GE 2005 Annual Report Download - page 128
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(128)
Interest and other
financial charges
Provision for
income taxes
(In millions)
2005
(Restated)
2004
(Restated)
2003
(Restated)
2005
(Restated)
2004
(Restated)
2003
(Restated)
Infrastructure(a) $1,706 $ 1,436 $ 1,236 $(202 ) $ 62 $ 243
Industrial(a)
536 526 601
64
(124 ) (165)
Commercial Finance 5,893 4,720 4,630 971
1,144 493
Consumer Finance 5,443 3,564 2,696 529
449 458
Corporate items and eliminations (restated)(b) 1,560 1,365 1,296
2,723
2,177 3,027
Total $15,138 $ 11,611 $ 10,459 $4,085
$ 3,708 $ 4,056
(a) Included only portions of the segment that are financial services businesses.
(b) Included amounts for Healthcare, NBC Universal and the industrial businesses of Infrastructure and Industrial, for which our measure of
segment profit excludes interest and other financial charges and income taxes.
Property, plant and equipment associated with operations based in the United States were $26,140 million, $25,219
million and $20,591 million at year-end 2005, 2004 and 2003, respectively. Property, plant and equipment
associated with operations based outside the United States were $41,388 million, $37,884 million and $32,560
million at year-end 2005, 2004 and 2003, respectively.
Basis for presentation
Our operating businesses are organized based on the nature of markets and customers. Segment accounting policies
are the same as described in note 1.
A description of our operating segments can be found on pages 142-145 and details of segment profit by
operating segment can be found in the Summary of Operating Segments table on page 38 of this report.
Note 27
Derivatives and Other Financial Instruments
Derivatives and hedging
We conduct our business activities in diverse markets around the world, including countries where obtaining local
funding may not be efficient. The nature of our activities exposes us to risks of changes in interest rates, currency
exchange rates and commodity prices. We manage these risks using a variety of straightforward techniques,
including issuing debt funding that matches the interest rate nature and currency denomination of the related asset.
In addition, we selectively use derivatives to reduce our exposure to interest rate and currency risk. For example, if
we make a fixed rate loan and fund that loan with variable rate debt, we will enter into an interest rate swap to pay a
fixed rate of interest and receive a variable rate of interest, and designate the swap as a hedge of the variable rate
borrowing. We apply strict policies to manage each of these risks, including prohibitions on derivatives trading,
derivatives market-making or other speculative activities.