EX-99 2 ex99.htm EXHIBIT 99 Exhibit 99
Exhibit 99
 
 


PRESS RELEASE  
GE Reports Strong Third-Quarter 2006 Financial Results with
14% EPS Growth and 12% Revenue Growth
 

Financial Highlights (Continuing Operations)
 
§  Earnings per share (EPS) of $.49, up 14%; Earnings of $5.1 billion, up 10%
§  Revenues of $40.9 billion, up 12%; Organic revenue growth of 10%
§  Total orders up 15%; Services orders up 18%; Financial Services assets grew 12%
§  Operating profit margin increased 30 basis points to 14.7% (ex-pension)
§  Return on average total capital (ROTC) increased 180 basis points to 18%
§  Year-to-date stock repurchase of $7.1 billion for 209 million shares of GE common stock
 
 

Fairfield, Conn. October 13, 2006 - GE announced today record third-quarter earnings from continuing operations of $5.1 billion or $.49 per share, up 10% and 14%, respectively, from third-quarter 2005. Revenues from continuing operations were $40.9 billion, up 12% from last year’s third quarter.

“Our portfolio changes and long-term strategy are paying dividends,” said GE Chairman and CEO Jeff Immelt. “The markets where we compete continue to be favorable for GE and our businesses are experiencing significant tailwinds.

“Our strong third quarter performance was led by our Infrastructure segment, where profits rose 24% on excellent performances across its portfolio including Energy, which is on track for the strong second half we expected. Sales of our Infrastructure products exceeded our expectations, creating long-term margin enhancement with future services revenue opportunities. Across the company, total orders were up 15% and our backlog of orders increased 21% year-to-date. We continue to build our capabilities around the world, with global revenues and developing country growth up 12% and 22%, respectively,” added Immelt.

“Healthcare, GE Money and Commercial Finance all delivered strong performances. Industrial generated solid profits, in spite of lower margins at Plastics caused by higher than expected commodity prices,” said Immelt. “NBC Universal is making good progress in finishing the year on the upswing with positive momentum from the new primetime line-up.

“Two years ago, we said we would focus on increasing organic revenue growth. For the third quarter, we generated 10% organic revenue growth - our seventh straight quarter of organic revenue growth at 2-3x GDP. Our leadership in technology is giving us the edge in winning big orders; our customer focus with Net Promoter Score (NPS) and Lean is expanding our businesses’ market shares; and Imagination Breakthroughs are creating a pipeline of incremental revenue growth.

“We continue to redeploy capital from our slow-growth industrial businesses and strengthen our higher growth, higher return businesses. In the quarter, we sold GE Supply and announced the sale of Advanced Materials. We have begun to restructure our cost base to provide long-term margin expansion. We are efficiently managing our capital to fund growth, increase dividends in line with earnings, fund our stock repurchase plan and increase returns,” said Immelt. “ROTC increased 180 basis points to 18% in the quarter - another good step toward our goal of 20% by 2008.”

Third-Quarter 2006 Financial Highlights:

Earnings from continuing operations were $5.059 billion, up 10% from $4.592 billion in third quarter 2005. EPS from continuing operations were $.49, up 14% from last year’s $.43. Four of six businesses contributed double-digit earnings growth for the quarter.

Continuing Revenues of $40.9 billion were 12% higher than last year’s $36.4 billion. Industrial sales increased 13% to $24.5 billion, reflecting core growth. Financial Services revenues grew 9% over last year to $16.3 billion, reflecting core growth and the effects of acquisitions.

Cash generated from GE’s operating activities in the first nine months of 2006 totaled $18.5 billion compared with $14.7 billion last year, reflecting a $3.2 billion increase in GE Capital Services’ dividends, substantially all of which was proceeds from sales of insurance businesses, and a 7% increase from the industrial businesses.

Loss from discontinued operations was $0.1 billion for the quarter and included adjustments related to the Genworth and GE Insurance Solutions dispositions, and the results of GE Life, which is in the process of being sold. Accordingly, third-quarter 2006 net EPS were $.48, up 9% from the third quarter of 2005.

