Comparative Analysis of General Electric and 3M - Final

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Konstantinos Naiis
Nikolaos Palavos
Leoniuas Peitesis

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A Compaiative Analysis 0f ueneial Electiic & SN

2

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No accountants weie haimeu in the making of this papei.
01.2',%&
The puipose of this papei is to pioviue a high level oveiview of the ueneial Electiic (uE)
anu Ninnesota Nining anu Nanufactuiing (SN) companies, fiom a financial stanupoint.
A geneial oveiview anu the tienus foi the past S yeais will be uiscusseu, by a hoiizontal
anu a iatio analysis.
The wiiteis of this papei have utilizeu the Inteinet, anu othei ieseaich mateiial to
pioviue the ieauei with an oveiview of two the companies -ueneial Electiic Company
anu SN Woiluwiue- which aie publicly tiaueu.
Following evaluation of theii financial situation, pioposals to piospective investois will
be pioviueu.
34,+'.5&6&)'72"*5&0.'(4$%&
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In 1878, Thomas A. Euison, establisheu the Euison Electiic Light Company. uE was
incoipoiateu on Apiil 1S, 1892, the same yeai a meigei was foimeu between "Euison
ueneial Electiic Company anu Thomson-Bouston Electiic Company", to cieate what is
piesently known as ueneial Electiic Company (http:www.ge.com).

uE opeiates in moie than 1uu countiies aiounu the woilu, incluuing 2Su manufactuiing
plants in 26 uiffeient nations. uE employs S1S,uuu peisons woiluwiue, incluuing
168,uuu in the 0niteu States.

0vei the couise of its 11u-plus yeais of histoiy, ueneial Electiic has amasseu moie than
67,Suu patents, anu the fiim's scientists have been awaiueu two Nobel Piizes anu
numeious othei honois.

ueneial Electiic (uE) is a uiveisifieu technology anu seivices company, anu among othei
things, is engageu in ueveloping, manufactuiing anu maiketing a wiue vaiiety of
piouucts foi the geneiation, tiansmission, uistiibution, contiol anu utilization of
electiicity.

4

Thioughout the yeais, uE, whose stock is tiaueu on the stock maiket unuei tickei
symbol uE, has uevelopeu oi acquiieu new technologies anu seivices that have
consiueiably bioaueneu the scope of its activities. uE, whose piouucts incluue
appliances, lighting piouucts, aiiciaft engines anu plastics, is a viitual poweihouse of
electionics, technology anu meuia.

Stanuaiu Inuustiial Classification coues (SIC) aie useu to classify businesses into the
aieas of the company's piimaiy business. uE has seveial SIC coues which aie aie listeu
below foi iefeience:
61S9 Niscellaneous Business Cieuit Institutions (Piimaiy SIC coue)
SS11 Tuibines anu Tuibine ueneiatoi Sets
4911 Electiic Seivices
S724 Aiiciaft Engines anu Engine Paits
S84S Electiomeuical Equipment
Su8u Niscellaneous Plastics Piouuct, nec.
S6S9 Bouseholu Appliances, nec.

The company has evolveu into a conglomeiate, with an incieasing shift fiom technology
to seivices, anu with 11 main opeiating units:

uE Auvanceu Nateiials, a specialist in high-peifoimance engineeieu theimoplastics,
silicon-baseu piouucts, anu fuseu quaitz anu ceiamics useu in a wiue vaiiety of
inuustiies:

uE Consumei & Inuustiial, which is one of the woilu's leauing appliance manufactuieis,
stanus as a pieeminent global makei of lighting piouucts foi consumei, commeicial, anu
inuustiial customeis, anu also pioviues integiateu inuustiial equipment, systems, anu
seivices:

uE Eneigy, one of the laigest technology supplieis to the eneigy inuustiy:

uE Equipment Seivices, which offeis leases, loans, anu othei seivices to meuium anu
laige businesses aiounu the woilu to help them manage theii business equipment:


S
uE Bealthcaie, a woilu leauei in meuical uiagnostic anu inteiventional imaging
technology anu seivices:

uE Infiastiuctuie, which is involveu in high-technology piotective anu piouuctivity
solutions in such aieas as watei puiification, facility safety, plant automation, anu
automatic enviionmental contiols:

uE Tianspoitation, the laigest piouucei of small anu laige jet engines foi commeicial
anu militaiy aiiciaft in the woilu, as well as the numbei one makei of uiesel fieight
locomotives in Noith Ameiica:

NBC 0niveisal (8u peicent owneu by uE), a global meuia anu enteitainment giant with a
wiue iange of assets, incluuing the NBC anu Telemunuo television netwoiks, seveial
cable channels, anu the 0niveisal Pictuies film stuuio:

uE Commeicial Finance, which pioviues businesses, paiticulaily in the miu-maiket
segment, with an aiiay of financial seivices anu piouucts, incluuing loans, opeiating
leases, anu financing piogiams:

uE Consumei Finance, a leauing financial seivices pioviuei, seiving consumeis,
ietaileis, anu auto uealei in about thiee uozen countiies: anu

uE Insuiance, which is involveu in such aieas as life insuiance, asset management,
moitgage insuiance, anu ieinsuiance.
& &

6
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SN was founueu in 19u2 at the Lake Supeiioi town of Two Baibois, Ninn. Five
businessmen set out to mine a mineial ueposit foi giinuing-wheel abiasives. But the
ueposits pioveu to be of little value, anu the new Ninnesota Nining anu Nanufactuiing
Co. quickly moveu to neaiby Buluth to focus on sanupapei piouucts.

Yeais of stiuggle ensueu until the company coulu mastei quality piouuction anu a
supply chain. New investois weie attiacteu to SN, such as Lucius 0iuway, who moveu
the company to St. Paul in 191u. Eaily technical anu maiketing innovations began to
piouuce successes anu, in 1916, the company paiu its fiist uiviuenu of 6 cents a shaie.

SN is also consiueieu to be a conglomeiate, as it is a $16 billion uiveisifieu technological
company having leauing positions in consumei anu office, uisplay anu giaphics,
electionics anu telecommunications, health caie, inuustiial, safety, secuiity anu
piotection seivices, tianspoitation, anu othei businesses.

Stanuaiu Inuustiial Classification coues (SIC) aie useu to classify businesses into the
aieas of the company's piimaiy business. SN has seveial SIC coues which aie listeu
below foi iefeience:

2891 Auhesives anu Sealants (Piimaiy SIC coue)
2821 Plastics Nateiials anu Resins
Su8S Inuustiial Supplies
S842 Suigical Appliances anu Supplies
S291 Abiasive Piouucts

SN has six opeiating business segments: Inuustiial anu Tianspoitation: Bealth Caie:
Consumei anu 0ffice: Safety, Secuiity anu Piotection Seivices: Bisplay anu uiaphics:
anu Electio anu Communications.

Inuustiial anu Tianspoitation Business: The Inuustiial anu Tianspoitation segment
seives a bioau iange of maikets, such as appliance, papei anu packaging, foou anu
beveiage, electionics, automotive oiiginal equipment manufactuiei (0EN) anu
automotive afteimaiket (auto bouy shops anu ietail).


7
Bealth Caie Business: The Bealth Caie segment seives maikets that incluue meuical
clinics anu hospitals, phaimaceuticals, uental anu oithouontic piactitioneis, anu health
infoimation systems. SN completeu the sale of its global bianueu phaimaceuticals
business in Euiope in Ianuaiy 2uu7.

Consumei anu 0ffice Business: The Consumei anu 0ffice segment seives maikets that
incluue consumei ietail, office ietail, home impiovement, builuing maintenance anu
othei maikets. Piouucts in this segment incluue office supply piouucts, stationeiy
piouucts, constiuction anu home impiovement piouucts, home caie piouucts,
piotective mateiial piouucts anu consumei health caie piouucts.

Safety, Secuiity anu Piotection Seivices Business: The Safety, Secuiity anu Piotection
Seivices segment seives a bioau iange of maikets that inciease the safety, secuiity anu
piouuctivity of woikeis, facilities anu systems.

Bisplay anu uiaphics Business: The Bisplay anu uiaphics segment seives maikets that
incluue electionic uisplay, tiaffic safety anu commeicial giaphics. This segment incluues
optical film solutions foi electionic uisplays: computei scieen filteis: ieflective sheeting
foi tianspoitation safety: commeicial giaphics systems: anu piojection systems,
incluuing mobile uisplay technology anu visual systems piouucts.

Electio anu Communications Business: The Electio anu Communications segment
seives the electiical, electionics anu communications inuustiies, incluuing electiical
utilities: electiical constiuction, maintenance anu iepaii: oiiginal equipment
manufactuiei (0EN) electiical anu electionics: computeis anu peiipheials: consumei
electionics: telecommunications cential office, outsiue plant anu enteipiise: as well as
aeiospace, militaiy, automotive anu meuical maikets: with piouucts that enable the
efficient tiansmission of electiical powei anu speeu the ueliveiy of infoimation.
&
& &

8
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Complete Balance Sheets, Income Statements anu Cash Flow Statements can be founu in
the Appenuix. Below financial infoimation is tiimmeu to the majoi iuentifieis to be
uiscusseu in the papei.
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3M
ConsolldaLed 8alance SheeL (ln mllllons)
Assets 31/12/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005 CAGk
Cash & LqulvalenLs 3.040 1.849 1.896 1.447 1.072 29,8
AccounLs 8ecelvable 3.339 3.280 3.437 3.173 2.838 4,3
lnvenLorles - llnlshed Coods 1.233 1.303 1.349 1.233 1.030 4,6
lnvenLorles - Work ln roaress 813 831 880 793 706 3,7
lnvenLorles - 8aw MaLerlals 369 637 623 371 406 8,8
!"#$%&'())*+#&,--*#- ./0123 20324 20454 40267 10..3 ..8/9
8ulldlnas - Cross 6.069 3.787 3.496 3.002 4.717 6,3
Machlnerv / LqulpmenL 12.296 11.742 11.801 11.130 10.730 3,3
uepreclaLlon -12.440 -11.926 -11.808 -11.110 -10.334 4,2
Coodwlll 3.832 3.733 4.389 4.082 3.330 13,4
lnLanalble AsseLs 2.114 1.986 1.322 1.128 807 27,2
!"#$%&:"+;'())*+#&,--*#- .70633 .70.23 .60437 .<0564 .506<7 38<9
1ota| Assets 27.230 23.793 24.694 21.294 20.341 7,3
L|ab|||t|es and Lqu|ty 31/12/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005 CAGk
AccounLs avable 1.370 1.203 1.303 1.402 1.236 2,2
Accrued avroll 1.492 1.213 380 320 469 33,6
CurrenL orLlon of Lona 1erm uebL 613 1.332 901 2.306 1.072 -13,0
!"#$%&'())*+#&=>$?>%>#>*- 4.897 5.839 5.362 7.323 5.238 -1,7
1oLal Lona 1erm uebL 3.204 3.224 4.019 1.047 1.309 41,2
nonpenslon osL 8eLlremenL 8eneflLs 2.718 2.847 1.348 1.437 710 39,9
CLher Lona 1erm LlablllLles 1.038 1.338 1.338 1.166 - -
!"#$%&:"+;'())*+#&=>$?>%>#*- 9.589 10.074 7.585 4.012 4.908 18,2
1ota| L|ab|||t|es 14.486 15.913 12.947 11.335 10.146 9,3
1ota| 3M shareowners' equ|ty 12.764 9.880 11.747 9.959 10.395 5,3
1C1AL LIA8ILI1IL5 AND LCUI1 27.250 25.793 24.694 21.294 20.541 7,3
!"#"$%&'(&")*$+)
ConsolldaLed 8alance SheeL (ln mllllons)
,--"*- ./0/101223 ./0/101224 ./0/101225 ./0/101226 ./0/101227 8,!9
!"#$%"&'%()*+,"-(&.#% /01023 45165/ 671/86 641399 51507 29:0;
<&,(#.=(&.%#(>*?+.+(#%% 761946 461442 4710/2 4/1532 401645 7:4;
!*??(&.%@(>(+,"A-(# 621475 061466 001079 69126/ 641576 0:2;
<&,(&.B?+(# 66195/ 681489 60159/ 631380 6314/4 8:4;
C.$(?%DE!F%@(>(+,"A-(# 6416// 681489 621764 621938 641880 G3:8;
:;*%&'8<$$"#*',--"*- 166.823 137.922 112.677 108.437 90.630 16,3
H+&"&>+&I%?(>(+,"A-(#%J%&(.% 8091080 8271625 8/21608 8061/82 05/1289 8:4;
K?BL(?.M:%L-"&.%"&'%()*+L=(&. 291060 /51783 //1555 /31273 2/1705 3:2;
DBB'N+-- 2717/4 561/79 561662 /61899 450/4 5:3;
C.$(?%+&."&I+A-(%"##(.# 661909 6419// 621640 601967 561283 G85:0;
O--%B.$(?%"##(.# 638146/ 6321599 6001545 961276 541505 7:6;
:;*%&'=;#>8<$$"#*',--"*- 614.993 639.847 683.006 388.226 382.691 1,4
:;*%&'?--"*-' 781.818 797.769 793.683 696.683 673.321 3,8
@+%A+&+*+"-'%#B'(C<+*D ./0/101223 ./0/101224 ./0/101225 ./0/101226 ./0/101227 8,!9
F$B?.G.(?=%AB??BN+&I# 6881374 6981297 6971633 6/01368 6751672 G4:0;
O>>B*&.#%L"M"A-(% 691/38 031569 061885 031280 061658 G6:5;
K?BI?(##%>B--(>.+B&# 601690 601782 91557 4179/ 41472 05:2;
P+,+'(&'#%L"M"A-( 61646 81843 81633 015/5 01208 G65:5;
C.$(?%DE%>*??(&.%-+"A+-+.+(# 681852 651003 671562 6/1944 651770 G/:5;
:;*%&'8<$$"#*'@+%A+&+*"- 179.476 248.610 243.239 218.064 204.970 -3,3
QB&IG.(?=%AB??BN+&I# 8851067 800154/ 8691368 0231/70 0601056 60:8;
<&,(#.=(&.%>B&.?">.#:%+&#*?"&>(%-+"A+-+.+(#%"&'%+&#*?"&>(%"&&*+.M%A(&(R+.# 861246 841380 841325 841736 88139/ G6:6;
O--%B.$(?%-+"A+-+.+(# 751526 241/92 791862 4/1763 891588 63:8;
P(R(??('%+&>B=(%."S(# 016/8 41754 601493 6416/6 621035 G89:7;
Q+"A+-+.(#%BR%A*#+&(##(#%$(-'%RB?%#"-( 21390 282 3 3 3 G
Q+"A+-+.(#%BR%'+#>B&.+&*('%BL(?".+B&# 61836 61480 61994 4/7 49170/ G79:/;
:;*%&'=;#>8<$$"#*'@+%A+&+*"- 438.283 428.327 426.881 337.409 330.946 3,7
:;*%&'@+%A+&+*+"- 636.682 684.137 672.120 377.681 333.916 4,3
:;*%&'!('-E%$";F#"$-G'"C<+*D' 117.291 104.663 113.339 111.309 109.331 1,8
:H:,@'@I,JI@I:I(K',=L'(MNI:O 781.818 797.769 793.683 696.683 673.321 3,8

9
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3M
ConsolldaLed flnanclal sLaLemenLs (ln mllllons)
31/12/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005 CAGk
Net 5a|es 23.123 25.269 24.462 22.923 21.167 2,2
CosL of Sales 12.109 13.379 12.733 11.713 10.408 3,9
Selllna, Ceneral & AdmlnlsLraLlve 4.907 3.243 3.013 3.066 4.631 1,3
8&u & relaLed expenses 1.293 1.404 1.368 1.322 1.274 0,4
1ota| Lxpenses 18.309 20.051 18.269 17.227 16.313 2,9
lncome before lncome Laxes 4.632 3.108 6.113 3.623 4.828 -1,0
lncome 1axes 1.388 1.388 1.964 1.723 1.627 -3,9
Net Income attr|butab|e to 3M 3.193 3.460 4.096 3.851 3.111 0,7
neL lncome per common share 2,04 2,00 1,92 1,84 3,96 -13,3
Genera| L|ectr|c
ConsolldaLed flnanclal sLaLemenLs (ln mllllons)
31/12/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005 CAGk
Net 5a|es 156.783 182.515 172.488 151.843 136.580 3,5
CosL of Coods Sold 30.380 34.602 47.309 43.279 39.169 6,6
CosL of Servlces Sold 23.341 27.170 23.816 23.494 20.613 3,3
CLher CosLs & Lxpenses
(selllna, aeneral and admlnlsLraLlve expenses) 37.804 42.021 40.173 33.639 33.278 3,2
1ota| Lxpenses 146.439 162.733 144.960 128.513 115.402 6,1
lncome before lncome 1axes 10.344 19.782 26.398 23.330 21.178 -16,4
lncome 1axes -1.090 1.032 4.133 3.930 3.824 -
Larnlnas (loss) from dlsconLlnued operaLlons -193 -679 -260 1.362 -634 -23,7
Net Income attr|butab|e to GL 11.025 17.410 22.208 20.742 16.720 -9,9
neL lncome per common share 1,01 1,72 2,17 2,00 1,37 -10,4
!"
ConsolldaLed SLaLemenL of Cash flows (ln mllllons)
# !$%$&%&''( !$%$&%&'') !$%$&%&''* !$%$&%&''+ !$%$&%&'', -./0
CperaLlna Cash llows 4.941 4.333 4.246 3.839 4.204 4,1
lnvesLlna Cash llows -1.732 -2.399 -1.367 -1.460 -2.241 -6,2
llnanclna Cash llows -2.014 -1.766 2.318 -2.061 -3.623 -13,7
123#-45672#86#-594 1.191 -47 449 373 -1.683 -
Cash bealnnlna of Lhe vear 1.849 1.896 1.447 1.072 2.737 -9,3
-594#26:#;25< 3.040 1.849 1.896 1.447 1.072 29,8
!"#"$%&'(&")*$+)
ConsolldaLed SLaLemenL of Cash flows (ln mllllons)
' ,-.-/./001 ,-.-/./002 ,-.-/./003 ,-.-/./004 ,-.-/./005 67!8
CperaLlna Cash llows 24.393 48.601 43.322 30.646 37.691 -10,1
lnvesLlna Cash llows 42.997 -33.401 -69.304 -31.402 -33.099 -
llnanclna Cash llows -43.313 19.136 27.937 23.231 -6.119 63,3
9"*'6:%#;"'+#'6%<: 24.077 32.336 1.733 2.473 -3.327 -
Cash bealnnlna of Lhe vear 48.367 16.031 14.276 11.801 13.328 33,3
6%<:'"#='>"%$ 72.444 48.367 16.031 14.276 11.801 37,4

1u
-*"$5,4,&
3'.4B'*+"$C!.%*D&-*"$5,4,&
Financial iesults aie calculateu against the base yeai (1uu) of 2uuS, in oiuei to
neutialize absolute figuies anu focus on the tienus of the elements.
The Tienu Balance Sheet

!"
ConsolldaLed 8alance SheeL
#$$%&$ !'(')()**+ !'(')()**, !'(')()**- !'(')()**. !'(')()**/ 0#12
Cash & LqulvalenLs 284 172 177 133 100 29,8
AccounLs 8ecelvable 118 116 121 112 100 4,3
lnvenLorles - llnlshed Coods 120 143 128 118 100 4,6
lnvenLorles - Work ln roaress 113 121 123 113 100 3,7
lnvenLorles - 8aw MaLerlals 140 162 133 141 100 8,8
!"#$%&'())*+#&,--*#- ./0 .1/ .12 .03 .44 ..546
8ulldlnas - Cross 129 123 117 106 100 6,3
Machlnerv / LqulpmenL 113 109 110 104 100 3,3
uepreclaLlon 118 113 112 103 100 4,2
Coodwlll 163 163 130 116 100 13,4
lnLanalble AsseLs 262 246 164 140 100 27,2
!"#$%&7"+8'())*+#&,--*#- .01 .0. ... 90 .44 /506
34&567#$$%&$ '!! '). ')* '*8 '** -9!:
;<5=<6<&<%$75>?7@AB<&C !'(')()**+ !'(')()**, !'(')()**- !'(')()**. !'(')()**/ 0#12
AccounLs avable 109 96 120 112 100 2,2
Accrued avroll 318 239 124 111 100 33,6
CurrenL orLlon of Lona 1erm uebL 37 143 84 234 100 -13,0
!"#$%&'())*+#&:;$<;%;#;*- 91 ... .40 .=4 .44 8.5>6
1oLal Lona 1erm uebL 398 399 307 80 100 41,2
nonpenslon osL 8eLlremenL 8eneflLs 383 401 190 202 100 39,9
CLher Lona 1erm LlablllLles - - - - - -
!"#$%&7"+8'())*+#&:;$<;%;#*- .9/ 04/ .// 20 .44 .2506
34&567;<5=<6<&<%$ '8! '/- '), '') '** +9!:
34&567!"7$D5E%4F>%E$G7%AB<&C7 ')! +/ ''! +. '** /9!:
3H3#;7;I#JI;I3IKL7#MN7KOPI3Q '!! '). ')* '*8 '** -9!:

