3rd Quarter & 9 Mths Results
General Electric Company
12 October 2001
GE's Third-Quarter Earnings Rise 3 Percent -
Up 16 Percent Excluding Insurance-Related Charges;
Company Confirms Full-Year Double-Digit Earnings Target
FAIRFIELD, Conn., October 11, 2001- General Electric Company (NYSE:GE) today
announced that third-quarter earnings of $3.281 billion, or 33 cents per
share, rose 3% over third quarter 2000 despite previously announced September
11-related insurance losses of $400 million, or 4 cents per share. Without
those insurance losses, GE earnings and earnings per share would have grown 16
percent.
'The GE business model outperformed as designed,' said GE Chairman and CEO
Jeff Immelt. 'The diversity of our portfolio and the ability of our people to
execute in all markets helped us grow earnings despite the economic downturn
and the September 11 tragedy.
'Our long-cycle businesses sustained their record-setting momentum, and GE
Capital, excluding its Sept. 11-related insurance losses, continued its
mid-teens earnings growth,' Immelt said. 'Our short-cycle businesses continued
to manage through the toughest environment of the past 10 years, and did a
great job of developing innovative, high-quality products even while reducing
costs. As a result, we succeeded in expanding operating margin and generating
record levels of cash from operations.'
Financial highlights of the quarter include:
* Earnings per share grew 3% to $.33 from last year's $.32, with earnings
increasing 3% to $3.281 billion from $3.180 billion. Excluding the
insurance losses, earnings increased 16% to $3.681 billion and earnings
per share increased 16% to $.37.
* Revenues were $29.5 billion, increasing 7% on a comparable basis over
third quarter 2000. Reported revenues were down 8%, reflecting the effects
of previously reported GE Capital Services (GECS) strategic repositioning
activities, the Olympics in third quarter 2000, and a Sept. 11-related
reinsurance premium. Ongoing Industrial revenues increased 10% to $16.4
billion, led by GE's long-cycle businesses, which grew 28% to $10.1
billion. Ongoing GECS revenues were up 4%. GE's short-cycle businesses are
maintaining order rates comparable to pre-Sept. 11 levels.
* Operating margin was 18.9% of sales, up from last year's comparable
18.4%, as GE businesses continued to execute on the Company's Six Sigma
quality and digitization initiatives and increased sales of product
services. This year's digitization savings totaled $1.2 billion at the end
of September, putting the Company ahead of its 2001 plans. Revenues from
sales of high-margin product services grew 23% over third quarter 2000 to
$4.7 billion, with double-digit growth at all long-cycle businesses.
* Cash generated from GE's operating activities in the first nine months
of the year totaled $11.7 billion, up 18% from last year's record $9.9
billion. Following the reopening of the New York Stock Exchange on Sept.
17, GE accelerated its stock repurchase program, and ended the quarter
having purchased $832 million of its stock. GE has purchased shares
totaling $19.9 billion since its $22 billion repurchase program began in
December 1994.
* GE Capital Services earnings for the quarter were $1.301 billion, 12%
lower than last year's $1.478 billion due to the Sept. 11-related
insurance losses. Eleven of GECS' 24 businesses contributed double-digit
earnings growth, and without the insurance losses, GECS earnings would
have increased 15% to $1.701 billion. GECS grew its assets $25 billion to
$391 billion, up 7% from $366 billion one year earlier. Ongoing quarterly
GECS revenues increased 4%. Reported revenues declined 19% to $13.3
billion due to the Sept. 11-related reinsurance premium and previously
announced strategic repositioning activities, including exiting Wards and
Auto Financial Services, contractions at IT Solutions, and the
restructuring of insurance policies obtained in certain Japanese
acquisitions.
