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



PRESS RELEASE

GE Reports Record Third-Quarter Net EPS up 15% to $.54 per Share and
Continuing EPS up 9% to $.50 per Share; Orders of $24 billion, up 20%;
Revenues of $42.5 billion, up 12%; Reaffirms Total Year 2007 Guidance
 
3Q ’07 Highlights (Net and Continuing Operations)

§  
Net earnings per share (EPS) of $.54, up 15%; continuing EPS of $.50, up 9%
§  
Net earnings of $5.5 billion, up 14%; continuing earnings of $5.1 billion, up 7%
§  
Revenues of $42.5 billion, up 12%; organic revenue growth of 8%; global revenue growth of 15%
§  
Total orders of $24 billion, up 20%; major equipment orders of $12 billion, up 39%; services orders of $8.2 billion, up 4%
§  
Return on average total capital (ROTC) increasing 80 basis points (bps) to 18.5%
§  
Industrial cash flow from operating activities growth of 16%
§  
4Q ’07 continuing EPS guidance of $.67-.69, up 18-21%, and 2007 full-year continuing EPS guidance of $2.19 – 2.22, up 18-19%

Fairfield, Conn., Oct. 12, 2007– GE announced today third-quarter 2007 net earnings of $5.5 billion or $.54 per share, up 14% and 15%, respectively, from third-quarter 2006.  Third-quarter 2007 earnings from continuing operations were $5.1 billion, or $.50 per share up 9%, and reflecting $.06 per share of restructuring and other charges.  Revenues from continuing operations were $42.5 billion, up 12%, increasing 8% organically.

GE’s total orders were up 20% to $24 billion, and total backlog grew $19 billion year-over-year, an increase of 43%.  Major equipment orders were $12 billion, up 39%, and major equipment backlog grew to $47 billion, up 56%. Services orders were up 4%, and Customer Service Agreement (CSA) backlog stood at $96 billion, up 7%.

GE achieved its eleventh straight quarter of organic revenue growth of 2-3 times global GDP. Services revenues were up 7% and global revenues grew 15%.  GE’s year-to-date segment operating profit margin was up 70 bps to 15.8%.

“GE delivered a solid quarter in spite of extreme volatility in the financial services market and some one-time items in our industrial businesses,” GE Chairman and CEO Jeff Immelt said.  “Infrastructure delivered double-digit segment profit growth of 12%, led by a strong performance at Oil & Gas, Transportation, and Energy. Our Aviation business remains solid with equipment order growth of 93%. In the quarter, we had an increase in our aviation development programs of $0.1 billion.
 

1

“Commercial Finance and GE Money generated broad-based earnings growth of 12% and 13%, respectively. These businesses had approximately $0.1 billion of impact in the quarter due to market volatility. With our global strength and the re-pricing of risk, these businesses are built to perform.

“NBC Universal posted its fourth straight quarter of segment profit growth, highlighted by the successful launch of its new, prime-time television line-up, a strong cable performance and a slate of popular summer films.  Jeff Zucker and his team have done an excellent job improving the content, operating the business, and expanding the portfolio.  Healthcare’s results were down slightly year-over-year, and in-line with expectations.  The US imaging business continues to face pressure from effects of the Deficit Reduction Act (DRA) and OEC has not started shipping; however, the balance of the Healthcare business is performing very well.”
 
As previously reported, the company realized a $1.8 billion after-tax benefit from the sale of its Plastics business and recorded it in discontinued operations.  At the same time, the company took a $1.4 billion charge in discontinued operations for its planned sale of the Japanese personal loan and WMC mortgage businesses. In addition, the company recorded $0.6 billion of after-tax industrial restructuring and other charges in continuing operations, $0.1 billion higher than previously announced.

The year-to-date consolidated effective tax rate was 18%, which is in line with full-year 2007 expectations, and the company is still forecasting a total year tax rate of 17%.  GE’s consolidated effective tax rate was 11% for the quarter, lowered by the movement of the Japanese personal loan business and WMC into discontinued operations and by the industrial restructuring and other charges.

