EX-99.A CHARTER 6 ge3q14_ex99a.htm

Exhibit 99(a)
General Electric Company
Financial Measures That Supplement Generally Accepted Accounting Principles


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:
·
Operating earnings and operating earnings per share (EPS)
·
Operating and non-operating pension costs (income)
·
GE Capital ending net investment (ENI), excluding cash and equivalents
·
Industrial segment organic revenue growth
The reasons we use these non-GAAP financial measures and their reconciliation to their most directly comparable GAAP financial measures follow.

Operating Earnings and Operating EPS
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30
(Dollars in millions; except earnings per share)
2014
 
2013
 
V%
 
 
 
 
 
 
 
 
Earnings from continuing operations attributable to GE
$
 3,480
 
$
 3,282
 
 6 %
Adjustment (net of tax): non-operating pension costs/(income)
 
 349
 
 
 426
 
 
Operating earnings
$
 3,829
 
$
 3,708
 
 3 %
 
 
 
 
 
 
 
 
Earnings per share – diluted(a)
 
 
 
 
 
 
 
Continuing earnings per share
$
 0.34
 
$
 0.32
 
 6 %
Adjustment (net of tax): non-operating pension costs/(income)
 
 0.03
 
 
 0.04
 
 
Operating earnings per share
$
 0.38
 
$
 0.36
 
 6 %
 
 
 
 
 
 
 
 

 
Nine months ended September 30
(In millions; except earnings per share)
2014
 
2013
 
V%
 
 
 
 
 
 
 
 
Earnings from continuing operations attributable to GE
$
 10,053
 
$
 10,186
 
 (1)%
Adjustment (net of tax): non-operating pension costs/(income)
 
 1,035
 
 
 1,279
 
 
Operating earnings
$
 11,088
 
$
 11,465
 
 (3)%
 
 
 
 
 
 
 
 
Earnings per share – diluted(a)
 
 
 
 
 
 
 
Continuing earnings per share
$
 0.99
 
$
 0.98
 
 1 %
Adjustment (net of tax): non-operating pension costs/(income)
 
 0.10
 
 
 0.12
 
 
Operating earnings per share
$
 1.09
 
$
 1.11
 
 (2)%
 
 
 
 
 
 
 
 
(a)
Earnings-per-share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total.

Operating earnings excludes non-service related pension costs of our principal pension plans comprising interest cost, expected return on plan assets and amortization of actuarial gains/losses. The service cost, prior service cost and curtailment loss components of our principal pension plans are included in operating earnings. We believe that these components of pension cost better reflect the ongoing service-related costs of providing pension benefits to our employees. As such, we believe that our measure of operating earnings provides management and investors with a useful measure of the operational results of our business. Other components of GAAP pension cost are mainly driven by capital allocation decisions and market performance, and we manage these separately from the operational performance of our businesses. Neither GAAP nor operating pension costs are necessarily indicative of the current or future cash flow requirements related to our pension plan. We also believe that this measure, considered along with the corresponding GAAP measure, provides management and investors with additional information for comparison of our operating results to the operating results of other companies.
(88)

Operating and Non-Operating Pension Costs (Income)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30
 
Nine months ended September 30
(In millions)
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
Service cost for benefits earned
$
 304
 
$
 362
 
$
 921
 
$
 1,145
Prior service cost amortization
 
 54
 
 
 62
 
 
 162
 
 
 185
Curtailment loss
 
 65
 
 
 -
 
 
 65
 
 
 -
Operating pension costs
 
 423
 
 
 424
 
 
 1,148
 
 
 1,330
Expected return on plan assets
 
 (792)
 
 
 (875)
 
 
 (2,393)
 
 
 (2,625)
Interest cost on benefit obligations
 
 687
 
 
 615
 
 
 2,060
 
 
 1,845
Net actuarial loss amortization
 
 642
 
 
 916
 
 
 1,925
 
 
 2,748
Non-operating pension costs (income)
 
 537
 
 
 656
 
 
 1,592
 
 
 1,968
Total principal pension plans costs
$
 960
 
$
 1,080
 
$
 2,740
 
$
 3,298
 
 
 
 
 
