GE Reports Record First-Quarter Financial Results with Double-Digit Increases in 2006 Earnings, Revenues and Cash Flow.FAIRFIELD Fairfield. 1 City (1990 pop. 12,200), Jefferson co., N central Ala., an industrial suburb of Birmingham; inc. 1919. Founded (1910) by the United States Steel Corp., its steel industry has greatly declined, negatively affecting the city's economy. , Conn. -- Financial Highlights (Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the ): --Revenues of $37.8 billion, up 10%; organic revenue growth of 9% --Earnings of $4.0 billion, up 14%; earnings per share (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) of $.39, up 18% --Total orders up 33% --Five of GE's six businesses deliver double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. earnings growth --Cash from GE's operating activities (CFOA CFOA Chief Fire Officers’ Association (UK Office of the Deputy Prime Minister Fire and Rescue National Framework) CFOA Cash Flow from Operating Activities CFOA Chief Financial Officer's Act of 1990 ) up 132% to $6.7 billion; Industrial CFOA up 24% --Return on average total capital (ROTC) increasing 1.4 percentage points to 17% GE announced today record first-quarter 2006 earnings from continuing operations of $4.0 billion or $.39 per share, up 14% and 18%, respectively, from first-quarter 2005. Revenues from continuing operations were also a record $37.8 billion, up 10% from last year's first quarter. Cash flow from GE's operating activities was a record $6.7 billion. "We had a strong performance in the quarter highlighted by double-digit growth in earnings, revenues and cash flow," said GE Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Jeff Immelt. "Driven by demand for our industrial equipment, momentum in healthcare and continued performance in our financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. businesses, we achieved 9% organic revenue growth. Five of six of GE's businesses delivered double-digit earnings growth. "Importantly, orders were strong across the company, growing 33%. Our orders for equipment and services were particularly robust, growing 67% and 20%, respectively. This gives us good visibility going forward," added Immelt. "Our solid fundamentals are delivering strong cash flow growth. For the quarter, we generated $6.7 billion in CFOA, an increase of 132% over the first quarter of last year, bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. by the proceeds from the sale of our remaining stake in Genworth. With our healthy cash position, we acquired 88 million shares of GE common stock, which accounts for $3 billion of the $7-9 billion stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. we have planned for this year. We also increased ROTC by 1.4 percentage points over the first quarter of 2005 to 17% - good progress toward our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. goal of exceeding 20%," said Immelt. "The first quarter results are a good reflection of our strategic execution," added Immelt. "Our products are winning in the global infrastructure markets, creating a high-margin installed base. We have sustained our high-return growth in financial services in an increasing interest rate environment. Our diversified diversified (di·verˑ·s healthcare franchise is winning globally with technical leadership that is providing consistent growth. We improved our operating performance in the Industrial segment. And we are improving NBC NBC in full National Broadcasting Co. Major U.S. commercial broadcasting company. It was formed in 1926 by RCA Corp., General Electric Co. (GE), and Westinghouse and was the first U.S. company to operate a broadcast network. Universal's performance based on a diversified business mix and quality programming," added Immelt. First-Quarter 2006 Financial Highlights: Earnings from continuing operations were $4.042 billion, up 14% from $3.560 billion in first quarter 2005. EPS from continuing operations were $.39, up 18% from last year's $.33. Five of GE's six businesses contributed double-digit earnings growth for the quarter. Continuing revenues of $37.8 billion were 10% higher than last year's $34.4 billion. Industrial sales increased 11% to $23.1 billion, reflecting core growth, and the effects of the 2006 Winter Olympic Games Olympic games, premier athletic meeting of ancient Greece, and, in modern times, series of international sports contests. The Olympics of Ancient Greece Although records cannot verify games earlier than 776 B.C. and acquisitions. Financial Services revenues grew 8% over last year to $14.7 billion, reflecting core growth. Cash generated from GE's operating activities in the first three months of 2006 totaled $6.7 billion compared with $2.9 billion last year, reflecting a 24% increase from the industrial businesses. The GE Capital Services' dividend of $3.4 billion for the quarter was up $3.2 billion over last year, primarily reflecting $2.5 billion from the sale of our remaining 18% stake in Genworth. Earnings from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. were $0.3 billion and included the results of Genworth, GE Insurance Solutions and, beginning in first quarter 2006, GE Life, which is in the process of being sold. Accordingly, first-quarter 2006 net EPS were $.41, up 11% from the first quarter of 2005. "Our strategic exit from the insurance business is on track," added Immelt. "We expect to close the sale of Insurance Solutions to Swiss Re Swiss Re is the world’s largest reinsurer, now that it has acquired GE Insurance Solutions (Ligi 2006). Founded in 1863, Swiss Re now operates in more than 30 countries. General Electric owns 8.9% of the firm. in the second quarter of this year and anticipate selling GE Life in the next 12 months. When we complete the Insurance Solutions sale, we will receive up to $3 billion in cash and have a stronger portfolio of higher return, less volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. businesses. "We are right on plan for the year. Our growth initiatives are performing well, our fundamentals are solid, our orders are up, and we have a healthy cash flow stream fueling our businesses and funding our share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program. The company is well positioned going forward. For the second quarter, we expect double-digit segment profit growth in five of our six businesses and EPS from continuing operations of $.46-.48. We are reaffirming our full-year 2006 guidance of earnings from continuing operations increasing 13-17% to $1.94-2.02," said Immelt. GE will discuss 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 NYSE See: New York Stock Exchange : 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 Advanced Materials is a leading peer-reviewed materials science journal published every two weeks. Advanced Materials includes Communications, Reviews, and Feature Articles from the cutting edge of materials science, including topics in chemistry, physics, , 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Results are preliminary and unaudited. 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 "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties which could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest rates and commodity prices; strategic actions, including 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; unanticipated loss development in our insurance businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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.