“We had balanced growth across the portfolio.  We were able to offset the $0.1 billion expense from the larger than expected restructuring, the $0.1 billion in increased development programs in Infrastructure, and the $0.1 billion impact in our financial services businesses from financial market volatility.  As a result, we have lowered our cost structure, improved our strategic position, and reduced the risk in our financial services businesses, making GE a better company going forward,” Immelt said.

The company also filed a Form 8-K today describing immaterial adjustments to its historic financial statements arising from the ongoing review of the company’s accounting policies and procedures. These adjustments have an insignificant impact on earnings in 2007.

Third-Quarter 2007 Financial Highlights:

Earnings were $5.5 billion, up 14% from $4.9 billion in third quarter 2006. EPS were $.54, up 15% from last year’s $.47. Earnings from continuing operations were a $5.1 billion, up 7% from $4.7 billion in third quarter 2006. EPS from continuing operations were $.50, up 9% from last year’s $.46 reflecting strong double-digit earnings growth at the Infrastructure and Commercial Finance businesses and restructuring and other charges. Earnings from discontinued operations were $0.5 billion, or $.04 per share. Effective in the third quarter 2007, discontinued operations for all periods presented include the results of WMC and our Japan personal loan business. Discontinued operations also include the results of our Plastics business, which was sold in the third quarter 2007 at an after-tax gain of $1.8 billion and the Advanced Materials business, sold in the fourth quarter 2006.
 

2

Continuing revenues grew 12% to $42.5 billion. GE industrial sales were $24.7 billion, an increase of 11% from third quarter 2006, reflecting core growth and the net effect of acquisitions. Financial services revenues grew 16% over last year to $18.1 billion, primarily reflecting core growth.

Cash generated from GE’s continuing operating activities (CFOA) in the first nine months of 2007 totaled $16.3 billion, down 8% from $17.7 billion last year. Industrial CFOA grew 16% to $10.5 billion.

The company increased its return on total capital 80 bps to 18.5%, and is on target to reach its goal of 20% by the end of 2008.  GE bought $6.3 billion worth of its common stock in the quarter and plans to buy back an additional $5.7 billion worth of its common stock in the fourth quarter of 2007.

“Our outlook for the remainder of the year is strong.  We have a better set of financial services businesses and a successful turnaround at NBC Universal, and we will have earnings acceleration in Infrastructure.  We are forecasting fourth quarter EPS from continuing operations of $.67-.69, up 18-21% over comparable 2006 earnings.  We are reaffirming guidance of $2.19 – 2.22, up 18-19% for the full year and are on track to deliver a solid, low-risk performance in 2007,” Immelt said.

GE will discuss preliminary third-quarter results on a conference call and Webcast at 8:30 a.m. ET 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, and media content, 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:

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.


Media Contact:
Russell Wilkerson, 203.373.3193 (office); 203.581.2114 (mobile)
russell.wilkerson@ge.com

Investor Contact:
Dan Janki, 203.373.2468 (office)
dan.janki@ge.com
 

3

GENERAL ELECTRIC COMPANY
Condensed Statement of Earnings
 
   
Consolidated
  
GE
  
Financial
Services (GECS)
  
Nine months ended September 30
    
2007
    
2006
(a)
V
%
  
2007
    
2006
(a)
V
%
  
2007
    
2006
(a)
V
%
                                                   
Revenues
   
    
   
    
   
  
      
    
   
    
   
  
      
    
   
    
   