Immelt said, 'We remain confident that our mix of businesses and our operating
system position us to deliver double-digit earnings growth of $1.41 per share
this year and double-digit growth next year as well. These are uncertain
times, but GE has fundamental strengths: our long-cycle portfolio; our diverse
financial services business; our initiatives, which enable us to improve
performance in very difficult short-cycle conditions; and our strong balance
sheet, which gives us the flexibility to pursue strategic opportunities. These
strengths give GE the ability to generate double-digit earnings growth even in
the most challenging economic circumstance.'
Business highlights for the quarter include:
* GE Power Systems (GEPS) orders for power generating equipment and
services remained strong at $6.4 billion. The total GEPS orders backlog is
$28.6 billion, up $3.5 billion over last year. GEPS shipped 94 heavy-duty
gas turbines and 50 aero-derivative units in the quarter, 49% and 67%
more, respectively, than in third quarter 2000. Total commitments for
multi-year service agreements rose to $20.6 billion, 69% above last year,
as GEPS added $1.2 billion in such agreements during the quarter. GEPS
also announced two acquisitions, of sofion AG, an IT service provider, and
Bussiere & Frechette, which provides field services for transmission and
distribution systems.
* GE Aircraft Engines (GEAE), and CFMI, its joint venture with Snecma,
continued to expand into international markets with an order placed by
China Aviation Supplies Import and Export Corporation, valued in excess of
$300 million, for 30 CFM engines to power Boeing 737 aircraft. GEAE
further increased its presence in China when Hainan Airlines joined its
partnership operating a maintenance facility in Xiamen. GEAE also signed
multi-year service agreements with Scandinavian Airline System (SAS),
LanChile Airlines and Continental Airlines bringing the value of such
agreements signed this year to approximately $4 billion. Other significant
events in the quarter included a multi-year agreement with Standard Aero
to perform maintenance on the CF34 engines powering regional jets, the
fastest growing sector of commercial aviation. Since Sept. 11, GEAE has
also been working closely with its U.S. military customers.
* GE Medical Systems (GEMS) posted strong results worldwide, with revenues
up 16% and operating profit up 13% over third quarter 2000. Total orders
grew 15% over last year. Orders for CT Systems, led by the new GE
LightSpeed Ultra, grew 40% over last year. Open MRI orders, driven by
customer demand for GE's OpenSpeed and Ovation technologies, grew 51% over
last year, and orders for Positron Emission Tomography (PET) systems were
up 127%, with strong sales of GE Discovery LS systems. GEMS' Information
Technology unit increased sales 43%, and total GEMS software orders grew
by 50%. In the quarter, GEMS's announced the acquisitions of Imatron,
Inc., a manufacturer of electron beam tomography systems that enhance GEMS
offerings in the fast-growing cardiac CT segment; Kretztechnik AG, a
provider of 3D ultrasound systems; and DataCritical Corp., a pioneer in
wireless telemetry and healthcare communications technologies.
* NBC continued its reign as the No. 1 network in key sales demographics,
airing eight of the summer's 10 top-rated shows. In the first week of the
fall season, Crossing Jordan delivered the network's highest ratings for a
Monday series premiere in seven years, and returning series such as Law
and Order and Friends made strong showings. Law & Order had its
most-watched season premiere in its 12-year history, and Friends had its
largest audience in more than five years. NBC Sports premiered NASCAR
races in July and increased their ratings 46% over the previous year. NBC
News programs Today, Nightly News and Meet the Press maintained their
long-standing No. 1 positions in key sales demographics. NBC's news
outlets -- NBC, CNBC and MSNBC - provided Americans with comprehensive
round-the-clock coverage of the tragic events of Sept. 11.
* GE Capital positioned itself for continued double-digit growth in its
core operation as well as through acquisitions. Through September, GECS
businesses had committed to acquire $36 billion in assets. These
agreements included the proposed acquisition of Heller Financial Inc.,
which will strengthen GECS's commercial finance, equipment leasing and
real estate finance businesses, add new international platforms in
factoring and innovative healthcare finance offerings. During the quarter,
Commercial Equipment Finance (CEF) completed the acquisitions of Franchise
Finance Corporation of America and Safeco Credit Company, extending its
core middle market equipment financing and leasing business. Vendor
Financial Services (VFS) extended its relationship with Xerox, and Fleet
Services added $490 million in assets through its acquisition of
Canadian-based Associates Fleet Services.
