GE [NYSE:GE]:

4Q and Full-Year 2013 Highlights

  • 4Q operating EPS of $0.53, up 20%
    • Industrial segment profit +12%, with six of seven segments growing earnings
    • 5% Industrial segment organic revenue growth
    • Full-year operating EPS of $1.64, up 9%
  • 4Q U.S. orders +8%, growth market orders +13%, Europe orders +3%
  • 4Q margins up 100 bps vs. 4Q'12; full-year margins +66 bps excluding acquisitions
    • $1.6 billion reduction in Industrial structural costs in 2013, ahead of plan
  • GE Capital earnings +38% including gains, with ENI (excluding cash and equivalents) at $380 billion
    • GECC Tier 1 common ratio (Basel 1) at 11.4%, +1.2%
  • $18.2 billion returned to shareholders in 2013
  • $89 billion of consolidated cash and equivalents at year-end
  • 2014 framework remains unchanged

GE [NYSE:GE] announced today fourth-quarter 2013 operating earnings of $5.4 billion, with earnings per share of $0.53, up 20% from the fourth quarter of 2012. GAAP earnings from continuing operations were $5.0 billion, with earnings per share of $0.49, up 20%. Revenues were $40.4 billion for the quarter, up 3% from the year-ago period, and $146.0 billion for the year.

"GE ended the year with strong fourth-quarter earnings and margin growth in an improving but mixed environment," said GE Chairman and CEO Jeff Immelt. "We saw good conditions in growth markets, strength in the U.S., and a mixed environment in Europe. We had strong operating performance for the year and are pleased with our execution in 2013, taking $1.6 billion of cost out, growing margins, reducing the size of GE Capital, and returning more than $18 billion to shareholders."

Industrial segment profits rose 12% to $5.5 billion. Six of seven Industrial segments had positive earnings growth. Industrial segment margins improved 100 basis points over the prior-year period. Infrastructure orders for the quarter were $30.7 billion, up 8%. GE's backlog of equipment and services at the end of the quarter was its highest ever at $244 billion, up $15 billion from the third quarter. Industrial segment revenues grew 6%, with organic growth of 5%. Growth market revenues were up 10% for the quarter, with double-digit growth in six of nine growth regions, and growth market orders were up 13%. Services revenue grew 6%, with gains in most segments.

During the quarter, GE and CFM (a 50/50 joint venture between GE and Snecma) announced Dubai Airshow wins of more than $40 billion at list price, including GE's largest airline commitment ever, valued at $11 billion at list price, for 300 GE9X engines for Emirates. GE also announced a nearly $700 million contract with Saudi Electricity Company for F-class combined-cycle gas turbines and services, and was awarded 545 megawatts of commitments for wind turbines in Brazil's A-3 auction. GE's investment in research & development continued to yield new products in 2013, including the release of 14 new Industrial Internet technologies to help airlines, energy companies, hospitals and other customers cut downtime, improve productivity, save fuel and reduce emissions.

GE Capital continued to execute on its strategy of becoming a smaller, more focused financial services business. GE Capital earnings rose 38% including gains from the IPO of our Swiss consumer business, and the BAY disposition. ENI (excluding cash and equivalents) was $380 billion at quarter-end. Volume was up 5% for the quarter, with attractive returns. General Electric Capital Corporation's (GECC) estimated Tier 1 common ratio (Basel 1) rose 1.2% to 11.4%, and net interest margin was strong at 5%. During the quarter, GECC paid $2 billion in dividends to the parent.

Full-year cash from GE operating activities (CFOA), excluding NBCUniversal deal-related taxes, was $17.4 billion. GE ended the quarter with $89 billion of consolidated cash and cash equivalents. GE's strong cash performance for the quarter and the year supported its balanced capital allocation plan. The Company returned $18.2 billion to shareowners in 2013, including $7.8 billion of dividends and $10.4 billion of stock buyback. During the quarter, GE announced a 16% increase in its quarterly dividend to $0.22 per share, the fifth increase in just over three years. GE also completed $9 billion of acquisitions in 2013.

