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

 
PRESS RELEASE    

GE Reports First-Quarter EPS up 10% to $.44 per share;
Reaffirms Total Year 2007 Guidance
 
 
1Q ’07 Highlights (Continuing Operations)

  • Earnings per share (EPS) of $.44, up 10%; Earnings of $4.5 billion, up 8%
  • Revenues of $40.2 billion, up 6%; Organic revenue growth of 8%
  • Global revenues of $19.6 billion, up 9%, and developing markets revenues of $7 billion, up 14%
  • Major equipment backlog of $37 billion, up 32%; services orders up 11%; financial services assets grew 22%
  • Segment operating profit margin increased 130 basis points to 14.4%
  • Return on average total capital (ROTC) increased 100 basis points to 18.1%
  • Cash flow from GE’s operating activities (CFOA) of $7.4 billion, up 10%
 
 

Fairfield, Conn., April 13, 2007 - GE announced today record first-quarter 2007 earnings from continuing operations of $4.5 billion or $.44 per share, up 8% and 10%, respectively, from first quarter 2006. Revenues from continuing operations were $40.2 billion, up 6%, increasing 8% organically.
 
“Infrastructure and Commercial Finance had strong quarters, and combined with the continued turnaround at NBC Universal, we delivered another quarter of double-digit EPS growth,” GE Chairman and CEO Jeff Immelt said. “Demand for global infrastructure in our Energy, Aviation and Oil & Gas businesses helped Infrastructure deliver 28% segment profit growth, while asset and earnings growth in Capital Solutions and Real Estate led to 21% segment profit growth at Commercial Finance. Our global growth was strong with developing markets revenues of $7 billion and total global revenues of $19.6 billion, increasing 14% and 9%, respectively.

“We delivered our ninth straight quarter of organic revenue growth of 2-3 times global GDP. Specifically, services revenues grew 10% and our Imagination Breakthrough programs contributed $5 billion of revenue - all driven by our growth initiative,” Immelt said.

Total orders for the company were up 3%, reflecting comparable first quarter 2006 orders that were particularly robust. Major equipment backlog grew to $37 billion, up 32% year-over-year, and increasing $5 billion from year-end 2006. Major equipment orders were 50% greater than shipments in the quarter, providing highly visible future organic growth. This growing installed base is creating strong demand for the company’s services. Services orders were up 11%, and Customer Service Agreement (CSA) backlog stands at $94 billion, an increase of 9% year-over-year.
 
 
1


 
Segment profit grew 13% and segment operating profit margin increased 130 basis points to 14.4%, on track to meet the company’s goal of 100 basis points of margin expansion for the year. Improving margins are driving higher returns. ROTC grew 100 basis points to 18.1%.

“GE Money’s earnings were tempered by challenges at its U.S. mortgage business (WMC), and Healthcare had a temporary regulatory suspension on shipments of its surgical supplies that affected their performance. Both of these businesses are in great shape and should rebound during the remainder of the year,” Immelt said. “Our ability to deliver such a solid quarter with these short-term headwinds truly demonstrates the breadth, strength and diversity of our businesses.
 
“As communicated at the December investor meeting, we expect to generate $1-2 billion in total gains from dispositions for the year. These gains will be used primarily for restructuring actions to make our businesses more efficient and more profitable,” Immelt said.

In the first quarter, the company realized a $0.6 billion pre-tax gain from the sale of its common stock in Swiss Re. At the same time, the company incurred several significant costs, including a $0.2 billion charge for an asbestos-related legal ruling and $0.4 billion of restructuring and other charges, including $0.1 billion for Industrial, $0.1 billion for Infrastructure, and $0.1 billion for Commercial Finance and GE Money. These items affected the GE and GE Capital Services earnings contributions for the quarter. Additionally, the company’s consolidated tax rate was 17%, in line with its expectations.  