11

@L IP')!P'&&,-,T!)$!:$)'.!"00,)0!TC(*-D!)P,!VH/,'(!&,(*$T\!
67!
Total assets uemonstiateu a steauy inciease of 7,S %. This giowth is mainly
attiibuteu in a consiueiable inciease of Intangible Assets (27,2%) especially in
2uu8, most likely uue to new piouuct innovations anu patents. This inciease is
also uepicteu in the Cash anu Cash equivalents that uemonstiateu a consiueiable
inciease (6S%) in 2uu9.
23
Total assets uemonstiateu a steauy inciease of S,8 %. We believe that this is uue
to a) the uisposition of Intangible assets (such as patents, licenses, tiauemaiks
etc.) anu b) a consiueiable inciease to the consoliuateu cash anu cash equivalent
wheie the main contiibutoi was inteiest eain fiom the gioups financial
activities (i.e. uECAS)
Genera| L|ectr|c
!"#$"%&'()*'+,(%(#-*+./**)
Assets 31/12/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005 CAGk
!"#$%"&'%()*+,"-(&.#% /01 234 05/ 046 066 41789
:&,(#.;(&.%#(<*=+.+(#%% 08> 1/ 065 00> 066 2739
!*==(&.%?(<(+,"@-(# 000 033 026 0>8 066 8749
:&,(&.A=+(# 003 08/ 08> 14 066 >739
B.$(=%CD!E%?(<(+,"@-(# 11 13 002 00/ 066 F67>9
1ota| Current Assets 184 152 124 120 100 16,5
G+&"&<+&H%=(<(+,"@-(#%I%&(.% 003 085 0>0 008 066 >739
J=AK(=.L7%K-"&.%"&'%()*+K;(&. 068 004 002 062 066 6749
CAA'M+-- 0>4 041 04/ 03/ 066 /769
B.$(=%+&."&H+@-(%"##(.# 02 0/ 86 04 066 F>/789
N--%A.$(=%"##(.# 088 084 032 06/ 066 2709
1ota| Non-Current Assets 106 113 117 101 100 1,4
1ota| Assets 116 118 118 103 100 3,8
L|ab|||t|es and Lqu|ty 31/12/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005 CAGk
E$A=.F.(=;%@A==AM+&H# /3 088 08> 061 066 F3789
N<<A*&.#%K"L"@-(% 1> 1/ 060 15 066 F07/9
J=AH=(##%<A--(<.+A&# 853 8/0 888 06> 066 8/749
O+,+'(&'#%K"L"@-( 3> 085 00/ 006 066 F0/7/9
B.$(=%CD%<*==(&.%-+"@+-+.+(# 58 1/ /2 15 066 F57/9
1ota| Current L|ab|||tes 88 121 120 106 100 -3,3
PA&HF.(=;%@A==AM+&H# 021 028 026 08> 066 087>9
:&,(#.;(&.%<A&.="<.#7%+&#*="&<(%-+"@+-+.+(#%"&'%+&#*="&<(%"&&*+.L%@(&(Q+.# 14 06> 06> 063 066 F0709
N--%A.$(=%-+"@+-+.+(# 03/ 04> 031 001 066 067>9
O(Q(==('%+&<A;(%."R(# 0> 8/ 55 /5 066 F>1729
P+"@+-+.(#%AQ%@*#+&(##(#%$(-'%QA=%#"-( F F F F F F
P+"@+-+.(#%AQ%'+#<A&.+&*('%AK(=".+A&# > > 3 0 066 F21759
1ota| Non-Current L|ab|||tes 125 122 122 102 100 5,7
1ota| L|ab|||t|es 118 123 121 104 100 4,3
1ota| GL shareowners' equ|ty 107 96 106 102 100 1,8
1C1AL LIA8ILI1IL5 AND LCUI1 116 118 118 103 100 3,8

12
JL F*T!,'4P!4$%&$-,-)!$1!'00,)0!D($Q!')!)P,!0'%,!('),!'0!:$)'.!"00,)0\!
67!
Each component of the Total Assets uiu not inciease at the same iate.
Total Cuiient Assets giew twice as much (11 %) as Total Non-Cuiient Assets
(S,2%). This uiffeience is attiibuteu to the consiueiable inciease in the
company's Cash anu Equivalents (29,8%) anu the acceleiateu uepieciation of the
company's assets.
23
Similaily each component of uE's Total Assets uiu not inciease at the same iate.
Total Cuiient Assets giew moie than 1u times as much (16,S %) as Total Non-
Cuiient Assets (1,4%).
We believe that this is uue to a) the uisposition of Intangible Assets anu b) A
consiueiable inciease to the consoliuateu Cash anu Equivalents (wheie the main
contiibutoi was inteiest eain fiom the gioup's financial activities (i.e. uECAS).

6L F*T!"00,)0]!X*'K*.*)*,0!'-T!>P'(,P$.T,(0!3^C*)/!D($Q!')!)P,!0'%,!('),\!
67!
Total Liabilities incieaseu 9,S % ovei the five yeais anu also the peicentage of
assets oweu to cieuitois also incieaseu slightly fiom 49% in 2uuS to SS% in
2uu9. This is piimaiily attiibuteu to a consiueiable inciease in the company's
long -teim uebt. Bowevei, Equity exhibiteu a healthy inciease of S,S%.
23!
Total Liabilities incieaseu 4,S % ovei the five yeais anu also the peicentage of
assets oweu to cieuitois also incieaseu fiom the alieauy high 82% in 2uuS to
84% in 2uu9. This is piimaiily attiibuteu to an inciease in the company's long -
teim uebt. A mouest inciease of 1,8% in Equity has been achieveu.

& &

1S
The Tienu Income Statement

@L F*T!>'.,0]!3Z&,-0,0!'-T!_,)!*-4$%,!*-4(,'0,!0),'T*./!TC(*-D!)P,!&,(*$T0!
,Z'%*-,T\!
67!
Net Sales have exhibiteu a steauy inciease up to 2uu8, accompanieu by a slightly
highei inciease in Total Expenses. Buiing 2uu9, Net Sales ietuineu to 2uu6
levels, but the company manageu to also significantly ueciease sales, not
analogously though. Net Income has exhibiteu moie fluctuations, anu manageu
to achieve small positive gains, not above inflation though.
23!
Net Sales have peifoimeu slightly bettei than SN, but the company uiu not
manage to contain Total Expenses who hau an almost uouble inciease than Net
Sales, with substantial fluctuation in the inteiim peiious. Theie has been a moie
aggiessive ueciease in 2uu9 though. Following the above, Net Income has
suffeieu mateiial losses, aftei its inteiim fluctuations.

!"
ConsolldaLed flnanclal sLaLemenLs
# !$%$&%&''( !$%$&%&'') !$%$&%&''* !$%$&%&''+ !$%$&%&'', -./0
123#45627 $'( $$( $$+ $') $'' &8&9
CosL of Sales 116 129 122 113 100 3,9
Selllna, Ceneral & AdmlnlsLraLlve 106 113 108 109 100 1,3
8&u & relaLed expenses 101 110 107 119 100 0,4
:;356#<=>2?727 $$& $&! $$& $'+ $'' &8(9
lncome before lncome Laxes 96 106 127 117 100 -1,0
lncome 1axes 83 98 121 106 100 -3,9
123#@?A;B2#533CDEF35E62#3;#!" $'! $$$ $!& $&G $'' '8*9
neL lncome per common share 32 31 48 46 100 -13,3
Genera| L|ectr|c
ConsolldaLed flnanclal sLaLemenLs
31/12/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005 CAGk
Net 5a|es 115 134 126 111 100 3,5
CosL of Coods Sold 129 139 121 110 100 6,6
CosL of Servlces Sold 123 132 123 114 100 3,3
CLher CosLs & Lxpenses
(selllna, aeneral and admlnlsLraLlve expenses) 114 126 121 107 100 3,2
1ota| Lxpenses 127 141 126 111 100 6,1
lncome before lncome 1axes 49 93 126 110 100 -16,4
lncome 1axes -29 28 109 103 100 -
Larnlnas (loss) from dlsconLlnued operaLlons 30 107 41 -213 100 -23,7
Net Income attr|butab|e to GL 66 104 133 124 100 -9,9
neL lncome per common share 64 110 138 127 100 -10,4

14

JL F*T!#$0)!$1!>'.,0!*-4(,'0,!$(!T,4(,'0,!(,.')*+,!)$!>'.,0!TC(*-D!)P,!&,(*$T\!
67!
The Cost of Sales in ielation to Sales has steauily incieaseu, with the exception of
the last yeai (2uu9) uuiing which the company has manageu to take effective
coiiective actions.
23!
0n the othei hanu, while uN was in a bettei position in 2uuS, it has also suffeieu
a ueteiioiation of its iatio, by an even highei iate. Its Cost of Sales to Sales iatio
iemains bettei than SN, but the tienu is alaiming foi the impact on its Net Sales
anu hence on its futuie piofitability.
!
Eainings pei Shaie
@L F*T!38>!(*0,!0),'T*./!,'4P!/,'(!TC(*-D!)P,!&,(*$T\!
67!
Eainings pei Shaie have exhibiteu fluctuations that ultimately leau to an almost
Su% ueciease in 2uu9 vs. 2uuS.
23!
Eainings pei Shaie have also suffeieu in the case of uE, since the initial incieases
weie followeu by a substantial ueciease in 2uu9 leaving them also woise off
than 2uuS.!

JL F*T!38>!(*0,!*-!&($&$()*$-!)$!)P,!*-4(,'0,!*-!>'.,0\!
67!
Aftei an initial completely opposite uiiection in 2uu6, theii evolution was
somewhat analogous until 2uu9 wheie EPS was slightly impioveu but Sales
suffeieu a ueciease, which was slightly containeu by the ueciease of Total
Expenses.
23!
No coiielation in the movement of the figuies exists. Theie is even the case of
2uu8, uuiing which theii evolution was completely the opposite.


1S
The Tienu Cash Flow Statement

@L "(,!)P,!Y&,(')*-D!#'0P!1.$Q0!&$0*)*+,!1$(!'..!/,'(0\!
67!
0peiating Cash Flows have manageu to stay positive with small fluctuations.
27!
0peiating Cash Flows have manageu to stay positive, but theii alaiming
ueciease in 2uu9 must be noteu.

JL "(,! )P,! Y&,(')*-D! #'0P! 1.$Q0! 0C11*4*,-)! )$! 4$+,(! '-/! -,D')*+,! 4'0P! 1.$Q0!
1($%!*-+,0)*-D!'-T!1*-'-4*-D!'4)*+*)*,0\!
67!
The company has exhibiteu gieat fluctuations in its Net Change in Cash, with
negative figuies in two of the five peiious. It must be noteu though that 2uu9
showeu piomising iesults foi the futuie.
27!
With the notable exception of 2uuS, uE has manageu to achieve positive Net
Change in Cash. It must be noteu howevei that 0peiating Cash Flows have
plummeteu in 2uu9, anu the positive Net Change might be attiibuteu to
uisinvestment activities that uecieaseu the outflows but might hinuei the
company's futuie iesults.
!"
ConsolldaLed SLaLemenL of Cash flows
# !$%$&%&''( !$%$&%&'') !$%$&%&''* !$%$&%&''+ !$%$&%&'', -./0
CperaLlna Cash llows 118 108 101 91 100 4,1
lnvesLlna Cash llows 77 107 61 63 100 -6,2
llnanclna Cash llows 36 49 -69 37 100 -13,7
123#-45672#86#-594 : : : : : :
Cash bealnnlna of Lhe vear 67 69 32 39 100 -9,3
-594#26;#<25= &)> $*& $** $!, $'' &(?)@
Genera| L|ectr|c
ConsolldaLed SLaLemenL of Cash flows
31/12/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005 CAGk
CperaLlna Cash llows 63 129 113 81 100 -10,1
lnvesLlna Cash llows -123 101 198 146 100 -
llnanclna Cash llows 711 -313 -437 -380 100 63,3
Net Change |n Cash -683 -917 -50 -70 100 -
Cash bealnnlna of Lhe vear 316 103 93 77 100 33,3
Cash end year 614 410 136 121 100 57,4

16
E"+4'&-*"$5,4,&
Ratio iesults aie calculateu foi the five yeai peiiou 2uuS-2uu9.
A. Piofitability Ratios:
A1.uioss Naigin Ratio:

&& FGGH& FGGI& FGGJ& FGGK& FGGL&
8.',,&;".M4*&
! ! ! ! !
"#! $%&'()! $'&%()! $*&+$)! $+&,%)! ,'&'*)!
-.! '*&+-)! '*&($)! '*&,')! '/&,()! $(&,+)!

This Ratio is useu to gain insight into the ielationship between piouuctionpuichasing
costs anu sales ievenue. The aim is foi a company to achieve a gioss piofit that will be
sufficient to covei its selling anu auministiative expenses. uN begins with an excellent
iatio of 94.47% in 2uuS but suffeis a significant uecieasing in 2uu6 that ieaches S1.4u%
by 2uu9. This is ioughly a -4u% uiop fiom the initial value within the S yeai-peiiou. SN
on the othei hanu, although staiting lowei than uE in 2uuS, at Su.96% has suffeieu only
a small ueciease in value, ieaching 47.6S% by 2uu9, oi an oveiall ueciease of about -S%
thioughout the S yeai peiiou.
A2.Piofit Naigin Befoie Income Tax Ratio:

N%+&0.'(4+&;".M4*&&
! ! ! ! !
"#! *&0()! %(&',)! %$&-,)! %$&(+)! %$&%()!
-.! 0(&(()! 0(&0()! 0'&,,)! 0'&$()! 0-&$()!

This Ratio measuies the peicentage of income befoie income taxes piouuceu by a given
level of ievenue. It inuicates how much piofit a company makes foi eveiy $1 it geneiates
in ievenue oi sales. Piofit maigins vaiy by inuustiy, but all else being equal, the highei a
company's piofit maigin compaieu to its competitois, the bettei.
Foi uE the contiibution of Sales to the oveiall company piofitability ianges fiom 1S,1%
to 7,2%. Foi SN the iesults seems to be bettei since the iatio ianges fiom 2S,S% to
2u%, although the iatio uecieases foi both companies in the S yeai peiiou.


17

AS.Retuin 0n Equity Aftei Taxes Ratio:

E%+1.*&'*&9O14+5& !! !! !! !! !!
"#! /&/()! %+&+()! %,&0()! %/&$()! %$&-()!
-.! 0'&(()! -$&(0)! -'&/()! -/&+()! -%&+()!

This iatio inuicates how much income was geneiateu foi a given level of equity oi in
othei woius it measuies a fiim's efficiency at geneiating piofits fiom eveiy unit of
shaieholueis' equity. uE iises fiom 1S.S% (2uuS) to 19.2 (2uu7) anu then uecieases
until 2uu9 to 8,8%. In compaiison to the above SN seems again to have bettei anu moie
stable iesults than uE beginning with a Ratio of S1.6% in 2uuS incieasing to S4,8 in
2uu6 anu finally uecieasing at to 24% uuiing 2uu9.
A4.Retuin 0n Capital Employeu Ratio:

E%+1.*&'*&)"24+"$&972$'5%D!!&
"#! %&'+)! 0&'-)! -&-/)! -&$*)! %-&*$)!
-.! %*&(()! %,&,,)! 0'&*+)! 0+&'0)! 0'&0,)!

This Ratio uemonstiates how much piofit a company eains fiom the capital employeu
oi in othei woius how efficiently a company uses its funus (uebt anu equity). Foi uE we
can see that although in 2uuS this iatio is 1S.S% it continuously uecieases until ieaching
1.46% in 2uu9. SN on the othei hanu staits at the much bettei value of 24,29% in 2uuS
anu continues (uecieasing) to ieach a peicentage of 17% in 2uu9 still many times above
uE.


18
B. Liquiuity Ratios:
B1.Cuiient Ratio!

This Ratio inuicates the company's ability to meet its cuiient liabilities with cash
geneiateu fiom its cuiient assets. uE in 2uuS hau an initial iatio of 1.4u to 1 anu uuiing
the five yeais peiiou hau an incieasing tienu at 1.86 to 1 at 2uu9. Similai iesults
(slightly bettei) exist foi SN beginning fiom 1.S6 to 1 with an incieasing tienu to 2.2u to
1 foi the yeai 2uu9.
B2.Receivables Tuinovei Ratio

E%/%4P"#$%,&!1.*'P%.&QD"5,R&
"#! *(&*! +,&*! /0! +,&0! *0!
-.! $%&-! '+&%! $(&0! ',&'! ',!

This Ratio inuicates how quickly a company collects its accounts ieceivable. Foi uE this
peiiou was 72 uays in 2uuS, incieaseu to 82 in 2uu7 anu finally uecieaseu again to 7u,7
in 2uu9. 0n the othei hanu, SN exhibiteu a lowei collection time of 49 uays in 2uuS anu
iemaineu faiily stable thioughout the S-yeai peiiou.
BS.Inventoiy Tuinovei Ratio

=*P%*+'.5&!1.*'P%.&QD"5,R&
"#! $*! +(! +'! $+! '/!
-.! *,&$! /0&0! /%&/! /%&%! *+!

This iatio shows how many times a company's inventoiy is solu anu ieplaceu ovei a
peiiou. Bigh inventoiy levels aie unhealthy because it might open the company up to
tiouble shoulu piices begin to fall. uE staiteu out at 48 uays in 2uuS, peakeu to 64 uays
in 2uu7 anu finally uioppeu to S7 uays in 2uu9. 0n the othei hanu, SN has achieveu
analogous fluctuations but exhibiteu consistently highei figuies than uE. Specifically, SN
neeueu 76 uays in 2uuS, iose slightly to 82,2 in 2uu8 anu finally uioppeu to 79.S in
2uu9.


19

C. Solvency Ratios:
C1.ueaiing Ratio

8%".4*M&
"#! *0&,()! *$&,()! *-&'()! +/&(()! ++&(()!
-.! 0*&*()! -'&-()! 0$&$()! ,&($)! %%&'()!

ueaiing iatio is a measuie of financial leveiage, uemonstiating the uegiee to which a
company's activities aie funueu by the ownei's funus veisus the cieuitoi's funus. A
company with high geaiing (high leveiage) is moie vulneiable to uowntuins in the
business cycle because the company must continue to seivice its uebt iegaiuless of how
bau sales aie. A gieatei piopoition of equity pioviues a cushion anu is seen as a
measuie of financial stiength. Foi uE we can see that the iatio was 66% in 2uuS anu
iose up to 72,9u% in 2uu9. SN hau lowei geaiing staiting at 11,4u% in 2uuS anu
incieaseu to 27,7u% in 2uu9 with a peak at S4.Su in 2uu8. SN woulu be bettei heugeu
uuiing a iecession.
C2.Bebt Ratio

S%#+&
"#! /'&(()! /+&(()! /'&'()! /0&/()! /0&$()!
-.! $%&%()! +%&-()! $0&'()! $%&*()! $(&**)!

This Ratio measuies how much the company ielies on uebt to finance assets. In geneial,
the lowei the company's ieliance on uebt foi asset foimation, the less iisky the company
is since excessive uebt can leau to a veiy heavy inteiest anu piincipal iepayment
buiuen. The iatio foi uE ianges fiom 82,S to 86% anu constitutes a highei amount of its
assets than SN that ianges fiom Su,7 to 61,S% foi the same peiiou.


2u

CS.Coveiage Ratio

)'P%."M%&
"#! %&+%! %&*-! 0&%%! 0&0*! %$&,-!
-.! 00&%! 0'&*! -(&%! '*&%! +%&*!

This Ratio measuies a company's ability to meet its loan obligations satisfactoiily. The
lowei the iatio, the moie the company is buiueneu by uebt expense. When a company's
inteiest coveiage iatio is 1,S oi lowei, its ability to meet inteiest expenses may be
questionable. Although uE staiteu off with a iatio of 1S,9S times to 1 in 2uuS theie is a
significant ueciease in 2uu6 leauing to a iatio of 1,61 in 2uu9. SN also suffeieu a
uecieasing tienu but the iesults aie significantly bettei than uE.
C4.Leveiage Ratio

T%P%."M%&
"#! 0&*(! -&%$! 0&*+! 0&-0! %&,'!
-.! (&-/! (&$0! (&-'! (&%(! (&%0!

The uebt-to-equity iatio is the most commonly useu leveiage iatio, pioviuing a measuie
of a company's liabilities in ielation to the funus given by shaieholueis. The lowei the
numbei, the less geaiing oi leveiage that the company is using. ueneially, the moie uebt
a company has, the iiskiei its stock is, since uebt holueis have fiist claim to a company's
assets iathei than the stockholuei. uE hau a iatio ianging fiom 1,94 in 2uuS to 2,7u in
2uu9 with a peak of S,1S in 2uu8. SN iatios iangeu fiom u,12 in 2uuS to u,S8 in 2uu9
with a peak at u,S2 in 2uu8. Fiom the afoiementioneu iesults we can concluue that uE is
much moie susceptible to financial iisk than SN.


21

B. Investment Ratios:
B1.Eainings Pei Shaie Ratio

9".*4*M,&2%.&?@".%&
"#! %&(-! %&+$! 0&00! 0&(-! %&$,!
-.! '&',! '&,,! $&*/! $&0'! '&0'!

This Ratio measuies the ietuin pei shaie of eainings available to shaieholueis. Eainings
pei shaie act as an inuicatoi of company's piofitability. uE began with an EPS of 1.S9$
peaking at 2,22$ in 2uu7 anu then uecieaseu to 1.uS$ in 2uu9. 0n the othei hanu, SN
EPS has been moie stable, staiting with 4,24$ pei shaie in 2uuS, hau a peak in 2uu7 at
S,78$ anu finally uecieaseu to 4.49$ in 2uu9.

