GE reports funding $29 billion of long-term debt needs for 2009

By Jennifer Lanning Drey

Portland, Ore., Jan. 23 - General Electric Co. has issued $29 billion of long-term debt, accounting for 64% of its long-term debt needs for 2009, Keith Sherin, chief financial officer of GE, said Friday during the company's fourth-quarter earnings conference call.

"That puts us in an excellent position as we think about the funding we need for the rest of 2009," Sherin said.

GE projects $45 billion of long-term debt needs for 2009.

During the fourth quarter, GE also strengthened its liquidity position by increasing its consolidated cash balance to $48 billion at the end of 2008, compared to $16 billion at the end of the third quarter.

"From a capital, liquidity and cash flow standpoint, I would say we're in great shape," Jeffrey Immelt, chief executive officer of GE, said during the call.

GE also paid down its commercial paper balance to $72 billion, a decrease of $16 billion from the third quarter. The company plans to continue the reduction until hitting its goal of $50 billion, Immelt said.

Challenging times

GE reported fourth-quarter earnings from continuing operations of $3.9 billion, which included $1.5 billion of after-tax restructuring and other charges. The figure compares to earnings from continuing operations of $6.8 billion in the fourth quarter of 2007.

For the year, revenue was $183 billion, up 6%, and earnings were $18.1 billion, down 19%.

The company's corporate lending business was the hardest hit during the fourth quarter, Sherin said.

GE Capital Finance earned $1 billion in the fourth quarter and $8.6 billion for the year. The business was hurt by increased loss reserves, negative marks to market and impairments.

The capital finance segment is focused on managing through the cycle, repositioning itself to be a smaller and more focused core finance company and supporting customers through new origination.

GE Capital Finance originated $48 billion of new assets during the quarter.

"I would say we really have prepared the company to perform in this environment," Immelt said.

GE reduced its workforce, simplified its organization and exited $14 billion of non-strategic assets in 2008.

"We're running the company with intensity. We've got a shorter cycle time on processes, we've diversified revenue streams, we've increased cash flow, we're changing the financial services business model, we've aggressively lowered costs and we're positioned for stimulus," Immelt said.

GE is a Fairfield, Conn.-based diversified infrastructure, finance and media company.

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