FAIRFIELD, Conn.--(BUSINESS WIRE)--Oct. 8, 2004--GE's third quarter 2004 earnings were $4.051 billion, 1% higher than last year's third quarter before the effect of a required accounting change in 2003, the Company announced today.
"We continued our excellent operating performance in the third quarter and built momentum for future growth," said GE Chairman and CEO Jeff Immelt. "We delivered $.38 per share despite approximately $300 million after tax of hurricane-related insurance losses. Excluding the impact of our insurance portfolio repositioning and earnings from our principal pension plans, earnings grew 13% and earnings per share grew 6%.
"The economy we see continues to be very strong, with our total orders for the quarter up 27%. Eight of our 11 businesses delivered at least double-digit earnings growth with continued strong performance on cash flow from operating activities. GE Energy performed as expected, and we saw real earnings momentum at Transportation, Commercial Finance, Consumer Finance and in services across our businesses.
"Our cash performance was exceptional, with 32% growth year-to-date. This reflects our continued focus on cash management and larger dividends from our financial services businesses. We are also ahead of our plan to reduce the 'parent-supported' debt of our financial services businesses.
"NBC Universal and GE Healthcare both made excellent progress integrating their respective major acquisitions. NBC Universal made full use of its new cable networks and produced a terrific Olympics broadcast watched by more than 200 million Americans. Healthcare launched a new molecular diagnostics unit that combines the strengths of Amersham and GE Medical Systems.
"We also continued to invest in our growth initiatives, with launches of new technology such as Healthcare's Vivid i(TM) portable ultrasound; global growth such as Consumer Finance's entry into Russia and expansion in Korea; and significant customer wins for 600 of our low-emission and fuel-efficient GE Evolution Series(TM) locomotives. I'm proud of the GE team and its passion for imagination and growth."
"This continued performance," Immelt said, "further strengthens our confidence in our outlook for double-digit earnings growth in the fourth quarter of 2004 and in 2005."
GE will discuss third quarter results on a conference call and Webcast at 8:30 a.m. EDT today. Call information and related charts are available at www.ge.com/investor.
Third Quarter 2004 Financial Highlights
-- Earnings of $4.051 billion were up 1% from last year's $4.021 billion before the effect of a required accounting change in 2003. Eight of GE's 11 businesses -- Commercial Finance, Consumer Finance, Consumer & Industrial, Equipment & Other Services, Healthcare, Infrastructure, NBC Universal and Transportation -- contributed at least double-digit earnings growth. A decline in earnings from Insurance reflected the exit from several businesses and hurricane losses.
Earnings per share (EPS) before the accounting change were $.38, down from last year's $.40, reflecting dilution from additional shares issued in connection with the Amersham and Vivendi Universal Entertainment transactions.
-- Revenues were $38.3 billion, 15% higher than last year's $33.4 billion. Industrial sales increased 27% to $21.0 billion, reflecting the combined impact of acquisitions, the stronger economy and the Olympics broadcasts by NBC Universal. Organic industrial sales grew 12%. Combined Commercial Finance and Consumer Finance revenues grew 15% over last year to $10.0 billion, while total financial services revenues grew 3% to $17.5 billion, principally reflecting the reduction in the company's insurance businesses.
-- Cash generated from GE's operating activities (CFOA) in the first nine months of 2004 was $9.7 billion, up 32% over last year's $7.4 billion. Special dividends from GE Capital Services, from proceeds of business dispositions, were up $.8 billion. Industrial CFOA in the first nine months increased 25% over last year. GE expects approximately 15% growth in CFOA for the full year.
-- Net earnings were $4.051 billion in third quarter 2004, up 11% from $3.649 billion in third quarter 2003, when the company recorded a non-cash transition charge of $372 million ($.04 per share) upon adoption of FASB Interpretation No. 46, which required the consolidation of certain entities by companies that do not control those entities.
"We have strong momentum going into the fourth quarter, and we are narrowing our earnings target for 2004 to $1.57-$1.60 per share, the high end of our range," Immelt said. "We also remain confident that we will achieve 10-15% earnings per share growth in 2005. We have a terrific set of businesses, great people to lead them and excellent prospects for the future."
Third Quarter 2004 Business Highlights
Healthcare
-- Increased total orders 42% over third quarter 2003 to $3.4 billion; excluding Amersham, orders grew 15% to $2.8 billion driven by 41% growth in PET (positron emission tomography) orders and 7% services growth.
-- Launched the revolutionary LightSpeed VCT(TM), an ultra-high speed CT (computed tomography) scanner that can capture images of the heart and coronary arteries in less than five heartbeats.