&

22
T474+"+4'*,&'(&-*"$5,4,&

Financial Statements constitute the key tools useu to convey the economic stanuing of a
company anu help stakeholueis to make infoimeu uecisions.

Bowevei theie aie a lot of limitations with the cuiient financial statements. They
convey goou uetails about the ^C'-)*)')*+, economic uata but uo not auuiess any of the
^C'.*)')*+, economic vaiiables. 0ualitative attiibutes such as the moiale of the
employee foice oi the quality of the management team aie some of the ciitical factois
that aie ielevant to the uecisions anu juugments that the financial statement usei is
making. The cuiient accounting piocess has no way of measuiing the value of these
intangible assets. Similaily tiauemaiks anu bianu value of a company aie not iecoiueu
as assets. Bianu value of a company is built ovei time anu has a lot of economic value.
Assets aie always valueu at theii oiiginal piice. Even if the value of an asset has
significantly incieaseu ovei time, it is still iepoiteu at the oiiginal cost. The value of lanu
has significantly iisen ovei the past few uecaues, but entities still iepoit it at the oiiginal
cost foi which they hau bought it. Impact of inflation is also not consiueieu when
piepaiing financial statements. The impact to the usefulness of financial statements is
negligible when inflation is low but it is significantly highei when inflation iate ieaches
1u% oi moie. A typical example is that the cost of goous solu ieflects oiiginal cost even
though the cost of ieplacement might be significantly highei.

Anothei limitation of financial statements is that it uoes not captuie impoitant changes
in the maiket place anu inuustiy anu hence suuuen ueviation in the financial
peifoimance of an entity is not auuiesseu in the iight context. This can misleau a lot of
inuiviuuals fiom making the iight uecisions.

A key factoi foi unueistanuing the financial stanuing of a company is by compaiing it
with competitois in the same inuustiy. Compaiability between fiims using uiffeient
accounting techniques (as is the case with SN anu uE) is veiy uifficult anu with the
cuiient globalization this becomes even moie complicateu as accounting stanuaius aie
uiffeient acioss the woilu.

Financial statements also uo not ieflect oppoitunity cost. This concept is ielateu to
income foigone because an oppoitunity to eain income was not puisueu. The
significance of this can be veiy high foi companies with huge assets.

2S
The most impoitant limitation of financial statements is that it cuiiently uesciibes only
one thing veiy well anu that is how efficiently an entity is peifoiming with the available
assets. This is uefinitely iequiieu anu impoitant but the ieal stiength of an entity is
actually measuieu not just on its peifoimance efficiency but on it's Innovation 0uotient.
This key measuiement is not available in the financial statements. In oiuei foi an entity
to be moie innovative, it neeus to spenu moie time anu money on ieseaich anu tiy to uo
things that ueviate fiom the stanuaiu path. It neeus to take auuitional iisks anu invest
foi long-teim gains. All of these uo not show up positively on the balance sheet oi the
income statement, in fact these show up as auuitional expenses. Bowevei, these
expenses aie manuatoiy foi an entity to establish its leaueiship in the inuustiy anu
expanu its maiket shaie.

Bence though financial statements pioviue a goou pictuie of the economic stanuing of
an entity, it is impoitant to unueistanu its limitations anu woik aiounu them to make
sounu uecisions.

!"#$%&'()*%+,&-'./0')1)234'%)5%'/+,6')5#77#30)8,&'30'()*++%,9$+,#3:)

&

24
E"+4',&UP%.P4%A&
E"+4',& U1.&24/V&
"#$%&'()&*&'+!#('&$,!
As it is known piofitability factois iepiesent how easily a company
can geneiates income. Although both companies aie suffeiing fiom
uecieasing tienus thioughout the five yeai peiiou, SN's iesults aie
much less fluctuating than uE's anu aie also healthiei that uE's!
!
-&./&0&'+!1('&$,!
These iatios uesciibe how easily a company's assets can be
conveiteu to cash. Both companies seem to have the ability, in the
event of an economic emeigency, to ielatively painlessly conveit
theii assets to cash. Bowevei, SN can be consiueieu to have an
oveiall slightly bettei liquiuity.!
!
2$*3456+!1('&$,!
These iatios show the company's ability to meet obligations
cieateu by the long-teim uebt. Although uE has a veiy high
peicentage of its assets financeu by its long-teim uebt (high
geaiing above 7u%) it still has the ability to pay it's peiiouic
inteiest obligations. SN on the othei hanu has a lowei geaiing (<
Su%) anu is also able to meet its peiiouic inteiest obligations.
Finally uue to its highei leveiage iatio uE is also "open" to gieatei
financial iisk when compaieu to SN.!
!
7534,'845'!1('&$,!
Keeping in minu all of the above iatios it is shoulu not be a suipiise
that SN has a 4 times bettei eainings pei shaie value than uE. 0n
the othei hanu uE shaies have a laigei potential foi giowth than
SN's anu this is something that futuie investois neeu to take into
consiueiation. As a geneial note, an impoitant aspect of EPS is the
capital that is iequiieu to geneiate the eainings (net income) in the
calculation. Two companies coulu geneiate the same EPS numbei,
but one coulu uo so with less equity (investment). That company
woulu be moie efficient at using its capital to geneiate income anu,
all othei things being equal, woulu be a "bettei" company.!
!


2S
)'*/$1,4'*&
If oui analysis was containeu in the finuings of the financial statements, it is eviuent that
SN seems oveiall a safei bet. Bowevei, one shoulu also take into account the limitations
of analysis anu examine the qualitative chaiacteiistics of the companies as well as othei
majoi issues not uepicteu in the statements, along with theii piospects.

Looking at each company sepaiately, the main thing that makes SN a gieat company is
that it is synonymous with innovation, consistently allocating funus in R&B (6% of
ievenue goes back into ieseaich - moie than $1 billion a yeai). As a iesult, aiounu Su%
of ievenue in any given yeai comes fiom piouucts ieleaseu in the last five yeais.
SN R&B geneiates a bioau aiiay of unique anu ubiquitous piouucts, fiom auhesives,
plastics anu films to appliances, secuiity systems anu foou-piocessing components.
Inuicatively, piouucts like Scotch tape anu Post-it notes have uefineu new maikets.
In auuition, it also has a big foieign piesence, anu S4% of ievenue comes fiom emeiging
maikets. 0veiall, SN gets moie than 6u% of its ievenue fiom outsiue the 0.S., anu about
S8% of its employees woik outsiue the 0.S.
Theiefoie, we consiuei SN as a goou investment foi the conseivative investoi that
values low iisk anu healthy long-teim ietuins.

0n the othei hanu, uE is a company that stiives to be a leauei in whatevei sectoi it is in,
even though its peifoimance is not analogous to SN foi the S-yeai peiiou examineu.
This may be attiibuteu to some iecent majoi mistakes - such as getting oveiextenueu in
cieuit caius anu commeicial ieal-estate loans uuiing the cieuit bubble anu the costly
pollution of the Buuson Rivei.
Bowevei, the company's financial statements ieflect the iecent pains of its tiansitional
phase in its ietuin to its coie competencies: infiastiuctuie technology anu financial
seivices sectois. Foi 2u1u, the company plans to spenu S% of its inuustiial ievenue on
R&B. Auuitionally, its lenuing uivision, uE Capital Seivices, seems to be ietuining to
health.
As foi the futuie, uE intenus to focus on clean eneigy piouucts, incluuing winu anu gas
tuibines - one of the maikets that will most likely go foiwaiu, as most westein
goveinments seem ueteimineu to suppoit. Like SN, uE has gieat exposuie to emeiging
maiket giowth. All of these factois help explain why uE shoulu be a buyei, too, foi the
investoi who is willing to accept highei iisk in oiuei to aspiie to highei gains in the
meuium oi long-teim futuie. &

26
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Company : 3M
Year : 2005
Profitability Ratios Calculations Remarks
Gross Margin Sales - Cost of Sales / Sales 50,96%
Return on Assets Net Income before taxes / Total Assets 4,983/20,513= 24,2% Level of Investments in assets (%)
Profit Margin before
income tax Net Income before taxes / Sales 4,983/21,167= 23,5% Percentage of Income produced by a given level of revenue (%)
Total Asset Turnover Sales / Total Assets 21,167/20,513= 1,03 times Amount of sales produced for a given level of assets (times)
Profit Margin after
income tax Net Income after taxes / Sales 3,199/21,167= 15,1% Net income after tax each sales dollar generates (%)
Return On equity after
Taxes Net Income after taxes / Equity 3,199/10,100= 31,6% How much after tax income generated for a given level of equity (%)
Return On equity before
Taxes Net Income before taxes / Equity 4,983/10,100= 49,3% How much before tax income generated for a given level of equity (%)
Return On Capital
Employed PBIT ( Dept + Equity) 24,29% How efficiently we use our funds
Liquidity Ratios Calculations Remarks
Current Ratio Current Assets / Current Liabilities 7,115/5,238= 1.36 to 1 Ability to meet current liabilities with cash from current assets
Quick Ratio Current Assets - Stock / Current Liabilities (1,072+2,838+0)/5,238= 0,74 to 1 Highly liquid current assets to current liabilities
Net Sales to Working
Capital Sales / Current Assets-Current Liabilities 21,167/(7,115-5,238)= 11.27 times Level of sales generated for a given level of of working capital (times)
Receivables TurnOver Sales / Account receivable 21,167/2,838= 7,46 ,365/7,46= 49 days. How quicly a company collects it's accounts receivable
Inventory TurnOver Cost of Sales / Inventory 10,381/2,162= 4,80, 365/4,80= 76 days.
Indicates the number of times total merchandise inventory is purchased
and sold during a period
Solvency Ratios Calculations Remarks
Dept Ratio Total liabilities / Total Assets 10,413/20,513= 50,77% Proportion of company's assets financed by debt
Coverage Ratio
Earnings before interest expense and
income Taxes / Interest expense (4,983+0,082)/0,082= 61.7 times. Company's ability to make it's periodic interest payments
Gearing Debt / Debt + Equity 1,309 /1,309 + 10,100 = 1,309 / 11,409 = 11,4% How much of funds is debt oriented
Leverage Debt / Equity 1,309/10,100= 0,129 The degree to which a business is utilizing borrowed money
Investement Ratios Calculations Remarks
Earnings per share PAT / Number of shares 4,24
Company : 3M
Year : 2006
Total Asset Turnover Sales / Total Assets 22,923/21,294= 1.07 times Amount of sales produced for a given level of assets (times)
Profit Margin after
Return On Capital
Current Ratio Current Assets / Current Liabilities 8,946//7,323= 1.22 to 1 Ability to meet current liabilities with cash from current assets
Quick Ratio Current Assets - Stock / Current Liabilities (1,447+3,102+0,471)/7,323= 0.68 to 1 Highly liquid current assets to current liabilities
Capital Sales / Current Assets-Current Liabilities 22,923/(8,946-7,323)= 22,923/1,623= 14.1 times Level of sales generated for a given level of of working capital (times)
Receivables TurnOver Sales / Account receivable 22,923/3,102= 7.39, 365/7.39= 49,4 days How quicly a company collects it's accounts receivable
Inventory TurnOver Cost of Sales / Inventory 11,713/2,601= 4.50, 365/4.50= 81,1 days
Dept Ratio Total liailities / Total Assets 11,335/21,924= 51,7% Proportion of company's assets financed by debt
Coverage Ratio
income Taxes / Interest expense (5,625+0,122)/0,122= 47.1 times Company's ability to make it's periodic interest payments
Company : 3M
Year : 2007
Profit Margin after
Taxes Net Income before taxes / Equity 6,115/11,747= 52% How much before tax income generated for a given level of equity (%)
Return On Capital
Current Ratio Current Assets / Current Liabilities 9,838/5,362= 1.83 to 1 Ability to meet current liabilities with cash from current assets
Quick Ratio Current Assets - Stock / Current Liabilities (1,896+3,362+0,579)/5,362= 5,837/5,362= 1.08 to1 Highly liquid current assets to current liabilities
Capital Sales / Current Assets-Current Liabilities 24,462/(9,838-5,362)= 24,462/4,476= 5.46 times Level of sales generated for a given level of of working capital (times)
Inventory TurnOver Cost of Sales / Inventory 12,735/2,852=4,46, 365/4,46= 81,8 days
Coverage Ratio
income Taxes / Interest expense (6,115+0,210)/0,210= 30,1 times Company's ability to make it's periodic interest payments
Company : 3M
Year : 2008
Profit Margin after
Return On Capital
Current Ratio Current Assets / Current Liabilities 9,598/5,839= 1.64 times Ability to meet current liabilities with cash from current assets
Quick Ratio Current Assets - Stock / Current Liabilities (1,849+0,373+3,195)/5,839= 5,417/5,839= 0.93 to 1 Highly liquid current assets to current liabilities
Capital Sales / Current Assets-Current Liabilities 25,269/(9,598-5,839)=25,269/3,759= 6.7 times Level of sales generated for a given level of of working capital (times)
Coverage Ratio
Gearing Debt / Debt + Equity 5,166 /5,166 + 9,879= 5,166 / 15,045 = 34,3% How much of funds is debt oriented
Company : 3M
Year : 2009
income tax Net Income before taxes / Sales 4,632/23,123= 20% Percentage of Income produced by a given level of revenue (%)
Profit Margin after
Taxes Net Income after taxes / Equity 3,193/13,302= 24% How much after tax income generated for a given level of equity (%)
Return On Capital
Current Ratio Current Assets / Current Liabilities 10,795/4,897= 2.20 times Ability to meet current liabilities with cash from current assets
Quick Ratio Current Assets - Stock / Current Liabilities (3,040+3,250+0,744)/4,897= 7,034/4,897= 1,44 to 1 Highly liquid current assets to current liabilities
Capital Sales / Current Assets-Current Liabilities 23,123/(10,795-4,897)=23,123/5,898= 3.92 times Level of sales generated for a given level of of working capital (times)
Coverage Ratio
Gearing Debt / Debt + Equity 5,097 /5,097 + 13,302= 5,097 / 18,399 = 27,7% How much of funds is debt oriented
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%
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9
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H
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5
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t
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n

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n

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t

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s
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s
2
6
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8
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5
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3
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7
=

3
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3
4
%
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e
v
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f

I
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(
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M
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l
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(
%
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T
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3
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0
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t
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l
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1
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8
%
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t

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(
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t
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5
9
=

1
9
,
2
%
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(
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q
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t
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2
6
,
5
9
8
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5
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5
5
9
=

2
3
%
H
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w

m
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b
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e

t
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3
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8
%
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!
! "#
ConsoIidated Statement of Income
3M Company and Subsidiaries
Years ended December 31

(MiIIions, except per share amounts) 2009 2008 2007
Net sales ........................................................................................ $ 23,123 $ 25,269 $ 24,462
Operating expenses
Cost of sales............................................................................... 12,109 13,379 12,735
Selling, general and administrative expenses............................ 4,907 5,245 5,015
Research, development and related expenses.......................... 1,293 1,404 1,368
(Gain)/loss from sale of businesses ........................................... - 23 (849)
Total operating expenses........................................................ 18,309 20,051 18,269
Operating income........................................................................... 4,814 5,218 6,193

nterest expense and income
nterest expense......................................................................... 219 215 210
nterest income ........................................................................... (37) (105) (132)
Total interest expense (income).............................................. 182 110 78

ncome before income taxes.......................................................... 4,632 5,108 6,115
Provision for income taxes............................................................. 1,388 1,588 1,964
Net income including noncontrolling interest ................................. $ 3,244 $ 3,520 $ 4,151

Less: Net income attributable to noncontrolling interest ................ 51 60 55

Net income attributable to 3M........................................................ $ 3,193 $ 3,460 $ 4,096

Weighted average 3M common shares outstanding basic ....... 700.5 699.2 718.3
Earnings per share attributable to 3M common shareholders
basic ........................................................................................... $ 4.56 $ 4.95 $ 5.70

Weighted average 3M common shares outstanding diluted ..... 706.7 707.2 732.0
Earnings per share attributable to 3M common shareholders
diluted ......................................................................................... $ 4.52 $ 4.89 $ 5.60

Cash dividends paid per 3M common share.................................. $ 2.04 $ 2.00 $ 1.92

The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.

!
! "$
ConsoIidated BaIance Sheet
At December 31

(DoIIars in miIIions, except per share amount) 2009 2008
Assets
Current assets
Cash and cash equivalents .................................................................................... $ 3,040 $ 1,849
Marketable securities current............................................................................. 744 373
Accounts receivable net of allowances of $109 and $85................................... 3,250 3,195
nventories
Finished goods.................................................................................................... 1,255 1,505
Work in process .................................................................................................. 815 851
Raw materials and supplies................................................................................ 569 657
Total inventories ..................................................................................................... 2,639 3,013
Other current assets ............................................................................................... 1,122 1,168
Total current assets ............................................................................................ 10,795 9,598
Marketable securities non-current...................................................................... 825 352
nvestments ............................................................................................................ 103 111
Property, plant and equipment ............................................................................... 19,440 18,812
Less: Accumulated depreciation............................................................................. (12,440) (11,926)
Property, plant and equipment net..................................................................... 7,000 6,886
Goodwill .................................................................................................................. 5,832 5,753
ntangible assets net .......................................................................................... 1,342 1,398
Prepaid pension benefits........................................................................................ 78 36
Other assets ........................................................................................................... 1,275 1,659
Total assets......................................................................................................... $ 27,250 $ 25,793

LiabiIities
Current liabilities
Short-term borrowings and current portion of long-term debt ................................ $ 613 $ 1,552
Accounts payable ................................................................................................... 1,453 1,301
Accrued payroll ....................................................................................................... 680 644
Accrued income taxes ............................................................................................ 252 350
Other current liabilities............................................................................................ 1,899 1,992
Total current liabilities ......................................................................................... 4,897 5,839

Long-term debt ........................................................................................................... 5,097 5,166
Pension and postretirement benefits.......................................................................... 2,227 2,847
Other liabilities............................................................................................................ 1,727 1,637
Total liabilities...................................................................................................... $ 13,948 $ 15,489

Commitments and contingencies (Note 14)

Equity
3M Company shareholders' equity
Common stock, par value $.01 per share .............................................................. $ 9 $ 9
Shares outstanding 2009: 710,599,119
Additional paid-in capital......................................................................................... 3,153 3,006
Retained earnings................................................................................................... 23,753 22,227
Treasury stock ........................................................................................................ (10,397) (11,676)
Unearned compensation ........................................................................................ - (40)
Accumulated other comprehensive income (loss).................................................. (3,754) (3,646)
Total 3M Company shareholders' equity ............................................................ 12,764 9,880
Noncontrolling interest ............................................................................................... 538 424
Total equity.......................................................................................................... $ 13,302 $ 10,304

Total liabilities and equity.................................................................................... $ 27,250 $ 25,793


!
! "%
ConsoIidated Statement of Changes in Equity and Comprehensive Income
Years Ended December 31

ConsoIidated Statement of Changes in Equity

3M Company SharehoIders
(MiIIions) TotaI
Common
Stock and
AdditionaI
Paid-in
CapitaI
Retained
Earnings
Treasury
Stock
Unearned
Compensation
AccumuIated
Other
Comprehensive
Income (Loss)
Non-
controIIing
Interest
BaIance at December 31, 2006* $ 10,238 $ 2,493 $ 17,911 $ (8,456) $ (115) $ (1,873) $ 278

Net income including
noncontrolling interest ................ 4,151 4,096 55
Cumulative translation adjustment . 548 532 16
Defined benefit pension and
postretirement plans adjustment 6 10 614 (4)
Debt and equity securities
unrealized gain (loss) ................. (10 ) (10)
Cash flow hedging instruments
Total comprehensive income ..... 5,289
Adjustment to initially apply
guidance concerning
uncertainty in income taxes........ (1 ) (1)
Dividends paid................................ (1,400 ) (1,380) (20)
Amortization of unearned
compensation............................. 36 36
Stock-based compensation, net
of tax impacts............................. 305 305
Reacquired stock ........................... (3,237 ) (3,237)
ssuances pursuant to stock
option and benefit plans ............. 829 (331) 1,160
ssuances pursuant to acquisitions 13 13
BaIance at December 31, 2007 $ 12,072 $ 2,798 $ 20,295 $ (10,520) $ (79) $ (747) $ 325
noncontrolling interest ................ 3,520 3,460 60
Cumulative translation adjustment . (806 ) (888) 82
Defined benefit pension and
postretirement plans adjustment (2,092 ) (2,072) (20)
unrealized gain (loss) ............ 72 72
Total comprehensive income ..... 683
Dividends paid................................ (1,421 ) (1,398) (23
compensation............................. 39 39
Stock-based compensation,
net of tax impacts....................... 217 217
Reacquired stock ........................... (1,603 ) (1,603)
option and benefit plans ............. 317 (130) 447
BaIance at December 31, 2008 $ 10,304 $ 3,015 $ 22,227 $ (11,676) $ (40) $ (3,646) $ 424

* Balances reflect the impact of retrospective application of new standards related to the accounting for convertible
debt instruments that may be settled in cash upon conversion (including partial cash settlement) and
noncontrolling interests in consolidated financial statements, as discussed in Note 1.

