GE 2010 Annual Report Download - page 133

GE 2010 ANNUAL REPORT 131
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to others; and various investments, loans and allocations of GE
corporate overhead costs. We believe that investors may find it
useful to compare GE’s operating cash flows without the effect of
GECS dividends, since these dividends are not representative of
the operating cash flows of our industrial businesses and can vary
from period to period based upon the results of the financial
services businesses. Management recognizes that this measure
may not be comparable to cash flow results of companies which
contain both industrial and financial services businesses, but
believes that this comparison is aided by the provision of addi-
tional information about the amounts of dividends paid by our
financial services business and the separate presentation in our
financial statements of the Financial Services (GECS) cash flows.
We believe that our measure of Industrial CFOA provides manage-
ment and investors with a useful measure to compare the
capacity of our industrial operations to generate operating cash
flow with the operating cash flow of other non-financial busi-
nesses and companies and as such provides a useful measure to
supplement the reported GAAP CFOA measure.
Industrial and Infrastructure Revenues
(In millions) 2010
Total segment revenues $147,963
Less GE Capital 47,040
Segment revenues,
excluding GE Capital
(Industrial revenues) 100,923
Less NBCU 16,901
Segment revenues, excluding GE Capital
and NBCU (Infrastructure revenues) $ 84,022
Industrial and Infrastructure Earnings
(In millions) 2010
Total segment profit $ 19,568
Less GE Capital 3,265
Segment profit,
excluding GE Capital
(Industrial earnings) 16,303
Less NBCU 2,261
Segment profit, excluding GE Capital
and NBCU (Infrastructure earnings) $ 14,042
We have provided segment revenues and profit excluding the
revenues and earnings of our financial services segment,
GE Capital, which we refer to as “Industrial revenues” and
“Industrial earnings,” and excluding GE Capital and our media
business, NBCU, which we refer to as “Infrastructure revenues”
and “Infrastructure earnings.” We believe that these are useful
comparisons because they provide investors with information
on the results of our industrial businesses, with and without the
NBCU business, which is classified as a business held for sale at
December 31, 2010. We believe that these measures, considered
along with the corresponding GAAP measures, provide manage-
ment and investors with additional information for comparison
to other industrial businesses.
Financial Measures that Supplement Generally
Accepted Accounting Principles
We sometimes use information derived from consolidated finan-
cial 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 U.S. Securities and Exchange
Commission rules. Specifically, we have referred, in various sec-
tions of this Annual Report, to:
• Industrial cash flow from operating activities (Industrial CFOA)
• Industrial and Infrastructure revenues
• Industrial and Infrastructure earnings
• Average GE shareowners’ equity, excluding effects of discon-
tinued operations
• Ratio of debt to equity at GECS, net of cash and equivalents
and with classification of hybrid debt as equity
• Ratio of debt to equity at GECC, net of cash and equivalents
and with classification of hybrid debt as equity
• GE Capital ending net investment (ENI), excluding cash
and equivalents
• GE pre-tax earnings from continuing operations, excluding
GECS earnings from continuing operations, the corresponding
effective tax rates and the reconciliation of the U.S. federal
statutory rate to those effective tax rates
The reasons we use these non-GAAP financial measures and the
reconciliations to their most directly comparable GAAP financial
measures follow.
Industrial Cash Flow from Operating Activities
(Industrial CFOA)
(In millions) 2010 2009 2008 2007 2006
Cash from GE’s
operating activities,
as reported $14,746 $16,405 $19,138 $23,301 $23,772
Less dividends
from GECS — — 2,351 7,291 9,847
Cash from GE’s
operating activities,
excluding dividends
from GECS
(Industrial CFOA) $14,746 $16,405 $16,787 $16,010 $13,925
We refer to cash generated by our industrial businesses as
“Industrial CFOA,” which we define as GE’s cash from operating
activities less the amount of dividends received by GE from GECS.
This includes the effects of intercompany transactions, including
GE customer receivables sold to GECS; GECS services for trade
receivables management and material procurement; buildings
and equipment (including automobiles) leased between GE and
GECS; information technology (IT) and other services sold to GECS
by GE; aircraft engines manufactured by GE that are installed on
aircraft purchased by GECS from third-party producers for lease