    
Sales of goods and services
  
$
70,231
  
$
66,495
      
$
70,659
  
$
65,337
      
$
337
  
$
1,786
      
Other income
    
2,319
    
1,662
        
2,550
    
1,771
        
-
    
-
      
GECS earnings from continuing operations
    
-
    
-
        
9,059
    
7,343
        
-
    
-
      
GECS revenues from services
    
51,612
    
42,382
        
-
    
-
        
52,503
    
43,131
      
Total revenues
    
124,162
    
110,539
  
12
%
  
82,268
    
74,451
  
10
%
  
52,840
    
44,917
  
18
%
                                                   
Costs and expenses
                                                  
Cost of sales, operating and administrative
                                                  
expenses
    
81,433
    
75,316
        
62,726
    
57,525
        
19,824
    
18,687
      
Interest and other financial charges
    
17,300
    
13,726
        
1,428
    
1,255
        
16,499
    
12,922
      
Investment contracts, insurance losses and
                                                  
insurance annuity benefits
    
2,601
    
2,364
        
-
    
-
        
2,744
    
2,503
      
Provision  for losses on financing receivables
    
3,216
    
2,200
        
-
    
-
        
3,216
    
2,200
      
Minority interest in net earnings of
                                                  
consolidated affiliates
    
634
    
635
        
445
    
454
        
189
    
181
      
Total costs and expenses
    
105,184
    
94,241
  
12
%
  
64,599
    
59,234
  
9
%
  
42,472
    
36,493
  
16
%
                                                   
Earnings from continuing operations
                                                  
before income taxes
    
18,978
    
16,298
  
16
%
  
17,669
    
15,217
  
16
%
  
10,368
    
8,424
  
23
%
Provision for income taxes
    
(3,322
)
  
(2,880
)
      
(2,013
)
  
(1,799
)
      
(1,309
)
  
(1,081
)
    
Earnings from continuing operations
    
15,656
    
13,418
  
17
%
  
15,656
    
13,418
  
17
%
  
9,059
    
7,343
  
23
%
                                                   
Earnings (loss) from discontinued
                                                  
operations, net of taxes
    
(135
)
  
866
        
(135
)
  
866
        
(2,003
)
  
429
      
                                                   
Net earnings
  
$
15,521
  
$
14,284
  
9
%
$
15,521
  
$
14,284
  
9
%
$
7,056
  
$
7,772
  
(9
)%
                                                   
Per-share amounts - earnings from
                                                  
continuing operations
                                                  
Diluted earnings per share
  
$
1.53
  
$
1.29
  
19
%
                                
Basic earnings per share
  
$
1.53
  
$
1.29
  
19
%
                                
                                                   
Per-share amounts - net earnings
                                                  
Diluted earnings per share
  
$
1.51
  
$
1.37
  
10
%
                                
Basic earnings per share
  
$
1.52
  
$
1.38
  
10
%
                                
                                                   
Total average equivalent shares
                                                  
Diluted shares
    
10,266
    
10,415
  
(1
)%
                                
Basic shares
    
10,230
    
10,380
  
(1
)%
                                
                                                   
Dividends declared per share
  
$
0.84
  
$
0.75
  
12
%
                                
                                                   

(a)
2006 amounts have been adjusted for effects of discontinued operations reporting as well as for accounting matters described in GE Current Report on Form 8-K filed on October 12, 2007, and available at http://ir.10kwizard.com/files.php?source=329&welc_next=1&XCOMP=0
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 2006 consolidated financial statements at www.ge.com/annual06 for further information about consolidation matters.


4

GENERAL ELECTRIC COMPANY
Condensed Statement of Earnings
 
   
Consolidated
  
GE
  
Financial
Services (GECS)
  
Third quarter ended September 30
    
2007
    
2006
(a)
V
%
  
2007
    
2006
(a)
V
%
  
2007
    
2006
(a)
V
%
                                                   
Revenues
   
    
   
    
   
  
      
    
   
    
   
  
      
    
   
    
   
    
Sales of goods and services
  
$
24,623
  
$
22,500
      
$
24,658
  
$
22,189
      
$
277
  
$
519
      
Other income
    
384
    
567
        
464
    
610
        
-
    
-
      
GECS earnings from continuing operations
    
-
    
-
        
3,214
    
2,521
        
-
    
-
      
GECS revenues from services
    
17,527
    
14,807
        
-
    
-
        
17,843
    
15,067
      
Total revenues
    
42,534
    
37,874
  
12
%
  
28,336
    
25,320
  
12
%
  
18,120
    
15,586
  
16
%
                                                   
Costs and expenses
                                                  
Cost of sales, operating and administrative
                                                  
expenses
    
28,490
    
25,407
        
22,017
    
19,364
        
6,958
    
6,343
      
Interest and other financial charges
    
6,077
    
5,030
        
473
    
467
        
5,787
    
4,729
      
 Investment contracts, insurance losses and                                                  
        insurance annuity benefits
    