Shares repurchased were 209 million year-to-date, or $7.1 billion of the $7-9 billion stock repurchase plan target for 2006.
 
“We are executing on our growth process, capitalizing on the strong demand for our infrastructure products and services, and expanding globally. With margins and returns growing, we expect broad-based, double-digit segment profit growth with EPS from continuing operations increasing 15-16% to $1.97-1.99 for 2006,” said Immelt.
 
GE will discuss third quarter results on a conference call and Webcast at 8:30 a.m. EDT today. Call information is available at www.ge.com/investor, and related charts will be posted there prior to the call.

* * *

GE (NYSE: GE) is Imagination at Work -- a diversified technology, media and financial services company focused on solving some of the world’s toughest problems. With products and services ranging from aircraft engines, power generation, water processing and security technology to medical imaging, business and consumer financing, media content and advanced materials, GE serves customers in more than 100 countries and employs more than 300,000 people worldwide. For more information, visit the company's Web site at www.ge.com.

Caution Concerning Forward-Looking Statements

Results are preliminary and unaudited. 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 "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties which could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest rates and commodity prices; strategic actions, including 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; unanticipated loss development in our insurance businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive and regulatory 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.

Media Contact:
Russell Wilkerson, 203-373-3193 (office); 203-581-2114 (mobile)
 russell.wilkerson@ge.com
General Electric, Fairfield

Investor Contact: 
Dan Janki, 203-373-2468 (office)
 dan.janki@ge.com
General Electric, Fairfield

 
GENERAL ELECTRIC COMPANY
Condensed Statement of Earnings

 
 Consolidated
  
GE
  
Financial
Services (GECS)
  
Three months ended September 30
 2006
  
2005
  
V%
  
2006
  
2005
  
V%
  
2006
  
2005
  
V%
  
Revenues
                                                  
Sales of goods and services
$
24,790
  
$
22,019
        
$
24,478
  
$
21,567
        
$
519
  
$
543
        
GECS earnings from continuing operations
  
-
   
-
         
2,704
   
2,600
         
-
   
-
       
GECS revenues from services
  
15,496
   
14,002
         
-
   
-
         
15,756
   
14,323
       
Other income
  
570
   
347
         
613
   
367
         
-
   
-
       
Total revenues
  
40,856
   
36,368
   
12
%
  
27,795
   
24,534
   
13
%
  
16,275
   
14,866
   
9
%
                                                       
Costs and expenses
                                                      
Cost of sales, operating and administrative expenses
  
27,701
   
24,750
         
21,457
   
18,789
         
6,543
   
6,209
       
Interest and other financial charges
  
5,143
   
3,715
         
507
   
339
         
4,802
   
3,508
       
Investment contracts, insurance losses                                                      
      and insurance annuity benefits
  
822
   
874
         
-
   
-
         
867
   
926
       
Provision for losses on financing receivables
  
965
   
1,095
         
-
   
-
         
965
   
1,095
       
Minority interest in net earnings of consolidated affiliates
  
215
   
230
         
158
   
146
         
57
   
84
       
Total costs and expenses
  
34,846
   
30,664
   
14
%
  
22,122
   
19,274
   
15
%
  
13,234
   
11,822
   
12
%
                                                       
Earnings from continuing operations before income taxes
  
6,010
   
5,704
   
5
%
  
5,673
   
5,260
   
8
%
  
3,041
   
3,044
   
0
%
Provision for income taxes
  
(951
)
  
(1,112
)
        
(614
)
  
(668
)
        
(337
)
  
(444
)
      
Earnings from continuing operations
  
5,059
   
4,592
   
10
%
  
5,059
   
4,592
   
10
%
  
2,704
   
2,600
   
4
%
                                                       
Earnings (loss) from discontinued operations, net of taxes
  
(95
)
  
