FAIRFIELD, Conn.--(BUSINESS WIRE)--Oct. 11, 2002--GE's third-quarter 2002 earnings of $4.1 billion, or $.41 per share, increased 25% over third quarter 2001, and year-to-date cash flow from operations, excluding progress collections, increased 16%, GE Chairman and CEO Jeff Immelt announced today.
"GE delivered 41 cents per share and strong cash flow growth in what continues to be a more difficult economic environment than anticipated," Immelt said. "We are managing through a variety of short-term challenges at some of our businesses. However, in total, GE continues to deliver. This is a tribute to the strength of the GE business model - a great set of leading businesses with strong growth capability and exceptional cash discipline."
Financial highlights include:
- Earnings rose 25% to $4.087 billion from $3.281 billion in third quarter 2001, and earnings per share (EPS) increased 24% to $.41 from $.33 last year. Comparisons reflect charges in third quarter 2001 of approximately $400 million for Sept. 11-related reinsurance losses. Power Systems, NBC, Commercial Finance and Consumer Finance all contributed double-digit earnings growth. As previously disclosed, the third quarter included a $317 million gain from the disposition of GE Global eXchange Services (GXS), a $156 million loss at Employers Reinsurance Corporation (ERC) resulting from current-period claims and increased estimates of prior-year losses, and a $167 million loss at GE Equity. All amounts are after tax.
As required by new accounting rules, as of Jan. 1, 2002, goodwill is no longer amortized. Without goodwill amortization in third quarter 2001, EPS in third quarter 2002 would have increased 14%; adjusted for two significant non-cash items, goodwill and pension income, EPS would have increased 19%.
- Consolidated Revenues rose 11% over third quarter 2001 to $32.6 billion; excluding the GXS sale, revenues rose 9%. Industrial revenues, excluding the sale of GXS, grew 6%, with double-digit growth at NBC, Specialty Materials and Industrial Systems. Revenues at GE's financial services businesses were $15.0 billion, up 13%, reflecting last year's Sept. 11-related reduction in net reinsurance premiums earned. Net revenues (revenues less interest costs) at Commercial Finance, Consumer Finance and Equipment Management grew 19%.
- Cash generated from GE's operating activities, excluding progress collections, was a record $9.6 billion for the first nine months of 2002, up 16% from $8.3 billion last year. Reported cash flow from operations was $5.7 billion, which, reflecting the record progress collections in 2001, was 51% lower than last year's reported $11.7 billion. GE returned $6.9 billion to shareowners in the first nine months of 2002 through $5.4 billion in dividends and $1.5 billion in share repurchases.
- Operating margin in the quarter was 19.3%, up from last year's 18.9%, reflecting GE's continuing productivity gains and sales of high-margin services. For the first nine months of 2002, operating margin was 19.6%, up from last year's 19.1%.
- Financial Services earnings grew to $1.551 billion, up 19% from last year's $1.301 billion. This comparison reflects the Sept. 11-related reinsurance losses in third quarter 2001. Financial Services assets totaled $473 billion at the end of the quarter, up 21% from $391 billion at the end of third quarter 2001.
GE will provide more detail on third-quarter results on a conference call and Webcast to be held at 9 a.m. EDT today. Call information and related charts are available at www.ge.com/investor.
Among third-quarter business highlights:
- GE Power Systems (GEPS) shipped 76 heavy-duty gas turbines in
the quarter, including 57 from its Greenville, South Carolina
facility. Revenue from customer terminations, net of costs,
increased pre-tax operating profit in the quarter by $57
million, but was more than offset by restructuring charges.
GEPS Energy Services added 12 new contractual services
agreements during the quarter, bringing the level of
commitments to $26.5 billion, an increase of $5.9 billion, or
29 percent, over third quarter 2001. More than 1,350 gas
turbines were covered by GEPS service agreements at the end of
the quarter, 64% more than at the end of third quarter 2001.
During the quarter GEPS completed the acquisition of
Panametrics Inc., a global provider of high-technology
ultrasonic testing equipment and process control
instrumentation.
- GE Medical Systems (GEMS) revenues grew 7% to $2.1 billion, as
some U.S. and Asia projects and financing approvals were
extended into future quarters. Demand for new GEMS technology
drove third quarter orders up 11%, to $2.5 billion. The new GE
Voluson(TM) 730 4D and GE LOGIQBook(TM) Portable Ultrasound
System led ultrasound order growth of 20%, or $185 million.