849
    
822
        
-
    
-
        
889
    
867
      
Provision  for losses on financing receivables
    
1,223
    
793
        
-
    
-
        
1,223
    
793
      
Minority interest in net earnings of
                                                  
consolidated affiliates
    
190
    
198
        
136
    
142
        
54
    
56
      
Total costs and expenses
    
36,829
    
32,250
  
14
%
  
22,626
    
19,973
  
13
%
  
14,911
    
12,788
  
17
%
                                                   
Earnings from continuing operations before
                                                  
income taxes
    
5,705
    
5,624
  
1
%
  
5,710
    
5,347
  
7
%
  
3,209
    
2,798
  
15
%
Provision for income taxes
    
(619
)
  
(875
)
      
(624
)
  
(598
)
      
5
    
(277
)
    
Earnings from continuing operations
    
5,086
    
4,749
  
7
%
  
5,086
    
4,749
  
7
%
  
3,214
    
2,521
  
27
%
                                                   
Earnings (loss) from discontinued operations,
                                                  
net of taxes
    
453
    
117
        
453
    
117
        
(1,347
)
  
(9
)
    
                                                   
Net earnings
  
$
5,539
  
$
4,866
  
14
%
$
5,539
  
$
4,866
  
14
%
$
1,867
  
$
2,512
  
(26
)%
                                                   
Per-share amounts - earnings from
                                                  
continuing operations
                                                  
Diluted earnings per share
  
$
0.50
  
$
0.46
  
9
%
                                
Basic earnings per share
  
$
0.50
  
$
0.46
  
9
%
                                
                                                   
Per-share amounts - net earnings
                                                  
Diluted earnings per share
  
$
0.54
  
$
0.47
  
15
%
                                
Basic earnings per share
  
$
0.54
  
$
0.47
  
15
%
                                
                                                   
Total average equivalent shares
                                                  
Diluted shares
    
10,215
    
10,348
  
(1
)%
                                
Basic shares
    
10,177
    
10,317
  
(1
)%
                                
                                                   
Dividends declared per share
  
$
0.28
  
$
0.25
  
12
%
                                
                                                   

(a)
2006 amounts have been adjusted for effects of discontinued operations reporting as well as for accounting matters described in GE Current Report on Form 8-K filed on October 12, 2007, and available at http://ir.10kwizard.com/files.php?source=329&welc_next=1&XCOMP=0
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 2006 consolidated financial statements at www.ge.com/annual06 for further information about consolidation matters.

 

5

GENERAL ELECTRIC COMPANY
Summary of Operating Segments (unaudited)
 
 
Three Months
Ended September 30
  
Nine Months
Ended September 30
  
(Dollars in millions) 
  
2007
    
2006
(a)
V
%
  
2007
    
2006
(a)
V
%
     
     
    
     
  
     
    
     
    
     
    
Revenues
                                
Infrastructure
$
14,451
  
$
12,113
  
19
  
$
40,587
  
$
33,578
  
21
  
Commercial Finance
  
7,032
    
6,006
  
17
    
19,698
    
17,017
  
16
  
GE Money
  
6,207
    
5,064
  
23
    
18,441
    
14,408
  
28
  
Healthcare
  
4,062
    
3,891
  
4
    
12,002
    
11,860
  
1
  
NBC Universal
  
3,756
    
3,631
  
3
    
10,865
    
11,971
  
(9
)
Industrial
  
6,229
    
6,256
  
(0
)
  
18,285
    
18,696
  
(2
)
Total segment revenues
  
41,737
    
36,961
  
13
    
119,878
    
107,530
  
11
  
Corporate items and eliminations
  
797
    
913
  
(13
)
  
4,284
    
3,009
  
42
  
                                 
Consolidated revenues from continuing operations
$
42,534
  
$
37,874
  
12
  
$
124,162
  
$
110,539
  
12
  
                                 
Segment profit (b)
                                
Infrastructure
$
2,615
  
$
2,339
  
12
  
$
7,386
  
$
6,131
  
20
  
Commercial Finance
  
1,450
    
1,290
  
12
    
4,121
    
3,521
  
17
  
GE Money
  
942
    
830
  
13
    
3,323
    
2,369
  
40
  
Healthcare
  
692
    
699
  
(1
)
  
