Second Quarter Results
General Electric Company
12 July 2002
GE Grows Second-Quarter Earnings 14%
To a Record $4.4 Billion, With Industrial Revenues Up 10%;
Reconfirms Full-Year Target of $1.65-$1.67 Per Share
Fairfield, Conn., July 12, 2002 - GE's second-quarter 2002 earnings grew 14%
over second quarter 2001 to $4.4 billion, or $.44 per share, the highest of any
quarter in the Company's history, GE Chairman and CEO Jeff Immelt announced
today.
'GE's diversified portfolio of leading businesses produced another quarter of
double-digit earnings growth and strong cash flow,' Immelt said. 'Our long-cycle
industrial businesses and GE Capital's consumer and mid-market businesses
continue to deliver. The improved performance we're seeing at our short-cycle
businesses - particularly NBC, Plastics and Appliances - position us well for
future quarters. The GE team continues to perform in a tough environment.'
Financial highlights include:
• Earnings rose 14% to $4.426 billion from $3.897 billion in second quarter
2001, and earnings per share (EPS) increased 13% to $.44. Power Systems,
NBC, Medical Systems, Appliances and eight GE Capital businesses had
double-digit earnings growth. As previously disclosed, earnings reflect $358
million from a favorable settlement with the Internal Revenue Service of a
dispute regarding exports from Aircraft Engines since 1979; a $70 million
after-tax benefit from terminations of Power Systems gas turbine orders;
approximately $350 million after taxes of adjustments for estimates of
prior-year loss events at Employers Reinsurance Corporation (ERC), which
resulted in a quarterly loss for ERC of $236 million; and a $110 million
after-tax loss to recognize impairment of WorldCom bonds.
As required by new accounting rules, as of Jan. 1, 2002, goodwill is no
longer amortized. On a comparable basis, second quarter 2002 EPS would
have increased 7%. Adjusting for goodwill and pension income, EPS would
have been up 11%.
• Revenues rose 4% over second quarter 2001 to $33.2 billion. Industrial
revenues grew 10%, with double-digit growth at Power Systems as well as
Medical Systems, Appliances and Specialty Materials. Revenues at GE Capital
Services (GECS) declined 4% because of the revenue effects of the ERC and
WorldCom items. GECS net revenues (revenues less interest costs) from
financing and operating activities grew 12%.
• Cash generated from GE's operating activities, excluding progress
collections, was a record $6.1 billion in the first half of 2002, up 12%
from $5.4 billion last year. Reported cash flow from operations was $3.5
billion, which, reflecting the record progress collections in 2001, was 55%
lower than last year's reported $7.8 billion. GE returned $4.7 billion to
shareowners in the first half of 2002 through $3.6 billion in dividends and
$1.1 billion in share repurchases.
• Operating margin was 21.2%, up from last year's 20.6%, reflecting GE's
continuing productivity gains.
• GE Capital Services (GECS) second-quarter earnings were $1.327 billion,
down 10% from last year's $1.477 billion as a result of losses at ERC and
the WorldCom bond impairment. Excluding ERC and the WorldCom item, and
putting goodwill on a comparable basis, GECS earnings grew 14%, with
particularly strong results from its Mid-Market Financing businesses and
Global Consumer Finance. GECS assets totaled $461 billion at the end of the
quarter, up 22% from $376 billion at the end of second quarter 2001.
GE will provide more detail on second-quarter results on a conference call and
Webcast to be held at 9 a.m. EDT today. Call information and related charts are
available at www.ge.com/investor.
Among second-quarter business highlights:
• GE Power Systems (GEPS) shipped 109 heavy-duty gas turbines in the
quarter, including 86 from its Greenville, South Carolina facility. GEPS
Energy Services added 25 new contractual services agreements valued at $1.1
billion. Commitments through the first half of the year reached $26.1
billion, $6.5 billion or 33 percent more since second quarter of last year.
During the quarter GEPS also completed the acquisition of the manufacturing
and technology assets of Enron Wind Corp., establishing GE Wind Energy as a
leading presence in the renewable energy industry, which is growing at
nearly 20% a year.