85
         
(95
)
  
85
         
(95
)
  
85
       
                                                       
Net earnings
$
4,964
  
$
4,677
    
6
%
$
4,964
  
$
4,677
    
6
%
$
2,609
  
$
2,685
    
(3
)%
                                                       
Per-share amounts - earnings from continuing operations
                                                      
Diluted earnings per share
$
0.49
  
$
0.43
    
14
%
                                    
Basic earnings per share
$
0.49
  
$
0.43
    
14
%
                                    
                                                       
Per-share amounts - net earnings
                                                      
Diluted earnings per share
$
0.48
  
$
0.44
    
9
%
                                    
Basic earnings per share
$
0.48
  
$
0.44
    
9
%
                                    
                                                       
Total average equivalent shares
                                                      
Diluted shares
  
10,348
   
10,623
   
(3
)%
                                    
Basic shares
  
10,317
   
10,585
   
(3
)%
                                    
                                                       
Dividends declared per share
$
0.25
  
$
0.22
    
14
%
                                    

Dollar amounts and share amounts in millions; per-share amounts in dollars; unaudited. Supplemental consolidating data are shown for “GE” and “GECS.” Transactions between GE and GECS have been eliminated from the “consolidated” columns. See note 1 to the 2005 consolidated financial statements at www.ge.com/annual05 for further information about consolidation matters.

GENERAL ELECTRIC COMPANY
Condensed Statement of Earnings

 
 Consolidated
  
GE
  
Financial
Services (GECS)
  
Nine months ended September 30
 2006
  
2005
  
V%
  
2006
  
2005
  
V%
  
2006
  
2005
  
V%
  
Revenues
                                                   
Sales of goods and services
$
73,171
  
$
66,413
        
$
72,012
  
$
64,808
        
$
1,786
  
$
1,881
        
GECS earnings from continuing operations
  
-
   
-
         
7,474
   
6,491
         
-
   
-
       
GECS revenues from services
  
43,728
   
39,584
         
-
   
-
         
44,477
   
40,551
       
Other income
  
1,678
   
1,260
         
1,787
   
1,321
         
-
   
-
       
Total revenues
  
118,577
   
107,257
   
11
%
  
81,273
   
72,620
   
12
%
  
46,263
   
42,432
   
9
%
                                                       
Costs and expenses
                                                      
Cost of sales, operating and administrative expenses
  
81,948
   
74,477
         
63,552
   
56,425
         
19,291
   
18,805
       
Interest and other financial charges
  
14,037
   
11,172
         
1,377
   
1,056
         
13,111
   
10,525
       
Investment contracts, insurance losses and                                                      
      insurance annuity benefits
  
2,364
   
2,500
         
-
   
-
         
2,503
   
2,642
       
Provision for losses on financing receivables
  
2,683
   
2,955
         
-
   
-
         
2,683
   
2,955
       
Minority interest in net earnings of consolidated affiliates
  
688
   
736
         
507
   
581
         
181
   
155
       
Total costs and expenses
  
101,720
   
91,840
   
11
%
  
65,436
   
58,062
   
13
%
  
37,769
   
35,082
   
8
%
                                                       
Earnings from continuing operations before income taxes
  
16,857
   
15,417
   
9
%
  
15,837
   
14,558
   
9
%
  
8,494
   
7,350
   
16
%
Provision for income taxes
  
(2,902
)
  
(2,889
)
        
(1,882
)
  
(2,030
)
        
(1,020
)
  
(859
)
      
