GE 2008 Annual Report Download - page 32

management’s discussion and analsis
30 ge 2008 annual report
CORPORATE ITEMS AND ELIMINATIONS
(In millions) 2008 2007 2006
REVENUES
Insurance activities $ 3,335 $ 3,962 $ 3,692
Eliminations and other (1,421) 647 (800)
Total $ 1,914 $ 4,609 $ 2,892
OPERATING PROFIT (COST)
Insurance activities $ (202) $ 145 $ 57
Principal pension plans (244) (755) (877)
Underabsorbed corporate overhead (341) (437) (266)
Other (1,904) (793) (462)
Total $(2,691) $(1,840) $(1,548)
Corporate Items and Eliminations include the effects of elimi-
nating transactions between operating segments; results of our
insurance activities remaining in continuing operations; certain
items in our treasury operations; cost of, and cost reductions from,
our principal pension plans; underabsorbed corporate overhead;
certain non-allocated amounts described below; and a variety of
sundry items. Corporate Items and Eliminations is not an operat-
ing segment. Rather, it is added to operating segment totals to
reconcile to consolidated totals on the financial statements.
Certain amounts included in the line “Other” above are not
allocated to segment results for internal measurement purposes.
In 2008, amounts primarily related to restructuring, rationalization
and other charges were $0.5 billion at each of Capital Finance
and NBC Universal, $0.4 billion at Technology Infrastructure and
$0.3 billion at each of Energy Infrastructure and Consumer &
Industrial. Included in these amounts in 2008 were technology
and product development costs of $0.2 billion at NBC Universal
and $0.1 billion at Technology Infrastructure and net losses on
business exits of $0.2 billion at Capital Finance. In 2007, amounts
primarily related to restructuring, rationalization and other charges
were $0.5 billion at Technology Infrastructure, $0.4 billion at each
of Consumer & Industrial (including $0.1 billion of product quality
issues) and Capital Finance, $0.3 billion at NBC Universal, and
$0.2 billion at Energy Infrastructure. Included in these amounts in
2007 were technology and product development costs of $0.1 bil-
lion at NBC Universal. GECS amounts are on an after-tax basis.
Corporate Items and Eliminations include the elimination of
transactions between our segments. In 2007, revenues, elimina-
tions and other included a $0.9 billion gain on sale of a business
interest to Hitachi by the Energy business and a $0.6 billion gain
on sale of Swiss Re common stock.
Other operating profit (cost) reflects a $0.9 billion gain on sale
of a business interest to Hitachi by the Energy business and a
$0.3 billion (after-tax basis) gain on sale of Swiss Re common stock
in 2007 and gains from sales of business interests of $0.4 billion
in 2006, principally GE Supply.
Real Estate assets at December 31, 2007, increased $25.5 bil-
lion, or 47%, from December 31, 2006, of which $12.6 billion
was real estate investments, also up 47%. During 2007, we sold
real estate assets with a book value totaling $7.0 billion, which
resulted in net earnings of $2.1 billion.
Energy Financial Services 2008 revenues and net earnings
increased 54% and 22%, respectively, compared with 2007.
Revenues in 2008 and 2007 included $1.6 billion and $0.3 billion,
respectively, from acquisitions. The increase in net earnings
resulted primarily from core growth ($0.2 billion), partially offset
by lower investment income ($0.1 billion).
Energy Financial Services 2007 revenues and net earnings
increased 45% and 4%, respectively, compared with 2006.
The increase in revenues resulted primarily from acquisitions
($0.6 billion) and organic revenue growth ($0.1 billion). The
increase in net earnings resulted primarily from core growth.
GECAS 2008 revenues increased 1% and net earnings
decreased 1% compared with 2007. The increase in revenues is
primarily a result of organic revenue growth ($0.1 billion), partially
offset by lower investment income. The decrease in net earnings
resulted primarily from lower investment income, partially offset
by core growth.
GECAS 2007 revenues and net earnings increased 11% and
3%, respectively, compared with 2006. The increase in revenues
resulted primarily from organic revenue growth ($0.4 billion) and
acquisitions ($0.1 billion). The increase in net earnings resulted
primarily from core growth.
CONSUMER & INDUSTRIAL revenues decreased 7%, or $0.9 billion,
to $11.7 billion in 2008 compared with 2007 as lower volume
($1.2 billion) was partially offset by higher prices ($0.2 billion) and
the effects of the weaker U.S. dollar ($0.1 billion). The decrease in
volume reflected tightened spending in the U.S. market. Segment
profit decreased 65%, or $0.7 billion, to $0.4 billion as higher
material and other costs ($0.4 billion), lower volume ($0.2 billion),
lower productivity ($0.1 billion) and the effects of the weaker U.S.
dollar on manufacturing costs ($0.1 billion) were partially offset by
higher prices ($0.2 billion).
Consumer & Industrial revenues decreased 4%, or $0.5 billion,
in 2007 compared with 2006 as lower volume ($0.8 billion) was
partially offset by the effects of the weaker U.S. dollar ($0.2 billion)
and higher prices ($0.1 billion). The decrease in volume reflects
the sale of GE Supply in the third quarter of 2006. Segment profit
rose 7%, or $0.1 billion, as productivity ($0.3 billion) and higher
prices ($0.1 billion) were partially offset by higher material and
other costs ($0.4 billion). See Corporate Items and Eliminations for
a discussion of items not allocated to this segment.