EX-99.A 6 exhibit99a.htm EXHIBIT 99(A) exhibit99a.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
 
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,
   
(In millions; except earnings per share)
2013 
 
2012 
 
V%
               
Earnings from continuing operations attributable to GE
$
 3,273 
 
$
 3,450 
 
(5)%
Adjustment (net of tax): non-operating pension costs/(income)
 
 426 
   
 348 
   
Operating earnings
$
 3,699 
 
$
 3,798 
 
(3)%
               
Earnings per share – diluted(a)
             
Continuing earnings per share
$
 0.32 
 
$
 0.33 
 
(3)%
Adjustment (net of tax): non-operating pension costs/(income)
 
 0.04 
   
 0.03 
   
Operating earnings per share
$
 0.36 
 
$
 0.36 
 
 -% 
               
     
 
Nine months ended September 30,
   
(In millions; except earnings per share)
2013 
 
2012 
 
V%
               
Earnings from continuing operations attributable to GE
$
 10,164 
 
$
 10,339 
 
 (2)%
Adjustment (net of tax): non-operating pension costs/(income)
 
 1,279 
   
 1,036 
   
Operating earnings
$
 11,443 
 
$
 11,375 
 
 1%
               
Earnings per share – diluted(a)
             
Continuing earnings per share
$
 0.98 
 
$
 0.98 
 
 -% 
Adjustment (net of tax): non-operating pension costs/(income)
 
 0.12 
   
 0.10 
   
Operating earnings per share
$
 1.11 
 
$
 1.07 
 
 4%
               
               
               
 
(a) 
Earnings-per-share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total.
 
 

 
(1)
 
 


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 and prior service cost 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 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.

Operating and Non-Operating Pension Costs (Income)
   
Three months ended September 30,
 
Nine months ended September 30,
(In millions)
 
2013 
 
2012 
 
2013 
 
2012 
                         
Service cost for benefits earned
 
$
 362 
 
$
 356 
 
$
 1,145 
 
$
 1,044 
Prior service cost amortization
   
 62 
   
 70 
   
 185 
   
 210 
Operating pension costs
   
 424 
   
 426 
   
 1,330 
   
 1,254 
Expected return on plan assets
   
 (875)
   
 (939)
   
 (2,625)
   
 (2,830)
Interest cost on benefit obligations
   
 615 
   
 619 
   
 1,845 
   
 1,858 
Net actuarial loss amortization
   
 916 
   
 855 
   
 2,748 
   
 2,565 
Non-operating pension costs (income)
   
 656 
   
 535 
   
 1,968 
   
 1,593 
Total principal pension plans costs
 
$
 1,080 
 
$
 961 
 
$
 3,298 
 
$
 2,847 
                         

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 and prior service cost amortization 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.
 

 
 
(2)
 
 


GE Capital Ending Net Investment (ENI), excluding cash and equivalents
 

 
September 30,
(In billions)
2013 
     
Financial Services (GECC) total assets
$
 515.0 
      Adjustment: deferred income taxes
 
 5.7 
GECC total assets
 
 520.7 
      Less assets of discontinued operations
 
 (1.7)
      Less non-interest bearing liabilities
 
 (58.1)
GE Capital ENI
 
 460.9 
      Less cash and equivalents
 
 (76.3)
GE Capital ENI, excluding cash and equivalents
$
 384.6 
     


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 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.


 
(3)