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

PRESS RELEASE                                           

GE Reports First Quarter 2008 Net EPS of $.43, down 2%, and
Continuing EPS of $.44, down 8%; Revenues of $42.2 billion, up 8%;
Orders of $24 billion, up 8%; Solid Industrial Earnings Offset by
Financial Services
 
1Q 2008 Highlights

§  
Continuing earnings per share (EPS) of $.44, down 8%; continuing earnings of $4.4 billion, down 12%
§  
Net EPS of $.43, down 2%; net earnings of $4.3 billion, down 6%
§  
Revenues of $42.2 billion, up 8%; Global revenue growth of 22%
§  
Industrial organic revenue growth of 5%; financial services organic revenue decline of 8%
§  
Industrial cash flow from operating activities (CFOA) of $3.7 billion, an increase of 8%
§  
Return on average total capital (ROTC) at 18.1%
§  
Total orders of $24 billion, up 8%; major equipment orders of $12 billion, up 11%;
services orders of $8.3 billion, up 5%
§  
Major equipment backlog of $52 billion, up 41%; customer service agreement (CSA) backlog of
$110 billion, up 16%
§  
Lowering EPS guidance for full year 2008 to $2.20 - 2.30, up 0-5% from 2007
 
 
Fairfield, Conn., Apr. 11, 2008 – GE announced today first quarter 2008 earnings from continuing operations of $4.4 billion with $.44 per share, down 8% from first quarter 2007.  First quarter 2008 net earnings were $4.3 billion with $.43 per share, down 2% from first quarter 2007.  First quarter revenues from continuing operations were $42.2 billion, up 8%.

“Demand for our global Infrastructure business remained strong, but our financial services businesses were challenged by a slowing U.S. economy and difficult capital markets,” GE Chairman and CEO Jeff Immelt said.  “While we are disappointed with our results, the fundamentals of our businesses are strong.

“Infrastructure had a solid quarter, growing revenues 23% and earnings 17%,” Immelt said.  “Oil & Gas, Energy, Transportation, and Aviation all generated double-digit profit growth – with no signs of slowing.  Infrastructure orders increased 12%, and we added more than $3 billion in backlog since last quarter.”

Total orders were $24 billion, up 8%.  Major equipment orders grew 11% to $12 billion. Major equipment backlog was at $52 billion, an increase of 41%. Services orders were up 5%, and CSA backlog stood at $110 billion, an increase of 16% year-over-year.

 
1

 
“Our focus on globalization has helped sustain the Company during the U.S. slowdown. Global revenues grew 22%, with strength in virtually every business,” Immelt said.  “Developing country growth was 38%, and 14% in developed countries outside the U.S.

“Nevertheless, we failed to meet our expectations.  Our primary shortfall was a decline in financial services earnings.  We knew the first quarter was going to be challenging, but the extraordinary disruption in the capital markets in March affected our ability to complete asset sales and resulted in higher mark-to-market losses and impairments,” Immelt said.  “Our inability to complete these asset sales and higher mark-to-market losses and impairments impacted earnings by $.05 per share versus plan.

“Commercial Finance and GE Money remain in good shape and still earned $2.2 billion in a tough market. Our balance sheet is strong, portfolio quality is stable and we are originating business at high margins.

“Our other industrial businesses had mixed performances.  NBC Universal grew segment profits 3%, for its sixth straight quarter of profit growth,” Immelt said.  “In the Industrial segment, we had strong performance in Enterprise Solutions, with profit up 15%, partially offsetting a difficult U.S. appliance market.  Healthcare earnings were impacted by a difficult U.S. environment and continued regulatory shipping restrictions on the surgical supplies business.

“In light of what we have seen in the first quarter, we have revised our earnings outlook for the full year to protect investors by reflecting a slower economy and assuming capital markets remain challenging,” Immelt said.  “We are lowering our full-year EPS guidance to $2.20-2.30 from continuing operations for growth of 0-5%.  As a part of this guidance, we expect our industrial earnings to grow 10-15% and financial services earnings to decline 5-10%.  This range encompasses any portfolio actions we have announced.  Consistent with this range, our second quarter 2008 guidance is $.53-.55 EPS.”

First Quarter 2008 Financial Highlights:

Earnings from continuing operations were $4.4 billion, down 12% from $4.9 billion in the first quarter of 2007. EPS from continuing operations were $.44, down 8% from last year’s $.48. GE’s Infrastructure business’ strong double-digit earnings growth for the quarter was offset by double-digit decreases at Commercial Finance, GE Money, Healthcare, and Industrial.

Including the effects of discontinued operations, first quarter net earnings were $4.3 billion ($.43 per share) in 2008 and $4.6 billion ($.44 per share) in the first quarter of 2007.