GE made a number of investments in the quarter to strengthen the company in 2014 and beyond. The Company recorded $0.05 per share of Industrial restructuring and other charges, partially offset by $0.03 per share of Industrial gains. This, and other moves, should allow GE to increase its planned cost-out efforts in 2014 to more than $1 billion. GE Capital strengthened its balance sheet, reduced non-core assets and took portfolio actions to decrease ENI, per the Company's plan.

Immelt concluded, "GE ended the year with great strength. We are well positioned to achieve our framework for 2014."

Fourth-quarter and Full-year 2013 Highlights:

Fourth-quarter operating earnings were $5.4 billion, up 16% from fourth-quarter 2012, and operating EPS was $0.53, up 20%. GAAP earnings from continuing operations (attributable to GE) were $5.0 billion, up 16%, or $0.49 per share, up 20% from the fourth quarter of 2012.

Including the effects of discontinued operations, fourth-quarter net earnings attributable to GE were $4.2 billion ($0.41 per share) in 2013 compared with $4.0 billion ($0.38 per share) in the fourth quarter of 2012. This included Grey Zone charges of $0.04 per share, WMC charges of $0.01 per share, and charges for a disposition in Russia of $0.02 per share.

Fourth-quarter revenues increased 3% to $40.4 billion. Industrial sales of $28.8 billion increased 6% compared to the fourth quarter of 2012. GECC revenues of $11.1 billion decreased 5% from last year.

Full-year operating earnings were $16.9 billion, up 5%, from $16.0 billion in 2012, and operating EPS was $1.64, up 9% from $1.51 in 2012. GAAP earnings from continuing operations (attributable to GE) were $15.2 billion, or $1.47 per share, up 4% and 7% respectively from 2012.

Including the effects of discontinued operations, full-year net earnings attributable to GE were $14.1 billion ($1.36 per share) in 2013 compared with $13.6 billion ($1.29 per share attributable to common shareowners) in 2012.

Full-year revenues were $146.0 billion, flat with last year. Industrial sales of $101.0 billion were flat with last year. GECC revenues of $44.1 billion were down 3% from 2012.

Cash generated from GE operating activities in 2013 totaled $17.4 billion excluding $3.2 billion of NBCUniversal deal-related taxes. Cash generated from Industrial operating activities, excluding the NBCUniversal deal-related taxes, totaled $11.5 billion.

The accompanying tables include information integral to assessing the Company's financial position, operating performance and cash flow.

GE will discuss preliminary fourth-quarter results on a webcast at 8:30 a.m. ET today, available at www.ge.com/investor. Related charts are now posted on our website for your review prior to the call.

About GE

GE (NYSE:GE) works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. For more information, visit the company's website at www.ge.com.

GE's Investor Relations website at www.ge.com/investor and our corporate blog at www.gereports.com, as well as GE's Facebook page and Twitter accounts, including @GE_Reports, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.

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 financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; potential market disruptions or other impacts arising in the United States or Europe from developments in sovereign debt situations; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation's (GECC) funding and on our ability to reduce GECC's asset levels as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; changes in Japanese consumer behavior that may affect our estimates of liability for excess interest refund claims (GE Money Japan); pending and future mortgage securitization claims and litigation in connection with WMC, which may affect our estimates of liability, including possible loss estimates; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flow and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at the planned level; GECC's ability to pay dividends to GE at the planned level; our ability to convert pre-order commitments/wins into orders; the price we realize on orders since commitments/wins are stated at list prices; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; our capital allocation plans, as such plans may change and affect planned share repurchases and strategic actions, including acquisitions, joint ventures and dispositions; our success in completing announced transactions and integrating acquired businesses; our ability to complete the staged exit from our North American Retail Finance business as planned; the impact of potential information technology or data security breaches; 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.

