Citizenship GE has a proven ability to impact the communities where employees work and live and beyond. In 2006, the Company rallied its philan- thropy resources to extend the impact to communities around the globe and focus on two central themes education and healthcare. By integrating Foundation grants, product donations, Company contributions and volunteer resources, GE employees drove substantive change while fostering deep, personal connections that encouraged and inspired communities. Around the world, GE’s employees demonstrated a tireless personal commitment to work together and deliver great outcomes for communities in need. Employees and retirees combined for more than one million volunteer hours on key community initiatives and total giving by the Company exceeded $200 million in contributions from the GE Foundation and GE businesses. As Company resources continue to focus on U.S. and international education and healthcare issues, GE delivers on its commitment to becoming a good neigh- bor and a good global citizen. GE made significant strides in 2006 on the Africa Project, as part of an ongoing $20 million donation effort to bring improved healthcare delivery to rural communities across Africa. With the completion of seven additional sites in Ghana, the value of GE’s Africa investment to date exceeds $12 million and includes 12 hospitals and clinics. The program is now expanding into nine additional countries in Africa. Pictured here are children in Asesewa, Ghana, who will see the benefits of GE’s commitment to “early health.” 44 ge 2006 annual report
financial section Contents 46 Management’s Discussion of Financial Responsibility .......................... We begin with a letter from our Chief Executive and Financial Officers discussing our unyielding commitment to rigorous oversight, controllership, informative disclosure and visibility to investors. 46 Management’s Annual Report on Internal Control Over Financial Reporting ..................................................................................... In this report our Chief Executive and Financial Offi cers provide their assessment of the effectiveness of our internal control over fi nancial reporting. 47 Report of Independent Registered Public Accounting Firm ................ Our independent auditors, KPMG LLP, express their opinions on our financial statements and our internal control over fi nancial reporting. 48 Management’s Discussion and Analysis (MD&A) 48 Operations ........................................................................................................ We begin the Operations section of MD&A with an overview of our earnings, including a perspective on how the global economic environment has affected our businesses over the last three years. We then discuss various key operating results for GE industrial (GE) and financial services (GECS). Because of the fundamental differences in these businesses, reviewing certain information separately for GE and GECS offers a more meaningful analysis. Next we provide a description of our global risk management process. Our discussion of segment results includes quantitative and qualitative disclosure about the factors affecting segment revenues and profits, and the effects of recent acquisitions, dispositions and significant transactions. We conclude the Operations section with an overview of our operations from a global perspective and a discussion of environmental matters. 58 Financial Resources and Liquidity ......................................................... In the Financial Resources and Liquidity section of MD&A, we provide an overview of the major factors that affected our consolidated financial position and insight into the liquidity and cash fl ow activities of GE and GECS. 63 Critical Accounting Estimates ................................................................. Critical Accounting Estimates are necessary for us to prepare our financial statements. In this section, we discuss what these estimates are, why they are important, how they are developed and uncertainties to which they are subject. 66 Other Information ......................................................................................... We conclude MD&A with a brief discussion of new accounting standards that will become effective for us in 2007. 66 Selected Financial Data.............................................................................. Selected Financial Data provides five years of fi nancial information for GE and GECS. This table includes commonly used metrics that facilitate comparison with other companies. 68 Audited Financial Statements and Notes 68 Statement of Earnings 68 Consolidated Statement of Changes in Shareowners’ Equity 70 Statement of Financial Position 72 Statement of Cash Flows 74 Notes to Consolidated Financial Statements 109 Supplemental Information .................................................................................. We provide Supplemental Information to reconcile certain “non-GAAP financial measures” referred to in our report to the most closely associated GAAP fi nancial measures. 112 Glossary ....................................................................................................................... For your convenience, we also provide a Glossary of key terms used in our fi nancial statements. We also present our financial information electronically at www.ge.com/investor. This award-winning site is interactive and informative. ge 2006 annual report 45
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