2,021
    
2,059
  
(2
)
NBC Universal
  
589
    
542
  
9
    
2,184
    
2,078
  
5
  
Industrial
  
513
    
485
  
6
    
1,365
    
1,307
  
4
  
Total segment profit
  
6,801
    
6,185
  
10
    
20,400
    
17,465
  
17
  
                                 
Corporate items and eliminations
  
(618
)
  
(371
)
(67
)
  
(1,303
)
  
(993
)
(31
)
GE interest and other financial charges
  
(473
)
  
(467
)
(1
)
  
(1,428
)
  
(1,255
)
(14
)
GE provision for income taxes
  
(624
)
  
(598
)
(4
)
  
(2,013
)
  
(1,799
)
(12
)
                                 
Earnings from continuing operations
$
5,086
  
$
4,749
  
7
  
$
15,656
  
$
13,418
  
17
  
                                 
Earnings (loss)  from discontinued operations (net of taxes) 
$
453
  
$
117
  
F
  
$
(135
)
$
866
  
U
  
                                 
Consolidated net earnings
$
5,539
  
$
4,866
  
14
  
$
15,521
  
$
14,284
  
9
  
                                 

(a)
2006 amounts have been adjusted for effects of discontinued operations reporting as well as for accounting matters described in GE Current Report on Form 8-K filed on October 12, 2007, and available at http://ir.10kwizard.com/files.php?source=329&welc_next=1&XCOMP=0
(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 also refer to as "operating profit," for Healthcare, NBC Universal, and the industrial businesses of the Infrastructure and Industrial segments; included in determining  segment profit, which we also 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) and the Industrial segment (Equipment Services).


6


 
GENERAL ELECTRIC COMPANY
Summary of Operating Segments (unaudited)
 
Additional Information
 
 
Three Months
Ended September 30
  
Nine Months
Ended September 30
  
(Dollars in millions) 
  
2007
    
2006
(a)
V
%
  
2007
    
2006
(a)
V
%
     
     
    
     
  
     
    
     
    
     
    
Infrastructure
                                
Revenues
$
14,451
  
$
12,113
  
19
  
$
40,587
  
$
33,578
  
21
  
                                 
Segment profit
$
2,615
  
$
2,339
  
12
  
$
7,386
  
$
6,131
  
20
  
                                 
Revenues
                                
Aviation
$
4,240
  
$
3,133
  
35
  
$
11,770
  
$
9,430
  
25
  
Aviation Financial Services
  
1,134
    
1,075
  
5
    
3,471
    
2,990
  
16
  
Energy
  
5,205
    
5,078
  
3
    
15,067
    
13,360
  
13
  
Energy Financial Services
  
832
    
524
  
59
    
1,573
    
1,189
  
32
  
Oil & Gas
  
1,699
    
1,033
  
64
    
4,668
    
2,901
  
61
  
Transportation
  
1,109
    
1,017
  
9
    
3,344
    
3,041
  
10
  
                                 
Segment profit
                                
Aviation
$
736
  
$
689
  
7
  
$
2,263
  
$
2,044
  
11
  
Aviation Financial Services
  
256
    
261
  
(2
)
  
910
    
777
  
17
  
Energy
  
823
    
761
  
8
    
2,407
    
1,877
  
28
  
Energy Financial Services
  
266
    
234
  
14
    
536
    
497
  
8
  
Oil & Gas
  
237
    
163
  
45
    
528
    
327
  
61
  
Transportation
  
253
    
196
  
29
    
684
    
565
  
21
  
                                 
Commercial Finance
                                
Revenues
$
7,032
  
$
6,006
  
17
  
$
19,698
  
$
17,017
  
16
  
                                 
Segment profit
$
1,450
  
$
1,290
  
12
  
$
4,121
  
$
3,521
  
17
  
                                 
Revenues
                                
Capital Solutions
$
3,166
  
$
3,101
  
2
  
$
9,128
  
$
8,968
  
2
  
Real Estate
  
1,937
    
1,328
  
46
    
5,109
    
3,450
  
48
  
                                 
Segment profit
                                
Capital Solutions
$
424
  
$
525
  
(19
)
$
1,258
  
$
1,297
  
(3
)
Real Estate
  
640
    
440
  
45
    
1,680
    
1,215
  
38
  
                                 
Industrial
                                
Revenues
$
6,229
  
$
6,256
  
(0
)
$
18,285
  
$
18,696
  
(2
)
                                 