-- Announced the development of the Vivid i(TM), the world's first miniaturized cardiovascular ultrasound system, which offers the functionality and performance of full-featured, larger-scale ultrasound devices in a portable "stethoscope of the future."
-- Helped open Saint Francis Heart Hospital in Tulsa, Oklahoma, the world's most advanced all-digital heart hospital, which integrates GE's leading cardiac imaging, picture archiving and communications systems into a comprehensive, seamless workflow.
-- In conjunction with The University of Illinois at Chicago, announced the world's most powerful MRI (magnetic resonance imaging) machine for human studies, ushering in a new age of metabolic imaging that will help researchers understand the workings of the human brain, detect diseases before their clinical signs appear and develop targeted drug therapies for illnesses such as stroke.
Transportation
-- Received aircraft engine, locomotive and services orders in
the quarter totaling $4.1 billion, up 40% over third quarter
last year.
-- Selected to provide 108 CF34(TM) regional jet engines to Air
Nostrum, Finnair and Chautauqua Airlines, and eight
extended-range GE90-115B(TM) engines to Emirates Airlines.
-- Through CFMI, a 50/50 joint company of GE and Snecma Moteurs
of France, selected to provide engines to airlines including
CEBU Pacific, Royal Air Maroc and AZAL (Azerbaijan Hava
Yollari).
-- Received new orders in the quarter for 600 GE Evolution Series
locomotives, the world's cleanest diesel-electric locomotives,
and 37 other locomotives for international customers.
-- Certified the CF6-80C2 engine for the U.S. Air Force's C-5
heavy aircraft modernization program, worth $2.6 billion of
potential total revenues for GE Transportation.
-- Selected to provide Canada's Maritime Helicopter Program with
the CT7 engine.
Energy
-- Announced on Oct. 4 the largest single award for new wind
generation capacity in the history of the global wind energy
industry, with a request from Hydro-Quebec to supply up to 660
wind turbines, totaling 990 megawatts of wind-generated
electricity, for eight Canadian projects to be placed on line
from 2006 to 2012.
-- Announced on Oct. 4 the intent to establish an alliance with
Bechtel Corp. to develop a standard commercial offering for
"cleaner coal" projects in North America.
-- Signed new contractual service agreements totaling $1.4
billion, increasing the number of gas turbines covered by 7%
over the same period last year and the number of sites by 8%.
-- Installed the 2,500th 1.5-megawatt GE wind turbine during the
quarter and shipped 49 1.5-megawatt wind turbines.
-- Completed the acquisition of BHA Group Holdings, Inc., an
environmental services leader in particulate matter control
systems, and the acquisition of three business units from S.D.
Myers, Inc., a leader in transformer and substation
maintenance services.
-- Received global equipment orders from Mexico, Turkey and
China; in China, received orders for eight gas turbines, and
turbine-generators for the Pubugou Hydropower plant.
-- Shipped 29 heavy-duty gas turbines from Greenville, S.C., and
Belfort, France, compared with 44 in third quarter 2003.
Commercial Finance
-- Increased the volume of financing for mid-market customers
(businesses with $50 million-$1 billion in annual revenues) by
22% over third quarter 2003 to $13.3 billion.
-- Arranged $1.4 billion of financing for healthcare
organizations in the quarter, 84% more than in third quarter
2003, including a $165 million credit facility to Beth Israel
Medical Center and a $25 million revolving credit facility to
Mount Sinai Hospital, both in New York City.
-- Through a joint venture with Southern Union, submitted the
winning bid for CrossCountry Energy, the holding company
formed from Enron's remaining U.S. gas pipelines.
-- Completed the $1.2 billion acquisition of Benchmark, PLC, a
U.K.-listed real estate property company, adding 41 assets in
London's West End to Commercial Finance's U.K. real estate
portfolio.
-- Ended the quarter with one aircraft on the ground out of a
fleet of more than 1,300 owned aircraft.
-- Introduced a new aircraft component management service that
helps airlines finance and manage their spare parts
inventories, reduce capital investment, lower costs and
improve operational efficiency.
Consumer Finance
-- Entered into a strategic joint venture with Hyundai Capital
Services, Korea's leading consumer finance company, purchasing
a 38% stake and acquiring immediate scale in one of the
world's largest economies.
-- Developed a new program with Dillard's and agreed to purchase
its private label credit card business, comprising the
sixth-largest in-house private label credit card program in
the U.S. and adding 5.5 million active card members to
Consumer Finance's customer base.
