GE 2009 Annual Report Download - page 30

28 GE 2009 ANNUAL REPORT
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Operations
Our consolidated financial statements combine the industrial
manufacturing, services and media businesses of General
Electric Company (GE) with the financial services businesses of
General Electric Capital Services, Inc. (GECS or financial services).
In the accompanying analysis of financial information, we
sometimes use information derived from consolidated financial
information but not presented in our financial statements prepared
in accordance with U.S. generally accepted accounting principles
(GAAP). Certain of these data are considered “non-GAAP financial
measures” under the U.S. Securities and Exchange Commission
(SEC) rules. For such measures, we have provided supplemental
explanations and reconciliations in the Supplemental Information
section.
We present Management’s Discussion of Operations in five
parts: Overview of Our Earnings from 2007 through 2009, Global
Risk Management, Segment Operations, Geographic Operations
and Environmental Matters. Unless otherwise indicated, we refer
to captions such as revenues and earnings from continuing
operations attributable to the company simply as “revenues” and
“earnings” throughout this Management’s Discussion and Analysis.
Similarly, discussion of other matters in our consolidated financial
statements relates to continuing operations unless otherwise
indicated.
Effective January 1, 2010, we reorganized our segments to
better align our Consumer & Industrial and Energy businesses
for growth. As a result of this reorganization, we created a
new segment called Home & Business Solutions that includes
the Appliances and Lighting businesses from our previous
Consumer & Industrial segment and the retained portion of
the GE Fanuc Intelligent Platforms business of our previous
Enterprise Solutions business (formerly within our Technology
Infrastructure segment). In addition, the Industrial business of
our previous Consumer & Industrial segment and the Sensing &
Inspection Technologies and Digital Energy businesses of our
previous Enterprise Solutions business are now part of the Energy
business within the Energy Infrastructure segment. The Security
business of Enterprise Solutions will be reported in Corporate
Items and Eliminations pending its expected sale. Also, effective
January 1, 2010, the Capital Finance segment was renamed
GE Capital and includes all of the continuing operations of
General Electric Capital Corporation. In addition, the Transportation
Financial Services business, previously reported in GE Capital
Aviation Services (GECAS), will be included in Commercial Lending
and Leasing (CLL) and our Consumer business in Italy, previously
reported in Consumer, will be included in CLL.
Results for 2009 and prior periods are reported on the basis
under which we managed our business in 2009 and do not reflect
the January 2010 reorganization described above.
Overview of Our Earnings from 2007 through 2009
Net earnings attributable to the Company decreased 37% in 2009
and 22% in 2008, reflecting the challenging economic conditions
of the last two years and the effect on both our industrial and
financial services businesses. Our financial services businesses
were most significantly affected as GECS net earnings attributable
to the Company fell 80% in 2009 and 32% in 2008. Excluding the
financial services businesses, our net earnings attributable to the
Company decreased 7% in 2009 and 13% in 2008, reflecting the
weakened global economy and challenging market conditions.
We believe that we are beginning to see signs of stabilization in
the global economy. We have a strong backlog entering 2010
and are positioned for global growth in 2011 and 2012.
Energy Infrastructure (21% and 24% of consolidated three-
year revenues and total segment profit, respectively) has grown
significantly over the last several years as the worldwide demand
for energy, and for alternative sources of power, such as wind
and thermal, rose to new levels. Revenues decreased 4% in 2009
after increasing 26% in 2008, and segment profit increased 13%
and 26% in 2009 and 2008, respectively. We continue to invest
in market-leading technology and services at Energy and Oil & Gas.
Technology Infrastructure (26% and 31% of consolidated
three-year revenues and total segment profit, respectively)
revenues and earnings both fell 8% in 2009 after rising 8% and
3%, respectively, in 2008. We continue to invest in market-
leading technologies and services at Aviation, Healthcare and
Transportation. Aviation generated strong revenues and earnings
as one of the world’s leading providers of aircraft engines and
services. Healthcare revenues and earnings trended down in 2009,
reflecting the generally weak global economic conditions and
continued uncertainty in the healthcare markets. Transportation
revenues and earnings fell 24% and 51%, respectively, in 2009
after rising 11% and 3%, respectively, in 2008 as the weakened
economy has driven overall reductions in U.S. freight traffic and
we updated our estimate of long-term product service costs.
NBC Universal (NBCU) (9% and 11% of consolidated three-
year revenues and total segment profit, respectively) is a
diversified media and entertainment company that has grown
over the past several years through business and geographic
diversity. NBCU revenues fell 9% and earnings decreased 28% in
2009 compared with a 10% increase in revenues and flat earn-
ings in 2008. While the television and film businesses continue
to be challenged by the effects of a difficult economy, our cable
business continues to grow and become more profitable. In 2010,
we expect to transfer the assets of the NBCU business to a
newly formed entity, which will consist of our NBCU businesses
and Comcast Corporation’s cable networks, regional sports
networks, certain digital properties and certain unconsolidated
investments. Pursuant to the transaction, we will receive cash
and will own a 49% interest in the newly formed entity. As a
result, we have classified NBCU assets and liabilities as held for
sale in our Statement of Financial Position.
Capital Finance (36% and 31% of consolidated three-year
revenues and total segment profit, respectively) earnings
declined to $2.3 billion and $8.6 billion in 2009 and 2008,
respectively, in a challenging economic environment, including
disruptions in capital markets, challenging credit markets and