Earnings from continuing operations
  
13,955
   
12,528
   
11
%
  
13,955
   
12,528
   
11
%
  
7,474
   
6,491
   
15
%
                                                       
Earnings from discontinued operations, net of taxes
  
166
   
761
         
166
   
761
         
166
   
761
       
                                                       
Net earnings
$
14,121
  
$
13,289
    
6
%
$
14,121
  
$
13,289
    
6
%
$
7,640
  
$
7,252
    
5
%
                                                       
Per-share amounts - earnings from continuing operations
                                                      
Diluted earnings per share
$
1.34
  
$
1.18
    
14
%
                                    
Basic earnings per share
$
1.34
  
$
1.18
    
14
%
                                    
                                                       
Per-share amounts - net earnings
                                                      
Diluted earnings per share
$
1.36
  
$
1.25
    
9
%
                                    
Basic earnings per share
$
1.36
  
$
1.25
    
9
%
                                    
                                                       
Total average equivalent shares
                                                      
Diluted shares
  
10,415
   
10,633
   
(2
)%
                                    
Basic shares
  
10,380
   
10,591
   
(2
)%
                                    
                                                       
Dividends declared per share
$
0.75
  
$
0.66
    
14
%
                                    
                                                       

Dollar amounts and share amounts in millions; per-share amounts in dollars; unaudited. Supplemental consolidating data are shown for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns. See note 1 to the 2005 consolidated financial statements at www.ge.com/annual05 for further information about consolidation matters.
 
 
 

GENERAL ELECTRIC COMPANY
Summary of Operating Segments (unaudited)

   
Three Months
  
Nine Months
  
   
Ended September 30
  
Ended September 30
  
(Dollars in millions)
  
2006
  
2005
  
V%
         
2006
  
2005
  
V%
  
                           
Revenues
                          
Infrastructure
  
$
12,104
  
$
10,128
    
20
  
$
33,588
  
$
29,723
    
13
  
Industrial
   
8,526
    
8,257
    
3
    
25,454
    
24,178
    
5
  
Healthcare
    
3,897
    
3,578
    
9
    
11,712
    
10,667
    
10
  
NBC Universal
    
3,631
    
3,038
    
20
    
11,971
    
10,497
    
14
  
Commercial Finance
    
6,006
    
5,414
    
11
    
17,017
    
15,415
    
10
  
GE Money (a)
    
5,590
    
4,913
    
14
    
15,948
    
14,530
    
10
  
Total segment revenues
    
39,754
    
35,328
    
13
    
115,690
    
105,010
    
10
  
Corporate items and eliminations
    
1,102
    
1,040
    
6
    
2,887
    
2,247
    
28
  
                 
 
                
 
  
Consolidated revenues from continuing operations
  
$
40,856
  
$
36,368
    
12
  
$
118,577
  
$
107,257
    
11
  
                 
 
                
 
  
Segment profit (b)
                
 
                
 
  
Infrastructure
  
$
2,336
  
$
1,880
    
24
  
$
6,146
  
$
5,336
    
15
  
Industrial
   
692
    
629
    
10
    
2,021
    
1,790
    
13
  
Healthcare
    
700
    
589
    
19
    
1,991
    
1,670
    
19
  
NBC Universal
    
542
    
603
    
(10)
 
  
2,078
    
2,291
    
(9)
 
Commercial Finance
    
1,290
    
1,212
    
6
    
3,521
    
3,010
    
17
  
GE Money (a)
    
916
    
810
    
13
    
2,632
    
2,280
    
15
  
Total segment profit
    
6,476
    
5,723
    
13
    
18,389
    
16,377
    
12
  
                 
 
                
 
  
Corporate items and eliminations
    
(296
)
  
(124
)
  
U
    
(1,175
)
  
(763
)
  
(54)
 
GE interest and other financial charges
    
(507
)
  
(339
)
  
(50)
 
  
(1,377
)
  
(1,056
)
  
(30)
 
GE provision for income taxes
    
(614
)
  
(668
)
  
8
    
(1,882
)
  
(2,030
)
  
7
  
                 
 
                    
Earnings from continuing operations
  
$
5,059
  
$
4,592
    
10
  
$
13,955
  
$
12,528
    
11
  
                 
 
                
 
  
Earnings (loss) from discontinued operations, net of taxes
  
$
(95
)
$
85
    
U
  
$
166
  
$
761
    
(78)
 
                                       
Consolidated net earnings
  
$
4,964
  
$
4,677
    
6
  
$
14,121
  
$
13,289
    
6
  
                                       


(a)
Formerly known as GE Consumer Finance.
   