GENERAL ELECTRIC COMPANY
Condensed Statement of Earnings
Consolidated
----------------------
Three months ended March 31 2006 2005 V%
----------------------------------------------- -------- -------- ----
Revenues
Sales of goods and services $23,484 $21,405
GECS earnings from continuing operations - -
GECS revenues from services 13,886 12,628
Other income 451 317
-------- --------
Total revenues 37,821 34,350 10%
-------- --------
Costs and expenses
Cost of sales, operating and administrative
expenses 26,698 24,390
Interest and other financial charges 4,361 3,671
Investment contracts, insurance losses and
insurance annuity benefits 749 827
Provision for losses on financing receivables 822 902
Minority interest in net earnings of
consolidated affiliates 238 216
-------- --------
Total costs and expenses 32,868 30,006 10%
-------- --------
Earnings from continuing operations before
income taxes 4,953 4,344 14%
Provision for income taxes (911) (784)
-------- --------
Earnings from continuing operations 4,042 3,560 14%
Earnings from discontinued operations, net of
taxes 263 405
-------- --------
Net earnings $4,305 $3,965 9%
======== ========
Per-share amounts - earnings from continuing
operations
Diluted earnings per share $0.39 $0.33 18%
Total average equivalent shares 10,480 10,641 (2)%
Basic earnings per share $0.39 $0.34 15%
Total average equivalent shares 10,442 10,597 (1)%
Per-share amounts - net earnings
Diluted earnings per share $0.41 $0.37 11%
Total average equivalent shares 10,480 10,641 (2)%
Basic earnings per share $0.41 $0.37 11%
Total average equivalent shares 10,442 10,597 (1)%
Dividends declared per share $0.25 $0.22 14%
GE Financial Services
(GECS)
--------------------- -------------------
Three months ended March 31 2006 2005 V% 2006 2005 V%
---------------------------- -------- -------- --- ------- ------- ---
Revenues
Sales of goods and services $23,086 $20,833 $555 $674
GECS earnings from
continuing operations 2,270 1,863 - -
GECS revenues from services - - 14,126 12,931
Other income 479 330 - -
-------- -------- ------- -------
Total revenues 25,835 23,026 12% 14,681 13,605 8%
-------- -------- ------- -------
Costs and expenses
Cost of sales, operating and
administrative expenses 20,701 18,320 6,236 6,325
Interest and other financial
charges 384 381 4,107 3,414
Investment contracts,
insurance losses and
insurance annuity benefits - - 805 866
Provision for losses on
financing receivables - - 822 902
Minority interest in net
earnings of consolidated
affiliates 163 186 75 30
-------- -------- ------- -------
Total costs and
expenses 21,248 18,887 13% 12,045 11,537 4%
-------- -------- ------- -------
Earnings from continuing
operations before income
taxes 4,587 4,139 11% 2,636 2,068 27%
Provision for income taxes (545) (579) (366) (205)
-------- -------- ------- -------
Earnings from continuing
operations 4,042 3,560 14% 2,270 1,863 22%
Earnings from discontinued
operations, net of taxes 263 405 263 405
-------- -------- ------- -------
Net earnings $4,305 $3,965 9% $2,533 $2,268 12%
======== ======== ======= =======
Per-share amounts -
earnings from continuing
operations
Diluted earnings per share
Total average equivalent
shares
Basic earnings per share
Total average equivalent
shares
Per-share amounts - net
earnings
Diluted earnings per share
Total average equivalent
shares
Basic earnings per share
Total average equivalent
shares
Dividends declared per share
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 2005 consolidated
financial statements at www.ge.com/annual05 for further information
about consolidation matters.
