GE cash from operating activities (CFOA) is a useful measure of performance for our non-financial businesses and totaled $24.6 billion in 2006, $21.6 billion in 2005 and $15.2 billion in 2004. Generally, factors that affect our earnings — for example, pricing, volume, costs and productivity — affect CFOA similarly. However, while management of working capital, including timing of collections and payments and levels of inventory, affects operating results only indirectly, the effect of these programs on CFOA can be significant.
Our GE Statement of Cash Flows shows CFOA in the required format. While that display is of some use in analyzing how various assets and liabilities affected our year-end cash positions, we believe that it is also useful to supplement that display and to examine in a broader context the business activities that provide and require cash.
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| December 31 (In billions) |
2006 |
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2005 |
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2004 |
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| Operating cash collections |
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| Operating cash payments |
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(83.4 |
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(76.1 |
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(69.5 |
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| Cash dividends from GECS |
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9.8 |
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7.8 |
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3.1 |
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| GE cash from operating activities |
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The most significant source of cash in CFOA is customer-related activities, the largest of which is collecting cash following a product or services sale. GE operating cash collections increased by $8.3 billion during both 2006 and 2005. These increases are consistent with the changes in comparable GE operating segment revenues, comprising Healthcare, NBC Universal and the industrial businesses of the Industrial and Infrastructure segments. Analyses of operating segment revenues discussed in the preceding Segment Operations section is the best way of understanding their customer-related CFOA.
The most significant operating use of cash is to pay our suppliers, employees, tax authorities and others for the wide range of materials and services necessary in a diversified global organization. GE operating cash payments increased by $7.3 billion in 2006 and by $6.6 billion in 2005, comparable to the increases in GE total costs and expenses.
Dividends from GECS represented distribution of a portion of GECS retained earnings, including proceeds from certain business sales, and are distinct from cash from continuing operating activities within the financial services businesses, which increased in 2006 by $2.1 billion to $21.9 billion and decreased in 2005 by $0.7 billion to $19.8 billion. The amount we show in CFOA is the total dividend, including the normal dividend as well as any special dividends from excess capital primarily resulting from GECS business sales.
Based on past performance and current expectations, in combination with the financial flexibility that comes with a strong balance sheet and the highest credit ratings, we believe that we are in a sound position to grow dividends, continue making selective investments for long-term growth and, depending on proceeds from a potential business disposition, continue to execute our $25 billion share repurchase program.