)
!
! &'
ConsoIidated Statement of Changes in Equity (continued)

3M Company SharehoIders
(MiIIions) TotaI
Common
Stock and
AdditionaI
Paid-in
CapitaI
Retained
Earnings
Treasury
Stock
Unearned
Compensation
AccumuIated
Other
Comprehensive
Income (Loss)
Non-
controIIing
Interest
BaIance at December 31, 2008 $ 10,304 $ 3,015 $ 22,227 $ (11,676) $ (40) $ (3,646) $ 424

noncontrolling interest ........... 3,244 3,193 51
Cumulative translation
adjustment ............................ 273 286 (13)
Defined benefit pension
and postretirement plans
adjustment ............................ (314) (309) (5)
unrealized gain (loss) ............ 10 10
unrealized gain (loss) ....... (80) (80)
Total comprehensive income 3,133
Dividends paid........................... (1,431) (1,431) -
Transfer to noncontrolling
interest .................................. - (66) (15) 81
compensation........................ 40 40
Stock-based compensation, net
of tax impacts........................ 213 213
Reacquired stock ...................... (17) (17)
option and benefit plans ........ 1,060 (236) 1,296
BaIance at December 31, 2009 $ 13,302 $ 3,162 $ 23,753 $ (10,397) $ - $ (3,754) $ 538

SuppIementaI share information (MiIIions): 2009 2008 2007
Treasury stock
Beginning balance...................................................................... 250.5 234.9 209.7
Reacquired stock........................................................................ 0.2 21.4 39.7
ssuances pursuant to stock options and benefit plans.............. (17.3) (5.8) (14.3)
ssuances pursuant to acquisitions............................................. - (0.2)
Ending balance............................................................................... 233.4 250.5 234.9

ConsoIidated Statement of Comprehensive Income (Loss)

(MiIIions) 2009 2008 2007
Other comprehensive income, net of tax:
Cumulative translation adjustment ............................................. 273 (806) 548
Defined benefit pension and postretirement plans adjustment .. (314) (2,092) 610
Debt and equity securities, unrealized gain (loss)...................... 10 (11) (10)
Cash flow hedging instruments, unrealized gain (loss) .............. (80) 72 (10)
Total other comprehensive income (loss), net of tax ..................... (111) (2,837) 1,138
Comprehensive income (loss) including noncontrolling interest .... 3,133 683 5,289
Comprehensive (income) loss attributable to noncontrolling
interest ........................................................................................ (33) (122) (67)
Comprehensive income (loss) attributable to 3M........................... $ 3,100 $ 561 $ 5,222


!
! &(
ConsoIidated Statement of Cash FIows

(MiIIions) 2009 2008 2007
Cash FIows from Operating Activities
Adjustments to reconcile net income including noncontrolling
interest to net cash provided by operating activities
Depreciation and amortization.................................................... 1,157 1,153 1,072
Company pension and postretirement contributions.................. (792) (474) (379)
Company pension and postretirement expense......................... 223 105 255
Stock-based compensation expense.......................................... 217 202 228
(Gain)/loss from sale of businesses ........................................... 23 (849)
Deferred income taxes ............................................................... 701 99 (217)
Excess tax benefits from stock-based compensation ................ (14) (21) (74)
Changes in assets and liabilities ................................................
Accounts receivable................................................................ 55 197 (35)
nventories............................................................................... 453 (127) (54)
Accounts payable.................................................................... 109 (224) (4)
Accrued income taxes (current and long-term)....................... (147) (143) 183
Product and other insurance receivables and claims ............. 64 153 158
Other net ................................................................................ (329) 70 (189)
Net cash provided by operating activities....................................... 4,941 4,533 4,246

Cash FIows from Investing Activities
Purchases of property, plant and equipment (PP&E) .................... (903) (1,471) (1,422)
Proceeds from sale of PP&E and other assets.............................. 74 87 103
Acquisitions, net of cash acquired.................................................. (69) (1,394) (539)
Purchases of marketable securities and investments.................... (2,240) (2,211) (8,194)
Proceeds from sale of marketable securities and investments...... 718 1,810 6,902
Proceeds from maturities of marketable securities........................ 683 692 886
Proceeds from sale of businesses ................................................. 5 88 897
Net cash used in investing activities .............................................. (1,732) (2,399) (1,367)

Cash FIows from Financing Activities
Change in short-term debt net................................................... (536) 361 (1,222)
Repayment of debt (maturities greater than 90 days).................... (519) (1,080) (1,551)
Proceeds from debt (maturities greater than 90 days)................... 41 1,756 4,024
Purchases of treasury stock........................................................... (17) (1,631) (3,239)
Reissuances of treasury stock ....................................................... 431 289 796
Dividends paid to shareholders...................................................... (1,431) (1,398) (1,380)
Distributions to noncontrolling interests ......................................... - (23) (20)
Excess tax benefits from stock-based compensation.................... 14 21 74
Other net.................................................................................... 3 (61)
Net cash used in financing activities .............................................. (2,014) (1,766) (2,518)
Effect of exchange rate changes on cash and cash equivalents... (4) (415) 88
Net increase/(decrease) in cash and cash equivalents ................. 1,191 (47) 449
Cash and cash equivalents at beginning of year ........................... 1,849 1,896 1,447
Cash and cash equivalents at end of year ..................................... $ 3,040 $ 1,849 $ 1,896


!
"#!

(MiIIions, except per share amounts) 2008 2007 2006
Net sales .............................................................................. $ 25,269 $ 24,462 $ 22,923
Operating expenses
Cost of sales..................................................................... 13,379 12,735 11,713
Selling, general and administrative expenses.................. 5,245 5,015 5,066
Research, development and related expenses................ 1,404 1,368 1,522
(Gain)/loss on sale of businesses..................................... 23 (849 ) (1,074)
Total .............................................................................. 20,051 18,269 17,227
Operating income................................................................. 5,218 6,193 5,696

nterest expense and income...............................................
nterest expense............................................................... 215 210 122
nterest income ................................................................. (105) (132 ) (51)
Total .............................................................................. 110 78 71

ncome before income taxes and minority interest .............. 5,108 6,115 5,625
Provision for income taxes................................................... 1,588 1,964 1,723
Minority interest .................................................................... 60 55 51
Net income.................................................................... $ 3,460 $ 4,096 $ 3,851

Weighted average common shares outstanding basic.... 699.2 718.3 747.5
Earnings per share basic................................................. $ 4.95 $ 5.70 $ 5.15

Weighted average common shares outstanding diluted . 707.2 732.0 761.0
Earnings per share diluted............................................... $ 4.89 $ 5.60 $ 5.06

Cash dividends paid per common share.............................. $ 2.00 $ 1.92 $ 1.84


!
""!
At December 31

(DoIIars in miIIions, except per share amount) 2008 2007
Assets
Current assets
Cash and cash equivalents .............................................................................. $ 1,849 $ 1,896
Marketable securities current....................................................................... 373 579
Accounts receivable net of allowances of $85 and $75............................... 3,195 3,362
nventories ........................................................................................................
Finished goods.............................................................................................. 1,505 1,349
Work in process ............................................................................................ 851 880
Raw materials and supplies.......................................................................... 657 623
Total inventories ............................................................................................... 3,013 2,852
Other current assets ......................................................................................... 1,168 1,149
Total current assets ...................................................................................... 9,598 9,838
Marketable securities non-current................................................................ 352 480
nvestments ...................................................................................................... 286 298
Property, plant and equipment ......................................................................... 18,812 18,390
Less: Accumulated depreciation....................................................................... (11,926 ) (11,808)
Property, plant and equipment net............................................................... 6,886 6,582
Goodwill ............................................................................................................ 5,753 4,589
ntangible assets net .................................................................................... 1,398 801
Prepaid pension and postretirement benefits................................................... 36 1,378
Other assets ..................................................................................................... 1,238 728
Total assets................................................................................................... $ 25,547 $ 24,694

LiabiIities and StockhoIders' Equity
Current liabilities
Short-term borrowings and current portion of long-term debt .......................... $ 1,552 $ 901
Accounts payable ............................................................................................. 1,301 1,505
Accrued payroll ................................................................................................. 644 580
Accrued income taxes ...................................................................................... 350 543
Other current liabilities...................................................................................... 1,992 1,833
Total current liabilities ................................................................................... 5,839 5,362

Long-term debt ..................................................................................................... 5,166 4,019
Pension and postretirement benefits.................................................................... 2,847 1,348
Other liabilities...................................................................................................... 1,816 2,218
Total liabilities................................................................................................ $ 15,668 $ 12,947

Stockholders' equity
Common stock, par value $.01 per share ........................................................ 9 9
Additional paid-in capital................................................................................... 3,001 2,785
Retained earnings............................................................................................. 22,248 20,316
Treasury stock .................................................................................................. (11,676 ) (10,520)
Unearned compensation .................................................................................. (57 ) (96)
Accumulated other comprehensive income (loss)............................................ (3,646 ) (747)
Stockholders' equity net ........................................................................... 9,879 11,747
Total liabilities and stockholders' equity........................................................ $ 25,547 $ 24,694


!
"$!
ConsoIidated Statement of Changes in StockhoIders' Equity and Comprehensive Income

(MiIIions) 2008 2007 2006
Common Stock, par vaIue......................................................... $ 9 $ 9 $ 9

AdditionaI Paid-in CapitaI
Beginning balance.................................................................... 2,785 2,484 2,225
Stock-based compensation expense (excluding tax benefit) ... 197 228 200
Stock-based compensation tax benefit .................................... 19 73 59
Ending balance............................................................................. 3,001 2,785 2,484

Retained Earnings
Beginning balance.................................................................... 20,316 17,933 15,715
Adjustment to beginning balance to initially apply FN 48........ - (1 ) -
Net income................................................................................ 3,460 4,096 3,851
Dividends paid .......................................................................... (1,398) (1,380 ) (1,376)
ssuances pursuant to stock option and benefit plans.............. (130) (332 ) (257)
Ending balance............................................................................. 22,248 20,316 17,933

Treasury Stock
Beginning balance.................................................................... (10,520) (8,456 ) (6,965)
Reacquired stock...................................................................... (1,603) (3,237 ) (2,332)
ssuances pursuant to stock option and benefit plans.............. 447 1,160 841
ssuances pursuant to acquisitions........................................... - 13 -
Ending balance............................................................................. (11,676) (10,520 ) (8,456)

Unearned Compensation
Beginning balance.................................................................... (96) (138 ) (178)
Amortization of unearned compensation.................................. 39 42 40
Ending balance............................................................................. (57) (96 ) (138)

AccumuIated Other Comprehensive Income (Loss)
Beginning balance.................................................................... (747) (1,873 ) (411)
Cumulative translation adjustment ........................................... (888) 532 506
Defined benefit pension and postretirement plans adjustment (2,072) 614 7
Adjustment to initially apply SFAS No. 158.............................. (1,918)
Debt and equity securities unrealized gain (loss) ................ (11) (10 ) (1)
Cash flow hedging instruments unrealized gain (loss) ........ 72 (10 ) (56)
Ending balance............................................................................. (3,646) (747 ) (1,873)

TotaI StockhoIder's Equity........................................................ $ 9,879 $ 11,747 $ 9,959

Comprehensive Income
Net income................................................................................ 3,460 4,096 3,851
Cumulative translation adjustment ........................................... (888) 532 506
Defined benefit pension and postretirement plans adjustment (2,072) 614 7
Debt and equity securities unrealized gain (loss) ................ (11) (10 ) (1)
Cash flow hedging instruments unrealized gain (loss) ........ 72 (10 ) (56)
TotaI Comprehensive Income................................................... $ 561 $ 5,222 $ 4,307

SuppIementaI share information: 2008 2007 2006
Treasury stock............................................................................
Beginning balance.................................................................... 234.9 209.7 189.5
Reacquired stock...................................................................... 21.4 39.7 31.2
ssuances pursuant to stock options and benefit plans............ (5.8) (14.3 ) (11.0)
ssuances pursuant to acquisitions........................................... - (0.2 )
Ending balance............................................................................. 250.5 234.9 209.7
!
"%!

(MiIIions) 2008 2007 2006
Cash FIows from Operating Activities
Net income .................................................................................... $ 3,460 $ 4,096 $ 3,851
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization................................................... 1,153 1,072 1,079
Company pension and postretirement contributions................. (474) (379 ) (385)
Company pension and postretirement expense........................ 105 255 440
Stock-based compensation expense......................................... 202 228 200
(Gain)/loss from sale of businesses .......................................... 23 (849 ) (1,074)
Deferred income taxes .............................................................. 118 11 (316)
Excess tax benefits from stock-based compensation ............... (21) (74 ) (60)
Changes in assets and liabilities
Accounts receivable............................................................... 197 (35 ) (103)
nventories.............................................................................. (127) (54 ) (309)
Accounts payable................................................................... (224) (4 ) 68
Accrued income taxes............................................................ (162) (45 ) 138
Product and other insurance receivables and claims ............ 153 158 58
Other net ............................................................................... 130 (105 ) 252
Net cash provided by operating activities...................................... 4,533 4,275 3,839

Cash FIows from Investing Activities
Purchases of property, plant and equipment (PP&E) ................... (1,471) (1,422 ) (1,168)
Proceeds from sale of PP&E and other assets............................. 87 103 49
Acquisitions, net of cash acquired................................................. (1,394) (539 ) (888)
Purchases of marketable securities and investments................... (2,211) (8,194 ) (3,253)
Proceeds from sale of marketable securities and investments..... 1,810 6,902 2,287
Proceeds from maturities of marketable securities....................... 692 886 304
Proceeds from sale of businesses ................................................ 88 897 1,209
Net cash used in investing activities ............................................. (2,399) (1,367 ) (1,460)

Cash FIows from Financing Activities
Change in short-term debt net.................................................. 361 (1,222 ) 882
Repayment of debt (maturities greater than 90 days)................... (1,080) (1,580 ) (440)
Proceeds from debt (maturities greater than 90 days).................. 1,756 4,024 693
Purchases of treasury stock.......................................................... (1,631) (3,239 ) (2,351)
Reissuances of treasury stock ...................................................... 289 796 523
Dividends paid to stockholders ..................................................... (1,398) (1,380 ) (1,376)
Distributions to minority interests .................................................. (23) (20 ) (38)
Excess tax benefits from stock-based compensation................... 21 74 60
Other net................................................................................... (61) (14)
Net cash used in financing activities ............................................. (1,766) (2,547 ) (2,061)
Effect of exchange rate changes on cash and cash equivalents . (415 ) 88 57
Net increase/(decrease) in cash and cash equivalents ................ (47) 449 375
Cash and cash equivalents at beginning of year .......................... 1,896 1,447 1,072
Cash and cash equivalents at end of year .................................... $ 1,849 $ 1,896 $ 1,447

!"#
# # # # ##
3M Company and Subsidiaries # # # #
Years ended December 31 # # #
(Millions, except per share amounts) 2007# 2006# 2005 ##
Net sales $24,462 $22,923 $21,167
Operating expenses # #
Cost of sales 12,735 11,713 10,408
Selling, general and administrative expenses 5,015 5,066 4,631
Research, development and related expenses 1,368 1,522 1,274
Gain on sale of businesses (849) (1,074)
Total 18,269 17,227 16,313
Operating income 6,193 5,696 4,854
#
#
# #
nterest expense and income #

nterest expense 210 122 82 #
nterest income (132) (51) (56)
Total 78

71

26

## #

ncome before income taxes, minority interest and

cumulative effect of accounting change 6,115 5,625 4,828

Provision for income taxes 1,964 1,723 1,627

Minority interest 55 51 55
ncome before cumulative effect of accounting change 4,096 3,851 3,146
Cumulative effect of accounting change - (35)
Net income $ 4,096

$ 3,851

$ 3,111
## #

Weighted average common shares outstanding basic 718.3 747.5 764.9

Earnings per share basic

ncome before cumulative effect of accounting change $ 5.70 $ 5.15 $ 4.11

Cumulative effect of accounting change - (0.04)
Net income $ 5.70

$ 5.15

$ 4.07

#
#
#

Weighted average common shares outstanding diluted 732.0 761.0 781.3
Earnings per share diluted
ncome before cumulative effect of accounting change $ 5.60 $ 5.06 $ 4.03
Net income $ 5.60

$ 5.06

$ 3.98


!$#
3M Company and Subsidiaries # # #
At December 31 # #
(Dollars in millions, except per share amount) # 2007 2006 #
Assets # # #
Current assets # #
Cash and cash equivalents $ 1,896 $ 1,447
Marketable securities - current 579 471
Accounts receivable net of allowances of $75 and $71 3,362 3,102
nventories
Finished goods 1,349 1,235
Work in process 880 795
Raw materials and supplies # 623 571
Total inventories 2,852 2,601
Other current assets # 1,149 1,325
Total current assets # 9,838 8,946
Marketable securities non-current 480 166

nvestments 298 314

Property, plant and equipment 18,390 17,017

Less: Accumulated depreciation # (11,808) (11,110)
Property, plant and equipment net 6,582 5,907 #
Goodwill 4,589 4,082
ntangible assets net 801 708

Prepaid pension and postretirement benefits 1,378 395

Other assets # 728 776

Total assets # $24,694 $21,294

LiabiIities and StockhoIders' Equity #

Current liabilities #

Short-term borrowings and current portion of long-term debt $ 901 $ 2,506

Accounts payable 1,505 1,402

Accrued payroll 580 520

Accrued income taxes 543 1,134
Other current liabilities # 1,833 1,761

Total current liabilities 5,362 7,323

Long-term debt 4,019 1,047

Other liabilities # 3,566 2,965

Total liabilities # $12,947 $11,335

Commitments and contingencies (Note 13) #

Stockholders' equity #

Common stock, par value $.01 per share 9 9

Shares outstanding 2007: 709,156,031 #

Shares outstanding 2006: 734,362,802 #

Additional paid-in capital 2,785 2,484

Retained earnings 20,316 17,933

Treasury stock (10,520) (8,456)
Unearned compensation (96) (138)
Accumulated other comprehensive income (loss) # (747) (1,873)
Stockholders' equity net # 11,747 9,959

Total liabilities and stockholders' equity # $24,694 $21,294

!%#

(Millions) 2007 2006 2005
Common Stock, par vaIue $ 9 $ 9 $ 9
AdditionaI Paid-in CapitaI
Beginning balance 2,484 2,225 2,018
Stock-based compensation expense (excluding tax benefit) 228 200 155
Stock-based compensation tax benefit 73 59 52
Ending balance 2,785 2,484 2,225
Retained Earnings
Beginning balance 17,933 15,715 14,198
Adjustment to beginning balance to initially apply FN 48 (1) - -
Net income 4,096 3,851 3,111
Dividends paid (1,380) (1,376) (1,286)
ssuances pursuant to stock option and benefit plans (332) (257) (308)
Ending balance 20,316 17,933 15,715
Treasury Stock
Beginning balance (8,456) (6,965) (5,503)
Reacquired stock (3,237) (2,332) (2,377)
ssuances pursuant to stock option and benefit plans 1,160 841 915
ssuances pursuant to acquisitions 13 - -
Ending balance (10,520) (8,456) (6,965)
Unearned Compensation
Beginning balance (138) (178) (196)
Amortization of unearned compensation 42 40 18
Ending balance (96) (138) (178)
AccumuIated Other Comprehensive Income (Loss)
Beginning balance (1,873) (411) 132
Cumulative translation adjustment 532 506 (578)
Defined benefit pension plans adjustment 614 7 (46)
Adjustment to initially apply SFAS No. 158 - (1,918) -
Debt and equity securities - unrealized gain (loss) (10) (1) 1
Cash flow hedging instruments - unrealized gain (loss) (10) (56) 80
Ending balance (747) (1,873) (411)
TotaI StockhoIder's Equity $11,747 $ 9,959 $10,395
Comprehensive Income
Net income 4,096 3,851 3,111
Cumulative translation adjustment 532 506 (578)
Defined benefit pension plans adjustment 614 7 (46)
Debt and equity securities - unrealized gain (loss) (10) (1) 1
Cash flow hedging instruments unrealized gain (loss) (10) (56) 80
TotaI Comprehensive Income $ 5,222 $ 4,307 $ 2,568
SuppIementaI share information: 2007 2006 2005
Treasury stock
Beginning balance 209.7 189.5 170.5
Reacquired stock 39.7 31.2 30.7
ssuances pursuant to stock options and benefit plans (14.3) (11.0) (11.7)
ssuances pursuant to acquisitions (0.2) - -
Ending balance 234.9 209.7 189.5

!&#
3M Company and Subsidiaries ## # # # # #
Years ended December 31 # # #
(Millions) ## 2007 # 2006 ## 2005 ##
# # # # # #
Cash FIows from Operating Activities # # # ## #
Net income # $4,096 $3,851

$3,111
Adjustments to reconcile net income # # # # # #
to net cash provided by operating activities # # # #
Depreciation and amortization # 1,072 1,079 986
Company pension and postretirement contributions # (379) (385) (788)
Company pension and postretirement expense # 255 440 437
Stock-based compensation expense # 228 200 155
Gain from sale of businesses # (849) (1,074)

Deferred income taxes # 11 (316) 132
Excess tax benefits from stock-based compensation # (74) (60) (54)
Changes in assets and liabilities # # # # # #
Accounts receivable # (35) (103) (184)
nventories # (54) (309)# (294)
Accounts payable # (4) 68

