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88 ge 2008 annual report
notes to consolidated financial statements
Note 27.
Operating Segments
Basis for Presentation
Our operating businesses are organized based on the nature of
markets and customers. Segment accounting policies are the
same as described in Note 1. Segment results for our financial
services businesses reflect the discrete tax effect of transactions,
but the intraperiod tax allocation is reflected outside of the seg-
ment unless otherwise noted in segment results.
Effects of transactions between related companies are elimi-
nated and consist primarily of GECS dividends to GE; GE customer
receivables sold to GECS; GECS services for trade receivables
management and material procurement; buildings and equipment
(including automobiles) leased by GE from GECS; IT and other
services sold to GECS by GE; aircraft engines manufactured by GE
that are installed on aircraft purchased by GECS from third-party
producers for lease to others; medical equipment manufactured
by GE that is leased by GECS to others; and various investments,
loans and allocations of GE corporate overhead costs.
A description of our operating segments as of December 31,
2008, can be found below, and details of segment profit by
operating segment can be found in the Summary of Operating
Segments table in Management’s Discussion and Analysis.
Energy Infrastructure
Power plant products and services, including design, installation,
operation and maintenance services are sold into global markets.
Gas, steam and aeroderivative turbines, generators, combined
cycle systems, controls and related services, including total asset
optimization solutions, equipment upgrades and long-term main-
tenance service agreements are sold to power generation and
other industrial customers. Renewable energy solutions include
wind turbines and solar technology. Water treatment services
and equipment include specialty chemical treatment programs,
water purification equipment, mobile treatment systems and
desalination processes.
The Oil & Gas business sells surface and subsea drilling and
production systems, equipment for floating production platforms,
compressors, turbines, turboexpanders and high pressure reactors
to national, international and independent oil and gas companies.
Services include equipment overhauls and upgrades, pipeline
inspection and integrity services, remote diagnostic and monitor-
ing and contractual service agreements. The acquisition of Hydril
Pressure Controls in April 2008 strengthened the drilling solutions
portfolio through the addition of blow out preventers, control
technology and associated services.
Note 26.
Intercompany Transactions
Effects of transactions between related companies are elimi-
nated and consist primarily of GECS dividend to GE; GE customer
receivables sold to GECS; GECS services for trade receivables
management and material procurement; buildings and equip-
ment (including automobiles) leased by GE from GECS; information
technology (IT) and other services sold to GECS by GE; aircraft
engines manufactured by GE that are installed on aircraft pur-
chased by GECS from third-party producers for lease to others;
medical equipment manufactured by GE that is leased by GECS
to others; and various investments, loans and allocations of GE
corporate overhead costs.
These intercompany transactions are reported in the GE and
GECS columns of our financial statements (and include customer
receivables sold from GE to GECS), but are eliminated in deriving
our Consolidated financial statements. The effects of these elimi-
nations on our Consolidated cash flows from operating, investing
and financing activities follow.
December 31 (In millions) 2008 2007 2006
OPERATING
Sum of GE and GECS cash from
operating activities —continuing
operations $ 50,290 $ 48,316 $ 45,351
Elimination of GECS dividend to GE (2,351) (7,291) (9,847)
Net decrease (increase) in GE
customer receivables sold to GECS 90 (255) (2,036)
Other reclassifications and eliminations (188) (828) (956)
Consolidated cash from operating
activities —continuing operations $ 47,841 $ 39,942 $ 32,512
INVESTING
Sum of GE and GECS cash used for
investing activities —continuing
operations $(39,615) $(67,845) $(54,132)
Net increase (decrease) in GE
customer receivables sold to GECS (90) 255 2,036
Other reclassifications and eliminations (320) 1,202 1,223
Consolidated cash used for investing
activities —continuing operations $(40,025) $(66,388) $(50,873)
FINANCING
Sum of GE and GECS cash from
financing activities —continuing
operations $ 22,760 $ 18,751 $ 16,772
Elimination of short-term
intercompany borrowings(a) (787) 1,950 (2,732)
Elimination of GECS dividend to GE 2,351 7,291 9,847
Other reclassifications and eliminations 316 99 (48)
Consolidated cash from financing
activities —continuing operations $ 24,640 $ 28,091 $ 23,839
(a) Represents GE investment in GECS short-term borrowings, such as commercial paper.