First-Quarter 2007 Financial Highlights:

Earnings from continuing operations were a record $4.5 billion, up 8% from $4.2 billion in first quarter 2006. EPS from continuing operations were $.44, up 10% from last year’s $.40. GE’s Infrastructure and Commercial Finance businesses contributed strong double-digit earnings growth for the quarter.

Including the effects of discontinued operations, first-quarter net earnings were $4.5 billion ($.44 per share) in 2007 and $4.4 billion ($.42 per share) in first quarter 2006.

Continuing revenues grew 6% to a record $40.2 billion. Financial services revenues grew 16% over last year to $17.3 billion, reflecting core growth and the net effects of acquisitions. Industrial sales were $22.9 billion, an increase of 7% from first quarter 2006 excluding the net effects of dispositions and the lack of a current-year counterpart to the 2006 Olympics broadcasts, and down 1% including those effects.

Cash generated from GE’s operating activities in the first three months of 2007 totaled $7.4 billion, up 10% from $6.7 billion last year, reflecting a 14% increase in GE Capital Services’ dividends, including proceeds from sales of insurance holdings; and a 6% increase from the industrial businesses.

“We expect to continue to deliver consistent, double-digit earnings growth with expanding margins and increasing returns in 2007. As reflected by our first-quarter results, our businesses are capitalizing on the big drivers of the global economy,” Immelt said. “For the second quarter, we expect to deliver EPS from continuing operations of $.52-.54, up 8-13% over comparable 2006 earnings. For the full year 2007, we are reaffirming our guidance of EPS from continuing operations of $2.18-2.23, an increase of 10-12%.”
 
 
2

 
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, 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:

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 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
  
 2007
 
2006
 
V%
     
2007
 
2006
 
V%
     
2007
 
2006
 
V%
  
Revenues
                                                        
Sales of goods and services
  
$
22,685
  
$
23,484
        
$
22,858
  
$
23,086
        
$
32
  
$
555
        
Other income
    
488
   
451
         
551
   
479
         
-
   
-
       
GECS earnings from continuing operations
    
-
   
-
         
3,025
   
2,405
         
-
   
-
       
GECS revenues from services
    
17,022
   
13,886
         
-
   
-
         
17,302
   
14,126
       
GECS commercial paper interest rate swap adjustment
    
-
   
208
         
-
   
-
         
-
   
208
       
    Total revenues
    
40,195
   
38,029
   
6
%
  
26,434
   
25,970
   
2
%
  
17,334
   
14,889
   
16
%
                                                         
Costs and expenses
                                                        
Cost of sales, operating and administrative expenses
    
26,826
   
26,698
         
20,635
   
20,701
         
6,469
   
6,236
       
Interest and other financial charges
    
5,699
   
4,348
         
575
   
384
         
5,324
   
4,094
       
Investment contracts, insurance losses and                                                        
    insurance annuity benefits
    
860
   
749
         
-
   
-
         
930
   
805
       
Provision for losses on financing receivables
    
1,174
   
822
         
-
   
-
         
1,174
   
822
       
Minority interest in net earnings of consolidated affiliates
    
219
   
238
         
126
   
163
         
93
   
75
       
    Total costs and expenses
    
34,778
   
32,855
   
6
%
  
21,336
   
21,248
   
0
%
  
13,990
   
12,032
   
16
%
                                                         
Earnings from continuing operations before income taxes (a)
    
5,417
   
5,174
   
5
%
  
5,098
   
4,722
   
8
%
  
3,344
   
2,857
   
17
%
Provision for income taxes
    
(907
)
  
(997
)
        
(588
)
  
(545
)
        
(319
)
  
(452
)
      
Earnings from continuing operations
    
4,510
   
4,177
   
8
%
  
4,510
   
4,177
   
8
%
  
3,025
   
2,405
   
26
%
                                                         
Earnings (loss) from discontinued operations, net of taxes
    
(2
)
  
263
         
(2
)
  
263
         
(2
)
  