 
 
GENERAL ELECTRIC COMPANY
Condensed Statement of Earnings
(unaudited)
                        Financial
Consolidated GE(a) Services (GECC)
Three Months Ended December 31 2013 2012   V% 2013 2012   V% 2013   2012     V%
Revenues and other income  
Sales of goods and services $ 28,701 $ 27,080 6% $ 28,826 $ 27,301 6% $ 36 $ 29 24%
Other income 932 826 993 830 - -
GECC earnings from continuing operations - - 2,493 1,805 - -
GECC revenues from services   10,749     11,256     -     -     11,041     11,576  
Total revenues and other income   40,382     39,162   3%   32,312     29,936   8%   11,077     11,605   (5)%
 
Costs and expenses

Cost of sales, operating and administrative expenses

31,039 29,113 26,231 24,417 5,178 5,118
Interest and other financial charges 2,468 2,934 345 393 2,273 2,682

Investment contracts, insurance losses and insurance annuity benefits

654 702 - - 648 713
Provision for losses on financing receivables   1,562     1,144     -     -     1,562     1,144  
Total costs and expenses   35,723     33,893   5%   26,576     24,810   7%   9,661     9,657   -%
 

Earnings from continuing operations before income taxes

 4,659 5,269 (12)% 5,736 5,126 12% 1,416 1,948 (27)%
Benefit (provision) for income taxes   490     (820 )   (602 )   (694 )   1,092     (126 )
Earnings from continuing operations 5,149 4,449 16% 5,134 4,432 16% 2,508 1,822 38%

Earnings (loss) from discontinued operations, net of taxes

  (787 )   (303 )   (787 )   (303 )   (723 )   (302 )
Net earnings 4,362 4,146 5% 4,347 4,129 5% 1,785 1,520 17%

Less net earnings (loss) attributable to noncontrolling interests

  158     135     143     118     15     17  

Net earnings attributable to the Company

 4,204 4,011 5% 4,204 4,011 5% 1,770 1,503 18%
Preferred stock dividends declared   -     -     -     -     (163 )   (123 )

Net earnings attributable to GE common shareowners

 $ 4,204   $ 4,011   5% $ 4,204   $ 4,011   5% $ 1,607   $ 1,380   16%
 
 
Amounts attributable to the Company:
Earnings from continuing operations $ 4,991 $ 4,314 16% $ 4,991 $ 4,314 16% $ 2,493 $ 1,805 38%

Earnings (loss) from discontinued operations, net of taxes

  (787 )   (303 )   (787 )   (303 )   (723 )   (302 )

Net earnings attributable to the Company

 $ 4,204   $ 4,011   5% $ 4,204   $ 4,011   5% $ 1,770   $ 1,503   18%
 

Per-share amounts - earnings from continuing operations

Diluted earnings per share $ 0.49 $ 0.41 20%
Basic earnings per share $ 0.49 $ 0.41 20%
 
Per-share amounts - net earnings
Diluted earnings per share $ 0.41 $ 0.38 8%
Basic earnings per share $ 0.42 $ 0.38 11%
 
Total average equivalent shares
Diluted shares 10,162 10,500 (3)%
Basic shares 10,090 10,447 (3)%
 
Dividends declared per common share $ 0.22 $ 0.19 16%
 
 
Amounts attributable to the Company:
Earnings from continuing operations $ 4,991 $ 4,314 16%

Adjustment (net of tax): Non-operating pension costs/(income)

  426     350  
Operating earnings (non-GAAP measure) $ 5,417   $ 4,664   16%
 

Operating earnings - diluted earnings per share

$ 0.53 $ 0.44 20%
 
(a) Refers to the Industrial businesses of the Company including GECC on an equity basis.
 

Dollar amounts and share amounts in millions; per-share amounts in dollars. Supplemental data are shown for "GE" and "GECC." Transactions between GE and GECC have been eliminated from the "Consolidated" columns. See Note 1 to the 2012 consolidated financial statements at www.ge.com/ar2012 for further information about consolidation matters.

 
 
GENERAL ELECTRIC COMPANY
Condensed Statement of Earnings
(unaudited)
                          Financial
Consolidated GE(a) Services (GECC)
Twelve Months Ended December 31 2013 2012   V% 2013 2012     V% 2013   2012     V%
Revenues and other income  
Sales of goods and services $ 100,542 $ 100,149 -% $ 101,014 $ 100,875 -% $ 126 $ 119 6%
Other income 3,014 2,563 2,886 2,657 - -
GECC earnings from continuing operations - - 8,258 7,345 - -
GECC revenues from services   42,489     43,972     -     -     43,941     45,245  
Total revenues and other income   146,045     146,684   -%   112,158     110,877   1%   44,067     45,364   (3)%
 
