10-KPeriod: FY2007

GENERAL ELECTRIC CO Annual Report, Year Ended Dec 31, 2007

Filed February 20, 2008For Securities:GE

Summary

General Electric (GE) filed its 2007 10-K on February 19, 2008, reporting significant revenue growth to $86.5 billion in 2007, up from $70.8 billion in 2006. The company highlighted its diverse business segments, including Infrastructure, Commercial Finance, GE Money, Healthcare, NBC Universal, and Industrial, serving customers in over 100 countries with a workforce exceeding 300,000. While the report details various operational aspects and competitive landscapes, it also discloses ongoing investigations by the SEC and DOJ, particularly concerning revenue recognition practices. GE acknowledged that these investigations, alongside identified internal control deficiencies related to revenue recognition, warranted significant remediation efforts, though management concluded these did not constitute a material weakness. Investors should note the company's active share repurchase program and its commitment to maintaining high credit ratings, crucial for its cost of capital.

Financial Highlights

28 data points
Beta

Revenue

$169.96B

72.2% Gross Margin

Net Income

$22.21B

13.1% Net Margin

EPS (Diluted)

$17.36

Cash & Equivalents

$15.73B

Free Cash Flow

$25.52B

Financial Statements
Beta
Revenue$169.96B
Cost of Revenue$47.31B
Gross Profit$122.66B
Operating Expenses$40.17B
Operating Income$25.61B
Net Income$22.21B
EPS (Basic)$17.44
EPS (Diluted)$17.36

Key Highlights

  • 1GE reported substantial revenue growth, reaching $86.5 billion in 2007, an increase from $70.8 billion in 2006, driven by its diversified business segments.
  • 2The company operates across a broad spectrum of industries including Infrastructure (aviation, energy, water), Commercial Finance, GE Money, Healthcare, NBC Universal, and Industrial products.
  • 3GE is subject to ongoing SEC and DOJ investigations concerning accounting practices, particularly revenue recognition, and has identified significant internal control deficiencies related to these issues.
  • 4Despite identified control deficiencies, management asserted that they do not, individually or in aggregate, constitute a material weakness.
  • 5The company has initiated significant remediation efforts to strengthen internal controls over financial reporting, focusing on revenue recognition policies and procedures.
  • 6GE's share repurchase program was active, with $14.9 billion remaining under a new program authorized in December 2007, indicating a focus on returning capital to shareholders.
  • 7The company emphasizes the importance of maintaining its 'Triple A' credit ratings for lower borrowing costs and access to capital markets.

Frequently Asked Questions

GE reported consolidated global revenues of $86.5 billion for 2007, a significant increase from $70.8 billion in 2006 and $60.9 billion in 2005. The filing, however, primarily focuses on the business operations and does not detail net earnings or EPS figures directly within the provided text, referring investors to the Annual Report to Shareowners for those specific metrics.

GE disclosed that it is cooperating with ongoing investigations by the SEC and the DOJ. The SEC investigation concerns the use of hedge accounting for derivatives and revenue recognition practices, while the DOJ and SEC are also investigating the marketing and sales of guaranteed investment contracts to municipalities. The company also noted specific environmental remediation efforts, notably concerning PCBs in the Hudson River.

GE is undertaking significant remediation efforts to address identified internal control deficiencies related to revenue recognition. These efforts include strengthening expertise in corporate accounting and internal audit, implementing improved review procedures for unusual transactions, enhancing operational controllership resources, clarifying global accounting policies and training, improving documentation processes, and emphasizing leadership communication on integrity and accuracy.

GE has an active share repurchase program. In December 2007, the Board approved a new three-year, $15 billion program, of which $14.9 billion remained as of December 31, 2007. This indicates a strategy of returning value to shareholders through stock buybacks.