Exhibit 99(b)
Non-GAAP Financial Measures
The press release dated July 11, 2003, which announces earnings for our second quarter includes “non-GAAP financial measures” as defined by SEC rules. Specifically, the release refers to:
| • | industrial sales, excluding the effects of the Power Systems business in the second quarters of 2002 and 2003; |
| • | combined net revenues (revenues from services less interest and other financial charges) of the Commercial Finance, Consumer Finance and Equipment Management segments; and |
| • | cash flow from operating activities, excluding progress collections. |
We believe that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about 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, significant 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 the sales of our industrial businesses without the effects of the long-anticipated down cycle in Power Systems.
In other cases, we believe the timing and magnitude of progress collections from customers may obscure an assessment of the repeatability and comparability of cash flow from operating activities. Accordingly, in addition to the reported cash flow from operations, we have provided investors information that excludes the unique effects of progress collections on our operating cash flows.
We also believe that disclosures of certain financial measures are useful to investors in comparing the results of our businesses to other businesses in the same industry that use the same performance measures. Consequently, we have provided the combined net revenues of our lending and leasing businesses for comparability to other financial services businesses whose results are sensitive to interest rates and financing costs.
Sales ex-Power
($ in Millions) | |||||||||
| 2Q’03 | 2Q’02 | V% | |||||||
Industrial Sales | $ | 17,640 | $ | 19,459 | (9 | )% | |||
Power Systems Sales | 4,479 | 6,502 | (31 | ) | |||||
Sales ex-Power | $ | 13,161 | $ | 12,957 | 2 | % | |||
Preliminary 2003 Second Quarter Results
Net Revenues Schedule
($ in Millions)
| Net Revenues Calculation | 2Q’03 | 2Q’02 | V% | ||||||
Revenues | |||||||||
Commercial Finance | $ | 4,737 | $ | 4,404 | 8 | % | |||
Consumer Finance | 3,046 | 2,463 | 24 | ||||||
Equipment Management | 1,153 | 1,168 | (1 | ) | |||||
Total | $ | 8,936 | $ | 8,035 | 11 | % | |||
Interest Expense | |||||||||
Commercial Finance | 1,427 | 1,430 | — | ||||||
Consumer Finance | 672 | 495 | 36 | ||||||
Equipment Management | 195 | 202 | (3 | ) | |||||
Total | $ | 2,294 | $ | 2,127 | 8 | % | |||
Net Revenue | |||||||||
Commercial Finance | 3,310 | 2,974 | 11 | ||||||
Consumer Finance | 2,374 | 1,968 | 21 | ||||||
Equipment Management | 958 | 966 | (1 | ) | |||||
TotalNet Revenues (Lending & Leasing Business) | $ | 6,642 | $ | 5,908 | 12 | % | |||
Preliminary 2003 Second Quarter Results
Cash From Operating Activities
($ in Billions) | |||||||||||||||
2Q YTD | 2003 | 2002 | V | V% | |||||||||||
CFOA ex-Progress | $ | 5.45 | $ | 6.08 | $ | (0.63 | ) | (10 | ) | ||||||
Progress Collections | (1.21 | ) | (2.60 | ) | 1.39 | 53 | |||||||||
CFOA | 4.24 | 3.48 | 0.76 | 22 | |||||||||||
Preliminary 2003 Second Quarter Results