GE 2010 Annual Report Download - page 35

management’s discussion and analsis
GE 2010 ANNUAL REPORT 33
NBC Universal (NBCU) (10% and 12% of consolidated three-year
revenues and total segment profit, respectively) is a diversified
media and entertainment company. NBCU revenues increased 9%
in 2010 after decreasing 9% in 2009 and segment profit was flat in
2010 after decreasing 28% in 2009. The cable business continues
to grow and become more profitable, the television business had
mixed performance, and our parks and film businesses have
improved as the U.S. economy has stabilized. On January 28, 2011,
we transferred the assets of the NBCU business to a newly formed
entity, which consists of our NBCU businesses and Comcast
Corporation’s cable networks, regional sports networks, certain
digital properties and certain unconsolidated investments. In
connection with the transaction, we received $6.2 billion in cash
and a 49% interest in the newly formed entity, NBC Universal LLC,
which we will account for under the equity method.
GE Capital (34% and 20% of consolidated three-year revenues
and total segment profit, respectively) net earnings increased to
$3.3 billion in 2010 due to stabilization in the overall economic
environment after declining to $1.5 billion in 2009 from the effects
of the challenging economic environment and credit markets.
Over the last several years, we tightened underwriting standards,
shifted teams from origination to collection and maintained a
proactive risk management focus. This, along with recent
increased stability in the financial markets, contributed to lower
losses and a return to pre-tax earnings and a significant increase
in segment profit in 2010. We also reduced our ending net invest-
ment (ENI), excluding cash and equivalents from $526 billion at
January 1, 2010 to $477 billion at December 31, 2010. The current
credit cycle has begun to show signs of stabilization and we
expect further signs of stabilization as we enter 2011. Our focus
is to reposition General Electric Capital Corporation (GECC) as a
diversely funded and smaller, more focused finance company with
strong positions in several mid-market, corporate and consumer
financing segments.
Home & Business Solutions (6% and 2% of consolidated three-
year revenues and total segment profit, respectively) revenues have
increased 2% in 2010 after declining 17% in 2009. Home & Business
Solutions continues to reposition its business by eliminating capac-
ity in its incandescent lighting manufacturing sites and investing in
energy efficient product manufacturing in locations such as
Louisville, Kentucky and Bloomington, Indiana. Segment profit
increased 24% in 2010 primarily as a result of the effects of produc-
tivity reflecting these cost reduction efforts and increased other
income, partially offset by lower prices. Segment profit increased
1% in 2009 on higher prices and lower material costs.
Overall, acquisitions contributed $0.3 billion, $2.9 billion and
$7.4 billion to consolidated revenues in 2010, 2009 and 2008,
respectively, excluding the effects of acquisition gains following
our adoption of an amendment to Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) 810,
Consolidation. Our consolidated net earnings included approxi-
mately $0.1 billion, $0.5 billion and $0.8 billion in 2010, 2009 and
2008, respectively, from acquired businesses. We integrate acqui-
sitions as quickly as possible. Only revenues and earnings from
the date we complete the acquisition through the end of the
fourth following quarter are attributed to such businesses.
Dispositions also affected our ongoing results through lower
revenues of $3.0 billion in 2010, lower revenues of $4.7 billion in
2009 and higher revenues of $0.1 billion in 2008. The effects of
dispositions on net earnings were increases of $0.1 billion,
$0.6 billion and $0.4 billion in 2010, 2009 and 2008, respectively.
Significant matters relating to our Statement of Earnings are
explained below.
DISCONTINUED OPERATIONS. Consistent with our goal of reduc-
ing GECC ENI and focusing our businesses on selective financial
services products where we have domain knowledge, broad
distribution, and the ability to earn a consistent return on capi-
tal, while managing our overall balance sheet size and risk, in
December 2010, we sold our Central American bank and card
business, BAC Credomatic GECF Inc. (BAC). In September 2007,
we committed to a plan to sell our Japanese personal loan
business (Lake) upon determining that, despite restructuring,
Japanese regulatory limits for interest charges on unsecured
personal loans did not permit us to earn an acceptable return.
During 2008, we completed the sale of GE Money Japan, which
included Lake, along with our Japanese mortgage and card
businesses, excluding our minority ownership in GE Nissen
Credit Co., Ltd. Discontinued operations also includes our
U.S. recreational vehicle and marine equipment finance business
(Consumer RV Marine) and Consumer Mexico. All of these busi-
nesses were previously reported in the GE Capital segment.
We reported the businesses described above as discontinued
operations for all periods presented. For further information
about discontinued operations, see Note 2.
WE DECLARED $5.2 BILLION IN DIVIDENDS IN 2010. Common
per-share dividends of $0.46 were down 25% from 2009, follow-
ing a 51% decrease from the preceding year. In February 2009,
we announced the reduction of the quarterly GE stock dividend
by 68% from $0.31 per share to $0.10 per share, effective with
the dividend approved by the Board in June 2009, which was
paid in the third quarter of 2009. As a result of strong cash
generation, recovery of GE Capital and solid underlying perfor-
mance in our industrial businesses during 2010, in July 2010, our
Board of Directors approved a 20% increase in our regular
quarterly dividend from $0.10 per share to $0.12 per share and
in December 2010, approved an additional 17% increase from
$0.12 per share to $0.14 per share. On February 11, 2011, our
Board of Directors approved a regular quarterly dividend of
$0.14 per share of common stock, which is payable April 25,
2011, to shareowners of record at close of business on
February 28, 2011. In 2010 and 2009, we declared $0.3 billion in
preferred stock dividends.
Except as otherwise noted, the analysis in the remainder of
this section presents the results of GE (with GECS included on a
one-line basis) and GECS. See the Segment Operations section for
a more detailed discussion of the businesses within GE and GECS.