• GE Medical Systems (GEMS) total orders of $1.8 billion increased 18%, with
double-digit growth in most modalities, and healthcare services orders grew
17%. Strong customer demand for GEMS new EXCITE magnetic resonance (MR)
technology resulted in more than $350 million in MR orders, a 21% increase.
Ultrasound orders grew 19% to almost $200 million, driven in part by the
success of the new VolusonTM 730 4D Ultrasound System. Orders for PET
(positron emission tomography) systems increased 87% and totaled nearly $100
million, driven by growing support for the clinical value of GE's
DiscoveryTM LS system, a combined PET/CT (computed tomography) system
focused on cancer diagnosis and treatment. Orders for healthcare information
technology (IT) systems grew 36% to more than $340 million, including an
increase of more than 100% for GE's image archiving systems and a 55%
increase in patient monitoring and clinical information systems. During the
quarter GEMS launched the Lightspeed16, its breakthrough 16-slice CT
scanner, and generated more than 50 orders worldwide.
• GE Aircraft Engines (GEAE) and CFMI, GEAE's joint venture with Snecma, won
$1.4 billion in commercial engine orders during the second quarter,
including orders from KLM Royal Dutch Airlines and China Eastern Airlines.
GEAE achieved a significant milestone during the quarter with certification
of its CF34 family of regional jet engines by the U.S. Federal Aviation
Administration. Regional jets constitute the fastest-growing sector of
commercial aviation, and to date GEAE has received more than $7 billion in
firm and option orders for its CF34 engines. During the quarter, GE Engines
Services completed the acquisition of Unison Industries Inc, a global leader
in ignition systems for aerospace applications. GE Engine Services' backlog
in multi-year service agreements now exceeds $26 billion. GEAE received more
than $600 million in military contracts during the quarter, including the
Air Force of the Republic of Korea's selection of GEAE's F110 engine to
power 40 new Boeing F-15K aircraft. The order, valued at more than $340
million, launches the F110 engine on the twin-engine F-15 aircraft. GEAE's
widely-used F404 fighter engine was selected by The Boeing Company to power
the Defense Advanced Research Agency/US Air Force X-45B Unmanned Combat Air
Vehicle (UCAV) currently under development.
• GE Capital Services (GECS) launched Healthcare Financial Services (HFS) in
the quarter, building on assets acquired in the Heller Financial transaction
to create one of the largest businesses providing capital, financial
solutions and related services to the healthcare industry. HFS serves a
growing global healthcare market that it estimates is more than $4 trillion.
During the quarter, Real Estate completed its acquisition of Security
Capital Group Inc., providing it with positions in self-storage,
grocery-anchored retail and parking. GECS acquired AGC Limited from Westpac,
expanding the platforms of Global Consumer Finance and Commercial Equipment
Finance.
• NBC continued its success in television's most sought-after demographic,
adults 18-49, with seven of the quarter's 10 highest-rated prime-time
programs. The network claimed its ninth consecutive sweeps victory in May
with a 37% advantage over its nearest competitor. Overall, NBC led in key
demographics for the quarter in morning news, daytime, evening news, late
night and Sunday morning public affairs programming. With this ratings
success, NBC garnered 52% of the growth in advertising industry dollars in
May's upfront sales season, reaching $2.7 billion at prices 7% higher than
last year. NBC also saw increases in scatter pricing, which at the end of
the quarter was 7% higher than upfront pricing. During the quarter, NBC
completed the Telemundo and KNTV acquisitions.
• GE Appliances (GEA) grew quarterly revenues 14% and operating profit 28%
as new products continued to drive share gains and increase profitability.
The GE Profile AdvantiumTM 120 won a Gold Medal Award for design from the
Industrial Designers Society of America and Business Week, and the GE
ProfileTM and Triton XLTM dishwashers were recognized by Design Journal. The
GE Profile ArcticaTM also won the 2002 Kitchen & Bath Award at the Kitchen &
Bath Industry annual show. During the quarter, GEA introduced its exclusive
Precise AirTM convection system, with reversing airflow that cooks more
evenly, and a new line of GE Profile products with dramatically contoured
styling.