The GE Lightspeed16, GE's industry-leading 16-slice CT
(computed tomography) scanner, drove CT orders 12% to more
than $300 million. MR (magnetic resonance) orders, led by new
GE EXCITE MRI systems, grew 9% to more than $305 million.
X-Ray orders, fueled by demand for the GE Innova digital
cardiac X-ray system, grew 12% to more than $305 million.
Orders for healthcare information technology systems grew 43%
to more than $325 million.
- GE Aircraft Engines (GEAE) and CFMI (jointly owned by GEAE and
Snecma) won $1.0 billion in commercial engine orders in the
quarter, including orders from Federal Express, Japan Airlines
and COPA. GEAE continued to invest in a wide range of
development programs, and made the first flight tests of the
world's most powerful jet engine, the GE90-115B, and initial
tests of the CF34-10 regional jet engine for the Embraer
190/195. The GE-90 will power Boeing's extended-range 777,
test flights of which will begin early next year; regional
jets are the fastest-growing sector of commercial aviation.
Firm and option orders for CF34 engines, including orders
received in the quarter from Alitalia and Jet Airways, total
$7.1 billion. During the quarter GEAE also received more than
$2.3 billion in military contracts, including a multi-year
$1.9 billion U.S. Navy procurement contract for the F414
engines, devices and spare modules that power the Navy's
advanced F/A-8E/F Super Hornet fighter jet.
- GE Commercial Finance assets grew 34% from the prior-year
period and totaled $185 billion at the end of the quarter.
Asset quality remained stable in a difficult environment, with
delinquency rates stable compared to the end of third quarter
2001. During the quarter, units of Commercial Finance agreed
to acquire Deutsche Financial Services' commercial inventory
financing business for $2.9 billion, and most of ABB's
structured finance operations for $2.3 billion.
- GE Consumer Finance assets totaled $73 billion at the end of
the quarter, up 20% from third quarter 2001. Consumer
Finance's disciplined risk management and collections
practices resulted in stable delinquency rates compared to the
end of third quarter last year. During the quarter, Consumer
Finance completed the acquisition of SDL Leasing, an auto
financing company in Singapore, and Kawai Assist in Japan,
which offers consumer financing to merchants.
- NBC maintained its lead through the third quarter in key
advertiser demographics in virtually every important daypart
-- morning news, daytime, evening news, prime time, late night
and Sunday-morning public affairs - and enjoyed strong
advertising pricing as a result. NBC won its eighth
consecutive summer in the key advertiser demographic of adults
18-49 with 10 of the top 20 programs in that category. In
September, NBC led the premiere week of the 2002-03 prime-time
season by a commanding 17 percent margin among adults 18-49.
Telemundo registered prime-time ratings increases of 61% over
third quarter last year among adults 18-49 in its first full
quarter since NBC acquired it.
- GE Transportation Systems (GETS) won $1 billion in new
locomotive, maintenance services and signaling orders in the
quarter, including nearly $500 million in orders for DASH-9
locomotives. GETS's signaling unit signed a $63 million
contract with the Maryland Transit Administration for a
state-of-the-art wayside and car-borne signaling and field
communications system, and completed its acquisition of
certain assets from Railway Technologies Inc., furthering
GETS's expansion into remote control yard switch products.
- GE Industrial Systems (GEIS) continued its expansion into the
high-tech sensor and security markets through the acquisitions
of Druck Holdings plc, NovaSensor Inc. and Kilsen. GEIS also
agreed to acquire Ion Track, a pioneer in the development of
advanced trace detection technologies for security and law
enforcement agencies.
Immelt said, "The economy is much tougher than anyone planned, but the fundamentals of GE are in great shape. We've got a great team of people who continue to serve our customers effectively and who come to work looking for new products and services, and new markets for growth. We are maintaining our full-year target of $1.65 per share in the environment we see today."
GE (NYSE: GE) is a diversified technology and services company dedicated to creating products that make life better. From aircraft engines and power generation to financial services, medical imaging, television programming and plastics, GE operates in more than 100 countries and employs more than 300,000 people worldwide. For more information, visit the company's Web site at http://www.ge.com.
Caution Concerning Forward-Looking Statements
This document includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors. More detailed information about those factors is contained in GE's filings with the Securities and Exchange Commission.
[See attachment for detailed financial numbers.]
CONTACT:
General Electric, Fairfield
David Frail, 203/373-3387
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