* GE Transportation Systems (GETS) signed an agreement to purchase service
assets and long-term service contracts from Wabtec Corporation, expanding
GETS's portfolio of offerings to include full maintenance services for
others' locomotives as well as GETS's own.
* GE Appliances demonstrated GE's capacity for innovative,
customer-centric product development. Among Appliances' new products
launched in the quarter were the GE Profile Triton XL, America's
highest-performance and most energy-efficient dishwashers; GE Profile
Arctica Top Freezer refrigerators, and a new side-by-side refrigerator
that was rated a Best Value by a leading consumer magazine.
* * *
GE, with 2000 revenues of $130 billion, is a diversified technology, services
and manufacturing company with a commitment to achieving customer success. GE
operates in more than 100 countries and employs 313,000 people worldwide. For
more information, visit the company's Web site at http://www.ge.com.
Caution Concerning Forward-Looking Statements
This document includes certain 'forward-looking statements' within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements are
based on management's current expectations and are subject to uncertainty and
changes in circumstances. Actual results may differ materially from these
expectations due to changes in global political, economic, business,
competitive, market and regulatory factors. More detailed information about
those factors is contained in GE's filings with the Securities and Exchange
Commission.
GENERAL ELECTRIC COMPANY
All amounts except per-share earnings are in millions of U.S. dollars.
THIRD QUARTER NINE MONTHS ENDED
SEPTEMBER 30, 2001
2001 2000 V% 2001 2000 V%
Revenues $29,468 $32,014 (8) $ 91,938 $ 94,872 (3)
Earnings before accounting changes $3,281 $3,180 3 $ 10,195 $ 9,150 11
Effect of accounting changes - - - (444) -
Earnings after accounting changes 3,281 3,180 3 9,751 9,150 7
Per-Share Earnings
Diluted
Before accounting changes $ 0.33 $ 0.32 3 $ 1.01 $ 0.91 11
Effect of accounting changes - - - (0.04) -
After accounting changes 0.33 0.32 3 0.97 0.91 7
Basic
Before accounting changes $ 0.33 $ 0.32 3 $ 1.03 $ 0.93 11
Effect of accounting changes - - - (0.05) -
After accounting changes 0.33 0.32 3 0.98 0.93 5
Segment Information
2001 2000 V% 2001 2000 V%
Revenues
Aircraft Engines $2,851 $2,580 11 $ 8,644 $ 7,770 11
Appliances 1,535 1,495 3 4,252 4,451 (4)
NBC 1,050 1,895 (45) 4,232 5,244 (19)
Industrial Products and Systems 2,776 2,716 2 8,605 8,443 2
Materials 1,681 2,038 (18) 5,471 6,021 (9)
Power Systems 5,038 3,521 43 14,440 10,469 38
Technical Products and Services 2,106 1,902 11 6,252 5,556 13
GE Capital Services 13,298 16,444 (19) 42,420 48,595 (13)
Segment profit
Aircraft Engines 674 614 10 1,939 1,781 9
Appliances 158 159 (1) 455 503 (10)
NBC 255 292 (13) 1,142 1,321 (14)
Industrial Products and Systems 437 472 (7) 1,362 1,548 (12)
Materials 374 512 (27) 1,311 1,509 (13)
Power Systems 1,301 670 94 3,479 1,875 86
Technical Products and Services 427 439 (3) 1,350 1,192 13
GE Capital Services net earnings 1,301 1,478 (12) 4,179 3,965 5
before accounting changes
Contact: David Frail, (203) 373-3387
david.frail@corporate.ge.com