GE 2006 Annual Report Download - page 54

’   
• Credit risk is the risk of financial loss arising from a customer
or counterparty failure to meet its contractual obligations.
We face credit risk in our lending and leasing activities (see
the Financial Resources and Liquidity and Critical Accounting
Estimates sections and notes 1, 13, 14 and 29) and derivative
financial instruments activities (see note 27).
• Market risk is the potential loss in value of investment and other
asset and liability portfolios, including fi nancial instruments
and residual values of leased assets. This risk is caused by
changes in market variables, such as interest and currency
exchange rates and equity and commodity prices. We are
exposed to market risk in the normal course of our business
operations as a result of our ongoing investing and funding
activities. Additional information can be found in the Financial
Resources and Liquidity section and in notes 15 and 27.
Other risks include natural disasters, availability of necessary
materials, guarantees of product performance and business
interruption. These types of risks are often insurable, and success
in managing these risks is ultimately determined by the balance
between the level of risk retained or assumed and the cost of
transferring risk to others.
Segment Operations
Operating segments comprise our six businesses focused on the
broad markets they serve: Infrastructure, Commercial Finance,
GE Money, Healthcare, NBC Universal and Industrial. For segment
reporting purposes, certain GECS businesses are included in
the industrial operating segments that actively manage such
businesses and report their results for internal performance
measurement purposes. These include Aviation Financial Services,
Energy Financial Services and Transportation Finance reported in
the Infrastructure segment, and Equipment Services reported in
the Industrial segment.
SEGMENT REVENUES 2002 2003 2004 2005 2006
(In $ billions) 159
144
130
108 108
A. Infrastructure
B. Commercial Finance
C. GE Money
D. Healthcare
E. NBC Universal
F. Industrial
Segment profit is determined based on internal performance
measures used by the Chief Executive Officer to assess the
performance of each business in a given period. In connection
with that assessment, the Chief Executive Officer may exclude
matters such as charges for restructuring; rationalization and
other similar expenses; in-process research and development and
certain other acquisition-related charges and balances; technology
and product development costs; certain gains and losses from
dispositions; and litigation settlements or other charges, respon-
sibility for which preceded the current management team.
SEGMENT PROFIT 2002 2003 2004 2005 2006
(In $ billions) 26.3
23.4
19.6
18.2 17.5
A. Infrastructure
B. Commercial Finance
C. GE Money
D. Healthcare
E. NBC Universal
F. Industrial
Segment profit always excludes the effects of principal pension
plans, results reported as discontinued operations 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 refer to as “operating profi t,” for
Healthcare, NBC Universal and the industrial businesses of the
Infrastructure and Industrial segments; included in determining
segment profit, which we refer to as “net earnings,” for Commercial
Finance, GE Money, and the financial services businesses of the
Infrastructure segment (Aviation Financial Services, Energy
Financial Services and Transportation Finance) and the Industrial
segment (Equipment Services).
In addition to providing information on segments in their
entirety, we have also provided supplemental information for
certain businesses within the segments.
We have reclassified certain prior-period amounts to conform
to the current period’s presentation. For additional information
about our segments, see note 26.
52 ge 2006 annual report