Costs and expenses

Cost of sales, operating and administrative expenses

112,284 110,207 93,735 92,727 19,884 19,023
Interest and other financial charges 10,116 12,407 1,333 1,353 9,267 11,596

Investment contracts, insurance losses and insurance annuity benefits

2,676 2,857 - - 2,779 2,984
Provision for losses on financing receivables   4,818     3,832     -     -     4,818     3,832  
Total costs and expenses   129,894     129,303   -%   95,068     94,080   1%   36,748     37,435   (2)%
 

Earnings from continuing operations before income taxes

 16,151 17,381 (7)% 17,090 16,797 2% 7,319 7,929 (8)%
Benefit (provision) for income taxes   (676 )   (2,534 )   (1,668 )   (2,013 )   992     (521 )
Earnings from continuing operations 15,475 14,847 4% 15,422 14,784 4% 8,311 7,408 12%

Earnings (loss) from discontinued operations, net of taxes

  (1,122 )   (983 )   (1,122 )   (983 )   (1,057 )   (1,130 )
Net earnings 14,353 13,864 4% 14,300 13,801 4% 7,254 6,278 16%

Less net earnings (loss) attributable to noncontrolling interests

  298     223     245     160     53     63  

Net earnings attributable to the Company

 14,055 13,641 3% 14,055 13,641 3% 7,201 6,215 16%
Preferred stock dividends declared   -     -     -     -     (298 )   (123 )

Net earnings attributable to GE common shareowners

 $ 14,055   $ 13,641   3% $ 14,055   $ 13,641   3% $ 6,903   $ 6,092   13%
 
 
Amounts attributable to the Company:
Earnings from continuing operations $ 15,177 $ 14,624 4% $ 15,177 $ 14,624 4% $ 8,258 $ 7,345 12%

Earnings (loss) from discontinued operations, net of taxes

  (1,122 )   (983 )   (1,122 )   (983 )   (1,057 )   (1,130 )

Net earnings attributable to the Company

 $ 14,055   $ 13,641   3% $ 14,055   $ 13,641   3% $ 7,201   $ 6,215   16%
 

Per-share amounts - earnings from continuing operations

Diluted earnings per share $ 1.47 $ 1.38 7%
Basic earnings per share $ 1.48 $ 1.39 6%
 
Per-share amounts - net earnings
Diluted earnings per share $ 1.36 $ 1.29 5%
Basic earnings per share $ 1.37 $ 1.29 6%
 
Total average equivalent shares
Diluted shares 10,289 10,564 (3)%
Basic shares 10,222 10,523 (3)%
 
Dividends declared per common share $ 0.79 $ 0.70 13%
 
 
Amounts attributable to the Company:
Earnings from continuing operations $ 15,177 $ 14,624 4%

Adjustment (net of tax): Non-operating pension costs/(income)

  1,705     1,386  
Operating earnings (non-GAAP measure) $ 16,882   $ 16,010   5%
 

Operating earnings - diluted earnings per share

$ 1.64 $ 1.51 9%
 
(a) Refers to the Industrial businesses of the Company including GECC on an equity basis.
 

Dollar amounts and share amounts in millions; per-share amounts in dollars. Supplemental data are shown for "GE" and "GECC." Transactions between GE and GECC have been eliminated from the "Consolidated" columns. See Note 1 to the 2012 consolidated financial statements at www.ge.com/ar2012 for further information about consolidation matters.

 
 
GENERAL ELECTRIC COMPANY
Summary of Operating Segments
(unaudited)
       
Three months ended December 31 Twelve months ended December 31
(Dollars in millions) 2013   2012     V% 2013   2012     V%
   
Revenues(a)
Power & Water $ 7,686 $ 7,652 -% $ 24,724 $ 28,299 (13)%
Oil & Gas 5,306 4,548 17% 16,975 15,241 11%
Energy Management 2,012 1,934 4% 7,569 7,412 2%
Aviation 6,170 5,467 13% 21,911 19,994 10%
Healthcare 5,117 5,183 (1)% 18,200 18,290 -%
Transportation 1,460 1,364 7% 5,885 5,608 5%
Appliances & Lighting(b)   2,196     2,068   6%   8,338     7,967   5%
Total industrial segment revenues 29,947 28,216 6% 103,602 102,811 1%
GE Capital   11,077     11,605   (5)%   44,067     45,364   (3)%
Total segment revenues 41,024 39,821 3% 147,669 148,175 -%
Corporate items and eliminations(a)   (642 )   (659 ) 3%   (1,624 )   (1,491 ) (9)%