Segment profit
$
513
  
$
485
  
6
  
$
1,365
  
$
1,307
  
4
  
                                 
Revenues
                                
Consumer & Industrial
$
3,323
  
$
3,421
  
(3
)
$
9,825
  
$
10,586
  
(7
)
Enterprise Solutions
  
2,656
    
2,577
  
3
    
7,662
    
7,399
  
4
  
                                 
Segment profit
                                
Consumer & Industrial
$
251
  
$
235
  
7
  
$
784
  
$
720
  
9
  
Enterprise Solutions
  
287
    
238
  
21
    
640
    
576
  
11
  
                                 

(a)
2006 amounts have been adjusted for effects of discontinued operations reporting as well as for accounting matters described in GE Current Report on Form 8-K filed on October 12, 2007, and available at http://ir.10kwizard.com/files.php?source=329&welc_next=1&XCOMP=0

 

7

GENERAL ELECTRIC COMPANY
Condensed Statement of Financial Position
 

 
Consolidated
  
GE
  
Financial
Services (GECS)
  
(Dollars in billions)
9/30/07
  
12/31/06
(a)
9/30/07
  
12/31/06
(a)
9/30/07
  
12/31/06
(a)
                                     
Assets
                                    
Cash & marketable securities
  
65.1
    
61.9
    
7.7
    
4.8
    
57.5
    
59.9
  
Receivables
  
12.7
    
12.2
    
13.0
    
12.5
    
–
    
–
  
Inventories
  
13.3
    
10.0
    
13.3
    
10.0
    
0.1
    
0.1
  
GECS financing receivables – net
  
361.7
    
328.6
    
–
    
–
    
361.7
    
328.6
  
Property, plant & equipment – net
  
76.3
    
70.7
    
13.5
    
12.7
    
62.8
    
58.0
  
Investment in GECS
  
–
    
–
    
56.2
    
54.1
    
–
    
–
  
Goodwill & intangible assets
  
94.3
    
84.3
    
65.3
    
58.4
    
29.1
    
25.9
  
Other assets
  
130.9
    
109.0
    
36.0
    
34.0
    
100.9
    
81.1
  
Assets of discontinued operations
  
7.4
    
19.8
    
–
    
8.6
    
7.4
    
11.1
  
                                     
Total assets
$
761.7
  
$
696.5
  
$
205.0
  
$
195.1
  
$
619.5
  
$
564.7
  
                                     
Liabilities and equity
                                    
Borrowings
  
491.6
    
432.8
    
12.6
    
11.1
    
480.9
    
426.3
  
                                     
Insurance contracts, insurance liabilities and
                                    
insurance annuity benefits
  
34.1
    
34.5
    
–
    
–
    
34.4
    
34.8
  
Other liabilities & minority interest
  
120.9
    
114.7
    
79.4
    
70.0
    
45.9
    
49.0
  
Liabilities of discontinued operations
  
2.3
    
2.6
    
0.2
    
2.1
    
2.1
    
0.5
  
Shareowners’ equity
  
112.8
    
111.9
    
112.8
    
111.9
    
56.2
    
54.1
  
                                     
Total liabilities and equity
$
761.7
  
$
696.5
  
$
205.0
  
$
195.1
  
$
619.5
  
$
564.7
  
                                     

(a)
2006 amounts have been adjusted for effects of discontinued operations reporting as well as for accounting matters described in GE Current Report on Form 8-K filed on October 12, 2007, and available at http://ir.10kwizard.com/files.php?source=329&welc_next=1&XCOMP=0
 
September 30, 2007, information is 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 2006 consolidated financial statements at www.ge.com/annual06 for further information about consolidation matters.

 

8

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, 2007, compared with the three months ended September 30, 2006; return on average total capital (ROTC), which is calculated using average total shareowners' equity, excluding effects of discontinued operations; GE industrial segment operating profit margin excluding the effects of the GE industrial portion of Corporate items and eliminations; and growth in industrial cash from operating activities (Industrial CFOA) for the first nine months of 2007 compared to the first nine months of 2006.  The reasons we use these non-GAAP financial measures and their reconciliation to the most directly comparable GAAP financial measures follow.
 
