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56 ge 2007 annual report
’   
Consolidated Statement of Changes in Shareowners’ Equity
Shareowners’ equity increased by $4.1 billion and $2.9 billion in
2007 and 2006, respectively, and decreased by $1.5 billion in
2005. Changes over the three-year period were largely attribut-
able to net earnings, partially offset by dividends declared of
$11.7 billion, $10.7 billion and $9.6 billion in 2007, 2006 and 2005,
respectively. In 2007, we purchased $13.9 billion of GE stock
(357.9 million shares) and in 2006, we purchased $7.8 billion of GE
stock (229.4 million shares) under our share repurchase programs.
Currency translation adjustments increased equity by $4.5 billion
in 2007 and $3.6 billion in 2006, compared with a $4.3 billion
decrease in 2005. Changes in currency translation adjustments
refl ect the effects of changes in currency exchange rates on our
net investment in non-U.S. subsidiaries that have functional
currencies other than the U.S. dollar. During 2007 and 2006, the
U.S. dollar weakened against the pound sterling and euro, after
strengthening in 2005. The U.S. dollar was also weaker against
the Japanese yen in 2007, after strengthening in 2006 and 2005.
See note 22.
Overview of Our Cash Flow from 2005 through 2007
GE cash from operating activities (CFOA) is a useful measure of
performance for our non-fi nancial businesses and totaled
$23.3 billion in 2007, $23.8 billion in 2006 and $19.9 billion in
2005. Generally, factors that affect our earnings — for example,
pricing, volume, costs and productivity — affect CFOA similarly.
However, while management of working capital, including timing
of collections and payments and levels of inventory, affects
operating results only indirectly, the effect of these programs
on CFOA can be signifi cant.
2003 2004 2005 2006 2007
69
45
25
12
92
GE CUMULATIVE CASH FLOWS
(In $ billions)
A. Cash flows from operating activities
B. Dividends paid
C. Shares repurchased ($)
Our GE Statement of Cash Flows shows CFOA in the required
format. While that display is of some use in analyzing how various
assets and liabilities affected our year-end cash positions, we
believe that it is also useful to supplement that display and to
examine in a broader context the business activities that provide
and require cash.
(In billions)
2007 2006 2005
Operating cash collections $102.8 $ 90.6 $ 80.8
Operating cash payments (86.8) (76.6) (68.7)
Cash dividends from GECS 7.3 9.8 7.8
GE cash from operating activities
$ 23.3 $ 23.8 $ 19.9
The most signifi cant source of cash in CFOA is customer-related
activities, the largest of which is collecting cash following a prod-
uct or services sale. GE operating cash collections increased by
$12.2 billion in 2007 and $9.8 billion in 2006. These increases are
consistent with the changes in comparable GE operating segment
revenues, comprising Healthcare, NBC Universal, Industrial and
the industrial businesses of the Infrastructure segment. Analyses
of operating segment revenues discussed in the preceding
Segment Operations section is the best way of understanding
their customer-related CFOA.
The most signifi cant operating use of cash is to pay our sup-
pliers, employees, tax authorities and others for the wide range of
materials and services necessary in a diversifi ed global organiza-
tion. GE operating cash payments increased by $10.2 billion in
2007 and by $7.9 billion in 2006, comparable to the increases in
GE total costs and expenses.
Dividends from GECS represented distribution of a portion
of GECS retained earnings, including proceeds from certain
business sales, and are distinct from cash from continuing oper-
ating activities within the fi nancial services businesses, which
increased in 2007 by $4.6 billion to $26.4 billion, following an
increase of $2.9 billion in 2006. The amount we show in CFOA is
the total dividend, including the normal dividend as well as any
special dividends from excess capital primarily resulting from
GECS business sales.
Based on past performance and current expectations, in
combination with the fi nancial fl exibility that comes with a strong
balance sheet and the highest credit ratings, we believe that we
are in a sound position to grow dividends, continue making selec-
tive investments for long-term growth and execute our newly
authorized three-year $15 billion share repurchase program.