113

Accrued income taxes # (45) 138

270

Product and other insurance receivables and claims # 158 58

122
Other net ## (105) 252 198
Net cash provided by operating activities ## 4,275

3,839

4,204

# # # # #
Cash FIows from Investing Activities # # # # #
Purchases of property, plant and equipment (PP&E) # (1,422) (1,168) (943)
Proceeds from sale of PP&E and other assets # 103 49 41
Acquisitions, net of cash acquired # (539) (888) (1,293)
Purchases of marketable securities and investments # (8,194) (3,253) (1,627)
Proceeds from sale of marketable securities and investments # 6,902 2,287 1,573
Proceeds from maturities of marketable securities # 886 304 8
Proceeds from sale of businesses ## 897

1,209

Net cash used in investing activities ## (1,367) (1,460) (2,241)
# # # # #
Cash FIows from Financing Activities # #

#

Change in short-term debt net # (1,222) 882 (258)
Repayment of debt (maturities greater than 90 days) # (1,580) (440) (656)
Proceeds from debt (maturities greater than 90 days) # 4,024 693

429

Purchases of treasury stock # (3,239) (2,351) (2,377)
Reissuances of treasury stock # 796 523 545
Dividends paid to stockholders # (1,380) (1,376) (1,286)
Distributions to minority interests # (20) (38) (56)
Excess tax benefits from stock-based compensation # 74 60 54
Other net ##

(14) (20)
Net cash used in financing activities ## (2,547) (2,061) (3,625)
# # # # # # #
Effect of exchange rate changes on cash # #

#

and cash equivalents ## 88 57 (23)
Net increase/(decrease) in cash and cash equivalents # 449 375 (1,685)
Cash and cash equivalents at beginning of year ## 1,447

1,072

2,757

Cash and cash equivalents at end of year ## $1,896

$1,447

$1,072

Consolidated Statement of Income

(Millions, except per share amounts) 2006 2005 2004
Net sales $22,923 $21,167 $20,011
Operating expenses
Cost of sales 11,713 10,408 10,002
Gain on sale of pharmaceuticals business (1,074) - -
Total 17,227 16,313 15,685
Interest expense and income
Interest expense 122 82 69
Interest income (51) (56) (46)
Total 71 26 23
Income before income taxes, minority interest and
Income before cumulative effect of accounting change 3,851 3,146 2,841
Cumulative effect of accounting change - (35)
Net income $ 3,851 $ 3,111 $ 2,841
Income before cumulative effect of accounting change $ 5.15 $ 4.11 $ 3.64
Net income $ 5.15 $ 4.07 $ 3.64
Net income $ 5.06 $ 3.98 $ 3.56
Consolidated Balance Sheet

At December 31
(Dollars in millions, except per share amount) 2006 2005
Assets
Current assets
Marketable securities - current 471 -
Inventories
Finished goods 1,235 1,050
Raw materials and supplies 571 406
Other current assets 1,325 1,043
Total current assets 8,946 7,115
Marketable securities non-current 166 -
Investments 314 272
Less: Accumulated depreciation (11,110) (10,534)
Property, plant and equipment net 5,907 5,593
ntangible assets net 708 486
Prepaid pension and postretirement benefits 395 2,905
Other assets 776 640
Total assets $21,294 $20,541
LiabiIities and StockhoIders' Equity
Current liabilities
Short-term borrowings and current portion of long-term debt $ 2,506 $ 1,072
Accrued income taxes 1,134 989
Other current liabilities 1,761 1,452
Long-term debt 1,047 1,309
Other liabilities 2,965 3,599
Total liabilities $11,335 $10,146
Stockholders' equity
Additional paid-in capital 2,484 2,225
Accumulated other comprehensive income (loss) (1,873) (411)
Stockholders' equity net 9,959 10,395
Total liabilities and stockholders' equity $21,294 $20,541

Common Accumulated
Stock and Other
Additional Comprehensive
(Dollars in millions, Paid-in Retained Treasury Unearned Income
except per share amounts) Total Capital Earnings Stock Compensation (Loss)
Balance at December 31, 2003 $ 8,096 $1,721 $12,796 $(4,641) $(226) $ (1,554)
Net income 2,841 2,841
Cumulative translation adjustment 490 490
Minimum pension liability adjustment 1,193 1,193
Derivative financial instruments
unrealized gain 3 3
Dividends paid ($1.44 per share) (1,125) (1,125)
Amortization of unearned compensation 30 30
Stock-based compensation, including
tax benefit of $54 million 306 306
Reacquired stock (22.0 million shares) (1,791) (1,791)
Issuances pursuant to stock option
and benefit plans (10.9 million shares) 572 (314) 886
Issuances pursuant to acquisitions
(0.5 million shares) 43 43
Balance at December 31, 2004 10,658 2,027 14,198 (5,503) (196) 132
Cumulative translation adjustment (578) (578)
Minimum pension liability adjustment (46) (46)
Debt and equity securities unrealized gain 1 1
unrealized gain 80 80
Balance at December 31, 2005 10,395 2,234 15,715 (6,965) (178) (411)
Minimum pension liability adjustment 7 7
Debt and equity securities unrealized loss (1) (1)
unrealized loss (56) (56)
Adjustment to initially apply SFAS No. 158 (1,918) (1,918)
Balance at December 31, 2006 $ 9,959 $2,493 $17,933 $(8,456) $(138) $(1,873)
Consolidated Statement of Cash Flows

(Dollars in millions) 2006 2005 2004

Cash Flows from Operating Activities
Net income $ 3,851 $ 3,111 $ 2,841
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization 1,079 986 999
Company pension and postretirement contributions (385) (788) (759)
Company pension and postretirement expense 440 437 435
Stock-based compensation expense 200 155 252
Gain from sale of pharmaceuticals business (1,074)

Deferred income taxes (316) 132 243
Excess tax benefits from stock-based compensation (60) (54) (54)
Accounts receivable (103) (184) 56
Inventories (309) (294) 7
Accounts payable 68 113 35
Accrued income taxes 138 270 83
Product and other insurance receivables and claims 58 122 12
Other net 252 198 78
Net cash provided by operating activities 3,839 4,204 4,228

Cash Flows from Investing Activities
Purchases of property, plant and equipment (PP&E) (1,168) (943) (937)
Proceeds from sale of PP&E and other assets 49 41 69
Acquisitions, net of cash acquired (888) (1,293) (73)
Purchases of marketable securities and investments (3,253) (1,627) (10)
Proceeds from sale of marketable securities and investments 2,287 1,573 13
Proceeds from maturities of marketable securities 304 8

Proceeds from sale of pharmaceuticals business 1,209

Net cash used in investing activities (1,460) (2,241) (938)

Cash Flows from Financing Activities
Change in short-term debt net 882 (258) 399
Repayment of debt (maturities greater than 90 days) (440) (656) (868)
Proceeds from debt (maturities greater than 90 days) 693 429 358
Purchases of treasury stock (2,351) (2,377) (1,791)
Reissuances of treasury stock 523 545 508
Dividends paid to stockholders (1,376) (1,286) (1,125)
Distributions to minority interests (38) (56) (11)
Excess tax benefits from stock-based compensation 60 54 54
Other net (14) (20) (4)
Net cash used in financing activities (2,061) (3,625) (2,480)

Effect of exchange rate changes on cash
and cash equivalents 57 (23) 111
Net increase/(decrease) in cash and cash equivalents 375 (1,685) 921
Cash and cash equivalents at beginning of year 1,072 2,757 1,836
Cash and cash equivalents at end of year $1,447 $1,072 $2,757
37
Consolidated Statement of Income
(Millions, except per share amounts) 2005 2004 2003
Net sales $21,167 $20,011 $18,232
Operating expenses
Cost of sales 10,381 9,958 9,285
Other expense 93
Total 16,158 15,433 14,519
Interest expense and income
Interest expense 82 69 84
Interest income (56) (46) (28)
Total 26 23 56
Income before income taxes, minority interest and
Income before cumulative effect of accounting change 3,234 2,990 2,403
Cumulative effect of accounting change (35)
Net income $ 3,199 $ 2,990 $ 2,403
Cumulative effect of accounting change (0.05)
Net income $ 4.18 $ 3.83 $ 3.07
Cumulative effect of accounting change (0.04)
Net income $ 4.12 $ 3.75 $ 3.02
38
Consolidated Balance Sheet
At December 31
(Dollars in millions, except per share amount) 2005 2004
Assets
Current assets
Inventories
Finished goods 1,050 947
Raw materials and supplies 406 336
Other current assets 1,043 1,274
Total current assets 7,115 8,720
Investments 272 227
Less: Accumulated depreciation (10,534) (10,579)
Property, plant and equipment net 5,593 5,711
Intangible assets net 486 277
Prepaid pension and postretirement benefits 2,905 2,591
Other assets 669 527
Total assets $20,513 $20,708
Liabilities and Stockholders Equity
Current liabilities
Short-term borrowings and current portion of long-term debt $ 1,072 $ 2,094
Accrued income taxes 989 867
Other current liabilities 1,452 1,455
Long-term debt 1,309 727
Other liabilities 3,866 3,532
Total liabilities $10,413 $10,330
Stockholders equity
Capital in excess of par value 287 287
Accumulated other comprehensive income (loss) (411) 132
Stockholders equity net 10,100 10,378
Total liabilities and stockholders equity $20,513 $20,708
39
Consolidated Statement of Changes in Stockholders Equity and Comprehensive Income
Common Accumulated
Stock and Other
Capital Comprehensive
(Dollars in millions, in Excess Retained Treasury Unearned Income
except per share amounts) Total of Par Earnings Stock Compensation (Loss)
Balance at December 31, 2002 $ 5,993 $ 296 $12,748 $ (4,767) $ (258) $ (2,026)
Debt and equity securities, unrealized gain 1 1
unrealized loss (6) (6)
Reacquired stock (9.7 million shares) (685) (685)
Balance at December 31, 2003 7,885 296 14,010 (4,641) (226) (1,554)
Minimum pension liability adjustment 1,193 1,193
Debt and equity securities -- --
unrealized gain 3 3
Issuances pursuant to acquisitions
(0.5 million shares) 43 43
Balance at December 31, 2004 10,378 296 15,649 (5,503) (196) 132
Cumulative translation adjustment (578) (578)
Debt and equity securities unrealized gain 1 1
unrealized gain 80 80
Balance at December 31, 2005 $10,100 $ 296 $17,358 $ (6,965) $ (178) $ (411)
40
Consolidated Statement of Cash Flows
(Dollars in millions) 2005 2004 2003
Cash Flows from Operating Activities
Net income $3,199 $2,990 $2,403
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization 986 999 964
Company pension and postretirement contributions (788) (759) (943)
Company pension and postretirement expense 437 435 256
Deferred income tax provision 147 313 115
Accounts receivable (184) 56 38
Inventories (294) 7 281
Accounts payable 113 35 62
Accrued income taxes 270 83 424
Product and other insurance receivables and claims 122 12 (35)
Other net 250 111 208
Net cash provided by operating activities 4,258 4,282 3,773
Cash Flows from Investing Activities
Purchases of property, plant and equipment (PP&E) (943) (937) (677)
Proceeds from sale of PP&E and other assets 41 69 129
Acquisitions, net of cash acquired (1,293) (73) (439)
Purchases of investments (1,627) (10) (16)
Proceeds from sale of investments 1,581 13 34
Net cash used in investing activities (2,241) (938) (969)
Cash Flows from Financing Activities
Change in short-term debt net (258) 399 (215)
Repayment of debt (maturities greater than 90 days) (656) (868) (719)
Proceeds from debt (maturities greater than 90 days) 429 358 494
Purchases of treasury stock (2,377) (1,791) (685)
Reissuances of treasury stock 545 508 555
Dividends paid to stockholders (1,286) (1,125) (1,034)
Distributions to minority interests (56) (11) (13)
Other net (20) (4) (10)
Net cash used in financing activities (3,679) (2,534) (1,627)
Effect of exchange rate changes on cash
and cash equivalents (23) 111 41
Net increase/(decrease) in cash and cash equivalents (1,685) 921 1,218
Cash and cash equivalents at beginning of year 2,757 1,836 618
Cash and cash equivalents at end of year $1,072 $2,757 $1,836

(67)
Statement of Earnings

General Electric Company
and consolidated affiliates
For the years ended December 31 (In millions; per-share amounts in dollars)
2005
(Restated)
2004
(Restated)
2003
(Restated)
REVENUES
Sales of goods $ 59,837 $ 55,005 $ 49,963
Sales of services 32,752 29,700 22,391
Other income (note 3) 1,683 1,064 602
GECS earnings from continuing operations
before accounting changes
GECS revenues from services (note 4) 55,430 48,712 39,930
GECS commercial paper interest rate swap adjustment (note 1) 540 518 535
Total revenues 150,242 134,999 113,421
COSTS AND EXPENSES (note 5)
Cost of goods sold 46,169 42,645 37,189
Cost of services sold 20,645 19,114 14,017
Interest and other financial charges 15,138 11,611 10,459
Investment contracts, insurance losses and
insurance annuity benefits 5,474 3,583 3,069
Provision for losses on financing receivables (note 14) 3,841 3,888 3,752
Other costs and expenses 35,271 33,096 26,480
Minority interest in net earnings of consolidated affiliates 986 728 308
Total costs and expenses 127,524 114,665 95,274
EARNINGS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND ACCOUNTING CHANGES 22,718 20,334 18,147
Provision for income taxes (note 8) (4,085) (3,708 ) (4,056)
EARNINGS FROM CONTINUING OPERATIONS BEFORE
ACCOUNTING CHANGES 18,633 16,626 14,091
Earnings (loss) from discontinued operations, net of taxes (note 2) (1,922) 534 2,057
EARNINGS BEFORE ACCOUNTING CHANGES 16,711 17,160 16,148
Cumulative effect of accounting changes (note 1) (587)
NET EARNINGS $ 16,711 $ 17,160 $ 15,561
Per-share amounts (note 9)
Per-share amounts-earnings from continuing
operations before accounting changes
Diluted earnings per share $ 1.76 $ 1.59 $ 1.40
Basic earnings per share 1.76 1.60 1.41
Per-share amounts earnings before accounting changes
Diluted earnings per share 1.57 1.64 1.60
Per-share amounts net earnings
DIVIDENDS DECLARED PER SHARE $ 0.91 $ 0.82 $ 0.77

The notes to consolidated finance statements are an integral part of this statement.

(68)
Statement of Earnings (continued)
GE GECS
For the years ended December 31
(In millions; per-share amounts in dollars)
2005
(Restated)
2004
(Restated)
2003
(Restated)
2005
(Restated)
2004
(Restated)
2003
(Restated)
REVENUES
Sales of goods $ 57,378 $ 52,260 $ 47,767 $ 2,528 $ 2,840 $ 2,228
Other income (note 3) 1,764 1,076 645
before accounting changes 9,499 8,194 6,256
GECS commercial paper interest rate swap
adjustment (note 1) 540 518 535
Total revenues 101,693 91,484 77,343 59,837 53,412 43,513
Cost of goods sold 43,870 39,999 35,102 2,369 2,741 2,119
Interest and other financial charges 1,432 979 941 14,259 11,076 9,896
Investment contracts, insurance losses
and insurance annuity benefits 5,674 3,800 3,069
Provision for losses on financing
receivables (note 14) 3,841 3,888 3,752
Other costs and expenses 13,279 12,001 9,870 22,658 21,788 17,095
Minority interest in net earnings of
consolidated affiliates 784 538 181 202 190 127
Total costs and expenses 80,310 72,885 60,395 49,003 43,483 36,058
EARNINGS FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES AND ACCOUNTING CHANGES 21,383 18,599 16,948 10,834 9,929 7,455
Provision for income taxes (note 8) (2,750) (1,973) (2,857) (1,335) (1,735) (1,199)
EARNINGS FROM CONTINUING OPERATIONS
BEFORE ACCOUNTING CHANGES 18,633 16,626 14,091 9,499 8,194 6,256
Earnings (loss) from discontinued
operations, net of taxes (note 2) (1,922) 534 2,057 (1,922) 534 2,057
EARNINGS BEFORE ACCOUNTING CHANGES 16,711 17,160 16,148 7,577 8,728 8,313
Cumulative effect of accounting changes (note 1) (587) (339)
NET EARNINGS $ 16,711 $ 17,160 $ 15,561 $ 7,577 $ 8,728 $ 7,974

In the consolidating data on this page, GE means the basis of consolidation as described in note 1 to the consolidated financial statements; GECS means General
Electric Capital Services, Inc. and all of its affiliates and associated companies. Transactions between GE and GECS have been eliminated from the General Electric
Company and consolidated affiliates columns on the previous page.

(69)
Consolidated Statement of Changes in Shareowners Equity
(In millions)
2005
(Restated)
2004
(Restated)
2003
(Restated)
CHANGES IN SHAREOWNERS EQUITY (note 23)
Balance at January 1 $ 110,908 $ 79,662 $ 63,979
Dividends and other transactions with shareowners (13,249) 10,009 (5,520)
Changes other than transactions with shareowners
Increase attributable to net earnings 16,711 17,160 15,561
Investment securities net (437) 412 710
Currency translation adjustments net (4,318) 3,936 5,061
Cash flow hedges net (47) 150 32
Minimum pension liabilities net (217) (421 ) (161)
Total changes other than transactions with shareowners 11,692 21,237 21,203
Balance at December 31 $ 109,351 $ 110,908 $ 79,662

The notes to consolidated financial statements are an integral part of this statement.

(70)
Statement of Financial Position

General Electric
Company
and consolidated
affiliates
At December 31 (In millions, except share amounts)
2005
(Restated)
2004
(Restated)
ASSETS
Cash and equivalents $ 9,011 $ 12,152
Investment securities (note 10) 53,144 56,923
Current receivables (note 11) 14,851 14,233
Inventories (note 12) 10,474 9,778
Financing receivables net (notes 13 and 14) 287,639 282,699
Other GECS receivables 14,767 11,340
Property, plant and equipment net (note 15) 67,528 63,103
Investment in GECS
Intangible assets net (note 16) 81,726 78,456
All other assets (note 17) 87,425 89,667
Assets of discontinued operations (note 2) 46,756 132,266
Total assets $ 673,321 $ 750,617
LIABILITIES AND EQUITY
Short-term borrowings (note 18) $ 158,156 $ 157,195
Accounts payable, principally trade accounts 21,273 19,137
Progress collections and price adjustments accrued 4,456 3,937
Dividends payable 2,623 2,329
All other current costs and expenses accrued 18,419 17,539
Long-term borrowings (note 18) 212,281 207,871
Investment contracts, insurance liabilities and
insurance annuity benefits (note 19) 45,432 48,076
All other liabilities (note 20) 40,632 42,779
Deferred income taxes (note 21) 16,312 15,308
Liabilities of and minority interest in
discontinued operations (note 2) 36,332 112,935
Total liabilities 555,916 627,106
Minority interest in equity of consolidated affiliates (note 22) 8,054 12,603
Common stock (10,484,268,000 and 10,586,358,000
shares outstanding at year-end 2005 and 2004, respectively) 669 669
Accumulated gains (losses) net
Investment securities 1,831 2,268
Currency translation adjustments 2,532 6,850
Cash flow hedges (352 ) (305)
Minimum pension liabilities (874 ) (657)
Other capital 25,227 24,265
Less common stock held in treasury (17,326 ) (12,762)
Total shareowners equity (notes 23 and 24) 109,351 110,908
Total liabilities and equity $ 673,321 $ 750,617

The sum of accumulated gains (losses) on investment securities, currency translation adjustments, cash flow hedges and minimum pension liabilities constitutes
Accumulated nonowner changes other than earnings, as shown in note 23, and was $3,137 million and $8,156 million at December 31, 2005 and 2004, respectively.

(71)
Statement of Financial Position (continued)
GE GECS
At December 31 (In millions, except share amounts)
2005
(Restated)
2004
(Restated)
2005
(Restated)
2004
(Restated)
ASSETS
Cash and equivalents $ 2,015 $ 3,155 $ 7,316 $ 9,191
Investment securities (note 10) 461 413 52,706 56,539
Inventories (note 12) 10,315 9,589 159 189
Property, plant and equipment net (note 15) 16,504 16,756 51,024 46,347
Investment in GECS 50,812 54,379
Intangible assets net (note 16) 57,839 54,720 23,887 23,736
All other assets (note 17) 36,752 38,123 52,037 52,682
Total assets $ 189,756 $ 191,668 $ 540,584 $ 618,614
Short-term borrowings (note 18) $ 1,127 $ 3,409 $ 157,672 $ 154,292
Accounts payable, principally trade accounts 11,870 11,013 13,133 11,374
All other current costs and expenses accrued 18,436 17,569
Long-term borrowings (note 18) 9,081 7,625 204,397 201,209
Investment contracts, insurance liabilities
and insurance annuity benefits (note 19) 45,722 48,393
All other liabilities (note 20) 23,273 23,561 17,453 19,300
Deferred income taxes (note 21) 3,733 3,616 12,579 11,692
Liabilities of and minority interest in
discontinued operations (note 2) 36,568 113,073
Total liabilities 74,599 73,059 487,524 559,333
Minority interest in equity of consolidated
affiliates (note 22) 5,806 7,701 2,248 4,902
Common stock (10,484,268,000 and 10,586,358,000 shares
outstanding at year-end 2005 and 2004, respectively) 669 669 1 1
Investment securities 1,831 2,268 1,754 2,345
Currency translation adjustments 2,532 6,850 2,287 5,104
Cash flow hedges (352) (305) (343 ) (436)
Minimum pension liabilities (874) (657) (179 ) (150)
Other capital 25,227 24,265 12,386 12,370
Retained earnings 97,644 90,580 34,906 35,145
Less common stock held in treasury (17,326) (12,762)
Total shareowners equity (notes 23 and 24) 109,351 110,908 50,812 54,379
Total liabilities and equity $ 189,756 $ 191,668 $ 540,584 $ 618,614

Company and consolidated affiliates columns.