• GE Plastics (GEP) order volume for core products grew 25% over second
quarter 2001, although global price pressures continued and held the
increase in the monetary value of those orders to 15%. Order backlog
quantities increased for the second consecutive quarter, and were 9% higher
at the end of second quarter than at the end of first quarter. China remains
a key growth region for GEP, and during the quarter the business announced
plans to move its Pacific headquarters from Tokyo to Shanghai.
'In a tough environment, GE's businesses continue to win in their markets by
bringing great technology and services to their customers,' Immelt said. 'We had
a record second quarter; our third quarter looks promising, and we remain
comfortable with the targets we've communicated for the full year. We have a
wonderful team of people who are committed to perform. I'm proud of them and
what they're delivering.'
GE (NYSE:GE) is a diversified technology, services and manufacturing company
with a commitment to achieving customer success. GE operates in more than 100
countries and employs approximately 310,000 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.
Contact: General Electric, Fairfield
David Frail, 203/373-3387
david.frail@corporate.ge.com
GENERAL ELECTRIC COMPANY
Condensed Statement of Earnings
Consolidated GE GECS
Second quarter ended June 30 2002 2001 2002 2001 2002 2001
Revenues
Sales of goods and services $20,261 $18,480 $19,459 $17,588 $899 $960
Earnings of GECS before accounting changes - - 1,327 1,477 - -
GECS revenues from services 12,867 13,341 - - 12,953 13,439
Other income 86 156 103 200 - -
Total revenues 33,214 31,977 20,889 19,265 13,852 14,399
Costs and expenses
Cost of sales, operating and 20,600 19,465 15,341 13,973 5,398 5,623
administrative expenses
Interest and other financial charges 2,443 2,707 75 115 2,429 2,671
Insurance losses and policyholder and 3,689 3,712 - - 3,689 3,712
annuity benefits
Provision for losses on financing 785 496 - - 785 496
receivables
Minority interest in net earnings of 90 101 50 59 40 42
consolidated affiliates
Total costs and expenses 27,607 26,481 15,466 14,147 12,341 12,544
Earnings before income taxes and 5,607 5,496 5,423 5,118 1,511 1,855
accounting changes
Provision for income taxes (1,181) (1,599) (997) (1,221) (184) (378)
Earnings before accounting changes $4,426 $3,897 $4,426 $3,897 $1,327 $1,477
Cumulative effect of accounting changes - - - - - -
Net earnings $4,426 $3,897 $4,426 $3,897 $1,327 $1,477
Per-share amounts before accounting
changes (in dollars)
Diluted earnings per share $0.44 $0.39
Basic earnings per share $0.45 $0.39
Per-share amounts after accounting changes
(in dollars)
Diluted earnings per share $0.44 $0.39
Basic earnings per share $0.45 $0.39
Dividends declared per share (in dollars) $0.18 $0.16
Dollar 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 consolidated financial statements in the 2001 Annual Report to
Share Owners for further information about consolidation matters.
