GE 2006 Annual Report Download - page 58

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($0.1 billion), partially offset by the effects of the 2004 disposition
of IT Solutions ($0.4 billion). Segment profit rose 35%, or
$0.6 billion, at the industrial businesses in the segment in 2005
as price increases ($1.5 billion) and higher volume ($0.1 billion)
more than offset higher material and other costs ($0.8 billion),
primarily from commodities such as benzene and natural gas
at Plastics, and lower productivity ($0.2 billion). Segment profi t
at Equipment Services also increased as a result of improved
operating performance, reflecting core growth ($0.1 billion).
See Corporate Items and Eliminations for a discussion of items
not allocated to this segment.
CORPORATE ITEMS AND ELIMINATIONS
(In millions) 2006 2005 2004
REVENUES
Insurance activities $ 3,692 $ 4,183 $4,003
GECS commercial paper interest
rate swap adjustment 197 540 518
Eliminations and other 278 (1,105) 75
Total $ 4,167 $ 3,618 $4,596
OPERATING PROFIT (COST)
Insurance activities $ 57 $ 159 $ 5
Principal pension plans (877) (329) 124
Underabsorbed corporate overhead (269) (464) (498)
GECS commercial paper interest
rate swap adjustment
130 358 341
Other (292) (306) 17
Total $(1,251) $ (582) $ (11)
Corporate Items and Eliminations include the effects of eliminating
transactions between operating segments; results of our insurance
activities remaining in continuing operations; cost of, and cost
reductions from, our principal pension plans; results of liquidating
businesses such as consolidated, liquidating securitization entities;
underabsorbed corporate overhead; certain non-allocated amounts
described below; and a variety of sundry items. Corporate Items
and Eliminations is not an operating segment. Rather, it is added
to operating segment totals to reconcile to consolidated totals on
the fi nancial statements.
Certain amounts included in the line “Other” above are not
allocated to GE operating segments because they are excluded
from the measurement of their operating performance for internal
purposes. In 2006, amounts not allocated to GE operating segments
included $0.2 billion at NBC Universal, principally for technology
and product development costs and restructuring charges;
$0.2 billion at Industrial for restructuring and other charges;
and $0.1 billion at Healthcare, principally for acquisition-related,
restructuring and other charges. In 2004, these comprised
$0.4 billion of Healthcare charges, principally related to the write-
off of in-process research and development projects and other
transitional costs associated with Amersham; and a $0.1 billion
charge at Industrial as the gain on sale of the motors business
was more than offset by costs for inventory obsolescence and
other charges.
Other operating profit (cost) also reflects gains of $0.7 billion
in 2006 from sales of business interests, principally Advanced
Materials and GE Supply, as well as $0.1 billion and $0.3 billion
from partial sales of an interest in Genpact in 2005 and 2004,
respectively. We have ongoing commercial and fi nancial relation-
ships with these former affi liates.
DISCONTINUED INSURANCE OPERATIONS
(In millions) 2006 2005 2004
Earnings (loss) from discontinued
operations, net of taxes $163 $(1,950) $559
Discontinued operations comprise GE Life, our U.K.-based life
insurance operation; the property and casualty insurance and
reinsurance businesses and the European life and health opera-
tions of GE Insurance Solutions and most of its affi liates; and
Genworth, our formerly wholly-owned subsidiary that conducted
most of our consumer insurance business, including life and
mortgage insurance operations. Results of these businesses are
reported as discontinued operations for all periods presented.
In December 2006, we completed the sale of GE Life to Swiss
Re for $0.9 billion. As a result, we recognized a loss of $0.3 billion
after tax during 2006.
In June 2006, we completed the sale of the property and
casualty insurance and reinsurance businesses and the European
life and health operations of GE Insurance Solutions to Swiss Re
for $9.3 billion, including the assumption of $1.7 billion of debt.
We received $5.4 billion in cash and $2.2 billion of newly issued
Swiss Re common stock, representing a 9% interest in Swiss Re.
In May 2004, we completed the initial public offering of
Genworth. Throughout 2005, we continued to reduce our owner-
ship in Genworth. In March 2006, we completed the sale of our
remaining 18% investment, through a secondary public offering
of 71 million shares of Class A Common Stock and direct sale to
Genworth of 15 million shares of Class B Common Stock.
Earnings from discontinued operations, net of taxes, in 2006
were $0.2 billion, reflecting earnings from GE Insurance Solutions
through the date of disposal ($0.3 billion), the gain on the sale
of our remaining 18% investment in Genworth ($0.2 billion) and
earnings from GE Life through the date of disposal ($0.1 billion),
partially offset by the losses on disposal of GE Life ($0.3 billion)
and GE Insurance Solutions ($0.1 billion).
Loss from discontinued operations, net of taxes, in 2005 was
$1.9 billion, reflecting losses from the portions of GE Insurance
Solutions described above ($2.8 billion), partially offset by earnings
from, and gains on the sale of, Genworth ($0.9 billion).
Earnings from discontinued operations, net of taxes, in 2004
were $0.6 billion, reflecting earnings of Genworth ($0.4 billion),
including our share of 2004 earnings from operations ($0.8 billion),
partially offset by the loss on the Genworth initial public offering
in May 2004 ($0.3 billion), and earnings from GE Insurance
Solutions ($0.1 billion), primarily 2004 operations.
For additional information related to discontinued operations,
see note 2.
56 ge 2006 annual report