263
       
                                                         
Net earnings
  
$
4,508
  
$
4,440
    
2
%
$
4,508
  
$
4,440
    
2
%
$
3,023
  
$
2,668
    
13
%
                                                         
Per-share amounts - earnings from continuing operations
                                                        
Diluted earnings per share
  
$
0.44
  
$
0.40
    
10
%
                                    
Basic earnings per share
  
$
0.44
  
$
0.40
    
10
%
                                    
                                                         
Per-share amounts - net earnings
                                                        
Diluted earnings per share
  
$
0.44
  
$
0.42
    
5
%
                                    
Basic earnings per share
  
$
0.44
  
$
0.43
    
2
%
                                    
                                                         
Total average equivalent shares
                                                        
Diluted shares
    
10,317
   
10,480
   
(2
)%
                                    
Basic shares
    
10,284
   
10,442
   
(2
)%
                                    
                                                         
Dividends declared per share
 
$
0.28
  
$
0.25
    
12
%
                                    
 
(a)
 
Included in the GECS column for the three months ended March 31, 2007, is a gain on sale of common stock in Swiss Re ($0.6 billion pre tax) and restructuring and other charges ($0.1 billion pre tax). Included in the GE column for the same period are restructuring and other charges ($0.3 billion pre tax) and a charge for an asbestos-related legal ruling ($0.2 billion pre tax).
 
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.
 
 
 
 
GENERAL ELECTRIC COMPANY
Summary of Operating Segments (unaudited)
 
 

   
Three Months
 
   
Ended March 31
  
(Dollars in millions)
  
2007
 
2006
 
V%
  
               
Revenues
                    
Infrastructure
  
$
11,983
  
$
10,152
    
18
  
Commercial Finance
    
6,283
    
5,484
    
15
  
GE Money
    
5,807
    
5,090
    
14
  
Healthcare
    
3,641
    
3,659
    
0
  
NBC Universal
    
3,484
    
4,482
    
(22
)
Industrial
   
7,428
    
8,140
    
(9
)
Total segment revenues
    
38,626
    
37,007
    
4
  
Corporate items and eliminations (b)
    
1,569
    
1,022
    
54
  
                     
Consolidated revenues from continuing operations
  
$
40,195
  
$
38,029
    
6
  
                     
Segment profit (a)
                    
Infrastructure
  
$
2,183
  
$
1,703
    
28
  
Commercial Finance
    
1,421
    
1,174
    
21
  
GE Money
    
851
    
836
    
2
  
Healthcare
    
520
    
496
    
5
  
NBC Universal
    
691
    
654
    
6
  
Industrial
   
481
    
600
    
(20
)
Total segment profit
    
6,147
    
5,463
    
13
  
                     
Corporate items and eliminations (c)
    
(474
)
  
(357
)
  
(33
)
GE interest and other financial charges
    
(575
)
  
(384
)
  
(50
)
GE provision for income taxes
    
(588
)
  
(545
)
  
(8
)
                     
Earnings from continuing operations
    
4,510
    
4,177
    
8
  
                     
Earnings (loss) from discontinued operations, net of taxes
    
(2
)
  
263
    
U
  
                     
Consolidated net earnings
  
$
4,508
  
$
4,440
    
2
  
 

(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 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 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).
 
(b)
 
Corporate items and eliminations revenues for the three months ended March 31, 2007, included a gain on sale of common stock in Swiss Re ($0.6 billion pre tax).
 
(c)
Corporate items and eliminations for the three months ended March 31, 2007, included the gain on sale of common stock in Swiss Re, restructuring and other charges ($0.4 billion pre tax) and a charge for an asbestos-related legal ruling ($0.2 billion pre tax).
 
