10-QPeriod: Q2 FY2009

GENERAL ELECTRIC CO Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 3, 2009For Securities:GE

Summary

General Electric Company (GE) reported its second quarter 2009 results, showcasing a significant decline in earnings and revenues compared to the prior year, reflecting the ongoing impact of the global economic downturn. Consolidated net earnings attributable to common shareowners were $2.6 billion, a substantial decrease from $5.1 billion in Q2 2008, with diluted EPS falling to $0.24 from $0.51. Revenues also saw a marked decrease of 17% year-over-year to $39.1 billion. This downturn was particularly evident in the Capital Finance segment, which experienced an 80% drop in net earnings and a 29% decline in revenues, primarily due to higher provisions for losses on financing receivables amidst challenging economic conditions. Despite the headwinds, GE maintained substantial liquidity with $52.3 billion in cash and equivalents and $55.4 billion in committed credit lines, signaling its ability to navigate the difficult market environment. The company also continued its strategic focus on reducing leverage and refining its portfolio. The company's industrial segments, Energy Infrastructure and Technology Infrastructure, showed resilience with modest revenue declines, though segment profits also saw a decrease. NBC Universal experienced an 8% revenue drop and a 41% decline in segment profit. GE highlighted its efforts to strengthen liquidity, including managing collections versus originations at GECS and completing its long-term debt funding targets. The company also took decisive actions to preserve capital, such as reducing its quarterly dividend by 68% and suspending its share repurchase program, signaling a conservative approach in the face of economic uncertainty.

Financial Highlights

41 data points
Beta

Revenue

$12.94B

55.9% Gross Margin

Net Income

$2.69B

20.8% Net Margin

EPS (Diluted)

$2.00

Total Assets

$778.17B

Cash & Equivalents

$52.32B

Free Cash Flow

$3.84B

Financial Statements
Beta
Revenue$12.94B
Cost of Revenue$12.45B
Gross Profit$7.23B
Operating Expenses$8.93B
Operating Income$144.00M
Net Income$2.69B
EPS (Basic)$2.00
EPS (Diluted)$2.00

Key Highlights

  • 1Consolidated net earnings attributable to common shareowners decreased 49% to $2.6 billion for Q2 2009 compared to $5.1 billion in Q2 2008.
  • 2Diluted Earnings Per Share (EPS) fell to $0.24 in Q2 2009 from $0.51 in Q2 2008.
  • 3Total revenues decreased by 17% to $39.1 billion in Q2 2009 compared to $46.8 billion in Q2 2008.
  • 4The Capital Finance segment's net earnings dropped by 80% to $0.59 billion in Q2 2009 from $2.9 billion in Q2 2008, driven by higher provisions for losses on financing receivables.
  • 5GE maintained strong liquidity with $52.3 billion in cash and equivalents and $55.4 billion in committed credit lines at June 30, 2009.
  • 6The company reduced its quarterly common stock dividend by 68% to $0.10 per share, effective Q3 2009, to conserve capital.
  • 7Loss from discontinued operations, net of taxes, was $0.19 billion in Q2 2009 compared to $0.32 billion in Q2 2008.

Frequently Asked Questions

The primary driver for the significant decline in earnings was the challenging global economic environment, which led to a substantial increase in provisions for losses on financing receivables, particularly within the Capital Finance segment. This segment experienced a sharp drop in net earnings and revenues due to higher credit loss provisions and a reduced asset base.

GE's industrial segments, Energy Infrastructure and Technology Infrastructure, showed more resilience with modest revenue declines, although segment profits also decreased. In contrast, the financial services segment, primarily Capital Finance, was more severely impacted, experiencing a much larger drop in revenues and net earnings due to its direct exposure to credit markets and higher loss provisions.

GE has taken several steps to strengthen its liquidity and capital position. These include maintaining substantial cash and equivalents, securing committed credit lines, reducing commercial paper borrowings, and completing long-term debt funding targets. Additionally, GE significantly reduced its quarterly dividend and suspended its share repurchase program to conserve capital and reduce leverage.

While most segments experienced declines, GE Capital Aviation Services (GECAS) showed some stability, with revenues increasing 3% and net earnings increasing 3% compared to Q2 2008. However, the overall performance across most segments reflects the pervasive economic challenges.