In 1974 International sales increased by 39% from 1973 and before tax earnings increased by 18%, due to higher levels of export sales and improved operating results of foreign affiliates especially in Canada and Latin America. General Electric Credit Corporation After three years of relatively stable earnings, General Electric Credit Corporation in 1975 reported an increase of 21% in net income. The increase resulted from significantly lower short-term interest costs and a higher level of receivables which more than offset considerably higher provisions for losses and lower yields. Financial statements for General Electric Credit Corporation appear elsewhere in this document. Comparison of Six Months Ended June 30, 1976 to Comparable Period of 1975 Operating results for the first half of 1976 were favorably affected by the strengthening of the United States economy compared with the generally depressed conditions which prevailed during the first half of 1975. For the first half of 1976, a 9% increase in sales, combined with vigorous efforts to control costs, resulted in substantially improved operating margins. In addition, other income for the first six months of 1976 included a non-recurring pre-tax gain of $20.7 million realized on the sale of the Company's investments in AEG Telefunken, a West German electrical equipment manufacturer. Net earnings for the first six months of 1976 were 55% higher than for the comparable 1975 period. The most significant factor in the increased earnings for the first six months of 1976 was the Consumer category. Consumer goods, benefiting from improved cost-price relationships and higher sales, reported substantially increased earnings from the low level of the prior period. Lamps and major appliances showed especially strong gains. Industrial Power Equipment sales for the first six months of 1976 were up moderately from the comparable prior period. Earnings were substantially improved from the depressed level of a year earlier. However, results for the second quarter of 1976 were down from the second quarter of 1975, primarily because shipments of large generating equipment were relatively low during the quarter and nuclear engineering costs were at a higher programmed level. Industrial Components and Systems sales and earnings for the first half of 1976 were improved from the 1975 period. Sales and earnings of components related to consumer products, and materials such as engineering plastics, showed particular improvement. Aerospace sales and earnings were about the same for both the 1976 and 1975 halves. International sales and earnings, both by affiliated companies and exports from the United States, were higher for the first six months of 1976 than for the same months of 1975. Earnings of the General Electric Credit Corporation for the first half of 1976 were $26.8 million compared with $25.3 million reported for the first half of 1975. The results of operations for the first six months of 1976 should not be regarded as necessarily indicative of the results that may be expected for the entire year. Three Months and Nine Months Ended September 30, 1976 For the third quarter of 1976, net sales billed amounted to $3,543,300,000, an increase of 8% from the $3,282,600,000 for the third quarter of 1975. Net earnings for the third quarter of 1976 were $184,800,000 ($1.00 per share), up 18% from net earnings of $156,100,000 ($0.85 per share) for the relatively strong 18 third quarter of 1975. For the first nine months of 1976, net sales of $10,452,600,000 were 9% higher than $9,631,700,000 for the first nine months of 1975. Net earnings for the first nine months of 1976 were $501,000,000 ($2.71 per share), an increase of 39% from $360,100,000 ($1.97 per share) for the first nine months of 1975. The foregoing amounts are unaudited but include all known adjustments (consisting of normal recurring accruals) considered necessary by General Electric to present a fair statement of the results of operations. Operating margins continued to improve from earlier 1976 periods in the third quarter of 1976 and were better than those in the third quarter of 1975 as the result of higher sales combined with effective control of costs. Other income for the third quarter of 1976 was also up from the comparable 1975 quarter, primarily as a result of higher income realized from short and long-term investments. Consumer goods sales and earnings for the third quarter of 1976 were again ahead of the comparable quarter of last year. Major appliances, housewares and lamps contributed significantly to the improvement. Industrial Power Equipment sales were up for the third quarter of 1976 from the same quarter of 1975. Earnings, however, despite improvements in turbine-generators, gas turbines and power delivery operations were down primarily as a result of lower nuclear sales and higher programmed nuclear engineering costs. Industrial Components and Systems sales and earnings continued strong in the 1976 third quarter and were better than the 1975 quarter, principally because of higher sales of components related to consumer products and increased demand for General Electric materials such as engineering plastics. Aerospace sales and earnings for the third quarter of 1976 were moderately improved from those for the 1975 quarter primarily because of higher sales of commercial aircraft engines. International sales and earnings improved for the 1976 third quarter over the comparable 1975 quarter principally because of higher export sales. Earnings of the General Electric Credit Corporation for the 1976 third quarter were $14.6 million, compared with $13.4 million reported in the comparable 1975 period. The first nine months earnings of the Credit Corporation were $41.4 million compared with $38.7 million for the same 1975 period. The results of operations for the three months and nine months ended September 30, 1976 should not be regarded as necessarily indicative of the results that may be expected for the entire year. 19