EX-99 7 ge-ex_99.htm Exhibit 99

Exhibit 99

Reconciliation of Non-GAAP Financial Measures

Our quarterly report on Form 10-Q for the second quarter of 2003 includes "non-GAAP financial measures" as defined by SEC rules. Specifically, in Item 2, "Management's Discussion and Analysis of Results of Operations and Financial Condition," we refer to:

  • industrial sales, excluding the effects of the Power Systems business in the second quarters of 2002 and 2003;
     
  • combined net revenues (revenues from services less interest and other financial charges) of the Commercial Finance, Consumer Finance and Equipment Management segments; and
     
  • cash flow from operating activities, excluding progress collections.

     Reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures – reported sales, revenues and cash flow from operating activities – follow.

Industrial Sales ex-Power Systems

 

($ in Millions)

2Q'03

  

2Q'02

  

V%

  
 
 
 
 

Industrial Sales

$

17,640

  

$

19,459

  

(9

)%

Power Systems Sales

  

4,479

  

 

6,502

  

(31

)
 
 
 
 

Sales ex-Power Systems

$

13,161

  

$

12,957

  

2

 %
 
 
 
 

 

(1)

Net Revenues Schedule

 

($ in Millions)

2Q'03

  

2Q'02

  

V%

  
 
 
     

Revenues

                

Commercial Finance

$

4,737

  

$

4,404

  

8

%

Consumer Finance

  

3,046

    

2,463

  

24

  

Equipment Management

  

1,153

    

1,168

  

(1

)
 
 
     

Total

$

8,936

  

$

8,035

  

11

  
 
 
     

Interest Expense

                

Commercial Finance

  

1,427

    

1,430

  

–

  

Consumer Finance

  

672

    

495

  

36

  

Equipment Management

  

195

    

202

  

(3

)
 
 
     

Total

$

2,294

  

$

2,127

  

8

  
 
 
     

Net Revenue

                

Commercial Finance

  

3,310

    

2,974

  

11

  

Consumer Finance

  

2,374

    

1,968

  

21

  

Equipment Management

  

958

    

966

  

(1

)
 
 
     

 

                

Total Net Revenues

                

(Lending & Leasing Business)

$

6,642

  

$

5,908

  

12

%
 
 
     

 

(2)

Cash From Operating Activities

 

($ in Millions)

2003

  

2002

  

V

  

V%

  
                 

2Q YTD
 
 
     
                 

CFOA ex-Progress

$

5,456

  

$

6,085

  

$

(629

)

(10

)%

Progress Collections

 

(1,212

)

 

(2,608

)

 

1,396

 

  

 
 
 
 
     

CFOA

$

4,244

 

$

3,477

 

$

767

 

22

 %
 
 
     

     We believe that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. In some cases, short-term patterns and long-term trends may be obscured by large factors or events. For example, significant trends in a particular segment may be so significant as to obscure patterns and trends of our industrial or financial services businesses in total. For this reason, we believe that investors may find it useful to see the sales of our industrial businesses without the effects of the long-anticipated down cycle in Power Systems.

     In other cases, we believe the timing and magnitude of progress collections from customers may obscure an assessment of the repeatability and comparability of cash flow from operating activities. Accordingly, in addition to the reported cash flow from operations, we have provided investors information that excludes the unique effects of progress collections on our operating cash flows.

     We also believe that disclosures of certain financial measures are useful to investors in comparing the results of our businesses to other businesses in the same industry that use the same performance measures. Consequently, we have provided the combined net revenues of our lending and leasing businesses for comparability to other financial services businesses whose results are sensitive to interest rates and financing costs.

(3)