GE 2009 Annual Report Download - page 119

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GE 2009 ANNUAL REPORT 117
 
Reconciliation of U.S. Federal Statutory Income Tax Rate to
GE Effective Tax Rate, Excluding GECS Earnings
2009 2008 2007
U.S. federal statutory income tax rate 35.0% 35.0% 35.0%
Reduction in rate resulting from
Tax on global activities including
exports (12.0) (8.0) (9.4)
U.S. business credits (1.1) (0.5) (0.6)
All other — net (0.1) (2.3) (4.4)
(13.2) (10.8) (14.4)
GE effective tax rate, excluding
GECS earnings 21.8% 24.2% 20.6%
We believe that the GE effective tax rate is best analyzed in
relation to GE earnings before income taxes excluding the GECS
net earnings from continuing operations, as GE tax expense does
not include taxes on GECS earnings. Management believes that
in addition to the Consolidated and GECS tax rates shown in
Note 14, this supplemental measure provides investors with
useful information as it presents the GE effective tax rate that
can be used in comparing the GE results to other non-financial
services businesses.
Delinquency Rates on Certain Financing Receivables
Delinquency rates on managed equipment financing loans and
leases and managed consumer financing receivables follow.
Equipment Financing
December 31 2009 2008 2007
Managed 2.81% 2.17% 1.21%
Off-book 2.29 1.20 0.71
On-book 2.91 2.34 1.33
Consumer
December 31 2009 2008 2007
Managed 8.82% 7.43% 5.38%
U.S. 7.66 7.14 5.52
Non-U.S. 9.34 7.57 5.32
Off-book 7.20 8.24 6.64
U.S. 7.20 8.24 6.64
Non-U.S. (a) (a) (a)
On-book 9.10 7.31 5.22
U.S. 8.08 6.39 4.78
Non-U.S. 9.34 7.57 5.32
(a) Not applicable.
Delinquency rates on on-book and off-book equipment financing
loans and leases increased from December 31, 2008 and 2007,
to December 31, 2009, as a result of continuing weakness in the
global economic and credit environment. In addition, delinquency
rates on on-book equipment financing loans and leases increased
nine basis points from December 31, 2008, to December 31, 2009,
as a result of the inclusion of the CitiCapital acquisition.
The increase in on-book delinquencies for consumer financing
receivables in the U.S. from December 31, 2008 and 2007, to
December 31, 2009, primarily reflects the continued rise in
delinquencies across the U.S. credit card receivables platforms.
The increase in on-book delinquencies for consumer financing
receivables outside of the U.S. from December 31, 2008 and
2007, to December 31, 2009, reflects the effects of the declining
U.K. housing market. The increase in off-book delinquencies for
consumer financing receivables in the U.S. from December 31,
2007, to December 31, 2008, primarily reflects the rise in delinquen-
cies across the U.S. credit card receivables platform. The decrease
in off-book delinquencies for consumer financing receivables in the
U.S. from December 31, 2008, to December 31, 2009, reflected
the replacement of certain lower-credit quality receivables from
a securitization trust in 2009.
We believe that delinquency rates on managed financing
receivables provide a useful perspective of our portfolio quality
and are key indicators of financial performance. We use this
non-GAAP financial measure because it provides information that
enables management and investors to understand the underlying
operational performance and trends of certain financing receiv-
ables and facilitates a comparison with the performance of our
competitors. The same underwriting standards and ongoing risk
monitoring are used for both on-book and off-book portfolios as
the customer’s credit performance will affect both loans retained
on the Statement of Financial Position and securitized loans. We
believe that managed basis information is useful to management
and investors, enabling them to understand both the credit risks
associated with the loans reported on the Statement of Financial
Position and our retained interests in securitized loans.
Five-Year Financial Performance Graph: 2005–2009
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN AMONG GE,
S&P 500 AND DOW JONES INDUSTRIAL AVERAGE
The annual changes for the five-year period shown in the graph
on this page are based on the assumption that $100 had been
invested in GE stock, the Standard & Poor’s 500 Stock Index
(S&P 500) and the Dow Jones Industrial Average (DJIA) on
December 31, 2004, and that all quarterly dividends were rein-
vested. The total cumulative dollar returns shown on the graph
represent the value that such investments would have had on
December 31, 2009.
2004 2005 2006 2007 2008 2009
GE $100 $ 99 $108 $111 $51 $ 49
S&P 500 100 105 121 128 81 102
DJIA 100 102 121 132 90 110