Consolidated revenues and other income from continuing operations

 $ 40,382   $ 39,162   3% $ 146,045   $ 146,684   -%
 
Segment profit(a)
Power & Water $ 1,897 $ 1,747 9% $ 4,992 $ 5,422 (8)%
Oil & Gas 802 649 24% 2,178 1,924 13%
Energy Management 46 64 (28)% 110 131 (16)%
Aviation 1,251 1,039 20% 4,345 3,747 16%
Healthcare 1,062 1,021 4% 3,048 2,920 4%
Transportation 280 252 11% 1,166 1,031 13%
Appliances & Lighting(b)   142     115   23%   381     311   23%
Total industrial segment profit 5,480 4,887 12% 16,220 15,486 5%
GE Capital   2,493     1,805   38%   8,258     7,345   12%
Total segment profit 7,973 6,692 19% 24,478 22,831 7%
 
Corporate items and eliminations(a) (2,035 ) (1,291 ) (58)% (6,300 ) (4,841 ) (30)%
GE interest and other financial charges (345 ) (393 ) 12% (1,333 ) (1,353 ) 1%
GE provision for income taxes   (602 )   (694 ) 13%   (1,668 )   (2,013 ) 17%
 

Earnings from continuing operations attributable to the Company

 4,991 4,314 16% 15,177 14,624 4%
 

Earnings (loss) from discontinued operations, net of taxes, attributable to the Company

   (787 )   (303 )

U 

  (1,122 )   (983 ) (14)%
 

Consolidated net earnings attributable to the Company

 $ 4,204   $ 4,011   5% $ 14,055   $ 13,641   3%
 
(a)   Segment revenues includes both revenues and other income related to the segment. Segment profit excludes results reported as discontinued operations, earnings attributable to noncontrolling interests of consolidated subsidiaries, GECC preferred stock dividends declared and accounting changes. 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 Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation and Appliances & Lighting; included in determining segment profit, which we sometimes refer to as "net earnings," for GE Capital. Certain corporate costs, such as shared services, employee benefits and information technology are allocated to our segments based on usage. A portion of the remaining corporate costs are allocated based on each segment's relative net cost of operations.
 
(b) Formerly Home & Business Solutions.
 
 
GENERAL ELECTRIC COMPANY
Summary of Operating Segments (unaudited)
Additional Information
                   
 
Three months ended December 31 Twelve months ended December 31
(Dollars in millions) 2013 2012   V% 2013 2012   V%
 
GE Capital
 
Revenues $ 11,077 $ 11,605 (5)% $ 44,067 $ 45,364 (3)%
 
Segment profit $ 2,493 $ 1,805 38% $ 8,258 $ 7,345 12%
 
Revenues
Commercial Lending and Leasing (CLL) $ 3,225 $ 4,052 (20)% $ 14,316 $ 16,458 (13)%
Consumer 4,583 3,912 17% 15,741 15,303 3%
Real Estate 697 994 (30)% 3,915 3,654 7%
Energy Financial Services 442 422 5% 1,526 1,508 1%
GE Capital Aviation Services (GECAS) 1,373 1,397 (2)% 5,346 5,294 1%
 
Segment profit
CLL $ 263 $ 546 (52)% $ 1,965 $ 2,401 (18)%
Consumer 2,057 751

F 

4,319 3,207 35%
Real Estate 128 309 (59)% 1,717 803

F 

Energy Financial Services 117 107 9% 410 432 (5)%
GECAS 71 343 (79)% 896 1,220 (27)%
 
 
GENERAL ELECTRIC COMPANY
Condensed Statement of Financial Position

(unaudited)

                 
Financial
Consolidated GE(a) Services (GECC)
(Dollars in billions) 12/31/13 12/31/12 12/31/13 12/31/12 12/31/13 12/31/12
 