(72)
Statement of Cash Flows

For the years ended December 31 (In millions)
2005
(Restated)
(a)
2004
(Restated)
(a)

2003
(Restated)
(a)
CASH FLOWS OPERATING ACTIVITIES
Net earnings $ 16,711 $ 17,160 $ 15,561
Loss (earnings) from discontinued operations 1,922 (534) (2,057)
Adjustments to reconcile net earnings to cash
provided from operating activities
Cumulative effect of accounting changes 587
Depreciation and amortization of property, plant and equipment 8,538 8,349 6,864
Earnings before accounting changes retained by GECS
Deferred income taxes (890) 50 1,417
Decrease (increase) in GE current receivables (360) (849) 534
Decrease (increase) in inventories (578) (468) 874
Increase in accounts payable 1,238 4,090 232
Increase (decrease) in GE progress collections 510 (464) (2,268)
Increase (decrease) in insurance liabilities 1,034 1,959 (729)
Provision for losses on GECS financing receivables 3,841 3,888 3,752
All other operating activities 1,821 (2,699) (2,927)
Cash from operating activities continuing operations 33,787 30,482 21,840
Cash from operating activities discontinued operations 3,854 6,002 7,389
CASH FROM OPERATING ACTIVITIES 37,641 36,484 29,229
Cash flows investing activities
Additions to property, plant and equipment (14,441) (13,092) (9,751)
Dispositions of property, plant and equipment 6,027 5,838 4,918
Net increase in GECS financing receivables (16,954) (15,280) (4,687)
Payments for principal businesses purchased (11,498) (18,703) (14,352)
All other investing activities 6,535 10,785 7,974
Cash used for investing activities continuing operations (30,331) (30,452) (15,898)
Cash used for investing activities discontinued operations (4,718) (7,962) (5,945)
CASH USED FOR INVESTING ACTIVITIES (35,049) (38,414) (21,843)
Cash flows financing activities
Net increase (decrease) in borrowings (maturities of 90 days or less) (4,600) (1,558) (20,559)
Newly issued debt (maturities longer than 90 days) 66,523 58,538 67,719
Repayments and other reductions (maturities longer than 90 days) (53,133) (47,106) (43,479)
Net dispositions (purchases) of GE shares for treasury (4,844) 3,993 726
Dividends paid to shareowners (9,352) (8,278) (7,643)
All other financing activities (1,191) (3,397) 286
Cash from (used for) financing activities continuing operations (6,597) 2,192 (2,950)
Cash from (used for) financing activities discontinued operations 478 2,402 (682)
CASH FROM (USED FOR) FINANCING ACTIVITIES (6,119) 4,594 (3,632)
INCREASE (DECREASE) IN CASH AND
EQUIVALENTS DURING YEAR (3,527) 2,664 3,754
Cash and equivalents at beginning of year 15,328 12,664 8,910
Cash and equivalents at end of year 11,801 15,328 12,664
Less cash and equivalents of discontinued operations at end of year 2,790 3,176 2,734
Cash and equivalents of continuing operations at end of year $ 9,011 $ 12,152 $ 9,930
SUPPLEMENTAL DISCLOSURE OF CASH
FLOWS INFORMATION
Cash paid during the year for interest $ (16,446) $ (11,907) $ (10,910)
Cash recovered (paid) during the year for income taxes (3,254) (1,339) (1,539)


(73)
Statement of Cash Flows (continued)
GE GECS
For the years ended December 31 (In millions)
2005
(Restated
(a)
2004
(Restated)
(a)
2003
(Restated)
(a)

2005
(Restated)
(a)

2004
(Restated)
(a)
2003
(Restated)
(a)
Net earnings $ 16,711 $ 17,160 $ 15,561 $ 7,577 $ 8,728 $ 7,974
Loss (earnings) from discontinued operations 1,922 (534) (2,057)
Adjustments to reconcile net earnings to cash
provided from operating activities
Cumulative effect of accounting changes 587 339
Depreciation and amortization of
property, plant and equipment 2,501 2,533 2,277 6,037 5,816 4,587
Earnings before accounting changes retained by GECS 239 (5,623) (4,878)
Deferred income taxes (287) (175) 389 (603 ) 225 1,028
Decrease (increase) in GE current receivables (266) (908) 585
Decrease (increase) in inventories (608) (459) 909 30 (9) (35)
Increase in accounts payable 983 1,888 676 596 2,927 96
Increase (decrease) in GE progress collections 510 (464) (2,268)
Increase (decrease) in insurance liabilities 1,034 1,959 (729)
All other operating activities 1,826 1,252 (913) 476 (2,875) (896)
Cash from operating activities continuing operations 21,609 15,204 12,925 20,910 20,125 14,059
Cash from operating activities discontinued operations 3,854 6,002 7,389
CASH FROM OPERATING ACTIVITIES 21,609 15,204 12,925 24,764 26,127 21,448
Cash flows investing activities
Additions to property, plant and equipment (2,812) (2,427) (2,158) (11,629 ) (10,665) (7,593)
Net increase in GECS financing receivables (16,954 ) (15,280) (4,687)
Payments for principal businesses purchased (4,331) (4,815) (3,870) (7,167 ) (13,888) (10,482)
All other investing activities 702 632 236 4,644 8,386 6,103
Cash used for investing activities continuing operations (6,441) (6,610) (5,792) (25,079 ) (25,609) (11,741)
Cash used for investing activities discontinued operations (4,718 ) (7,962) (5,945)
CASH USED FOR INVESTING ACTIVITIES (6,441) (6,610) (5,792) (29,797 ) (33,571) (17,686)
Cash flows financing activities
Net increase (decrease) in borrowings
(maturities of 90 days or less) (392) (1,690) (6,704) (4,044 ) 33 (13,487)
Newly issued debt (maturities longer than 90 days) 1,704 434 7,356 65,054 58,143 60,113
Repayments and other reductions (maturities longer than 90 days) (3,424) (1,568) (277) (49,709 ) (45,538) (43,202)
Net dispositions (purchases) of GE shares for treasury (4,844) 3,993 726
Dividends paid to shareowners (9,352) (8,278) (7,643) (7,816 ) (3,105) (3,435)
All other financing activities (1,191 ) (3,397) 286
Cash from (used for) financing activities continuing operations (16,308) (7,109) (6,542) 2,294 6,136 275
Cash from (used for) financing activities discontinued operations 478 2,402 (682)
CASH FROM (USED FOR) FINANCING ACTIVITIES (16,308) (7,109) (6,542) 2,772 8,538 (407)
INCREASE (DECREASE) IN CASH AND
EQUIVALENTS DURING YEAR (1,140) 1,485 591 (2,261 ) 1,094 3,355
Cash and equivalents at beginning of year 3,155 1,670 1,079 12,367 11,273 7,918
Cash and equivalents at end of year 2,015 3,155 1,670 10,106 12,367 11,273
Less cash and equivalents of discontinued operations at end of year 2,790 3,176 2,734
Cash and equivalents of continuing operations at end of year $ 2,015 $ 3,155 $ 1,670 $ 7,316 $ 9,191 $ 8,539
SUPPLEMENTAL DISCLOSURE OF CASH
FLOWS INFORMATION
Cash paid during the year for interest $ (928) $ (603) $ (248) $ (15,518 ) $ (11,304) $ (10,662)
Cash recovered (paid) during the year for income taxes (1,829) (2,261) (2,685) (1,425 ) 922 1,146

Company and consolidated affiliates columns.
(a) Certain individual lines items within cash from operating activities have been restated.

tuoifco riNtNcitL sftfcicNfs
and consolidated afliates
For the years ended December 31 (In millions; per-share amounts in dollars) 2006 2005 2004
REVENUES
Sales of goods $ 64,297 $ 59,837 $ 55,005
Other income (note 3) 2,537 1,683 1,064
GECS commercial paper interest rate swap adjustment 197 540 518
Total revenues 163,391 147,956 134,291
Investment contracts, insurance losses and insurance annuity benefits 3,214 3,374 3,086
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 24,620 22,696 20,297
Provision for income taxes (note 8) (3,954) (4,035) (3,696)
EARNINGS FROM CONTINUING OPERATIONS 20,666 18,661 16,601
Earnings (loss) from discontinued operations, net of taxes (note 2) 163 (1,950) 559
NET EARNINGS $ 20,829 $ 16,711 $ 17,160
Per-share amounts earnings from continuing operations
(In millions) 2006 2005 2004
Balance at January 1 $109,351 $110,908 $ 79,662
Dividends and other transactions with shareowners (17,983) (13,249) 10,009
Increase attributable to net earnings 20,829 16,711 17,160
Investment securities net (223) (437) 412
Currency translation adjustments net 3,649 (4,318) 3,936
Cash flow hedges net 223 (47) 150
Benefit plans net (3,532) (217) (421)
Balance at December 31 $112,314 $109,351 $110,908
The notes to consolidated financial statements are an integral part of these statements.
68 ge 2006 annual report
sftfcicNf or ctrNiNos
GE GECS
2006 2005 2004 2006 2005 2004
$ 62,336 $ 57,378 $ 52,260 $ 2,384 $ 2,528 $ 2,840
36,772 33,052 29,954
2,690 1,764 1,076
10,495 9,527 8,169
61,021 54,483 49,346
197 540 518
112,293 101,721 91,459 63,602 57,551 52,704
48,808 43,870 39,999 2,204 2,369 2,741
23,891 20,945 19,368
1,834 1,432 979 18,081 14,223 11,081
3,419 3,574 3,303
3,839 3,841 3,888
13,841 13,279 12,001 23,955 22,530 21,609
673 784 538 235 202 190
89,047 80,310 72,885 51,733 46,739 42,812
23,246 21,411 18,574 11,869 10,812 9,892
(2,580) (2,750) (1,973) (1,374) (1,285) (1,723)
20,666 18,661 16,601 10,495 9,527 8,169
163 (1,950) 559 163 (1,950) 559
$ 20,829 $ 16,711 $ 17,160 $10,658 $ 7,577 $ 8,728
In the consolidating data on this page, GE means the basis of consolidation as described in
note 1 to the consolidated financial statements; GECS means General Electric Capital Services,
Inc. and all of its affiliates and associated companies. Transactions between GE and GECS have
been eliminated from the General Electric Company and consolidated affiliates columns.
ge 2006 annual report 69
At December 31 (In millions, except share amounts) 2006 2005
ASSETS
Investment in GECS
Intangible assets net (note 16) 86,433 81,630
Assets of discontinued operations (note 2) 61,066
Total assets $697,239 $673,321
Short-term borrowings (note 18) $172,153 $158,156
Other GE current liabilities 18,538 18,552
Investment contracts, insurance liabilities and insurance annuity benefits (note 19) 34,499 33,097
Liabilities of discontinued operations (note 2) 475 49,527
Common stock (10,277,373,000 and 10,484,268,000 shares outstanding
at year-end 2006 and 2005, respectively) 669 669
Investment securities 1,608 1,831
Cash flow hedges (129) (352)
Benefit plans (4,406) (874)
Total liabilities and equity $697,239 $673,321
The sum of accumulated gains (losses) on investment securities, currency translation adjustments, cash flow hedges and benefit plans constitutes Accumulated nonowner
changes other than earnings, as shown in note 23, and was $3,254 million and $3,137 million at December 31, 2006 and 2005, respectively.
sftfcicNf or riNtNcitL rosifioN
GE GECS
2006 2005 2006 2005
$ 4,480 $ 2,015 $ 12,629 $ 7,130
342 461 47,492 41,710
14,278 15,058
11,347 10,315 54 159
334,232 287,639
21,853 18,625
16,738 16,504 58,228 51,024
54,097 50,812
60,465 57,839 25,968 23,791
34,078 36,752 64,212 49,440
61,066
$195,825 $189,756 $564,668 $540,584
$ 2,212 $ 1,127 $173,316 $157,672
11,913 11,870 13,923 13,043
5,248 4,456
2,878 2,623
18,538 18,569
9,085 9,081 252,963 204,397
34,807 33,387
26,060 23,140 20,935 16,787
1,954 3,733 12,217 12,475
455 49,763
77,888 74,599 508,616 487,524
5,623 5,806 1,955 2,248
669 669 1 1
1,608 1,831 1,594 1,754
6,181 2,532 4,837 2,287
(129) (352) (171) (343)
(4,406) (874) (278) (179)
25,486 25,227 12,537 12,386
107,798 97,644 35,577 34,906
(24,893) (17,326)
112,314 109,351 54,097 50,812
$195,825 $189,756 $564,668 $540,584
In the consolidating data on this page, GE means the basis
of consolidation as described in note 1 to the consolidated
financial statements; GECS means General Electric Capital
Services, Inc. and all of its affiliates and associated companies.
Transactions between GE and GECS have been eliminated
from the General Electric Company and consolidated
affiliates columns.
For the years ended December 31 (In millions) 2006 2005 2004
Net earnings $ 20,829 $ 16,711 $ 17,160
Loss (earnings) from discontinued operations (163) 1,950 (559)
Adjustments to reconcile net earnings to cash provided from operating activities
Net earnings retained by GECS
Deferred income taxes 1,950 (940) 51
Decrease (increase) in GE current receivables (2,152) (974) (1,617)
Decrease (increase) in inventories (1,779) (578) (468)
Increase (decrease) in accounts payable (119) 245 3,756
Increase (decrease) in GE progress collections 926 510 (464)
All other operating activities 530 3,362 777
Cash from (used for) operating activities discontinued operations (2,373) 5,027 5,621
CASH FLOWS INVESTING ACTIVITIES
Proceeds from sales of discontinued operations 9,022 8,106 3,437
Proceeds from principal business dispositions 3,870 481 1,179
All other investing activities (4,274) (1,701) 5,080
Cash used for investing activities discontinued operations (383) (5,733) (7,651)
CASH FLOWS FINANCING ACTIVITIES
Net increase (decrease) in borrowings (maturities of 90 days or less) 4,582 (4,600) (1,558)
Net dispositions (purchases) of GE shares for treasury (8,554) (4,844) 3,993
All other financing activities (1,174) (1,128) (3,304)
Cash from (used for) financing activities continuing operations 23,450 (6,534) 2,285
Cash from (used for) financing activities discontinued operations (220) 415 2,309
CASH FROM (USED FOR) FINANCING ACTIVITIES 23,230 (6,119) 4,594
INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING YEAR 2,474 (3,527) 2,664
Less cash and equivalents of discontinued operations at end of year 2,976 3,267
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid during the year for interest $(18,254) $(16,446) $(11,907)
sftfcicNf or cts rLows
2006
GE
2005 2004 2006
GECS
2005 2004
$ 20,829

$ 16,711

$ 17,160

$ 10,658
(163)
$ 7,577
1,950
$ 8,728
(559)
2,624
(811)
842
813
(1,756)
392
926

768
24,627

24,627
2,501
239
(287)
(266)
(608)
983
510

1,826
21,609

21,609
2,533
(5,623)
(175)
(908)
(459)
1,888
(464)

1,252
15,204

15,204
6,534

1,108

(23)
(1)

3,839
(41)
21,911
(2,373)
19,538
6,036

(653)

30
(397)

3,841
1,403
19,787
5,027
24,814
5,815

226

(9)
2,593

3,888
(167)
20,515
5,621
26,136
(3,637)

3,484
(4,353)
(11)
(4,517)

(4,517)
(2,812)

272
(4,331)
430
(6,441)

(6,441)
(2,427)

707
(4,815)
(75)
(6,610)

(6,610)
(13,184)
6,799
(41,046)
9,022
386
(7,299)
(5,555)
(50,877)
(383)
(51,260)
(11,629)
6,027
(16,954)
8,106
209
(7,167)
(2,706)
(24,114)
(5,733)
(29,847)
(10,665)
5,839
(15,280)
3,437
472
(13,888)
4,156
(25,929)
(7,651)
(33,580)
1,292
130
(93)
(8,554)
(10,420)

(17,645)

(17,645)
(392)
1,704
(3,424)
(4,844)
(9,352)

(16,308)

(16,308)
(1,690)
434
(1,568)
3,993
(8,278)

(7,109)

(7,109)
6,461
88,278
(49,253)

(9,847)
(1,174)
34,465
(220)
34,245
(4,044)
65,054
(49,709)

(7,816)
(1,128)
2,357
415
2,772
33
58,143
(45,538)

