the financial statements at contract value as reported to the Plan. Contract value represents contributions made under the contracts, plus interest accrued at the current rate, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. There are no reserves against the contract value of the guaranteed insurance contracts for credit risk of the contract issuer or otherwise. The average yield and crediting interest rates ranged from approximately 4.2% to 4.0% for 2006 and 2005. The crediting interest rate is based on a formula agreed upon with the issuer, but may not be less than a specified rate, which was 4.0% as of December 31, 2006. Such interest rates are reviewed on an annual basis for resetting. The fair values of these contracts as of December 31, 2006 and 2005 approximate the contract values. | |||
| Certain events limit the ability of the Plan to transact at contract value with the issuer. Such events include the following: (a) amendments to the plan documents (including complete or partial plan termination or merger with another plan) (b) changes to the Plan’s prohibition on competing investment options or deletion of equity wash provisions; (c) bankruptcy of the plan sponsor or other plan sponsor events (e.g. divestitures or spin-offs of a subsidiary) which cause a significant withdrawal from the Plan or (d) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The plan administrator does not believe that the occurrence of any such value event, which would limit the Plan’s ability to transact at contract value with participants is probable. | |||
| (d) | Net Appreciation in Fair Value of Investments | ||
| Net appreciation in fair value of investments included in the statements of changes in net assets available for benefits consists of realized gains or losses on investments sold and the unrealized appreciation (depreciation) on investments held at the end of the year. | |||
| (e) | Plan Expenses | ||
| The Company pays all Plan administrative expenses other than loan administration charges and commissions and fees on transactions involving General Electric Company common stock. Loan administration charges and common stock commissions and fees are charged to the participant’s account electing the loan or common stock transaction. | |||
| (f) | Payment of Benefits | ||
| Benefit payments are recorded when paid. |
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| (g) | Use of Estimates | ||
| The preparation of the Plan’s financial statements in conformity with U.S. generally accepted accounting principles requires the Plan administrator to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. | |||
| (h) | Risks and Uncertainties | ||
| The Plan invests in a variety of investments. Investment securities are exposed to various risks including, but not limited to, interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term. |
| (3) | Investments | |
| The following tables present investments that represent 5% or more of the Plan’s net assets as of December 31, 2006 and 2005. |
| 2006 | 2005 | |||||||
The Growth Fund of America R4 |
$ | 18,539,267 | $ | 15,508,395 | ||||
Davis New York Venture Fund (A) |
18,330,108 | 15,222,075 | ||||||
New York Life Insurance Anchor Account I |
17,436,958 | 16,085,649 | ||||||
Mainstay Balanced Fund RI |
15,784,763 | 15,440,943 | ||||||
Fidelity Advisor Diversified International T |
14,138,622 | 10,187,491 | ||||||
Mainstay S&P 500 Index Fund I |
13,924,011 | 11,647,000 | ||||||
JP Morgan Mid Cap Value Fund A |
13,095,380 | 11,399,566 | ||||||
PIMCO Total Return Fund (Admin) |
12,014,152 | 11,851,861 | ||||||
General Electric Company common stock |
7,637,948 | 7,757,546 | ||||||
| 2006 | 2005 | |||||||
General Electric Company common stock |
$ | 462,683 | $ | (235,545 | ) | |||
Mutual funds |
7,844,395 | 4,262,322 | ||||||
Net appreciation in fair value of investments |
$ | 8,307,078 | $ | 4,026,777 | ||||
| (4) | Concentration of Investments | |
| The Plan’s investment in General Electric Company common stock represents approximately 5% and 6% of total investments as of December 31, 2006 and 2005, respectively. General Electric Company is a diversified technology, media and financial services company, with products and services ranging from aircraft engines, power generation, water processing and security technology to medical |
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| imaging, business and consumer financing, media content and advanced materials; GE serves customers in more than 100 countries. |
| (5) | Party-in-Interest Transactions | |
| The Plan engages in investment transactions with funds managed by the Trustee, a party-in-interest with respect to the Plan. The Plan also has investments in General Electric Company common stock. These transactions are covered by an exemption from the “prohibited transaction” provisions of ERISA and IRC. | ||
| (6) | Tax Status | |
| The Internal Revenue Service has determined and informed the Plan administrator by a letter dated September 24, 2002, that the Plan and related trust are designed in accordance with applicable sections of the IRC. The Plan has been amended since receiving the determination letter; however, the Plan administrator believes that the Plan is designed and is currently operated in compliance with the applicable requirements of the IRC and the related trust was tax exempt as of December 31, 2006 and 2005. |
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| Number of | Current | |||||||||
| Identity of issue | Description of investment | shares | value | |||||||
Corporate Stocks – Common: |
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General Electric Company* |
General Electric Company common stock | 205,266 | $ | 7,637,948 | ||||||
Money Market Fund: |
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New York Life Trust Company* |
Mainstay Cash Reserves Fund I | 453,128 | 453,128 | |||||||
Mutual Funds: |
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American Funds |
The Growth Fund of America R4 | 567,743 | 18,539,267 | |||||||
New York Life Trust Company* |
Mainstay Balanced Fund RI | 567,389 | 15,784,763 | |||||||
Davis Funds |
Davis New York Venture Fund (A) | 475,860 | 18,330,108 | |||||||
PIMCO Funds |
PIMCO Total Return Fund (Admin) | 1,157,433 | 12,014,152 | |||||||
New York Life Trust Company* |
Mainstay S&P 500 Index Fund I | 425,941 | 13,924,011 | |||||||
JP Morgan |
JP Morgan Mid Cap Value Fund A | 508,361 | 13,095,380 | |||||||
Fidelity Investments |
Fidelity Advisor Diversified International T | 626,712 | 14,138,622 | |||||||
Artisan Funds |
Artisan Mid Cap Fund | 203,107 | 6,186,643 | |||||||
Van Kampen |
Van Kampen Growth and Income A | 261,202 | 5,767,334 | |||||||
New York Life Trust Company* |
Mainstay MAP Fund RI | 71,060 | 2,642,008 | |||||||
PIMCO Funds |
PIMCO Real Return Admin Fund | 156,997 | 1,672,019 | |||||||
Pooled Separate Account: |
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New York Life Trust Company* |
New York Life Insurance Anchor Account I | 17,436,958 | ||||||||
Guaranteed Insurance Contracts: |
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American Founders Life Insurance Company |
Bradford
National Life Insurance Company Guarantee #2990002645, 4.0%, maturing January 28, 2044 |
120,506 | ||||||||
Conseco Life Insurance Company |
American Life and Casualty Insurance Company Contract, #ON890313, 4.2%, maturing April 1, 2019 |
227,886 | ||||||||
Participant loans* |
Interest rates from 4.0% to 11.8% | 3,919,210 | ||||||||
| $ | 151,889,943 | |||||||||
| * | Denotes party in interest. |
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By:
|
/s/ THOMAS O’DONNELL | |||
| Thomas O’Donnell | ||||
| Plan Administrator |
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