GENERAL ELECTRIC COMPANY
Summary of Operating Segments (unaudited)
Three Months
Ended March 31
----------------------
(Dollars in millions) 2006 2005 V%
----------------------
Revenues
Infrastructure $10,152 $9,374 8
Industrial 8,140 7,668 6
Healthcare 3,659 3,321 10
NBC Universal 4,482 3,601 24
Commercial Finance 5,484 5,072 8
Consumer Finance 5,090 4,689 9
-----------------
Total segment revenues 37,007 33,725 10
Corporate items and eliminations 814 625 30
-----------------
Consolidated revenues from continuing
operations $37,821 $34,350 10
=================
Segment profit (a)
Infrastructure $1,703 $1,540 11
Industrial 600 526 14
Healthcare 496 409 21
NBC Universal 654 709 (8)
Commercial Finance 1,174 926 27
Consumer Finance 836 735 14
-----------------
Total segment profit 5,463 4,845 13
Corporate items and eliminations (492) (325) (51)
GE interest and other financial charges (384) (381) (1)
GE provision for income taxes (545) (579) 6
-----------------
Earnings from continuing operations $4,042 $3,560 14
-----------------
Earnings from discontinued operations, net of
taxes $263 $405 (35)
-----------------
Consolidated net earnings $4,305 $3,965 9
=================
(a) Segment profit always excludes the effects of principal pension
plans and results reported as discontinued operations and
accounting changes. Segment profit 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 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 Industrial and Infrastructure segments; included
in determining segment profit, which we refer to as "net
earnings," for Commercial Finance, Consumer Finance, and the
financial services businesses of the Industrial segment (Equipment
Services) and the Infrastructure segment (Aviation Financial
Services, Energy Financial Services and Transportation Finance).
GENERAL ELECTRIC COMPANY
Summary of Operating Segments (unaudited)
Additional Information
Three Months
Ended March 31
---------------------
(Dollars in millions) 2006 2005 V%
---------------------
Infrastructure
Revenues $10,152 $9,374 8
================
Segment profit $1,703 $1,540 11
================
Revenues
Aviation $3,041 $2,590 17
Aviation Financial Services 934 817 14
Energy 3,835 3,951 (3)
Energy Financial Services 301 228 32
Oil & Gas 772 641 20
Transportation 1,023 756 35
Segment profit
Aviation $645 $527 22
Aviation Financial Services 206 163 26
Energy 436 577 (24)
Energy Financial Services 117 94 24
Oil & Gas 55 27 F
Transportation 204 82 F
Industrial
Revenues $8,140 $7,668 6
================
Segment profit $600 $526 14
================
Revenues
Consumer & Industrial $3,534 $3,261 8
Equipment Services 1,634 1,574 4
Plastics 1,644 1,648 -
Segment profit
Consumer & Industrial $220 $165 33
Equipment Services 16 10 60
Plastics 225 240 (6)
Commercial Finance
Revenues $5,484 $5,072 8
================
Segment profit $1,174 $926 27
================
Revenues
Capital Solutions $2,820 $2,889 (2)
Real Estate 1,075 898 20
Segment profit
Capital Solutions $339 $286 19
Real Estate 441 310 42
GENERAL ELECTRIC COMPANY
Condensed Statement of Financial Position
(Dollars in billions)
Consolidated
------------------
Assets 03/31/06 12/31/05
-------- ---------
Cash & marketable securities $53.6 $51.0
Receivables 12.6 14.9
Inventories 11.4 10.5
GECS financing receivables - net 286.8 287.6
Property, plant & equipment - net 67.7 67.5
Investment in GECS - -
Goodwill & intangible assets 83.0 81.6
Other assets 101.2 99.1
Assets of discontinued operations 58.5 61.1
-------- ---------
Total assets $674.8 $673.3
======== =========
Liabilities and equity
Borrowings $376.2 $370.4
Insurance contracts, insurance liabilities
and insurance annuity benefits 33.4 33.1
Other liabilities & minority interest 108.2 110.9
Liabilities of discontinued operations 49.5 49.5
Shareowners' equity 107.5 109.4
-------- ---------
Total liabilities and equity $674.8 $673.3
======== =========
GE Financial Services
(GECS)
------------------ -------------------
Assets 03/31/06 12/31/05 03/31/06 12/31/05
-------- --------- --------- ---------
Cash & marketable securities $2.4 $2.5 $51.4 $48.8
Receivables 12.8 15.1 - -
Inventories 11.2 10.3 0.2 0.2
GECS financing receivables -
net - - 286.8 287.6
Property, plant & equipment -
net 16.4 16.5 51.3 51.0
Investment in GECS 49.3 50.8 - -
Goodwill & intangible assets 59.1 57.8 23.8 23.8
Other assets 36.4 36.8 70.8 68.1
Assets of discontinued
operations - - 58.5 61.1
------- --------- --------- ---------
Total assets $187.6 $189.8 $542.8 $540.6