(b)
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 refer to as "operating profit," for Healthcare, NBC Universal, and the industrial businesses of the Industrial and Infrastructure segments; included in determining segment profit, which we refer to as "net earnings," for Commercial Finance, GE Money, and the financial services businesses of the Industrial segment (Equipment Services) and Infrastructure segment (Aviation Financial Services, Energy Financial Services and Transportation Finance).

 
 
GENERAL ELECTRIC COMPANY
Summary of Operating Segments (unaudited)
Additional Information
 
 
 
  
Three months
Ended September 30
  
Nine months
Ended September 30
  
(Dollars in millions)
  
2006
  
2005
  
V%
  
2006
  
2005
  
V%
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
Infrastructure
  
 
  
 
  
 
  
 
  
 
  
 
  
Revenues
  
$
12,104
  
$
10,128
    
20
  
$
33,588
  
$
29,723
    
13
  
Segment profit
  
$
2,336
  
$
1,880
    
24
  
$
6,146
  
$
5,336
    
15
  
Revenues
                          
Aviation
  
$
3,157
  
$
3,007
    
5
  
$
9,489
  
$
8,568
    
11
  
Aviation Financial Services
    
1,075
    
964
    
12
    
2,990
    
2,600
    
15
  
Energy
    
5,055
    
3,681
    
37
    
13,332
    
11,516
    
16
  
Energy Financial Services
    
524
    
379
    
38
    
1,189
    
989
    
20
  
Oil & Gas
    
1,029
    
906
    
14
    
2,895
    
2,310
    
25
  
Transportation
    
1,016
    
910
    
12
    
3,041
    
2,558
    
19
  
Segment profit
                          
Aviation
  
$
706
  
$
604
    
17
  
$
2,079
  
$
1,821
    
14
  
Aviation Financial Services
    
261
    
195
    
34
    
777
    
543
    
43
  
Energy
    
747
    
584
    
28
    
1,872
    
1,786
    
5
  
Energy Financial Services
    
234
    
177
    
32
    
497
    
450
    
10
  
Oil & Gas
    
161
    
107
    
50
    
324
    
209
    
55
  
Transportation
    
196
    
161
    
22
    
565
    
344
    
64
  
 
                          
Industrial
                          
Revenues
  
$
8,526
  
$
8,257
    
3
  
$
25,454
  
$
24,178
    
5
  
Segment profit
  
$
692
  
$
629
    
10
  
$
2,021
  
$
1,790
    
13
  
Revenues
                          
Consumer & Industrial
  
$
3,533
  
$
3,522
    
-
  
$
10,919
  
$
10,359
    
5
  
Equipment Services
    
1,848
    
1,709
    
8
    
5,279
    
4,935
    
7
  
Plastics
    
1,677
    
1,663
    
1
    
5,005
    
4,951
    
1
  
Segment profit
                          
Consumer & Industrial
  
$
283
  
$
196
    
44
  
$
821
  
$
588
    
40
  
Equipment Services
    
91
    
66
    
38
    
167
    
112
    
49
  
Plastics
    
152
    
197
    
(23)
 
  
560
    
645
    
(13)
 
 
                          
Commercial Finance
                          
Revenues
  
$
6,006
  
$
5,414
    
11
  
$
17,017
  
$
15,415
    
10
  
Segment profit
  
$
1,290
  
$
1,212
    
6
  
$
3,521
  
$
3,010
    
17
  
Revenues
                          
Capital Solutions
  
$
3,101
  
$
2,834
    
9
  
$
8,968
  
$
8,579
    
5
  
Real Estate
    
1,328
    
1,022
    
30
    
3,450
    
2,664
    
30
  
Segment profit
                          
Capital Solutions
  
$
525
  
$
444
    
18
  
$
1,297
  
$
1,055
    
23
  
Real Estate
    
440
    
343
    
28
    
1,215
    
893
    
36
  
 
 