Continuing revenues grew 8% to $42.2 billion. Financial services revenues grew 3% over last year to $18.1 billion. Industrial sales were $24.2 billion, an increase of 12% from first quarter of 2007.

Cash generated from GE’s operating activities in the first three months of 2008 totaled $4.9 billion, down 34% from $7.3 billion last year, reflecting a $2.7 billion decrease in GE Capital Services’ dividends due to the non-repeat of a special $2.7 billion dividend from the sale of Swiss Re common stock and GE Life in the first quarter of 2007.  The Company had solid industrial cash flow from operating activities of $3.7 billion, an increase of 8%, for the quarter, and is on track to reach its goal of $23 billion for the full year. Return on total capital was 18.1%.
 
 
2

 
“We take full accountability for our performance and are making the right operational adjustments for this environment,” Immelt said.  “The Company’s business fundamentals are solid with strong global growth led by Infrastructure, robust orders and increasing backlog, a ‘Triple-A’-rated balance sheet, healthy cash flow, and disciplined capital allocation.”

GE will discuss preliminary first 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)
  
Three months ended March 31
    
2008
    
2007
  
V
%
  
2008
    
2007
  
V
%
  
2008
    
2007
  
V
%
Revenues
   
    
     
    
     
  
     
    
     
    
     
  
     
    
     
    
     
    
Sales of goods and services
  
$
24,322
  
$
21,515
      
$
24,186
  
$
21,688
      
$
367
  
$
32
      
Other income
    
575
    
511
        
658
    
574
        
–
    
–
      
GECS earnings from continuing
                                                  
operations
    
–
    
–
        
2,466
    
3,424
        
–
    
–
      
GECS revenues from services
    
17,346
    
17,174
        
–
    
–
        
17,686
    
17,453
      
Total revenues
    
42,243
    
39,200
  
8
%
  
27,310
    
25,686
  
6
%
  
18,053
    
17,485
  
3
%
                                                   
Costs and expenses
                                                  
Cost of sales, operating and administrative expenses
    
28,242
    
25,443
        
21,472
    
19,455
        
7,129
    
6,265
      
Interest and other financial charges
    
6,516
    
5,578
        
588
    
533
        
6,179
    
5,245
      
Investment contracts, insurance losses
                                                  
and insurance annuity benefits
    
804
    
860
        
–
    
–
        
848
    
930
      
Provision  for losses on financing
                                                  
receivables
    
1,329
    
936
        
–
    
–
        
1,329
    
936
      
Minority interest in net earnings of
                                                  
consolidated affiliates
    
162
    
223
        
131
    
130
        
31
    
93
      
Total costs and expenses
    
37,053
    
33,040
  
12
%
  
22,191
    
20,118
  
10
%
  
15,516
    
13,469
  
15
%
                                                   
Earnings from continuing operations
                                                  
before income taxes
    
5,190
    
6,160
  
(16)
%
  
5,119
    
5,568
  
(8)
%
  
2,537
    
4,016
  
(37)
%
Provision for income taxes
    
(829
)
  
(1,232
)
      
(758
)
  
(640
)
      
(71
)
  
(592
)
    
Earnings from continuing operations
    
4,361
    
4,928
  
(12)
%
  
4,361
    
4,928
  
(12)
%
  
2,466
    
3,424
  
(28)
%
                                                   
Loss from discontinued operations,
                                                  
net of taxes
    
(57
)
  
(357
)
      
(57
)
  
(357
)
      
(71
)
  
(401
)
    
                                                   
Net earnings
  
$
4,304
  
$
4,571
  
(6)
%
$
4,304
  
$
4,571
  
(6)
%
$
2,395
  
$
3,023
  
(21)
%
                                                   
Per-share amounts – earnings from
                                                  
continuing operations
                                                  
Diluted earnings per share
  
$
0.44
  
$
0.48
  
(8)
%
                                
Basic earnings per share
  
$
0.44
  
$
0.48
  
(8)
%
                                
                                                   
Per-share amounts – net earnings
                                                  
Diluted earnings per share
  
$
0.43
  
$
0.44
  
(2)
%
                                
Basic earnings per share
  
$
0.43
  
$
0.44
  
(2)
%
                                
                                                   
Total average equivalent shares
                                                  
Diluted shares
    
10,006
    
10,317
  
(3)
%
                                
Basic shares
    
9,978
    
10,284
  
(3)
%
                                
                                                   
Dividends declared per share
  
$
0.31
  
$
0.28
  
11
%
                                

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 2007 consolidated financial statements at www.ge.com/annual07 for further information about consolidation matters.
 