======= ========= ========= =========
Liabilities and equity
Borrowings $11.2 $10.2 $366.7 $362.1
Insurance contracts, insurance
liabilities and insurance
annuity benefits - - 33.8 33.4
Other liabilities & minority
interest 68.9 70.2 43.3 44.5
Liabilities of discontinued
operations - - 49.7 49.8
Shareowners' equity 107.5 109.4 49.3 50.8
------- --------- --------- ---------
Total liabilities and equity $187.6 $189.8 $542.8 $540.6
======= ========= ========= =========
March 31, 2006 information is unaudited. Supplemental consolidating
data are shown for "GE" and "Financial Services (GECS)." Transactions
between GE and GECS have been eliminated from the "consolidated"
columns. See note 1 to the 2005 consolidated financial statements at
www.ge.com/annual05 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, 2006, compared with the three months ended March 31, 2005,
the increase in cash from operating activities from our industrial
businesses (or Industrial CFOA) for the three months ended March 31,
2006, compared with the three months ended March 31, 2005 and return
on average total capital invested (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 their most directly comparable GAAP financial
measures follow.
(Dollars in millions)
Three months
ended March 31
-------------------------
Organic Revenue Growth 2006 2005 V%
---------------------- --------- --------- ----
GE consolidated revenues as reported $37,821 $34,350 10%
Less the effects of:
Acquisitions, business dispositions (other
than dispositions of businesses acquired
for investment) and currency exchange
rates 227 413
The 2006 Olympics broadcasts 684 -
GE consolidated revenues excluding the
effects of acquisitions, business
dispositions (other than dispositions of
businesses acquired for investment),
currency exchange rates and the effects of
the 2006 Olympics broadcasts (organic -------------------
revenues) $36,910 $33,937 9%
===================
Three months
ended March 31
-------------------------
Growth in Industrial CFOA 2006 2005 V%
------------------------- --------- --------- ----
Cash from GE's operating activities as
reported $6,712 $2,890 132%
Less: GECS dividends 3,404 224
-------------------
Cash from GE's operating activities
excluding dividends from GECS (Industrial
CFOA) $3,308 $2,666 24%
===================
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 2006 growth in revenues without the effects of acquisitions,
business dispositions and currency exchange rates and without the
effects of the 2006 Olympics broadcasts. We also believe that
investors would find it useful to compare our operating cash flow for
the three months ended March 31, 2006, to the operating cash flow for
the three months ended March 31, 2005, without the effect of GECS
dividends, which can vary from period-to-period.
Three months
ended March 31
--------------------
Average Total Shareowners' Equity, Excluding
Effects of Discontinued Operations (a) 2006 2005
-------------------------------------------- --------- ---------
Average total shareowners' equity (b) $111,016 $102,305
Less:
Cumulative effect of earnings from
discontinued operations (c) 1,458 3,168
Average net investment in discontinued
operations (d) 6,828 -
-------------------
Average total shareowners' equity, excluding
effect of discontinued operations (a) $102,730 $99,137
===================
(a) Used for computing return on average total capital invested
(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
twelve-month basis, calculated using a five-point average).
(b) On a twelve-month basis, calculated using a five-point average.
(c) Represented the average cumulative net earnings effect of
discontinued operations from 2001 through the first half of 2005 (on a
twelve-month basis, calculated using a five-point average).
(d) Represented the average net investment in discontinued operations
since the second half of 2005.
U.S. GAAP requires earnings of discontinued operations to be displayed
separately in the Statement of Earnings. Accordingly, the numerator
used in our calculation of return on average total capital invested
excludes those earnings (losses). Further we believe it is appropriate
to exclude from the average shareowners' equity component of the
denominator the cumulative effect of those earnings (losses) since
2000 (reclassifications for discontinued operations began in 2001), 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.
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