GE 2006 Annual Report Download - page 59

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Global Operations
Our global activities span all geographic regions and primarily
encompass manufacturing for local and export markets, import
and sale of products produced in other regions, leasing of aircraft,
sourcing for our plants domiciled in other global regions and
provision of financial services within these regional economies.
Thus, when countries or regions experience currency and/or
economic stress, we often have increased exposure to certain
risks, but also often have new profit opportunities. Potential
increased risks include, among other things, higher receivable
delinquencies and bad debts, delays or cancellations of sales
and orders principally related to power and aircraft equipment,
higher local currency financing costs and slowdown in established
financial services activities. New profit opportunities include,
among other things, more opportunities for lower cost outsourc-
ing, expansion of industrial and financial services activities through
purchases of companies or assets at reduced prices and lower
U.S. debt fi nancing costs.
Estimated results of global activities include the results of our
operations located outside the United States plus all U.S. exports.
We classify certain GECS operations that cannot meaningfully be
associated with specific geographic areas as “Other Global” for
this purpose.
GLOBAL REVENUES BY REGION
(In millions) 2006 2005 2004
Europe $39,700 $34,600 $31,700
Pacific Basin 18,000 16,000 13,000
Americas 9,600 7,500 7,000
Other Global 7,000 6,100 5,700
74,300 64,200 57,400
Exports from the U.S. to
external customers 13,100 11,400 8,800
Total(a) $87,400 $75,600 $66,200
(a) Included $7.7 billion, $6.6 billion and $5.8 billion of intercompany revenues in 2006,
2005 and 2004, respectively.
Global revenues rose 16% to $87.4 billion in 2006, compared
with $75.6 billion and $66.2 billion in 2005 and 2004, respec-
tively. Global revenues to external customers as a percentage of
consolidated revenues were 49% in 2006, compared with 47%
and 45% in 2005 and 2004, respectively. The effects of currency
fluctuations on reported results were to decrease revenues by
$0.1 billion in 2006 and increase revenues by $0.9 billion and
$4.1 billion in 2005 and 2004, respectively; and to increase earn-
ings by $0.1 billion in both 2005 and 2004, compared with an
inconsequential effect on earnings in 2006.
GE global revenues in 2006 were $56.5 billion, up 17% over
2005, led by increases at Infrastructure, primarily in Europe and
the Americas. U.S. exports grew 14% in 2006 on strong growth
led by Infrastructure, again showing strength in Europe and the
Americas. GE global revenues were $48.2 billion in 2005, up 15%
over 2004, led by increases at Infrastructure and NBC Universal,
mainly in Europe and the Pacific Basin. Exports from the U.S.
were up 30%, led by Infrastructure, again showing strength in
Europe and the Pacifi c Basin.
2006 GLOBAL REVENUES BY REGION
A. Europe 54%
B. Pacific Basin 24%
C. Americas 13%
D. Other Global 9%
GECS global revenues rose 12% to $30.9 billion in 2006,
compared with $27.4 billion and $24.5 billion in 2005 and 2004,
respectively. GECS revenues in Other Global increased 21% in
2006, primarily as a result of organic revenue growth at the
Aviation Financial Services business of Infrastructure. GECS
revenues increased 19% in the Americas, primarily as a result of
organic revenue growth and acquisitions at Commercial Finance
and GE Money, partially offset by dispositions at Commercial
Finance. GECS revenues increased 10% in Europe, primarily as a
result of organic revenue growth and acquisitions at Commercial
Finance and GE Money, partially offset by results of our remaining
insurance activities.
Global operating profit was $15.2 billion in 2006, an increase
of 20% over 2005, which was 20% higher than in 2004. GE global
operating profit in 2006 rose 18%, primarily from gains on the
sale of Advanced Materials in the Pacific Basin and core growth
in Europe, primarily at Infrastructure.
2006 GLOBAL ASSETS BY REGION
A. Europe 53%
B. Pacific Basin 22%
C. Americas 10%
D. Other Global 15%
Total assets of global operations on a continuing basis were
$344.9 billion in 2006, an increase of $59.9 billion, or 21%, over
2005. GECS global assets on a continuing basis of $305.9 billion
at the end of 2006 were 24% higher than at the end of 2005,
reflecting core growth and acquisitions in Europe, the Pacifi c Basin
and the Americas, primarily at Commercial Finance and GE Money.
Financial results of our global activities reported in U.S.
dollars are affected by currency exchange. We use a number of
techniques to manage the effects of currency exchange, including
selective borrowings in local currencies and selective hedging of
significant cross-currency transactions. Such principal currencies
are the pound sterling, the euro, the Japanese yen and the
Canadian dollar.
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