GENERAL ELECTRIC COMPANY
Condensed Statement of Earnings
Consolidated GE GECS
Six months ended June 30 2002 2001 2002 2001 2002 2001
Revenues
Sales of goods and services $37,749 $35,340 $36,207 $33,438 $1,715 $2,028
Earnings of GECS before accounting - - 2,984 2,878 - -
changes
GECS revenues from services 25,845 26,915 - - 26,036 27,094
Other income 141 215 189 309 - -
Total revenues 63,735 62,470 39,380 36,625 27,751 29,122
Costs and expenses
Cost of sales, operating and 39,453 38,320 29,041 27,017 10,692 11,546
administrative expenses
Interest and other financial charges 4,817 5,783 232 370 4,717 5,569
Insurance losses and policyholder and 7,238 7,235 - - 7,238 7,235
annuity benefits
Provision for losses on financing 1,447 979 - - 1,447 979
receivables
Minority interest in net earnings of 166 203 92 104 74 99
consolidated affiliates
Total costs and expenses 53,121 52,520 29,365 27,491 24,168 25,428
Earnings before income taxes and 10,614 9,950 10,015 9,134 3,583 3,694
accounting changes
Provision for income taxes (2,670) (3,036) (2,071) (2,220) (599) (816)
Earnings before accounting changes $7,944 $6,914 $7,944 $6,914 $2,984 $2,878
Cumulative effect of accounting changes (1,015) (444) (1,015) (444) (1,015) (169)
Net earnings $6,929 $6,470 $6,929 $6,470 $1,969 $2,709
Per-share amounts before accounting
changes (in dollars)
Diluted earnings per share $0.79 $0.69
Basic earnings per share $0.80 $0.70
Per-share amounts after accounting
changes (in dollars)
Diluted earnings per share $0.69 $0.64
Basic earnings per share $0.70 $0.65
Dividends declared per share (in $0.36 $0.32
dollars)
Dollar 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 consolidated financial statements in the 2001 Annual Report to
Share Owners for further information about consolidation matters.
GENERAL ELECTRIC COMPANY
All amounts except per-share earnings are in millions of U.S. dollars.
SECOND QUARTER SIX MONTHS ENDED
JUNE 30
2002 2001 V% 2002 2001 V%
Revenues $ 33,214 $ 31,977 4 $63,735 $62,470 2
Earnings before accounting changes $ 4,426 $ 3,897 14 $ 7,944 $ 6,914 15
Cumulative effect of accounting changes - - - (1,015) (444)
Net earnings 4,426 3,897 14 6,929 6,470 7
Per-Share Earnings
Diluted
Before accounting changes $ 0.44 $ 0.39 13 $ 0.79 $ 0.69 14
Cumulative effect of accounting changes - - - (0.10) (0.05)
After accounting changes 0.44 0.39 13 0.69 0.64 8
Basic
Before accounting changes $ 0.45 $ 0.39 15 $ 0.80 $ 0.70 14
Cumulative effect of accounting changes - - - (0.10) (0.05)
After accounting changes 0.45 0.39 15 0.70 0.65 8
Segment Information - Industrial Businesses
2002 2001 V% 2002 2001 V%
Revenues
Aircraft Engines $ 2,764 $ 3,055 (10) $ 5,341 $ 5,793 (8)
Appliances 1,600 1,402 14 3,014 2,717 11
Industrial Products & Systems:
Industrial Systems 1,273 1,220 4 2,370 2,344 1
Lighting 532 604 (12) 1,072 1,213 (12)
Transportation Systems 594 572 4 1,076 1,120 (4)
GE Supply 626 586 7 1,158 1,152 1
Total Industrial Products & Systems 3,025 2,982 1 5,676 5,829 (3)
Materials:
Plastics 1,420 1,363 4 2,599 2,811 (8)
Specialty Materials 608 493 23 1,009 979 3
Total Materials 2,028 1,856 9 3,608 3,790 (5)
NBC 1,987 1,831 9 3,985 3,182 25
Power Systems 6,526 5,142 27 11,797 9,402 25
Technical Products and Services:
Medical Systems 2,212 1,960 13 4,075 3,788 8
Global eXchange Services 104 188 (45) 209 358 (42)
Total Technical Products and Services 2,316 2,148 8 4,284 4,146 3
Segment profit (1)
Aircraft Engines 566 552 3 987 1,032 (4)
Appliances 119 93 28 210 180 17
Industrial Products & Systems:
Industrial Systems 129 160 (19) 232 293 (21)
Lighting 29 78 (63) 49 137 (64)
Transportation Systems 124 122 2 177 172 3
GE Supply 28 22 27 48 40 20
Total Industrial Products & Systems 310 382 (19) 506 642 (21)
Materials:
Plastics 275 334 (18) 482 673 (28)
Specialty Materials 94 97 (3) 141 178 (21)
Total Materials 369 431 (14) 623 851 (27)
NBC 545 491 11 858 789 9
Power Systems 1,910 1,153 66 3,462 2,010 72
Technical Products and Services:
Medical Systems 401 356 13 667 649 3
Global eXchange Services 10 67 (85) 15 98 (85)
Total Technical Products and Services 411 423 (3) 682 747 (9)
(1) Segment profit 2001 data reclassified to conform to 2002 presentation.
