Exhibit 99
Financial Measures That Supplement Generally Accepted Accounting Principles
General Electric Company and Consolidated Affiliates
We sometimes use information derived from consolidated financial information but not presented in our financial statements prepared in accordance with generally accepted accounting principles in the U.S. (GAAP). Certain of these data are considered "non-GAAP financial measures" under SEC rules. Specifically, we have referred to:
- Earnings and earnings per share growth excluding the effect of GE's insurance portfolio repositioning and earnings from GE's principal pension plans;
- net revenues (revenues from services less interest and other financial charges) of the Commercial Finance and Consumer Finance segments; and
- delinquency rates on managed financing receivables of the Commercial Finance and Consumer Finance segments.
The reasons we use these non-GAAP financial measures and their reconciliation to their most directly comparable GAAP financial measures follow.
| | Three months ended
September 30 |
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(Dollars in millions; per-share amounts in dollars) | | 2004 | | | 2003 | | V% |
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Earnings before accounting change | $ | 4,051 | | $ | 4,021 | | |
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Less: Effect of insurance portfolio repositioning | | | | | |
Total Insurance segment | | 120 | | | 604 | | |
Less: Insurance Solutions (Formerly ERC) | | (39 | ) | | 120 | | |
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Effect of insurance portfolio repositioning | | 159 | | | 484 | | |
Less: Net earnings from GE's principal pension plans | | 25 | | | 102 | | |
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Earnings excluding the effect of insurance portfolio
repositioning and earnings from GE's principal pension plans | $ | 3,867 | | $ | 3,435 | | 13% |
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EPS excluding the effect of insurance portfolio repositioning
and earnings from GE's principal pension plans | $ | 0.36 | | $ | 0.34 | | 6% |
We believe that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and the likelihood that particular factors will repeat. In some cases, short-term patterns and long-term trends may be obscured by large factors or events. For example, events or trends in a particular segment may be so significant as to obscure patterns and trends of our industrial or financial services businesses in total. For this reason, we believe that investors may find it useful to see our third quarter 2004 earnings and earnings per share without the effect of insurance portfolio repositioning and the decline in earnings from our principal pension plans.
Net Revenues
We provided reconciliations of net revenues to reported revenues for these segments on pages 24 and 25 of the Form 10-Q, respectively. Because net revenues is a common industry measure of margin, these disclosures enable investors to compare the results of our businesses with results of others in the same industry.
Delinquency Rates on Managed Financing Receivables
Approximate delinquency rates on financial receivables follow.
CONSUMER FINANCE
| | At | |
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| | 9/30/04 | | 12/31/03 | | 9/30/03 | |
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Managed | 5.50 | % | 5.57 | % | 5.62 | % |
Off-book | 4.55 | % | 4.58 | % | 4.38 | % |
On-book | 5.59 | % | 5.67 | % | 5.75 | % |
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COMMERCIAL FINANCE
| | At | |
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| | 9/30/04 | | 12/31/03 | | 9/30/03 | |
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Managed | 1.64 | % | 1.37 | % | 1.79 | % |
Off-book | 1.44 | % | 0.72 | % | 1.16 | % |
On-book | 1.70 | % | 1.55 | % | 1.96 | % |
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We believe that delinquency rates on managed financing receivables provide a useful perspective of our portfolio quality and are key indicators of financial performance. Further, investors use such information, including the results of both the on-book and securitized portfolios, which are relevant to our overall performance.