-- Teamed with SAM'S CLUB to launch the new Premier Line of
Credit(SM), which offers small business owners a credit line
of up to $100,000 and interest rates as low as prime to help
them start and grow their businesses with the same level of
financial flexibility typically afforded to mid- to
large-sized companies.
-- Agreed to acquire DeltaBank in Russia, entering one of the
world's fastest-growing consumer markets through GE's largest
single investment in Russia to date.
-- Agreed to purchase the credit card receivables of Target
Corporation's Mervyn's retail subsidiary (with 257 stores in
13 states, primarily in the West and South), reinforcing GE's
commitment to the retail card segment and building on Consumer
Finance's strategy to grow in the United States market.
NBC Universal
-- Attracted 203 million total U.S. viewers -- 86% of all U.S.
television households -- with unprecedented, 24-hour-a-day
coverage of the 2004 Summer Games in Athens on the networks of
NBC Universal, making the Games the third-most watched event
in the history of television.
-- Led primetime broadcast TV viewing for the quarter in the key
demographic of adults 18-49.
-- Drove double-digit ratings growth on every NBCU Cable
entertainment network -- Bravo, USA Networks and SciFi -- with
the group's ratings growing faster in the quarter than those
of any other cable group.
-- Increased Telemundo's Monday-Friday prime-time ratings among
adults 18-49 by 70% compared to the year-ago quarter.
-- Completed the 2003-04 season of Today with the largest total
viewers in the program's history, and continued NBC's
late-night leadership, with Jay Leno and Conan O'Brien leading
their respective competitors in ratings by 29% and 67%
respectively; NBC also extended Leno's contract through 2009
and named O'Brien his successor.
-- Completed the quarter with The Bourne Supremacy having
garnered a worldwide theatrical gross of more than $230
million since its July 23 release.
-- Shipped more than 1.5 million units in the first week of
release of the DVD of Eternal Sunshine of the Spotless Mind.
-- Increased MSNBC's primetime viewership in the quarter by 55%
over third quarter 2003, which represents faster growth than
any other cable channel in the quarter and almost three times
the growth of CNN.
Infrastructure
-- Provided EntryScan(TM) and Itemiser(TM) explosives detection
devices to protect attendees of the Olympic Games, the
Democratic and Republican national conventions and the
re-opened Statue of Liberty.
-- Concluded successful trials for the U.S. Transportation
Security Administration (TSA) of GE's walk-through EntryScan
at four U.S. airports, with the TSA choosing to make the
installations permanent.
-- Entered the global cargo security industry with
CommerceGuard(TM), a palm-sized security device that helps
detect unauthorized access to a container and monitors the
container in transit for signs of intrusion; also was selected
for a new TSA pilot program to screen air cargo for
explosives.
-- Signed new water and process technologies contracts,
generating a customized services backlog of more than $50
million while driving new growth in pure water outsourcing,
emergency mobile water and equipment, with customers in the
transportation, chemical, power, hydro-carbon processing,
energy and microprocessing industries.
Advanced Materials
-- Introduced new LNP(TM) resin additives used to manufacture
self-lubricating, wear-resistant gears for sectors as diverse
as consumer electronics, automotive, power tools and
appliances.
-- Introduced a tough, custom-colorable thermoplastic compound
for the electronics industry with permanent antistatic and
electrostatic-dissipative properties.
Consumer & Industrial
-- Named The Home Depot's 2004 "Partner of the Year" in the
Kitchen and Bath Department for consistently outstanding
performance.
-- Began rolling out a lighting products program for all of The
Home Depot's 1,500-plus U.S.-based stores.
-- Increased margins on high-end Monogram(R) and Profile(TM)
appliances by 39% and 24% respectively over third quarter
2003.
-- Increased margins through several new product launches
including the new Profile 42" Built-In Refrigerator, Monogram
Integrated Dishwasher, Transformore(TM) Transformer and
several stainless steel appliance upgrades.
-- Completed the disposition of the Commercial AC motor business
to Regal-Beloit Corporation.
GE (NYSE: GE) is a diversified technology, media and financial 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 contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties arise from the behavior of financial markets, including fluctuations in interest rates and commodity prices, from future integration of acquired businesses, from future financial performance of major industries which we serve, including, without limitation, the air and rail transportation, energy generation and healthcare industries, from unanticipated loss development in our insurance businesses, and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
[See attachment for detailed financial numbers.]
CONTACT:
General Electric, Fairfield
David Frail, 203-373-3387
[email protected]