GE 2005 Annual Report Download - page 87
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(87)
In 2002, we adopted on a prospective basis the stock option expense provisions of SFAS 123, Accounting
for Stock-Based Compensation. A comparison of reported and pro-forma net earnings, including effects of
expensing stock options, follows.
(In millions; per-share amounts in dollars)
2005
(Restated)
2004
(Restated)
2003
(Restated)
Net earnings, as reported $16,711 $ 17,160 $ 15,561
Earnings per share, as reported
Diluted 1.57 1.64 1.54
Basic 1.58 1.65 1.55
Stock option expense included in net earnings 106 93 81
Total stock option expense(a)
191 245 315
PRO-FORMA EFFECTS
Net earnings, on pro-forma basis 16,626 17,008 15,327
Earnings per share, on pro-forma basis
Diluted 1.57 1.63 1.52
Basic 1.57 1.64 1.53
Other stock-based compensation expense recognized in earnings was $87 million, $95 million and $75 million in 2005, 2004 and 2003,
respectively.
(a) As if we had applied SFAS 123 to expense stock options in all periods. Included amounts we actually recognized in earnings.
Note 2
Discontinued Operations
Planned sale of GE Insurance Solutions
On November 18, 2005, Swiss Reinsurance Company (Swiss Re) agreed to buy the property and casualty insurance
and reinsurance businesses and the European life and health operations of GE Insurance Solutions for $8.5 billion,
including the assumption of $1.7 billion of debt. Of the consideration other than assumed debt, 55%, or $3.7 billion,
will consist of some combination of cash and mandatory convertible instruments and 45%, or $3.1 billion, of newly
issued Swiss Re common stock that will be restricted from sale for 360 days. The common stock position is
expected to represent about a 12% ownership position in Swiss Re. Operating results through closing will be
controlled by us and be for our benefit, we will be subject to certain restrictions with respect to conducting the
businesses being sold, and we and Swiss Re will mutually indemnify each other. Effective at closing, all claims
liabilities will be the responsibility of Swiss Re.
We presently expect this transaction to close in the second quarter of 2006, subject to regulatory approvals
and customary closing conditions.
Sale of Genworth
In May 2004, we completed the initial public offering of Genworth Financial Inc. (Genworth), our formerly wholly-
owned subsidiary that conducted most of our consumer insurance business, including life and mortgage insurance
operations. During 2005, we reduced our ownership in Genworth to 18% through further sales of stock in three
secondary public offerings. Our remaining available-for-sale investment in Genworth common stock is included in
assets of discontinued operations, and results of future sales will be reported in discontinued operations.