 
 
GENERAL ELECTRIC COMPANY
Summary of Operating Segments (unaudited)
Additional Information
 
   
Three Months
  
   
Ended March 31
  
(Dollars in millions)
  
2007
  
2006
  
V%
  
                     
Infrastructure
                    
Revenues
  
$
11,983
  
$
10,152
    
18
  
                     
Segment profit
  
$
2,183
  
$
1,703
    
28
  
Revenues
                    
Aviation
  
$
3,514
  
$
3,041
    
16
  
Aviation Financial Services
    
1,249
    
934
    
34
  
Energy
    
4,393
    
3,835
    
15
  
Energy Financial Services
    
324
    
301
    
8
  
Oil & Gas
    
1,146
    
772
    
48
  
Transportation
    
1,122
    
1,023
    
10
  
Segment profit
                    
Aviation
  
$
755
  
$
645
    
17
  
Aviation Financial Services
    
388
    
206
    
88
  
Energy
    
613
    
436
    
41
  
Energy Financial Services
    
101
    
117
    
(14
)
Oil & Gas
    
101
    
55
    
84
  
Transportation
    
210
    
204
    
3
  
                     
Commercial Finance
                    
Revenues
  
$
6,283
  
$
5,484
    
15
  
                     
Segment profit
  
$
1,421
  
$
1,174
    
21
  
Revenues
                    
Capital Solutions
  
$
2,893
  
$
2,820
    
3
  
Real Estate
    
1,615
    
1,075
    
50
  
Segment profit
                    
Capital Solutions
  
$
380
  
$
339
    
12
  
Real Estate
    
564
    
441
    
28
  
                     
Industrial
                    
Revenues
  
$
7,428
  
$
8,140
    
(9
)
                     
Segment profit
  
$
481
  
$
600
    
(20
)
Revenues
                    
Consumer & Industrial
  
$
3,233
  
$
3,534
    
(9
)
Equipment Services
    
1,748
    
1,634
    
7
  
Plastics
    
1,598
    
1,644
    
(3
)
Segment profit
                    
Consumer & Industrial
  
$
267
  
$
220
    
21
  
Equipment Services
    
19
    
16
    
19
  
Plastics
    
121
    
225
    
(46
)
 
 
 
GENERAL ELECTRIC COMPANY
Condensed Statement of Financial Position
 
 
(Dollars in billions)
                   
 
      
   
Consolidated
  
 GE
  
 Financial
Services (GECS)
  
Assets
  
3/31/07
 
12/31/06
 
 3/31/07
 
12/31/06
 
3/31/07
 
12/31/06
 
    Cash & marketable securities
  
$
64.4
  
$
62.1
  
$
9.5
  
$
4.8
  
$
58.0
  
$
60.1
  
    Receivables
    
12.7
   
14.0
   
13.0
   
14.3
   
-
   
-
 
    Inventories
    
13.1
   
11.4
   
13.1
   
11.3
   
0.1
   
0.1
 
    GECS financing receivables - net
   
335.4
   
334.2
   
-
   
-
   
335.5
   
334.2
 
    Property, plant & equipment - net
    
77.7
   
75.0
   
16.6
   
16.7
   
61.1
   
58.2
 
    Investment in GECS
    
-
   
-
   
52.7
   
54.1
   
-
   
-
 
    Goodwill & intangible assets
   
88.9
   
86.4
   
61.4
   
60.5
   
27.5
   
26.0
 
    Other assets
    
121.9
   
114.1
   
35.6
   
34.1
   
91.8
   
86.1
 
                                       
Total assets
  
$
714.1
  
$
697.2
  
$
201.9
  
$
195.8
  
$
574.0
  
$
564.7
  
                                       
Liabilities and equity
                                      
    Borrowings
  
$
450.1
  
$
433.0
  
$
14.3
  
$
11.3
  
$
440.5
  
$
426.3
  
    Investment contracts, insurance liabilities
                                     
        and insurance annuity benefits
    
34.8
   
34.5
   
-
   
-
   
35.2
   
34.8
 
    Other liabilities & minority interest
    
114.5
   
116.9
   
73.4
   
72.2
   
45.1
   
49.0
 
    Liabilities of discontinued operations
    
0.5
   
0.5
   
-
   
-
   
0.5
   
0.5
 
    Shareowners' equity
    
114.2
   
112.3
   
114.2
   
112.3
   
52.7
   
54.1
 
                                       
Total liabilities and equity
  
$
714.1
  
$
697.2
  
$
201.9
  
$
195.8
  
$
574.0
  
$
564.7
  



March 31, 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.
 