Assets
Cash & marketable securities $ 132.5 $ 125.8 $ 14.0 $ 15.6 $ 118.5 $ 110.3
Receivables 21.4 19.9 11.0 9.3 - -
Inventories 17.3 15.4 17.3 15.3 0.1 0.1
Financing receivables - net 241.9 257.2 - - 253.0 268.2
Property, plant & equipment - net 68.8 68.6 17.6 16.0 51.6 53.0
Investment in GECC - - 78.7 77.9 - -
Goodwill & intangible assets 92.0 85.1 64.6 56.8 27.3 28.3
Other assets 80.3 109.5 28.7 45.5 59.1 70.0
Assets of businesses held for sale 0.1 0.2 - - 0.1 0.2
Assets of discontinued operations   2.3   3.3   -   -   2.3   3.3
 
Total assets $ 656.6 $ 685.0 $ 231.9 $ 236.4 $ 512.0 $ 533.4
 
Liabilities and equity
Borrowings and bank deposits $ 383.0 $ 413.8 $ 13.4 $ 17.5 $ 371.1 $ 397.0
Investment contracts, insurance liabilities
and insurance annuity benefits 26.5 28.3 - - 27.0 28.7
Other liabilities 106.4 111.6 86.1 95.0 27.0 22.2
Liabilities of businesses held for sale - 0.2 - - - 0.2
Liabilities of discontinued operations 3.0 2.7 0.1 0.1 2.8 2.7
GE shareowners' equity 131.5 123.0 131.5 123.0 83.7 81.9
Noncontrolling interests   6.2   5.4   0.8   0.8   0.4   0.7
 
Total liabilities and equity $ 656.6 $ 685.0 $ 231.9 $ 236.4 $ 512.0 $ 533.4
 
(a) Refers to the Industrial businesses of the Company including GECC on an equity basis.
 

Supplemental consolidating data are shown for "GE" and "GECC." Transactions between GE and GECC have been eliminated from the "Consolidated" columns. See Note 1 to the 2012 consolidated financial statements at www.ge.com/ar2012 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. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. We have referred to operating earnings, operating earnings per share (EPS), Industrial segment organic revenue growth, GE Capital ending net investment (ENI) excluding cash and equivalents, cash generated from GE Industrial operating activities (Industrial CFOA), Industrial CFOA excluding certain items, GE CFOA excluding the effects of NBCU deal-related taxes and operating margin excluding the effects of acquisitions. The reconciliations of these measures to the most comparable GAAP measures follow.
 
Operating Earnings and Operating Earnings Per Share
               
(Dollars in millions; except earnings per share) Three Months Ended December 31
2013 2012   V%
 
Earnings from continuing operations attributable to GE $ 4,991 $ 4,314 16%
Adjustment (net of tax): non-operating pension costs/(income)   426   350
Operating earnings $ 5,417 $ 4,664 16%
 

Earnings per share - diluted(a)

Continuing earnings per share $ 0.49 $ 0.41 20%
Adjustment (net of tax): non-operating pension costs/(income)   0.04   0.03
Operating earnings per share $ 0.53 $ 0.44 20%
 
 
Twelve Months Ended December 31
(Dollars in millions; except earnings per share) 2013 2012 V%
 
Earnings from continuing operations attributable to GE $ 15,177 $ 14,624 4%
Adjustment (net of tax): non-operating pension costs/(income)   1,705   1,386
Operating earnings $ 16,882 $ 16,010 5%
 

Earnings per share - diluted(a)

Continuing earnings per share $ 1.47 $ 1.38 7%
Adjustment (net of tax): non-operating pension costs/(income)   0.16   0.13
Operating earnings per share $ 1.64 $ 1.51 9%
 
(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 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.
 
 
Industrial Segment Organic Revenue Growth
    Three Months Ended December 31
(Dollars in millions) 2013     2012       V%
 
Segment revenues:
Power & Water $ 7,686 $ 7,652
Oil & Gas 5,306 4,548
Energy Management 2,012 1,934
Aviation 6,170 5,467
Healthcare 5,117 5,183
Transportation 1,460 1,364
Appliances & Lighting   2,196     2,068  
Industrial segment revenues 29,947 28,216 6%
Less the effects of:
Acquisitions, business dispositions and currency exchange rates   (864 )   (534 )

 

Industrial segment revenues excluding effects of acquisitions, business dispositions
 and currency exchange rates (Industrial segment organic revenues)

$ 29,083   $ 27,682   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.
     
