GE 2012 Annual Report Download - page 142

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 flows from operating activities (Industrial CFOA)
• Operating earnings, operating EPS, operating EPS exclud-
ing the effects of the 2011 preferred stock redemption and
Industrial operating earnings
• Operating and non-operating pension costs (income)
• Industrial segment organic revenues
• Average GE shareowners’ equity, excluding effects of
discontinued operations
• 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
GECC earnings from continuing operations, the correspond-
ing effective tax rates and the reconciliation of the U.S. federal
statutory income tax rate to GE effective tax rate, excluding
GECC earnings
The reasons we use these non-GAAP financial measures and the
reconciliations to their most directly comparable GAAP financial
measures follow.
Industrial Cash Flows from Operating Activities
(Industrial CFOA)
(In millions) 2012 2011 2010 2009 2008
Cash from GE’s
operating activities,
as reported $17,826 $12,057 $14,746 $16,405 $19,138
Less dividends from
GECC 6,426 — — — 2,351
Cash from GE’s
operating activities,
excluding
dividends from
GECC (Industrial
CFOA) $11,400 $12,057 $14,746 $16,405 $16,787
We refer to cash generated by our industrial businesses as
“Industrial CFOA,” which we define as GE’s cash from continuing
operating activities less the amount of dividends received by GE
from GECC. This includes the effects of intercompany transac-
tions, including GE customer receivables sold to GECC; GECC
services for trade receivables management and material procure-
ment; buildings and equipment (including automobiles) leased
between GE and GECC; information technology (IT) and other
services sold to GECC by GE; aircraft engines manufactured by GE
that are installed on aircraft purchased by GECC from third-party
producers for lease 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 GECC 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 rec-
ognizes 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 additional information about the amounts of divi-
dends paid by our financial services business and the separate
presentation in our financial statements of the financial services
(GECC) cash flows. We believe that our measure of Industrial
CFOA provides management and investors with a useful measure
to compare the capacity of our industrial operations to generate
operating cash flows with the operating cash flows of other non-
financial businesses and companies and as such provides a useful
measure to supplement the reported GAAP CFOA measure.
140 GE 2012 ANNUAL REPORT
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