4
 
GENERAL ELECTRIC COMPANY
 
Summary of Operating Segments (unaudited)
 

 
Three Months
Ended March 31
  
 (Dollars in millions) 
2008
  
2007
  
V
%
                   
Revenues
                  
Infrastructure
$
14,960
  
$
12,202
    
23
  
Commercial Finance
  
8,566
    
8,031
    
7
  
GE Money
  
6,377
    
5,958
    
7
  
Healthcare
  
3,887
    
3,895
    
-
  
NBC Universal
  
3,584
    
3,484
    
3
  
Industrial
  
4,110
    
4,089
    
1
  
Total segment revenues
  
41,484
    
37,659
    
10
  
Corporate items and eliminations
  
759
    
1,541
    
(51
)
                   
Consolidated revenues from continuing operations
$
42,243
  
$
39,200
    
8
  
                   
Segment profit (a) 
                  
Infrastructure
$
2,588
  
$
2,208
    
17
  
Commercial Finance
  
1,158
    
1,440
    
(20
)
GE Money
  
995
    
1,223
    
(19
)
Healthcare
  
528
    
637
    
(17
)
NBC Universal
  
712
    
691
    
3
  
Industrial
  
300
    
358
    
(16
)
Total segment profit
  
6,281
    
6,557
    
(4
)
                   
Corporate items and eliminations
  
(574
)
  
(456
)
  
(26
)
GE interest and other financial charges
  
(588
)
  
(533
)
  
(10
)
GE provision for income taxes
  
(758
)
  
(640
)
  
(18
)
                   
Earnings from continuing operations
$
4,361
  
$
4,928
    
(12
)
                   
Loss from discontinued operations (net of taxes) 
$
(57
)
$
(357
)
  
84
  
                   
Consolidated net earnings
$
4,304
  
$
4,571
    
(6
)

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

 
5
 
GENERAL ELECTRIC COMPANY
 
Summary of Operating Segments (unaudited)
 
Additional Information
 

 
Three Months
Ended March 31
  
 (Dollars in millions) 
2008
  
2007
  
V
%
                   
Infrastructure
                  
Revenues
$
14,960
  
$
12,202
    
23
  
                   
Segment profit
$
2,588
  
$
2,208
    
17
  
                   
Revenues
                  
Aviation
$
4,320
  
$
3,451
    
25
  
Aviation Financial Services
  
1,231
    
1,249
    
(1
)
Energy
  
5,640
    
4,667
    
21
  
Energy Financial Services
  
770
    
324
    
F
  
Oil & Gas
  
1,535
    
1,148
    
34
  
Transportation
  
1,148
    
1,128
    
2
  
                   
Segment profit
                  
Aviation
$
775
  
$
699
    
11
  
Aviation Financial Services
  
387
    
388
    
–
  
Energy
  
907
    
689
    
32
  
Energy Financial Services
  
145
    
101
    
44
  
Oil & Gas
  
161
    
102
    
58
  
Transportation
  
254
    
214
    
19
  
                   
Commercial Finance
                  
Revenues
$
8,566
  
$
8,031
    
7
  
                   
Segment profit
$
1,158
  
$
1,440
    
(20
)
                   
Revenues
                  
Capital Solutions
$
3,634
  
$
3,363
    
8
  
Real Estate
  
1,883
    
1,615
    
17
  
                   
Segment profit
                  
Capital Solutions
$
400
  
$
395
    
1
  
Real Estate
  
476
    
564
    
(16
)
                   
Industrial
                  
Revenues
$
4,110
  
$
4,089
    
1
  
                   
Segment profit
$
300
  
$
358
    
(16
)
                   
Revenues
                  
Consumer & Industrial
$
3,026
  
$
3,065
    
(1
)
Enterprise Solutions
  
1,105
    
1,024
    
8
  
                   
Segment profit
                  
Consumer & Industrial
$
147
  
$
224
    
(34
)
Enterprise Solutions
  
154
    
134
    
15
  


6
 
GENERAL ELECTRIC COMPANY
 
Condensed Statement of Financial Position
 


 
Consolidated
  
GE
  
Financial
Services (GECS)
  