GE Capital Ending Net Investment (ENI), Excluding Cash and Equivalents
 
December 31,
(In billions) 2013
 
Financial Services (GECC) total assets $ 512.0
Adjustment: deferred income taxes   4.8  
GECC total assets 516.8
Less assets of discontinued operations (2.3 )
Less non-interest bearing liabilities   (59.3 )
GE Capital ENI 455.2
Less cash and equivalents   (74.9 )
GE Capital ENI, excluding cash and equivalents $ 380.3  
 
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.
 
 
Industrial CFOA, Industrial CFOA Excluding the Effects of NBCU Deal-Related Taxes and Pension

Contributions and GE CFOA Excluding the Effects of NBCU Deal-Related Taxes

 
   
Twelve Months Ended December 31
(Dollars in millions) 2013   2012     V%
 
Cash from GE's operating activities (continuing operations) as reported $ 14,255 $ 17,826 (20)%
Less dividends from GECC   5,985   6,426

Cash from GE's operating activities (continuing operations) excluding dividends from GECC (Industrial CFOA)

8,270 11,400 (27)%
 
Adjustment: effects of NBCU deal-related taxes 3,184 -
Adjustment: effect of pension contributions   -   433

Industrial CFOA excluding effects of NBCU deal-related taxes and pension contributions

$ 11,454 $ 11,833 (3)%
 
Cash from GE's operating activities (continuing operations) as reported $ 14,255
Adjustment: effects of NBCU deal-related taxes   3,184
GE CFOA excluding effects of NBCU deal-related taxes $ 17,439
 
We define "Industrial CFOA" as GE's cash from operating activities (continuing operations) less the amount of dividends received by GE from GECC. This includes the effects of intercompany transactions, including GE customer receivables sold to GECC; GECC services for trade receivables management and material procurement; buildings and equipment (including automobiles) leased by GE from GECC; information technology (IT) and other services sold to GECC by GE; aircraft engines manufactured by GE that are installed on aircraft purchased by GECC from third-party producers for lease to others; and various investments, loans and allocations of GE corporate overhead costs. We believe that investors may find it useful to compare GE's operating cash flows without the effect of GECC dividends, since these dividends are not representative of the operating cash flows of our industrial businesses and can vary from period to period based upon the results of the financial services businesses. We also believe that investors may find it useful to compare Industrial CFOA excluding the effects of taxes paid related to the NBCU transaction and 2012 pension contributions. Management recognizes that these measures may not be comparable to cash flow results of companies which contain both industrial and financial services businesses, but believes that this comparison is aided by the provision of additional information about the amounts of dividends paid by our financial services business and the separate presentation in our financial statements of the GECC cash flows. We believe that our measures of Industrial CFOA and CFOA excluding certain items provide management and investors with useful measures to compare the capacity of our industrial operations to generate operating cash flow with the operating cash flow of other non-financial businesses and companies and as such provides useful measures to supplement the reported GAAP CFOA measure.
 
 
Operating Margin Excluding the Effects of Acquisitions
      Twelve Months Ended December 31
(Dollars in millions) 2013     2012       V
 
Industrial Segments
Revenues $ 103,602 $ 102,811
Operating profit 16,220 15,486
Operating margin 15.66 % 15.06 % 60bps
 
Less the effects of acquisitions in 2013
Revenues $ (1,503 )
Operating profit (168 )
 
Industrial Segments excluding the effects of acquisitions in 2013
Revenues $ 102,099 $ 102,811
Operating profit 16,052 15,486
Operating margin 15.72 % 15.06 % 66bps
 
For our industrial segments, we define operating margin as segment profit as a percentage of segment revenues. We believe that this is a useful measure of our industrial segments' performance. We also believe that the effects of acquisitions may obscure the underlying trend of operating margins for our industrial segments. As such, we believe that measuring operating margins excluding the effect of acquisitions in 2013 provides management and investors with useful information for comparison of our industrial segment results.

GE
Investor Contact:
Trevor Schauenberg, 203-373-2424
trevor.a.schauenberg@ge.com
or
Media Contact:
Seth Martin, 203-572-3567
seth.martin@ge.com