July 12, 2002 — General Electric Co.’s second-quarter 2002 earnings grew 14% over second quarter 2001 to $4.4 billion, or $.44 per share, the highest of any quarter in the company’s history, GE Chairman and CEO Jeff Immelt announced Friday.
“GE’s diversified portfolio of leading businesses produced another quarter of double-digit earnings growth and strong cash flow,” Immelt said. “Our long-cycle industrial businesses and GE Capital’s consumer and mid-market businesses continue to deliver. The improved performance we’re seeing at our short-cycle businesses – particularly NBC, Plastics and Appliances – position us well for future quarters. The GE team continues to perform in a tough environment.”
Earnings rose 14% to $4.426 billion from $3.897 billion in second quarter 2001, and earnings per share (EPS) increased 13% to $.44. Power Systems, NBC, Medical Systems, Appliances and eight GE Capital businesses had double-digit earnings growth.
As previously disclosed, earnings reflect $358 million from a favorable settlement with the Internal Revenue Service of a dispute regarding exports from Aircraft Engines since 1979; a $70 million after-tax benefit from terminations of Power Systems gas turbine orders; approximately $350 million after taxes of adjustments for estimates of prior-year loss events at Employers Reinsurance Corporation (ERC), which resulted in a quarterly loss for ERC of $236 million; and a $110 million after-tax loss to recognize impairment of WorldCom bonds.
As required by new accounting rules, as of Jan. 1, 2002, goodwill is no longer amortized. On a comparable basis, second quarter 2002 EPS would have increased 7%. Adjusting for goodwill and pension income, EPS would have been up 11%.
Revenues rose 4% over second quarter 2001 to $33.2 billion. Industrial revenues grew 10%, with double-digit growth at Power Systems as well as Medical Systems, Appliances and Specialty Materials. Revenues at GE Capital Services (GECS) declined 4% because of the revenue effects of the ERC and WorldCom items. GECS net revenues (revenues less interest costs) from financing and operating activities grew 12%.
GE Power Systems (GEPS) shipped 109 heavy-duty gas turbines in the quarter, including 86 from its Greenville, South Carolina facility. GEPS Energy Services added 25 new contractual services agreements valued at $1.1 billion.
Commitments through the first half of the year reached $26.1 billion, $6.5 billion or 33 percent more since second quarter of last year. During the quarter GEPS also completed the acquisition of the manufacturing and technology assets of Enron Wind Corp., establishing GE Wind Energy as a leading presence in the renewable energy industry, which is growing at nearly 20% a year.
“In a tough environment, GE’s businesses continue to win in their markets by bringing great technology and services to their customers,” Immelt said. “We had a record second quarter; our third quarter looks promising, and we remain comfortable with the targets we’ve communicated for the full year. We have a wonderful team of people who are committed to perform. I’m proud of them and what they’re delivering.”
GE is a diversified technology, services and manufacturing company with a commitment to achieving customer success. GE operates in more than 100 countries and employs approximately 310,000 people worldwide. For more information, visit the company’s Web site at https://ge.com.
Conference call information and related charts are available at www.ge.com/investor.