(Dollars in billions)
3/31/08
  
12/31/07
  
3/31/08
  
12/31/07
  
3/31/08
  
12/31/07
  
                                     
Assets
                                    
Cash & marketable securities
  
60.9
    
61.2
    
5.5
    
7.0
    
56.1
    
54.5
  
Receivables
  
21.7
    
22.3
    
14.5
    
15.1
    
-
    
-
  
Inventories
  
14.3
    
12.9
    
14.2
    
12.8
    
0.1
    
0.1
  
GECS financing receivables - net
  
409.8
    
377.7
    
-
    
-
    
417.9
    
385.6
  
Property, plant & equipment - net
  
79.2
    
77.9
    
14.4
    
14.1
    
64.9
    
63.8
  
Investment in GECS
  
-
    
-
    
57.4
    
57.7
    
-
    
-
  
Goodwill & intangible assets
  
99.1
    
97.3
    
67.5
    
67.3
    
31.5
    
30.0
  
Other assets
  
141.5
    
139.2
    
42.1
    
40.7
    
105.9
    
105.4
  
Assets of discontinued operations
  
7.4
    
6.8
    
0.1
    
0.1
    
7.4
    
6.7
  
                                     
Total assets
$
833.9
  
$
795.3
  
$
215.7
  
$
214.8
  
$
683.8
  
$
646.1
  
                                     
                                     
Liabilities and equity
                                    
Borrowings
  
547.8
    
514.1
    
13.9
    
15.8
    
536.7
    
500.9
  
Insurance contracts, insurance liabilities and
                                    
  insurance annuity benefits
  
34.8
    
34.1
    
-
    
-
    
35.3
    
34.4
  
Other liabilities & minority interest
  
133.3
    
129.7
    
85.9
    
83.1
    
52.3
    
51.6
  
Liabilities of discontinued operations
  
2.3
    
1.8
    
0.2
    
0.3
    
2.1
    
1.5
  
Shareowners’ equity
  
115.7
    
115.6
    
115.7
    
115.6
    
57.4
    
57.7
  
                                     
Total liabilities and equity
$
833.9
  
$
795.3
  
$
215.7
  
$
214.8
  
$
683.8
  
$
646.1
  

March 31, 2008, 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 2007 consolidated financial statements at www.ge.com/annual07 for further information about consolidation matters.
 
 
7

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 GE industrial organic revenue growth for the three months ended March 31, 2008, compared with the three months ended March 31, 2007; financial services organic revenue decline for the three months ended March 31, 2008, compared with the three months ended March 31, 2007; growth in industrial cash from operating activities (industrial CFOA) for the first three months of 2008, compared with the first three months of 2007; 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 the most directly comparable GAAP financial measures follow.
 

(Dollars in millions)
Three months
ended March 31
  
GE Industrial Organic Revenue Growth - Continuing Operations
2008
  
2007
  
V
%
                   
Revenues as reported
$
24,844
  
$
22,262
    
12
%
Less the effects of
                  
Acquisitions, business dispositions (other than dispositions
                  
of businesses acquired for investment) and currency
                  
exchange rates
  
1,736
    
251
        
Revenues excluding the effects of acquisitions, business
                  
dispositions (other than dispositions of businesses acquired
                  
for investment) and currency exchange rates (organic revenues) 
$
23,108
  
$
22,011
    
5
%

 
 
Three months
ended March 31
  
Financial Services Organic Revenue Decline – Continuing
2008
  
2007
  
V
%
Operations
            
                   
Revenues as reported
$
18,053
  
$
17,485
    
3
%
Less the effects of
                  
Acquisitions, business dispositions (other than dispositions
                  
of businesses acquired for investment) and currency
                  
exchange rates
  
2,346
    
375
        
Revenues excluding the effects of acquisitions, business
                  
dispositions (other than dispositions of businesses acquired
                  
for investment) and currency exchange rates (organic revenues) 
$
15,707
  
$
17,110
    
(8)
%



 
Three months
ended March 31
  
Growth in Industrial CFOA
2008
  
2007
  
V
%
                   
Cash from GE’s operating activities as reported
$
4,854
  
$
7,324
    
(34)
%
Less dividends from GECS
  
1,130
    
3,872
        
Cash from GE’s operating activities excluding dividends
                  
from GECS (industrial CFOA) 
$
3,724
  
$
3,452
    
8
%

 
 
Three
months
ended
March 31
          
Average Total Shareowners’ Equity, Excluding Effects of
2008
          
Discontinued Operations (a)
            
                   
Average total shareowners’ equity (b) 
$
114,674
              
Less the effects of
                  
  Cumulative earnings from discontinued operations
  
-
              
  Average net investment in discontinued operations
  
2,326
              
Average total shareowners’ equity, excluding effects
                  
of discontinued operations (a)
$
112,348
              

(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 periods 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.
 
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 this reason, we believe that investors may find it useful to see our GE industrial and financial services revenue growth without the effects of acquisitions, dispositions and currency exchange rates; our operating cash flow without the effects of GECS dividends which can vary from period to period; and average total shareowners’ equity, excluding effects of discontinued operations.
 
 
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