(Dollars in millions)
Three months
ended September 30
  
 
2007
  
2006
  
V
%
Organic Revenue Growth - Continuing Operations
                  
                   
Revenues as reported
$
42,534
  
$
37,874
    
12
%
Less the effects of
                  
Acquisitions, business dispositions (other than dispositions of
                  
businesses acquired for investment)
                  
and currency exchange rates
  
2,790
    
1,253
        
The GECS commercial paper interest rate swap adjustment
  
-
    
(163
)
      
Revenues excluding the effects of acquisitions, business
                  
dispositions (other than dispositions of businesses
                  
acquired for investment), currency exchange rates
                  
and the GECS commercial paper interest rate swap
                  
adjustment (organic revenues)
$
39,744
  
$
36,784
    
8
%
                   

 
 
 
Three months
ended September 30
      
 
2007
  
2006
      
Average Total Shareowners’ Equity, Excluding Effects
                  
of Discontinued Operations (a)
                  
                   
Average total shareowners’ equity (b)
$
113,433
  
$
109,912
        
Less the effects of
                  
Cumulative earnings from discontinued operations
  
–
    
–
        
Average net investment in discontinued operations
  
5,410
    
11,762
        
Average total shareowners’ equity, excluding
                  
effects of discontinued operations(a)
$
108,023
  
$
98,150
        
                   

(a)
Used for computing 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 12-month basis, calculated using a five-point average).
(b)
On a 12-month basis, calculated using a five-point average.

 
U.S. GAAP requires earnings of discontinued operations to be displayed separately in the Statement of Earnings.  Accordingly, the numerators used in our calculations of ROTC exclude those earnings (losses).  Further, we believe that it is appropriate to exclude from the denominators, specifically the average total shareowners’ equity component, the cumulative effect of those earnings for each of the years for which related discontinued operations were presented, 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.
 
 
Nine months
ended September 30, 2007
  
Nine months
ended September 30, 2006
      
GE Industrial Segment Operating Profit Margin
Revenues
  
Op
profit
  
Op
profit %
  
Revenues
  
Op
profit
  
Op
profit %
  
V pts.
  
     
     
    
     
    
     
    
     
    
     
    
     
      
As reported
                                          
Infrastructure
$
40,587
  
$
7,386
        
$
33,578
  
$
6,131
              
Industrial
  
18,285
    
1,365
          
18,696
    
1,307
              
Healthcare
  
12,002
    
2,021
          
11,860
    
2,059
              
NBC Universal
  
10,865
    
2,184
          
11,971
    
2,078
              
   
81,739
    
12,956
          
76,105
    
11,575
              
Less the effects of
                                          
Financial services components reported in
                                          
Infrastructure and Industrial
  
10,503
    
1,653
          
9,602
    
1,500
              
Inter-company transactions between industrial
                                          
and financial services components
  
(423
)
  
-
          
(425
)
  
-
              
GE industrial segment operating profit margin
                                          
excluding the effects of the GE industrial portion
                                          
of Corporate items and eliminations
$
71,659
  
$
11,303
    
15.8%
  
$
66,928
  
$
10,075
    
15.1%
    
0.7
  
                                           

 
Nine months
ended  September 30
  
 
2007
  
2006
  
V%
  
Growth in Industrial CFOA
                  
                   
Cash from GE’s operating activities as reported
$
16,334
  
$
17,659
    
(8)%
  
Less dividends from GECS
  
5,871
    
8,672
        
Cash from GE’s operating activities excluding dividends
                  
from GECS (Industrial CFOA)
$
10,463
  
$
8,987
    
16%
  

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 revenue growth without the effects of acquisitions, dispositions, currency exchange rates and the GECS commercial paper interest rate swap adjustment; average total shareowners’ equity, excluding effects of discontinued operations; GE industrial segment operating profit margin excluding the effects of the GE industrial portion of Corporate items and eliminations; and our operating cash flow without the effects of GECS dividends which can also vary from period to period.
 

9