 
GENERAL ELECTRIC COMPANY
Condensed Statement of Financial Position
 
(Dollars in billions)
  
 
  
 
  
 
  
 
  
Consolidated
  
GE
  
Financial
Services (GECS)
  
Assets
  
09/30/06
  
12/31/05
  
09/30/06
  
12/31/05
  
09/30/06
  
12/31/05
  
Cash & marketable securities
  
$
59.4
  
$
51.0
  
$
2.2
  
$
2.5
  
$
57.4
  
$
48.8
  
Receivables
    
12.3
    
14.9
    
12.6
    
15.1
    
-
    
-
  
Inventories
    
11.9
    
10.5
    
11.7
    
10.3
    
0.2
    
0.2
  
GECS financing receivables - net
   
310.2
    
287.6
    
-
    
-
    
310.3
    
287.6
  
Property, plant & equipment - net
    
72.2
    
67.5
    
15.8
    
16.5
    
56.4
    
51.0
  
Investment in GECS
    
-
    
-
    
51.1
    
50.8
    
-
    
-
  
Goodwill & intangible assets
   
85.5
    
81.6
    
60.1
    
57.8
    
25.3
    
23.8
  
Other assets
    
115.0
    
99.1
    
39.3
    
36.8
    
81.1
    
68.1
  
Assets of discontinued operations
    
15.5
    
61.1
    
-
    
-
    
15.5
    
61.1
  
 
                          
Total assets
  
$
682.0
  
$
673.3
  
$
192.8
  
$
189.8
  
$
546.2
  
$
540.6
  
 
                          
Liabilities and equity
                          
Borrowings
  
$
410.1
  
$
370.4
  
$
11.7
  
$
10.2
  
$
400.2
  
$
362.1
  
Investment contracts, insurance liabilities
                         
and insurance annuity benefits
    
34.6
    
33.1
    
-
    
-
    
34.9
    
33.4
  
Other liabilities & minority interest
    
110.6
    
110.9
    
69.7
    
70.2
    
44.7
    
44.5
  
Liabilities of discontinued operations
    
15.3
    
49.5
    
-
    
-
    
15.3
    
49.8
  
Shareowners' equity
    
111.4
    
109.4
    
111.4
    
109.4
    
51.1
    
50.8
  
 
                          
Total liabilities and equity
  
$
682.0
  
$
673.3
  
$
192.8
  
$
189.8
  
$
546.2
  
$
540.6
  
 
September 30, 2006 information is unaudited.  Supplemental consolidating data are shown for "GE" and "Financial Services (GECS)." Transactions between GE and GECS have been eliminated from the "consolidated" columns. See note 1 to the 2005 consolidated financial statements at www.ge.com/annual05 for further information about consolidation matters.
 
 
 
 
GENERAL ELECTRIC COMPANY
Financial Measures That Supplement GAAP
 
 
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 rules.  Specifically, we have referred to organic revenue growth for the three months ended September 30, 2006, compared with the three months ended September 30, 2005, the operating profit margin increase for the three months ended September 30, 2006, compared with the three months ended September 30, 2005, the increase in cash from operating activities from our industrial businesses (or Industrial CFOA) for the nine months ended September 30, 2006, compared with the nine months ended September 30, 2005 and return on average total capital (ROTC), which is calculated using average total shareowners' equity, excluding effects of discontinued operations.  The reasons we use these non-GAAP financial measures and their reconciliation to their most directly comparable GAAP financial measures follow.
 