G GE Capital Services
Summary of Operating Segments
Three Months Ended Three Months Ended
6/30/02 6/30/01 $ V %V 6/30/02 6/30/01 $ V %V
Consolidated
Revenues Net Earnings
Consumer Services 5,330 5,618 (288) -5% Consumer Services 559 586 (27) -5%
Equipment 1,733 1,768 (35) -2% Equipment 183 360 (177) -49%
Management Management
Mid-Market 2,346 1,920 426 22% Mid-Market 392 277 115 42%
Financing Financing
Specialized 784 727 57 8% Specialized 171 161 10 6%
Financing Financing
Specialty Insurance 2,446 2,981 (535) -18% Specialty (50) 279 (329) -118%
Insurance
All Other 1,213 1,385 (172) -12% All Other 72 (52) 124 238%
Total Revenues 13,852 14,399 (547) -4% Total Net Earnings 1,327 1,611 (284) -18%
Consumer Services
Revenues Net Earnings
Global Consumer 1,501 1,370 131 10% Global Consumer 323 242 81 33%
Finance Finance
GE Financial 2,817 3,198 (381) -12% GE Financial 53 149 (96) -64%
Assurance Assurance
GE Card Services 962 956 6 1% GE Card Services 176 187 (11) -6%
Other Consumer 50 94 (44) -47% Other Consumer 7 8 (1) -13%
Services Services
Total Revenues 5,330 5,618 (288) -5% Total Net Earnings 559 586 (27) -5%
Equipment Management
Revenues Net Earnings
Aviation Services 683 589 94 16% Aviation Services 117 155 (38) -25%
Americom - 118 (118) -100% Americom - 34 (34) -100%
Other Equipment 1,050 1,061 (11) -1% Other Equipment 66 171 (105) -61%
Management Management
Total Revenues 1,733 1,768 (35) -2% Total Net Earnings 183 360 (177) -49%
Mid-Market Financing
Revenues Net Earnings
Commercial 1,170 997 173 17% Commercial 165 119 46 39%
Equipment Equipment
Commercial Finance 554 436 118 27% Commercial Finance 138 92 46 50%
Vendor Financial 554 487 67 14% Vendor Financial 74 62 12 19%
Other Mid-Market 68 - 68 - Other Mid-Market 15 4 11 275%
Total Revenues 2,346 1,920 426 22% Total Net Earnings 392 277 115 42%
Specialized Financing
Revenues Net Earnings
Real Estate 557 461 96 21% Real Estate 133 123 10 8%
SFG 296 275 21 8% SFG 125 106 19 18%
GE Equity (87) (21) (66) -314% GE Equity (85) (64) (21) -33%
Other Specialized 18 12 6 50% Other Specialized (2) (4) 2 50%
Financing Financing
Total Revenues 784 727 57 8% Total Net Earnings 171 161 10 6%
Specialty Insurance
Revenues Net Earnings
Mortgage Insurance 256 270 (14) -5% Mortgage Insurance 133 93 40 43%
GE Global Insurance 2,076 2,565 (489) -19% GE Global (236) 140 (376) -269%
Insurance
Other Specialty 114 146 (32) -22% Other Specialty 53 46 7 15%
Insurance Insurance
Total Revenues 2,446 2,981 (535) -18% Total Net Earnings (50) 279 (329) -118%
All Other
Revenues Net Earnings
IT Solutions 994 1,090 (96) -9% IT Solutions 7 (4) 11 275%
Other 219 295 (76) -26% Other 65 (48) 113 235%
Total Revenues 1,213 1,385 (172) -12% Total Net Earnings 72 (52) 124 238%
This information is provided by RNS
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