GE 2015 Annual Report Download - page 131

MD&A SUPPLEMENTAL INFORMATION
GE 2015 FORM 10-K 103
INDUSTRIAL SEGMENT GROSS MARGIN (EXCLUDING ALSTOM)
(Dollars in millions) 2015 2014
Industrial Sales $ 106,206
$ 107,308
Less: Corporate sales and eliminations
(
1,858
)
(
1,767
)
Industrial segment sales 108,064 109,075
Less: Alstom sales 1,953 -
Industrial segment sales excluding Alstom $ 106,111 $ 109,075
Industrial cost of sales $ 80,828 $ 81,876
Less: Corporate cost of sales and eliminations 2,026 1,775
Industrial segment cost of sales 78,802 80,101
Less: Alstom cost of sales 1,730 -
Industrial segment cost of sales excluding Alstom $ 77,072 $ 80,101
Industrial segment gross margin 29,262 28,974
Industrial segment gross margin percentage 27.1% 26.6%
Industrial segment gross margin excluding Alstom 29,039 28,974
Industrial segment gross margin percentage excluding Alstom 27.4% 26.6%
We have presented our segment gross margin excluding the results of our fourth quarter 2015 Alstom power and grid acquisition. We
believe that industrial segment gross margin adjusted for the Alstom impacts is a meaningful measure because it increases the
comparability of period-to-period results.
Other measures excluding Alstom: We have also presented results of our Power, Renewable Energy and Energy Management
segments excluding the effects of the fourth quarter Alstom power and grid acquisition. These measurements included revenues,
operating profit and margin excluding Alstom, the reconciliations for which are included in the segment sections within MD&A. We also
presented Industrial SG&A as a percentage of sales excluding Alstom. We believe that these metrics adjusted for the Alstom impacts
are meaningful measures because they increase the comparability of period-to-period results.
A
VERAGE GE SHAREOWNERS' EQUITY, EXCLUDING EFFECTS OF DISCONTINUED OPERATIONS(a)
(In millions) 2015 2014 2013 2012 2011
$
YHUDJH*(VKDUHRZQHUV¶ equity(a) $ 111,140 $ 131,914 $ 124,501 $ 120,401 $ 122,289
Less the effects of the average net investment
in discontinued operations 27,910 45,455 44,948 41,399 38,130
$
YHUDJH*(VKDUHRZQHUV¶HTXLW\H[FOXGLQJ
effects of discontinued operations(b) $ 83,230 $ 86,459 $ 79,553 $ 79,002 $ 84,159
(a) On an annual basis, calculated using a five-point average.
(b) Used for computing Industrial return on total capital (ROTC).
Our Industrial ROTC calculation excludes earnings (losses) of discontinued operations from the numerator because GAAP requires us
to display those earnings (losses) in the Statement of Earnings. Those earnings (losses) from discontinued operations include an
allocation of interest expense either directly attributable or related to discontinued operations. Net investment in discontinued operations
is calculated as assets of discontinued operations less liabilities of discontinued operations, including an allocation of GE Capital debt.
2XUFDOFXODWLRQRIDYHUDJH*(VKDUHRZQHUV¶HTXLW\PD\QRWEHGLUHFWO\FRPSDUDEOHWRVLPLODUO\WLWOHGPHDVXUHVUHSRUWHGE\RWKer
companies. We believe that it is a clearer way to measure the ongoing trend in return on total capital for the continuing operations of
our businesses given the extent that discontinued operations have affected our reported results. We believe that this results in a more
relevant measure for management and investors to evaluate performance of our continuing operations, on a consistent basis, and to
evaluate and compare the performance of our continuing operations with the ongoing operations of other businesses and companies.
Definitions indicating how the above-QDPHGUDWLRVDUHFDOFXODWHGXVLQJDYHUDJH*(VKDUHRZQHUV¶HTXLW\H[FOXGLQJHIIHFWVRI
discontinued operations, can be found in the Other Items and Measures section within the MD&A.
GE 2015 FORM 10-K 103