 
 
 
 
 
 
 

We have provided the operating and non-operating components of cost for our principal pension plans.  Operating pension costs comprise the service cost of benefits earned, prior service cost amortization and curtailment loss for our principal pension plans. Non-operating pension costs (income) comprise the expected return on plan assets, interest cost on benefit obligations and net actuarial loss amortization for our principal pension plans. We believe that the operating components of pension costs better reflects the ongoing service-related costs of providing pension benefits to our employees. We believe that the operating and non-operating components of cost for our principal pension plans, considered along with the corresponding GAAP measure, provide management and investors with additional information for comparison of our pension plan costs and operating results with the pension plan costs and operating results of other companies.



GE Capital Ending Net Investment (ENI), Excluding Cash and Equivalents
 
 
 
 
(In billions)
September 30, 2014
 
 
 
GECC total assets
$
 506.9
   Less assets of discontinued operations
 
 1.3
   Less non-interest bearing liabilities
 
 60.9
GE Capital ENI
 
 444.7
   Less cash and equivalents
 
 79.9
GE Capital ENI, excluding cash and equivalents
$
 364.8
 
 
 

We use ENI to measure the size of our GE Capital segment. We believe that this measure is a useful indicator of the capital (debt or equity) required to fund a business as it adjusts for non-interest bearing current liabilities generated in the normal course of business that do not require a capital outlay. We also believe that by excluding cash and equivalents, we provide a meaningful measure of assets requiring capital to fund our GE Capital segment as a substantial amount of this cash and equivalents resulted from debt issuances to pre-fund future debt maturities and will not be used to fund additional assets. Providing this measure will help investors measure how we are performing against our previously communicated goal to reduce the size of our financial services segment.

(89)

Industrial Segment Organic Revenue Growth
 
Three months ended September 30
 
Nine months ended September 30
(Dollars in millions)
 
2014
 
 
2013
 
V%
 
 
2014
 
 
2013
 
V%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Power & Water
$
 6,375
 
$
 6,498
 
 
 
$
 18,176
 
$
 17,038
 
 
    Oil & Gas
 
 4,597
 
 
 4,315
 
 
 
 
 13,666
 
 
 11,669
 
 
    Energy Management
 
 1,813
 
 
 1,828
 
 
 
 
 5,341
 
 
 5,557
 
 
    Aviation
 
 5,698
 
 
 5,364
 
 
 
 
 17,566
 
 
 15,741
 
 
    Healthcare
 
 4,485
 
 
 4,304
 
 
 
 
 13,166
 
 
 13,083
 
 
    Transportation
 
 1,540
 
 
 1,406
 
 
 
 
 4,073
 
 
 4,425
 
 
    Appliances & Lighting
 
 2,117
 
 
 2,098
 
 
 
 
 6,094
 
 
 6,142
 
 
Industrial segment revenues
 
 26,625
 
 
 25,813
 
3%
 
 
 78,082
 
 
 73,655
 
6%
Less the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Acquisitions, business dispositions (other than
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  dispositions of businesses acquired for investment)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     and currency exchange rates
 
 815
 
 
 880
 
 
 
 
 2,288
 
 
 1,729
 
 
Industrial segment revenues excluding effects of acquisitions,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     business dispositions (other than dispositions of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     businesses acquired for investment) and currency
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     exchange rates (Industrial segment organic revenues)
$
 25,810
 
$
 24,933
 
4%
 
$
 75,794
 
$
 71,926
 
5%

Organic revenue growth measures revenue excluding the effects of acquisitions, business dispositions and currency exchange rates.  We believe that this measure provides management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and currency exchange, which activities are subject to volatility and can obscure underlying trends.  We also believe that presenting organic revenue growth separately for our industrial businesses provides management and investors with useful information about the trends of our industrial businesses and enables a more direct comparison to other non-financial businesses and companies.  Management recognizes that the term "organic revenue growth" may be interpreted differently by other companies and under different circumstances. Although this may have an effect on comparability of absolute percentage growth from company to company, we believe that these measures are useful in assessing trends of the respective businesses or companies and may therefore be a useful tool in assessing period-to-period performance trends.

(90)