(Dollars in millions)
  
Three months
  
 
  
ended September 30
  
Organic Revenue Growth
    
2006
    
2005
    
V
%
 
              
GE consolidated continuing revenues as reported
  
$
40,856
  
$
36,368
    
12
%
Less the effects of:
              
    Acquisitions, business dispositions (other than dispositions
              
    of businesses acquired for investment)
             
         and currency exchange rates
    
1,646
    
757
      
 
              
GE consolidated revenues excluding the effects of acquisitions,
              
business dispositions (other than dispositions
             
of businesses acquired for investment) and currency exchange rates (organic revenues)
  
$
39,210
  
$
35,611
    
10
%
 
 
 
  
Three months
  
Three months
  
 
  
GE Industrial op profit % ex. pension costs
  
ended September 30, 2006
ended September 30, 2005
    
 
    
Revenues  
    
Op profit
    
Op profit
%
  
Revenues
   
Op profit
    
Op profit
%
  
V pts.
  
 
                              
As reported
  
$
25,091
  
$
3,476
    
13.9
%
$
21,934
  
$
2,999
    
13.7
%
  
0.2pts
  
Less:
                                    
Pension costs
    
-
    
(211
)
      
-
    
(152
)
        
 
                                    
GE Industrial revenue, op profit and op profit %
                             
excluding the effects of pension costs
  
$
25,091
  
$
3,687
    
14.7
%
$
21,934
  
$
3,151
    
14.4
%
  
0.3pts
  
 
 
 
  
Nine months
 
 
  
ended September 30
  
Growth in Industrial CFOA
    
2006
        
2005
        
V
%
 
              
Cash from GE's operating activities as reported
  
$
18,485
  
$
14,697
    
26
%
Less: GECS dividends
    
8,672
    
5,512
      
Cash from GE's operating activities excluding dividends from GECS (Industrial CFOA)
  
$
9,813
  
$
9,185
    
7
%
 
 
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, events or 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 our 2006 growth in revenues without the effects of acquisitions, business dispositions and currency exchange rates and to see our operating profit margin increase without the effects of pension costs.  We also believe that investors would find it useful to compare our operating cash flow for the nine months ended September 30, 2006, to the operating cash flow for the nine months ended September 30, 2005, without the effect of GECS dividends, which can vary from period-to-period. 
 
 
  
Three months
 
 
  
ended September 30
  
Average Total Shareowners' Equity, Excluding Effects of Discontinued Operations (a)
    
2006
    
2005
  
 
          
Average total shareowners' equity (b)
  
$
109,999
  
$
110,241
  
Less:
          
Cumulative effect of earnings from discontinued operations (c)
    
-
    
2,733
  
Average net investment in discontinued operations (d)
    
7,166
    
2,805
  
Average total shareowners' equity, excluding effect of discontinued operations (a)
  
$
102,833
  
$
104,703
  
 
 
(a)
Used for computing return on average total capital invested (ROTC).  For GE, ROTC is earnings from continuing operations plus the sum of after-tax interest and other financial charges and minority interest, divided by the sum of the averages of total shareowners' equity (excluding effects of discontinued operations), borrowings, mandatorily redeemable preferred stock and minority interest (on a twelve-month basis, calculated using a five-point average). 
(b)
On a twelve-month basis, calculated using a five-point average.
(c)
Represented the average cumulative net earnings effect of discontinued operations from 2001 through the first half of 2005 (on a twelve-month basis, calculated using a five-point average).
(d)
Represented the average net investment in discontinued operations since the second half of 2005.
 
U.S. GAAP requires earnings of discontinued operations to be displayed separately in the Statement of Earnings.  Accordingly, the numerator used in our calculation of return on average total capital invested excludes those earnings (losses).  Further we believe it is appropriate to exclude from the average shareowners' equity component of the denominator the cumulative effect of those earnings (losses) since 2000 (reclassifications for discontinued operations began in 2001), as well as our average net investment in discontinued operations since the second half of 2005.  Had we disposed of these operations before mid-2005, proceeds would have been applied to reduce parent-supported debt at GE Capital; however since parent-supported debt at GE Capital was retired in the first half of 2005, we have assumed that any proceeds after that time would have been distributed to shareowners by means of share repurchases, thus reducing average total shareowners' equity.