(3,105)
(3,304)
6,229
2,309
8,538
2,465
2,015
4,480

$ 4,480
(1,140)
3,155
2,015

$ 2,015
1,485
1,670
3,155

$ 3,155
2,523
10,106
12,629

$ 12,629
(2,261)
12,367
10,106
2,976
$ 7,130
1,094
11,273
12,367
3,267
$ 9,100
$ (1,159)
(2,203)
$ (928)
(1,829)
$ (603)
(2,261)
$(17,095)
(666)
$(15,518)
(1,425)
$(11,304)
922
itNtocicNfs oiscussioN tNo tNtL\sis
Selected Financial Data
(Dollars in millions; per-share amounts in dollars) 2007 2006 2005 2004 2003
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
Revenues $172,738 $151,843 $136,580 $124,176 $104,624
Earnings from continuing operations before accounting changes 22,468 19,380 17,354 15,638 13,277
Earnings (loss) from discontinued operations, net of taxes (260) 1,362 (634) 1,584 2,828
Earnings before accounting changes 22,208 20,742 16,720 17,222 16,105
Net earnings 22,208 20,742 16,720 17,222 15,518
Dividends declared 11,713 10,675 9,647 8,594 7,759
Return on average shareowners equity
(a)
20.4% 19.9% 18.2% 16.2% 17.1%
Per share
Earnings from continuing operations before accounting
changes diluted $ 2.20 $ 1.86 $ 1.64 $ 1.50 $ 1.32
Earnings (loss) from discontinued operations diluted (0.03) 0.13 (0.06) 0.15 0.28
Earnings before accounting changes diluted 2.17 2.00 1.57 1.65 1.60
Net earnings diluted 2.17 2.00 1.57 1.65 1.54
Earnings from continuing operations before accounting
changes basic 2.21 1.87 1.64 1.50 1.33
Earnings (loss) from discontinued operations basic (0.03) 0.13 (0.06) 0.15 0.28
Earnings before accounting changes basic 2.18 2.00 1.58 1.66 1.61
Net earnings basic 2.18 2.00 1.58 1.66 1.55
Dividends declared 1.15 1.03 0.91 0.82 0.77
Stock price range 42.1533.90 38.4932.06 37.3432.67 37.7528.88 32.4221.30
Year-end closing stock price 37.07 37.21 35.05 36.50 30.98
Total assets of continuing operations 788,568 676,808 590,487 580,862 484,703
Total assets 795,337 696,683 673,210 750,252 647,395
Long-term borrowings 319,015 260,752 212,170 207,788 170,194
Shares outstanding average (in thousands) 10,182,083 10,359,320 10,569,805 10,399,629 10,018,587
Shareowner accounts average 608,000 624,000 634,000 658,000 670,000
Employees at year end
United States 155,000 155,000 161,000 165,000 155,000
Other countries 172,000 164,000 155,000 142,000 150,000
Total employees 327,000 319,000 316,000
(b)
307,000 305,000
GE DATA
Short-term borrowings $ 4,106 $ 2,076 $ 972 $ 3,252 $ 2,398
Minority interest 6,503 5,544 5,308 7,236 663
Shareowners equity 115,559 111,509 108,633 110,181 78,873
Total capital invested $137,824 $128,172 $123,899 $128,230 $ 90,223
Return on average total capital invested
(a)
18.9% 18.6% 16.8% 14.9% 15.7%
Borrowings as a percentage of total capital invested
(a)
11.4% 8.7% 8.0% 9.0% 11.8%
Working capital
(a)
$ 5,186 $ 6,649 $ 7,266 $ 7,163 $ 4,211
GECS DATA
Revenues $ 72,186 $ 61,626 $ 55,207 $ 50,682 $ 41,795
Earnings from continuing operations before accounting changes 12,428 10,255 9,004 7,661 5,871
Earnings (loss) from discontinued operations, net of taxes (2,127) 403 (1,427) 1,067 2,442
Earnings before accounting changes 10,301 10,658 7,577 8,728 8,313
Net earnings 10,301 10,658 7,577 8,728 7,974
Total borrowings 500,925 426,266 362,046 355,470 316,562
Ratio of debt to equity at GE Capital 8.10:1 7.52:1 7.09:1 6.45:1 6.62:1
Total assets $646,139 $564,668 $540,584 $618,614 $554,877
Transactions between GE and GECS have been eliminated from the consolidated information.
(a) Indicates terms are defined in the Glossary.
(b) Excludes employees of Genworth in 2005 as a result of the third quarter deconsolidation.
REVENUES
Sales of goods $ 60,670 $ 55,181 $ 50,727
Other income (note 3) 3,019 2,154 1,673
Total revenues 172,738 151,843 136,580
Provision for income taxes (note 7) (4,130) (3,950) (3,824)
Earnings (loss) from discontinued operations, net of taxes (note 2) (260) 1,362 (634)
NET EARNINGS $ 22,208 $ 20,742 $ 16,720
Per-share amounts earnings from continuing operations
(In millions) 2007 2006 2005
Balance at January 1 $111,509 $108,633 $110,181
Dividends and other transactions with shareowners (23,102) (17,983) (13,249)
Investment securitiesnet (1,484) (223) (437)
Currency translation adjustments net 4,527 3,649 (4,318)
Cash flow hedges net (539) 223 (47)
Benefit plans net 2,566 287 (217)
Total changes other than earnings 5,070 3,936 (5,019)
Increases attributable to net earnings 22,208 20,742 16,720
Cumulative effect of changes in accounting principles
(a)
(126) (3,819)
(a) The effect of the 2006 accounting change was previously included in the caption Benefit plans net.
See accompanying notes.
ge 2006 annual report 65 ge 2007 annual report 65
GE GECS
2007 2006 2005 2007 2006 2005
$ 60,374 $ 53,221 $ 48,268 $ 718 $ 2,384 $ 2,528
39,422 36,698 33,139
3,371 2,307 1,754
12,428 10,255 9,004
71,468 59,242 52,679
115,595 102,481 92,165 72,186 61,626 55,207
47,103 41,501 36,869 628 2,204 2,369
26,382 23,863 20,915
1,993 1,668 1,319 22,731 17,857 14,045
3,647 3,419 3,574
4,546 3,130 3,239
14,148 12,893 12,316 26,661 23,125 21,628
707 624 714 209 238 202
90,333 80,549 72,133 58,422 49,973 45,057
25,262 21,932 20,032 13,764 11,653 10,150
(2,794) (2,552) (2,678) (1,336) (1,398) (1,146)
22,468 19,380 17,354 12,428 10,255 9,004
(260) 1,362 (634) (2,127) 403 (1,427)
$ 22,208 $ 20,742 $ 16,720 $10,301 $10,658 $ 7,577
ASSETS
Investment in GECS
Goodwill (note 15) 81,116 71,399
Other intangible assets net (note 15) 16,178 12,915
Total assets $795,337 $696,683
Short-term borrowings (note 17) $195,101 $172,013
Investment contracts, insurance liabilities and insurance annuity benefits (note 18) 34,068 34,501
Liabilities of discontinued operations (note 2) 1,828 2,744
Common stock (9,987,599,000 and 10,277,373,000 shares outstanding
at year-end 2007 and 2006, respectively) 669 669
Investment securities 124 1,608
Cash flow hedges (668) (129)
Benefit plans (1,840) (4,406)
The sum of accumulated gains (losses) on investment securities, currency translation adjustments, cash flow hedges and benefit plans constitutes Accumulated nonowner
changes other than earnings, as shown in note 22, and was $8,324 million and $3,254 million at December 31, 2007 and 2006, respectively.
GE GECS
2007 2006 2007 2006
$ 6,702 $ 4,480 $ 9,455 $ 12,452
343 342 45,093 47,472
15,093 13,766
12,834 9,978 63 54
385,604 328,589
22,091 21,690
14,142 12,675 63,753 57,975
57,676 54,097
55,689 48,645 25,427 22,754
11,633 9,739 4,545 3,176
40,608 33,442 83,405 59,387
66 8,756 6,703 11,119
$214,786 $195,920 $646,139 $564,668
$ 4,106 $ 2,076 $192,421 $173,313
11,120 10,969 14,774 13,803
10,374 5,248
3,100 2,878
16,629 17,944
11,656 9,043 308,504 252,953
34,359 34,807
32,046 26,930 26,625 20,691
3,391 1,540 8,753 12,570
302 2,239 1,526 485
92,724 78,867 586,962 508,622
6,503 5,544 1,501 1,949
669 669 1 1
124 1,608 110 1,594
10,708 6,181 7,472 4,837
(668) (129) (727) (171)
(1,840) (4,406) (105) (278)
26,100 25,486 12,574 12,537
117,362 106,993 38,351 35,577
(36,896) (24,893)
115,559 111,509 57,676 54,097
$214,786 $195,920 $646,139 $564,668
of consolidation as described in note 1 to the consolidated
Transactions between GE and GECS have been eliminated
from the General Electric Company and consolidated
affiliates columns.
Net earnings $ 22,208 $ 20,742 $ 16,720
Loss (earnings) from discontinued operations 260 (1,362) 634
Earnings from continuing operations retained by GECS
Deferred income taxes 623 1,710 (1,063)
Decrease (increase) in GE current receivables 980 (2,205) (1,090)
Decrease (increase) in inventories (1,494) (1,481) (556)
Increase (decrease) in accounts payable 469 (36) 240
Increase in GE progress collections 4,458 927 510
All other operating activities 657 2,152 3,628
Cash from (used for) operating activities discontinued operations 2,982 (1,390) 7,588
Proceeds from principal business dispositions 2,746 1,883 476
All other investing activities (10,275) (4,553) (350)
Cash from (used for) investing activities discontinued operations (2,723) (1,401) (8,318)
Net increase (decrease) in borrowings (maturities of 90 days or less) 2,339 4,527 (4,622)
Net purchases of GE shares for treasury (12,319) (8,554) (4,844)
Cash from (used for) financing activities continuing operations 28,364 23,402 (6,552)
Cash from (used for) financing activities discontinued operations (152) (171) 433
CASH FROM (USED FOR) FINANCING ACTIVITIES 28,212 23,231 (6,119)
INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING YEAR 1,755 2,475 (3,527)
Less cash and equivalents of discontinued operations at end of year 284 177 3,139
Cash paid during the year for interest $(23,340) $(18,438) $(16,593)
GE

GECS
2007 2006 2005 2007 2006 2005
$ 22,208 $ 20,742 $ 16,720 $ 10,301 $ 10,658 $ 7,577
260 (1,362) 634 2,127 (403) 1,427
2,149 1,953 1,845 8,129 6,506 5,996
(5,137) (408) (1,188)
564 703 (119) 59 1,007 (944)
14 760 (382)
(1,496) (1,458) (586) 2 (23) 30
(1,073) 289 891 1,784 185 (310)
4,620 927 510
4,546 3,130 3,239
1,192 1,626 1,577 (524) 723 1,918
23,301 23,772 19,902 26,424 21,783 18,933
(857) 855 1,707 3,839 (2,245) 5,881
22,444 24,627 21,609 30,263 19,538 24,814
(2,968) (2,913) (2,225) (15,219) (13,170) (11,597)
8,460 6,796 6,019
(45,368) (40,563) (16,388)
10,826 1,987 117 9,022 8,106
1,047 1,497 267 1,699 386 209
(9,645) (4,274) (4,269) (7,570) (7,299) (7,167)
(1,697) 100 1,519 (8,931) (5,945) (2,444)
(2,437) (3,603) (4,708) (66,812) (50,773) (23,262)
1,003 (914) (1,733) (3,726) (487) (6,585)
(1,434) (4,517) (6,441) (70,538) (51,260) (29,847)
(3,284) 1,233 (418) 3,398 6,464 (4,040)
8,751 130 1,704 92,016 88,276 65,055
(298) (93) (3,424) (49,528) (49,244) (49,706)
(12,319) (8,554) (4,844)
(11,492) (10,420) (9,352) (7,291) (9,847) (7,816)
(1,204) (1,174) (1,128)
(18,642) (17,704) (16,334) 37,391 34,475 2,365
(146) 59 26 (6) (230) 407
(18,788) (17,645) (16,308) 37,385 34,245 2,772
2,222 2,465 (1,140) (2,890) 2,523 (2,261)
4,480 2,015 3,155 12,629 10,106 12,367
6,702 4,480 2,015 9,739 12,629 10,106
284 177 3,139
$ 6,702 $ 4,480 $ 2,015 $ 9,455 $ 12,452 $ 6,967
$ (1,466) $ (1,343) $ (1,075) $(21,874) $(17,095) $(15,518)
(4,036) (2,203) (1,829) 1,124 (666) (1,425)
itNtccicNfs oiscussioN tNo tNtL\sis
Selected Financial Data.
The following table provides key information for Consolidated, GE and GECS.
Revenues $182,515 $172,488 $151,568 $136,262 $123,814
Earnings from continuing operations 18,089 22,457 19,344 17,279 15,591
Earnings (loss) from discontinued operations, net of taxes (679) (249) 1,398 (559) 1,631
Net earnings 17,410 22,208 20,742 16,720 17,222
Dividends declared
(a)
12,649 11,713 10,675 9,647 8,594
Return on average shareowners equity
(b)
15.9% 20.4% 19.8% 18.1% 18.8%
Per common share
Earnings from continuing operations diluted $ 1.78 $ 2.20 $ 1.86 $ 1.63 $ 1.49
Earnings (loss) from discontinued operations diluted (0.07) (0.02) 0.13 (0.05) 0.16
Earnings from continuing operations basic 1.79 2.21 1.87 1.63 1.50
Earnings (loss) from discontinued operations basic (0.07) (0.02) 0.14 (0.05) 0.16
Stock price range 38.5212.58 42.1533.90 38.4932.06 37.3432.67 37.7528.88
Cash and equivalents 48,187 15,731 14,086 8,608 11,833
Total assets 797,769 795,683 697,273 673,210 750,252
Common shares outstandingaverage (in thousands) 10,079,923 10,182,083 10,359,320 10,569,805 10,399,629
Common shareowner accounts average 604,000 608,000 624,000 634,000 658,000
United States 152,000 155,000 155,000 161,000 165,000
Other countries 171,000 172,000 164,000 155,000 142,000
Total employees 323,000 327,000 319,000 316,000 307,000
(c)
GE DATA
Short-term borrowings $ 2,375 $ 4,106 $ 2,076 $ 972 $ 3,252
Minority interest 6,678 6,503 5,544 5,308 7,236
Total capital invested $123,545 $137,824 $128,172 $123,899 $128,230
(b)
14.8% 18.9% 18.5% 16.7% 16.9%
(b)
9.9% 11.4% 8.7% 8.0% 9.0%
Working capital
(b)
$ 3,904 $ 6,433 $ 7,527 $ 7,853 $ 7,788
GECS DATA
Revenues $ 71,287 $ 71,936 $ 61,351 $ 54,889 $ 50,320
Earnings from continuing operations 7,774 12,417 10,219 8,929 7,614
Earnings (loss) from discontinued operations, net of taxes (719) (2,116) 439 (1,352) 1,114
Net earnings 7,055 10,301 10,658 7,577 8,728
Total borrowings 514,601 500,922 426,262 362,042 355,463
Ratio of debt to equity at GE Capital 8.76:1
(d)
8.10:1 7.52:1 7.09:1 6.45:1
Total assets $660,902 $646,485 $565,258 $540,584 $618,614
(a) Includes $75 million of preferred stock dividends in 2008.
(b) Indicates terms are defined in the Glossary.
(c) Includes employees of Genworth, which was subsequently deconsolidated in 2005.
(d) 7.07:1 net of cash and equivalents and with classification of hybrid debt as equity.
REVENUES
Sales of goods $ 69,100 $ 60,670 $ 55,181
Other income (Note 3) 1,586 3,019 2,154
GECS revenues from services (Note 4) 68,160 69,943 57,904
Total revenues 182,515 172,488 151,568
COSTS AND EXPENSES (Note 5)
Provision for losses on financing receivables (Note 13) 7,518 4,431 3,062
Provision for income taxes (Note 7) (1,052) (4,155) (3,944)
Earnings (loss) from discontinued operations, net of taxes (Note 2) (679) (249) 1,398
NET EARNINGS 17,410 22,208 20,742
Preferred stock dividends declared (75)
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS $ 17,335 $ 22,208 $ 20,742
Per-share amounts (Note 8)
Earnings from continuing operations
Net earnings
DIVIDENDS DECLARED PER COMMON SHARE $ 1.24 $ 1.15 $ 1.03
(In millions) 2008 2007 2006
CHANGES IN SHAREOWNERS EQUITY (Note 23)
Balance at January 1 $115,559 $111,509 $108,633
Dividends and other transactions with shareowners 1,873 (23,102) (17,983)
Other comprehensive income
Investment securities net (3,218) (1,484) (223)
Currency translation adjustments net (11,007) 4,527 3,649
Cash flow hedges net (2,664) (539) 223
Benefit plans net (13,288) 2,566 287
Total other comprehensive income (30,177) 5,070 3,936
Increases attributable to net earnings 17,410 22,208 20,742
Comprehensive income (12,767) 27,278 24,678
Cumulative effect of changes in accounting principles (126) (3,819)
GE GECS
2008 2007 2006 2008 2007 2006
$ 67,637 $ 60,374 $ 53,221 $ 1,773 $ 718 $ 2,384
44,377 39,422 36,698
1,965 3,371 2,307
7,774 12,417 10,219
69,514 71,218 58,967
121,753 115,584 102,445 71,287 71,936 61,351
53,395 47,103 41,501 1,517 628 2,204
29,878 26,382 23,863
2,153 1,993 1,668 25,116 22,706 17,840
3,421 3,647 3,419
7,518 4,431 3,062
14,401 14,148 12,893 28,085 26,537 22,977
410 707 624 231 209 238
100,237 90,333 80,549 65,888 58,158 49,740
21,516 25,251 21,896 5,399 13,778 11,611
(3,427) (2,794) (2,552) 2,375 (1,361) (1,392)
18,089 22,457 19,344 7,774 12,417 10,219
(679) (249) 1,398 (719) (2,116) 439
17,410 22,208 20,742 7,055 10,301 10,658
(75)
$ 17,335 $ 22,208 $ 20,742 $ 7,055 $10,301 $10,658
Note 1 to the consolidated financial statements; GECS means General Electric Capital Services, Inc.
and all of its affiliates and associated companies. Separate information is shown for GE and
Financial Services (GECS). Transactions between GE and GECS have been eliminated from the
General Electric Company and consolidated affiliates columns on the prior page.
sftfcicNf or ctrNiNcs
ASSETS
Investment securities (Note 9) 41,446 45,276
Current receivables (Note 10) 21,411 22,259
Inventories (Note 11) 13,674 12,897
Financing receivables net (Notes 12 and 13) 365,168 376,123
Property, plant and equipment net (Note 14) 78,530 77,888
Investment in GECS
Goodwill (Note 15) 81,759 81,116
Other intangible assets net (Note 15) 14,977 16,142
All other assets (Note 16) 106,899 122,848
Assets of businesses held for sale (Note 17) 10,556
Assets of discontinued operations (Note 2) 1,723 8,889
Total assets $797,769 $795,683
Short-term borrowings (Note 18) $193,695 $195,100
Long-term borrowings (Note 18) 330,067 319,013
Investment contracts, insurance liabilities and insurance annuity benefits (Note 19) 34,032 34,068
All other liabilities (Note 20) 64,796 59,316
Deferred income taxes (Note 21) 4,584 12,490
Liabilities of businesses held for sale (Note 17) 636
Liabilities of discontinued operations (Note 2) 1,432 1,994
Minority interest in equity of consolidated affiliates (Note 22) 8,947 8,004
Preferred stock (30,000 and 0 shares outstanding at year-end 2008 and 2007, respectively)
Common stock (10,536,897,000 and 9,987,599,000 shares outstanding at year-end 2008 and 2007, respectively) 702 669
Investment securities (3,094) 124
Currency translation adjustments (299) 10,708
Cash flow hedges (3,332) (668)
Benefit plans (15,128) (1,840)
Total shareowners equity (Notes 23 and 24) 104,665 115,559
The sum of accumulated gains (losses) on investment securities, currency translation adjustments, cash flow hedges and benefit plans constitutes Accumulated other
comprehensive income, as shown in Note 23, and was $(21,853) million and $8,324 million at December 31, 2008 and 2007, respectively.
GE GECS
2008 2007 2008 2007
$ 12,090 $ 6,702 $ 37,486 $ 9,439
213 343 41,236 44,941
15,064 15,093
13,597 12,834 77 63
372,456 384,067
18,636 22,078
14,433 14,142 64,097 63,746
53,279 57,676
56,394 55,689 25,365 25,427
11,364 11,633 3,613 4,509
22,435 40,608 85,721 83,392
10,556
64 66 1,659 8,823
$198,933 $214,786 $660,902 $646,485
$ 2,375 $ 4,106 $193,533 $192,420
11,699 11,120 13,882 14,714
13,058 10,374
3,340 3,100
18,284 15,816
9,827 11,656 321,068 308,502
34,369 34,359
32,767 32,859 32,090 26,522
(3,949) 3,391 8,533 9,099
636
189 302 1,243 1,692
87,590 92,724 605,354 587,308
6,678 6,503 2,269 1,501

