GE 2015 Annual Report Download - page 133

MD&A SUPPLEMENTAL INFORMATION
GE 2015 FORM 10-K 105
INDUSTRIAL CASH FLOWS FROM OPERATING ACTIVITIES (INDUSTRIAL CFOA)
(
In millions
)
2015 2014 2013
Cash from GE's operating activities, as reported $ 16,354 $ 15,171 $ 14,255
Less dividends from GE Capital 4,300 3,000 5,985
Cash from GE's operating activities, excluding dividends
from GE Capital (Industrial CFOA) $ 12,054 $ 12,171 $ 8,270
We refer to cash generated by our industrial businesses as "Industrial CFOA," which we define as *(¶V cash from continuing operating
activities less the amount of dividends received by GE from GE Capital. This includes the effects of intercompany transactions,
including GE customer receivables sold to GE Capital; GE Capital services for trade receivables management and material
procurement; buildings and equipment (including automobiles) leased between GE and GE Capital; information technology (IT) and
other services sold to GE Capital by GE; aircraft engines manufactured by GE that are installed on aircraft purchased by GE Capital
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 *(¶V operating cash flows without the effect of GE Capital 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 these measures may not be comparable to cash flow
results of companies that contain both industrial and financial services businesses, but believes that this comparison is aided by the
provision of additional information about the amounts of dividends paid by our financial services business and the separate presentation
in our financial statements of the Financial Services (GE Capital) cash flows. We believe that our measures of Industrial CFOA provide
management and investors with useful measures 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 provide useful measures to supplement the
reported GAAP CFOA measure.
FREE CASH FLOW
(In millions) 2015 2014 2013
Cash from GE's operating activities (continuing operations) $ 16,354 $ 15,171 $ 14,255
Less GE additions to property, plant and equipment 3,785 3,970 3,680
Plus GE dispositions of property, plant and equipment 939 615 381
Free cash flow 13,508 11,816 10,956
Plus GE
p
roceeds from
p
rinci
p
al business dis
p
ositions 1,725 602 1,316
Free cash flow plus dispositions 15,233 12,418 12,272
We define free cash flow as *(¶V cash from operating activities (continuing operations) less GE additions to property, plant and
equipment and plus GE dispositions of property, plant and equipment, which are included in cash flows from investing activities. We
believe that free cash flow is a useful financial metric to assess our ability to pursue opportunities to enhance our growth. We also
believe that presenting free cash flow separately for our industrial businesses provides management and investors with useful
information about the trends of our industrial businesses and enables a more direct comparison to other non-financial businesses and
companies. We also believe that presenting free cash flow plus proceeds from business dispositions provides investors with useful
information about the FRPSDQ\¶V actual performance against performance targets. Management recognizes that the term free cash flow
may be interpreted differently by other companies and under different circumstances. Although this may have an effect on comparability
of absolute percentage growth from company to company, we believe that these measures are useful in assessing trends of the
respective businesses or companies and may therefore be a useful tool in assessing period-to-period performance trends.
GE 2015 FORM 10-K 105