 

 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 March 31, 2007, compared with the three months ended March 31, 2006; segment operating profit margin excluding the effects of the GE Industrial portion of Corporate items and eliminations; return on average total capital (ROTC), which is calculated using average total shareowners' equity, excluding effects of discontinued operations; and GE Industrial sales excluding the net effects of dispositions and the 2006 Olympics broadcasts. 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
  
Organic Revenue Growth – Continuing Operations
    
2007
    
2006
    
V
%
                     
Revenues as reported
                    
Less the effects of
  
$
40,195
  
$
38,029
    
6
%
    Acquisitions, business dispositions (other than dispositions of businesses acquired for investment)
                   
        and currency exchange rates
   
2,159
   
1,761
       
    The 2006 Olympics broadcasts
    
-
   
684
       
    The GECS commercial paper interest rate swap adjustment
    
-
   
208
       
Revenues excluding the effects of acquisitions, business dispositions (other than dispositions of
                   
    businesses acquired for investment), currency exchange rates, the 2006 Olympics broadcasts and
                    
    the GECS commercial paper interest rate swap adjustment (organic revenues)
  
$
38,036
  
$
35,376
    
8
%
 
 

   
Three months   
  
Three months   
      
   
ended March 31, 2007  
        
ended March 31, 2006  
            
Segment Operating Profit Margin
    
Revenues
    
Op profit
    
Op profit
%
  
Revenues
    
Op profit
    
Op profit
%
  
V pts.
  
                                             
As reported
  
$
23,409
  
$
2,648
    
11.3
%
$
23,565
  
$
2,701
    
11.5
%
  
(0.2
)%
Less the effects of
                                            
   GE Industrial portion of Corporate items and eliminations
    
97
   
(702
)
        
7
   
(383
)
            
GE Industrial revenues, operating profit and operating profit                                            
  margin excluding the effects of the
                                           
    Industrial portion of Corporate items and eliminations
 
$
23,312
  
$
3,350
    
14.4
%
$
23,558
  
$
3,084
    
13.1
%
  
1.3
%
 
 

   
Three months
 
   
ended March 31
  
Average Total Shareowners' Equity, Excluding Effects of Discontinued Operations (a)
    
2007
    
2006
  
               
Average total shareowners' equity (b)
  
$
110,836
  
$
111,210
  
Less the effects of
              
Cumulative earnings from discontinued operations
    
-
   
1,469
 
Average net investment in discontinued operations
   
1,692
   
6,873
 
Average total shareowners' equity, excluding effects of discontinued operations (a)
  
$
109,144
  
$
102,868
  
 

(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
 
 

   
Three months   
  
   
ended March 31  
  
GE Industrial sales excluding dispositions and the 2006 Olympics broadcasts
    
2007
    
2006
    
V
%
                     
As reported
  
$
22,858
  
$
23,086
    
(1
)%
Less the effects of
                    
    Industrial business dispositions (other than dispositions of businesses acquired for investment)
    
-
   
1,066
       
    The 2006 Olympics broadcasts
    
-
   
684
       
GE Industrial sales excluding the effects of industrial business dispositions
                    
    (other than dispositions of businesses acquired for investment) and the 2006 Olympics broadcasts
  
$
22,858
  
$
21,336
    
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 2007 revenue growth without the effects of acquisitions, dispositions, currency exchange rates, the 2006 Olympics broadcasts and the GECS commercial paper interest rate swap adjustment; segment operating profit margin excluding the effects of the GE Industrial portion of Corporate items and eliminations; average total shareowners' equity, excluding effects of discontinued operations; and GE Industrial sales excluding the effects of industrial business dispositions (other than dispositions of businesses acquired for investment) and the 2006 Olympics broadcasts.