702 669 1 1
(3,094) 124 (3,097) 110
(299) 10,708 (1,258) 7,472
(3,332) (668) (3,134) (727)
(15,128) (1,840) (367) (105)
40,390 26,100 18,079 12,574
122,123 117,362 43,055 38,351
(36,697) (36,896)
104,665 115,559 53,279 57,676
$198,933 $214,786 $660,902 $646,485
In the consolidating data on this page, GE means the basis of
consolidation as described in Note 1 to the consolidated financial
statements; GECS means General Electric Capital Services, Inc.
and all of its affiliates and associated companies. Separate infor-
mation is shown for GE and Financial Services (GECS).
Transactions between GE and GECS have been eliminated from
the General Electric Company and consolidated affiliates col-
umns on the prior page.
Net earnings $ 17,410 $ 22,208 $ 20,742
Loss (earnings) from discontinued operations 679 249 (1,398)
Deferred income taxes (1,284) 657 1,639
Decrease (increase) in GE current receivables (24) (868) (2,194)
Decrease (increase) in inventories (719) (1,562) (1,514)
Increase (decrease) in accounts payable (1,078) (997) (276)
Increase in GE progress collections 2,827 4,622 642
All other operating activities 11,020 927 3,352
Cash from (used for) operating activities discontinued operations 760 3,380 (1,057)
Proceeds from principal business dispositions 4,986 2,746 1,883
All other investing activities 195 (9,910) (6,053)
Cash from (used for) investing activities discontinued operations (876) (3,116) (1,774)
Cash used for investing activities (40,901) (69,504) (52,647)
Net increase (decrease) in borrowings (maturities of 90 days or less) (34,221) 2,063 4,969
Proceeds from issuance of preferred stock and warrants 2,965
Proceeds from issuance of common stock 12,006
Net purchases of GE shares for treasury (1,249) (12,319) (8,554)
All other financing activities 3,638 (1,204) (1,174)
Cash from (used for) financing activities continuing operations 24,640 28,091 23,839
Cash from (used for) financing activities discontinued operations (4) (154) (172)
CASH FROM (USED FOR) FINANCING ACTIVITIES 24,636 27,937 23,667
INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING YEAR 32,336 1,755 2,475
Less cash and equivalents of discontinued operations at end of year 180 300 190
Cash paid during the year for interest $ (25,853) $ (23,340) $(18,438)
GE GECS
2008 2007 2006 2008 2007 2006
$ 17,410 $ 22,208 $ 20,742 $ 7,055 $ 10,301 $ 10,658
679 249 (1,398) 719 2,116 (439)
2,162 2,149 1,953 9,330 8,126 6,504
(5,423) (5,126) (372)
(417) 564 703 (867) 93 936
(168) 14 760
(524) (1,496) (1,458) (14) 2 (23)
233 (1,073) 289 (1,045) 485 (154)
2,896 4,620 927
7,518 4,431 3,062
2,238 1,192 1,626 8,508 (539) 1,035
19,086 23,301 23,772 31,204 25,015 21,579
(5) (857) 855 765 4,039 (2,041)
19,081 22,444 24,627 31,969 29,054 19,538
(2,996) (2,968) (2,913) (13,321) (15,217) (13,168)
10,975 8,457 6,795
(17,375) (44,164) (40,270)
203 10,826 1,987 5,220 117 9,022
58 1,047 1,497 4,928 1,699 386
(3,149) (9,645) (4,274) (24,961) (7,570) (7,299)
(5,176) (1,697) 100 5,979 (8,730) (5,995)
(11,060) (2,437) (3,603) (28,555) (65,408) (50,529)
5 1,003 (914) (881) (3,921) (731)
(11,055) (1,434) (4,517) (29,436) (69,329) (51,260)
(2,152) (3,284) 1,233 (31,282) 3,397 6,470
136 8,751 130 122,507 92,019 88,280
(1,936) (298) (93) (67,114) (49,528) (49,253)
2,965
12,006
(1,249) (12,319) (8,554)
(12,408) (11,492) (10,420) (2,351) (7,291) (9,847)
3,638 (1,204) (1,174)
(2,638) (18,642) (17,704) 25,398 37,393 34,476
(146) 59 (4) (8) (231)
(2,638) (18,788) (17,645) 25,394 37,385 34,245
5,388 2,222 2,465 27,927 (2,890) 2,523
6,702 4,480 2,015 9,739 12,629 10,106
12,090 6,702 4,480 37,666 9,739 12,629
180 300 190
$ 12,090 $ 6,702 $ 4,480 $ 37,486 $ 9,439 $ 12,439
$ (1,190) $ (1,466) $ (1,343) $ (24,663) $(21,874) $(17,095)
(2,627) (4,036) (2,203) (610) 1,124 (666)
Note 1 to the consolidated financial statements; GECS means General Electric Capital Services,
Inc. and all of its affiliates and associated companies. Separate information is shown for GE and
Financial Services (GECS). Transactions between GE and GECS have been eliminated from the
General Electric Company and consolidated affiliates columns on the prior page.
itNtocicNfs oiscussioN tNo tNtL\sis
GE 2009 ANNUAL REPORT 59
Selected Financial Data
The following table provides key information for Consolidated, GE and GECS.
Revenues $156,783 $182,515 $172,488 $151,568 $136,262
Earnings from continuing operations attributable to
the Company 11,218 18,089 22,457 19,344 17,279
Earnings (loss) from discontinued operations, net of taxes,
attributable to the Company (193) (679) (249) 1,398 (559)
Net earnings attributable to the Company 11,025 17,410 22,208 20,742 16,720
Dividends declared
(a)
6,785 12,649 11,713 10,675 9,647
Return on average GE shareowners equity
(b)
10.1% 15.9% 20.4% 19.8% 18.1%
Per common share
Earnings from continuing operations diluted $ 1.03 $ 1.78 $ 2.20 $ 1.86 $ 1.63
Earnings (loss) from discontinued operations diluted (0.02) (0.07) (0.02) 0.13 (0.05)
Earnings from continuing operations basic 1.03 1.79 2.21 1.87 1.63
Earnings (loss) from discontinued operations basic (0.02) (0.07) (0.02) 0.14 (0.05)
Stock price range 17.52 5.87 38.52 12.58 42.15 33.90 38.49 32.06 37.34 32.67
Cash and equivalents 72,260 48,187 15,731 14,086 8,608
Total assets 781,818 797,769 795,683 697,273 673,210
Common shares outstanding average (in thousands) 10,613,717 10,079,923 10,182,083 10,359,320 10,569,805
Common shareowner accounts average 605,000 604,000 608,000 624,000 634,000
United States 134,000 152,000 155,000 155,000 161,000
Other countries 154,000 171,000 172,000 164,000 155,000
BAC Credomatic GECF Inc.
(c)
16,000
Total employees 304,000 323,000 327,000 319,000 316,000
GE DATA
Short-term borrowings $ 504 $ 2,375 $ 4,106 $ 2,076 $ 972
Noncontrolling interests 5,797 6,678 6,503 5,544 5,308
GE shareowners equity 117,291 104,665 115,559 111,509 108,633
Total capital invested $135,273 $123,545 $137,824 $128,172 $123,899
(b)
9.5% 14.8% 18.9% 18.5% 16.7%
(b)
9.0% 9.9% 11.4% 8.7% 8.0%
Working capital
(b)
$ (1,596) $ 3,904 $ 6,433 $ 7,527 $ 7,853
GECS DATA
Revenues $ 54,163 $ 71,287 $ 71,936 $ 61,351 $ 54,889
Earnings from continuing operations attributable to GECS 1,590 7,774 12,417 10,219 8,929
Earnings (loss) from discontinued operations, net of taxes,
attributable to GECS (175) (719) (2,116) 439 (1,352)
Net earnings attributable to GECS 1,415 7,055 10,301 10,658 7,577
GECS shareowners equity 70,833 53,279 57,676 54,097 50,812
Total borrowings and bank deposits 500,334 514,601 500,922 426,262 362,042
Ratio of debt to equity at GE Capital 6.74:1
(d)
8.76:1
(d)
8.10:1 7.52:1 7.09:1
Total assets $650,241 $660,902 $646,485 $565,258 $540,584
(a) Included $300 million and $75 million of preferred stock dividends in 2009 and 2008, respectively.
(b) Indicates terms are defined in the Glossary.
(c) In 2009, we consolidated BAC Credomatic GECF Inc. (BAC) as a result of an increase in our ownership from 49.99% to 75%.
(d) Ratios of 5.22:1 and 7.07:1 for 2009 and 2008, respectively, net of cash and equivalents and with classification of hybrid debt as equity.
121237_FIN_25_59.indd 59 2/25/10 4:29 PM
60 GE 2009 ANNUAL REPORT
REVENUES
Sales of goods $ 65,068 $ 69,100 $ 60,670
Total revenues 156,783 182,515 172,488
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 10,344 19,782 27,528
Benefit (provision) for income taxes (Note 14) 1,090 (1,052) (4,155)
Loss from discontinued operations, net of taxes (Note 2) (193) (679) (249)
NET EARNINGS 11,241 18,051 23,124
Less net earnings attributable to noncontrolling interests 216 641 916
NET EARNINGS ATTRIBUTABLE TO THE COMPANY 11,025 17,410 22,208
Preferred stock dividends declared (300) (75)
NET EARNINGS ATTRIBUTABLE TO GE COMMON SHAREOWNERS $ 10,725 $ 17,335 $ 22,208
AMOUNTS ATTRIBUTABLE TO THE COMPANY
Earnings from continuing operations $ 11,218 $ 18,089 $ 22,457
Loss from discontinued operations, net of taxes (193) (679) (249)
NET EARNINGS ATTRIBUTABLE TO THE COMPANY $ 11,025 $ 17,410 $ 22,208
PER-SHARE AMOUNTS (Note 20)
Net earnings
See Note 3 for other-than-temporary impairment amounts.
(In millions) 2009 2008 2007
GE shareowners equity balance at January 1 $104,665 $115,559 $111,509
Dividends and other transactions with shareowners (5,049) 1,873 (23,102)
Other comprehensive income (loss)
Investment securities net 2,659 (3,218) (1,484)
Cash flow hedges net 1,598 (2,664) (539)
Benefit plans net (1,804) (13,288) 2,566
Total other comprehensive income (loss) 6,588 (30,177) 5,070
Increases from net earnings attributable to the Company 11,025 17,410 22,208
Comprehensive income (loss) 17,613 (12,767) 27,278
(a)
62 (126)
Balance at December 31 117,291 104,665 115,559
Noncontrolling interests
(b)
7,845 8,947 8,004
Total equity balance at December 31 $125,136 $113,612 $123,563
On January 1, 2009, we adopted an amendment to ASC 810, Consolidation, that requires certain changes to the presentation of our financial statements. This amendment requires
us to classify noncontrolling interests (previously referred to as minority interest) as part of shareowners equity.
(a) We adopted amendments to ASC 320, Investments Debt and Equity Securities, and recorded a cumulative effect adjustment to increase retained earnings as of April 1, 2009.
See Note 15.
(b) See Note 15 for an explanation of the change in noncontrolling interests for 2009.
121237_FIN_60_120_0228_1849.indd 60 2/28/10 8:34 PM

GE
(a)
GECS
2009 2008 2007 2009 2008 2007
$ 64,211 $ 67,637 $ 60,374 $ 970 $ 1,773 $ 718
39,246 44,377 39,422
1,179 1,965 3,371
1,590 7,774 12,417
53,193 69,514 71,218
106,226 121,753 115,584 54,163 71,287 71,936
49,886 53,395 47,103 808 1,517 628
25,878 29,878 26,382
1,478 2,153 1,993 17,942 25,116 22,706
3,193 3,421 3,647
10,928 7,518 4,431
14,842 14,401 14,148 23,500 28,085 26,537
92,084 99,827 89,626 56,371 65,657 57,949
14,142 21,926 25,958 (2,208) 5,630 13,987
(2,739) (3,427) (2,794) 3,829 2,375 (1,361)
11,403 18,499 23,164 1,621 8,005 12,626
(193) (679) (249) (175) (719) (2,116)
11,210 17,820 22,915 1,446 7,286 10,510
185 410 707 31 231 209
11,025 17,410 22,208 1,415 7,055 10,301
(300) (75)
$ 10,725 $ 17,335 $ 22,208 $ 1,415 $ 7,055 $10,301
$ 11,218 $ 18,089 $ 22,457 $ 1,590 $ 7,774 $12,417
(193) (679) (249) (175) (719) (2,116)
$ 11,025 $ 17,410 $ 22,208 $ 1,415 $ 7,055 $10,301
(a) Represents the adding together of all affiliated companies except General Electric Capital
Services, Inc. (GECS or financial services), which is presented on a one-line basis.
In the consolidating data on this page, GE means the basis of consolidation as described
in Note 1 to the consolidated financial statements; GECS means General Electric Capital
Services, Inc. and all of its affiliates and associated companies. Separate information is
shown for GE and GECS. Transactions between GE and GECS have been eliminated from
the General Electric Company and consolidated affiliates columns on the prior page.
REVENUES
Sales of goods $ 65,068 $ 69,100 $ 60,670
Total revenues 156,783 182,515 172,488
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 10,344 19,782 27,528
Benefit (provision) for income taxes (Note 14) 1,090 (1,052) (4,155)
Loss from discontinued operations, net of taxes (Note 2) (193) (679) (249)
NET EARNINGS 11,241 18,051 23,124
NET EARNINGS ATTRIBUTABLE TO THE COMPANY 11,025 17,410 22,208
Preferred stock dividends declared (300) (75)
NET EARNINGS ATTRIBUTABLE TO GE COMMON SHAREOWNERS $ 10,725 $ 17,335 $ 22,208
AMOUNTS ATTRIBUTABLE TO THE COMPANY
Earnings from continuing operations $ 11,218 $ 18,089 $ 22,457
Loss from discontinued operations, net of taxes (193) (679) (249)
NET EARNINGS ATTRIBUTABLE TO THE COMPANY $ 11,025 $ 17,410 $ 22,208
PER-SHARE AMOUNTS (Note 20)
Net earnings
See Note 3 for other-than-temporary impairment amounts.
(In millions) 2009 2008 2007
GE shareowners equity balance at January 1 $104,665 $115,559 $111,509
Dividends and other transactions with shareowners (5,049) 1,873 (23,102
)
Other comprehensive income (loss)
Investment securities net 2,659 (3,218) (1,484)
Cash flow hedges net 1,598 (2,664) (539)
Benefit plans net (1,804) (13,288) 2,566
Total other comprehensive income (loss) 6,588 (30,177) 5,070
Increases from net earnings attributable to the Company 11,025 17,410 22,208
Comprehensive income (loss) 17,613 (12,767) 27,278
(a)
62 (126)
Balance at December 31 117,291 104,665 115,559
(b)
7,845 8,947 8,004
Total equity balance at December 31 $125,136 $113,612 $123,563
On January 1, 2009, we adopted an amendment to ASC 810, Consolidation, that requires certain changes to the presentation of our financial statements. This amendment requires
us to classify noncontrolling interests (previously referred to as minority interest) as part of shareowners equity.
(a) We adopted amendments to ASC 320, Investments Debt and Equity Securities, and recorded a cumulative effect adjustment to increase retained earnings as of April 1, 2009.
See Note 15.
(b) See Note 15 for an explanation of the change in noncontrolling interests for 2009.
121237_FIN_60_120.indd 61 2/25/10 4:33 PM

ASSETS
Financing receivables net (Note 6) 329,232 365,168
Investment in GECS
Goodwill (Note 8) 65,574 81,759
Assets of businesses held for sale (Note 2) 34,111 10,556
Total assets $781,818 $797,769
Bank deposits (Note 10) 38,923 36,854
Liabilities of businesses held for sale (Note 2) 6,092 636
Preferred stock (30,000 shares outstanding at both year-end 2009 and 2008)
Accumulated other comprehensive income net
(a)
Investment securities (435) (3,094)
Currency translation adjustments 3,836 (299)
Cash flow hedges (1,734) (3,332)
Benefit plans (16,932) (15,128)
Total GE shareowners equity 117,291 104,665
(b)
7,845 8,947
Total equity (Notes 15 and 16) 125,136 113,612
(a) The sum of accumulated other comprehensive income net was $(15,265) million and $(21,853) million at December 31, 2009 and 2008, respectively.
(b) Included accumulated other comprehensive income net attributable to noncontrolling interests of $(188) million and $(194) million at December 31, 2009 and 2008, respectively.
121237_FIN_60_120.indd 62 2/25/10 4:33 PM

ASSETS
Financing receivables net (Note 6) 329,232 365,168
Investment in GECS
Goodwill (Note 8) 65,574 81,759
Assets of businesses held for sale (Note 2) 34,111 10,556
Total assets $781,818 $797,769
Bank deposits (Note 10) 38,923 36,854
Liabilities of businesses held for sale (Note 2) 6,092 636
Preferred stock (30,000 shares outstanding at both year-end 2009 and 2008)
Accumulated other comprehensive income net
(a)
Investment securities (435) (3,094)
Currency translation adjustments 3,836 (299)
Cash flow hedges (1,734) (3,332)
Benefit plans (16,932) (15,128)
Total GE shareowners equity 117,291 104,665
(b)
7,845 8,947
Total equity (Notes 15 and 16) 125,136 113,612
(a) The sum of accumulated other comprehensive income net was $(15,265) million and $(21,853) million at December 31, 2009 and 2008, respectively.
(b) Included accumulated other comprehensive income net attributable to noncontrolling interests of $(188) million and $(194) million at December 31, 2009 and 2008, respectively.

GE
(a)
GECS
2009 2008 2009 2008
$ 8,654 $ 12,090 $ 64,356 $ 37,486
30 213 51,913 41,236
9,818 15,064
11,916 13,597 71 77
336,926 372,456
18,752 18,636
12,495 14,433 56,717 64,097
70,833 53,279
36,613 56,394 28,961 25,365
8,450 11,364 3,479 3,613
17,097 22,435 87,471 85,721
33,986 125 10,556
50 64 1,470 1,659
$209,942 $198,933 $650,241 $660,902
$ 504 $ 2,375 $133,939 $163,899
10,373 11,699 13,275 13,882
12,957 13,058
1,141 3,340
13,386 18,284
38,923 36,854
11,681 9,827 327,472 313,848
32,009 34,369
35,232 32,767 23,756 32,090
(4,620) (3,949) 6,793 8,533
6,037 55 636
163 189 1,138 1,243
86,854 87,590 577,360 605,354

702 702 1 1
(435) (3,094) (436) (3,097)
3,836 (299) 1,372 (1,258)
(1,734) (3,332) (1,769) (3,134)
(16,932) (15,128) (434) (367)
37,729 40,390 27,591 18,079
126,363 122,123 44,508 43,055
(32,238) (36,697)
117,291 104,665 70,833 53,279
5,797 6,678 2,048 2,269
123,088 111,343 72,881 55,548
$209,942 $198,933 $650,241 $660,902
(a) Represents the adding together of all affiliated companies
except General Electric Capital Services, Inc. (GECS or
financial services), which is presented on a one-line basis.
of consolidation as described in Note 1 to the consolidated
Separate information is shown for GE and GECS. Transactions
between GE and GECS have been eliminated from the General
Electric Company and consolidated affiliates columns on the
prior page.
121237_FIN_60_120.indd 63 2/25/10 4:33 PM
Net earnings $ 11,241 $ 18,051 $ 23,124
Net earnings attributable to the Company 11,025 17,410 22,208
Loss from discontinued operations 193 679 249
Adjustments to reconcile net earnings attributable to the Company
to cash provided from operating activities
Deferred income taxes (2,705) (1,284) 657
Decrease (increase) in GE current receivables 3,273 (24) (868)
Decrease (increase) in inventories 1,101 (719) (1,562)
Increase (decrease) in accounts payable (480) (1,078) (997)
Increase (decrease) in GE progress collections (500) 2,827 4,622
All other operating activities (Note 25) (8,747) 11,020 927
Cash from (used for) operating activities continuing operations 24,724 47,841 39,942
Cash from (used for) operating activities discontinued operations (131) 760 3,380
CASH FROM (USED FOR) OPERATING ACTIVITIES 24,593 48,601 43,322
Net decrease (increase) in GECS financing receivables 43,690 (17,484) (44,237)
Proceeds from sales of discontinued operations 5,423 11,574
Capital contribution from GE to GECS
All other investing activities (2,520) 5,695 (9,910)
Cash from (used for) investing activities continuing operations 42,863 (34,525) (66,388)
Cash from (used for) investing activities discontinued operations 134 (876) (3,116)
CASH FROM (USED FOR) INVESTING ACTIVITIES 42,997 (35,401) (69,504)
Net increase (decrease) in borrowings (maturities of 90 days or less) (25,741) (48,454) 308
Net increase (decrease) in bank deposits (3,986) 20,623 2,144
Net dispositions (purchases) of GE shares for treasury 623 (1,249) (12,319)
Cash from (used for) financing activities continuing operations (43,513) 19,140 28,091
Cash from (used for) financing activities discontinued operations (4) (154)
CASH FROM (USED FOR) FINANCING ACTIVITIES (43,513) 19,136 27,937
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 24,077 32,336 1,755
Cash paid during the year for interest $(19,601) $ (25,853) $ (23,340)
121237_FIN_60_120.indd 64 2/25/10 4:33 PM
Net earnings $ 11,241 $ 18,051 $ 23,124
Net earnings attributable to the Company 11,025 17,410 22,208
Loss from discontinued operations 193 679 249
Adjustments to reconcile net earnings attributable to the Company
to cash provided from operating activities
Deferred income taxes (2,705) (1,284) 657
Decrease (increase) in GE current receivables 3,273 (24) (868)
Decrease (increase) in inventories 1,101 (719) (1,562)
Increase (decrease) in accounts payable (480) (1,078) (997)
Increase (decrease) in GE progress collections (500) 2,827 4,622
All other operating activities (Note 25) (8,747) 11,020 927
Cash from (used for) operating activities continuing operations 24,724 47,841 39,942
Cash from (used for) operating activities discontinued operations (131) 760 3,380
CASH FROM (USED FOR) OPERATING ACTIVITIES 24,593 48,601 43,322
Net decrease (increase) in GECS financing receivables 43,690 (17,484) (44,237)
Proceeds from sales of discontinued operations 5,423 11,574
All other investing activities (2,520) 5,695 (9,910)
Cash from (used for) investing activities continuing operations 42,863 (34,525) (66,388)
Cash from (used for) investing activities discontinued operations 134 (876) (3,116)
CASH FROM (USED FOR) INVESTING ACTIVITIES 42,997 (35,401) (69,504)
Net increase (decrease) in borrowings (maturities of 90 days or less) (25,741) (48,454) 308
Net increase (decrease) in bank deposits (3,986) 20,623 2,144
Net dispositions (purchases) of GE shares for treasury 623 (1,249) (12,319)
Cash from (used for) financing activities continuing operations (43,513) 19,140 28,091
Cash from (used for) financing activities discontinued operations (4) (154)
CASH FROM (USED FOR) FINANCING ACTIVITIES (43,513) 19,136 27,937
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 24,077 32,336 1,755
Cash paid during the year for interest $(19,601) $ (25,853) $ (23,340)

GE
(a)

GECS
2009 2008 2007 2009 2008 2007
$ 11,210 $ 17,820 $ 22,915 $ 1,446 $ 7,286 $ 10,510
185 410 707 31 231 209
11,025 17,410 22,208 1,415 7,055 10,301
193 679 249 175 719 2,116

2,311 2,162 2,149 8,325 9,330 8,126
(1,590) (5,423) (5,126)
(460) (417) 564 (2,245) (867) 93
3,056 (168) 14
1,188 (524) (1,496) (6) (14) 2
(918) 233 (1,073) (379) (1,045) 485
(257) 2,896 4,620
10,928 7,518 4,431
2,033 2,238 1,192 (10,654) 8,508 (539)
16,581 19,086 23,301 7,559 31,204 25,015
2 (5) (857) (133) 765 4,039
16,583 19,081 22,444 7,426 31,969 29,054
(2,429) (2,996) (2,968) (6,443) (13,321) (15,217)
6,479 10,975 8,457
43,952 (17,375) (44,164)
203 10,826 5,220 117
890 58 1,047 9,088 4,928 1,699
(428) (3,149) (9,645) (5,702) (24,961) (7,570)
(9,500) (5,500)
(198) 324 (1,697) (1,686) 5,979 (8,730)
(11,665) (11,060) (2,437) 45,688 (28,555) (65,408)
(2) 5 1,003 136 (881) (3,921)
(11,667) (11,055) (1,434) 45,824 (29,436) (69,329)
317 (2,152) (3,284) (26,882) (45,515) 1,642
(3,986) 20,623 2,144
1,883 136 8,751 81,186 116,117 91,678
(1,675) (1,936) (298) (83,503) (67,114) (49,576)
2,965
12,006
623 (1,249) (12,319)
(8,986) (12,408) (11,492) (2,351) (7,291)
9,500 5,500
(514) (2,691) (1,862) (1,204)
(8,352) (2,638) (18,642) (26,376) 25,398 37,393
(146) (4) (8)
(8,352) (2,638) (18,788) (26,376) 25,394 37,385
(3,436) 5,388 2,222 26,874 27,927 (2,890)
12,090 6,702 4,480 37,666 9,739 12,629
8,654 12,090 6,702 64,540 37,666 9,739
184 180 300
$ 8,654 $ 12,090 $ 6,702 $ 64,356 $ 37,486 $ 9,439
$ (768) $ (1,190) $ (1,466) $(18,833) $ (24,663) $ (21,874)
(3,078) (2,627) (4,036) 543 (610) 1,124
(a) Represents the adding together of all affiliated companies except General Electric Capital
Services, Inc. (GECS or financial services), which is presented on a one-line basis.
Note 1 to the consolidated financial statements; GECS means General Electric Capital Services,
Inc. and all of its affiliates and associated companies. Separate information is shown for GE and
GECS. Transactions between GE and GECS have been eliminated from the General Electric
Company and consolidated affiliates columns on the prior page and are discussed in Note 26.
121237_FIN_60_120.indd 65 2/25/10 4:33 PM

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Consolidated Statement of Income

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