What was the impact of FIN 46 on GE's financial results?

GE adopted FIN 46 (Consolidation of Variable Interest Entities) on July 1, 2003. This led to the consolidation of certain entities, adding $51 billion in assets to the balance sheet but also resulting in a non-cash, after-tax transition charge of $372 million, which reduced diluted earnings per share by $0.04 in the third quarter.

How did the different business segments perform in the third quarter?

Several segments showed strong performance, including Commercial Finance (up 5% in revenue), Consumer Finance (up 30% in revenue), Insurance (up 10% in revenue), and Medical Systems (up 10% in revenue). However, the Power Systems segment saw a significant 18% decline in revenue due to lower gas turbine sales. NBC also reported an 11% increase in revenue.

What are the key financial position changes from the previous quarter?

Consolidated assets increased by $51.7 billion to $626.9 billion, largely driven by the consolidation of FIN 46 entities and increased financing receivables. Consolidated liabilities also rose by $42.6 billion to $548.7 billion, primarily due to the FIN 46 adoption and increased long-term borrowings within GE Capital. Financing receivables grew by $16.6 billion to $214.6 billion.

What significant divestitures or strategic changes occurred during the quarter?

GE completed the sale of its Tokyo-based GE Edison Life Insurance Company and its U.S. Auto and Home businesses, realizing significant gains. The company also announced an agreement to sell a controlling interest in Financial Guaranty Insurance Company (FGIC) and reported GE Superabrasives as held for sale, indicating ongoing portfolio management and streamlining efforts.

GE 10-Q Quarterly Report Q3 FY2003 — Revenue, Net Income, EPS

Summary

General Electric (GE) reported its third-quarter and nine-month results for 2003, showcasing a mixed performance with some segments experiencing growth while others faced headwinds. While consolidated revenues saw a modest increase, net earnings experienced a decline primarily due to a significant one-time accounting charge related to the adoption of FIN 46. This new accounting standard led to the consolidation of certain variable interest entities, adding $51 billion in assets but also resulting in a $372 million after-tax charge, impacting earnings per share. Despite the accounting adjustments, several core businesses like Commercial Finance and Consumer Finance demonstrated strong revenue and earnings growth, driven by acquisitions and increased customer activity. However, the Power Systems segment continued to struggle with a significant decline in large gas turbine sales. Investors should note the ongoing strategic divestitures, such as the sale of GE Edison Life and the U.S. Auto and Home businesses, which are reshaping the company's portfolio and impacting financial results.

Key Highlights

1Consolidated revenues for Q3 2003 increased by 2% year-over-year to $33.4 billion, while for the nine months, revenues grew 1% to $97.2 billion.
2Net earnings for Q3 2003 were $3.649 billion ($0.36 EPS) compared to $4.087 billion ($0.41 EPS) in Q3 2002. The adoption of FIN 46 resulted in a $372 million after-tax charge ($0.04 EPS).
3The Power Systems segment experienced an 18% revenue decline in Q3, primarily due to a significant drop in large gas turbine sales (47 in Q3 2003 vs. 83 in Q3 2002).
4Commercial Finance and Consumer Finance segments showed robust growth, with revenues up 5% and 30% respectively in Q3, driven by acquisitions and increased business activity.
5GE completed the sale of GE Edison Life and U.S. Auto and Home businesses, realizing gains and continuing its portfolio reshaping efforts.
6GE Capital maintained its strong credit ratings (AAA/Aaa long-term), with ongoing strategies to manage debt and liquidity.
7Goodwill balances increased significantly by $3.563 billion in Q3 2003, largely due to acquisitions in NBC and Consumer Finance segments.

GENERAL ELECTRIC CO Quarterly Report for Q3 Ended Sep 30, 2003

Summary

Key Highlights

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