GENERAL ELECTRIC CO (Form: 10-Q, Received: 07/27/2018 17:11:25)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission file number 001-00035

GENERAL ELECTRIC COMPANY

(Exact name of registrant as specified in its charter)



New York		14-0689340
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

41 Farnsworth Street, Boston, MA		02210
(Address of principal executive offices)		(Zip Code)

(Registrant’s telephone number, including area code) (617) 443-3000 _______________________________________________ (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer þ	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company ¨
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act . ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

There were 8,691,081,000 shares of common stock with a par value of $0.06 per share outstanding at June 30, 2018 .

TABLE OF CONTENTS



	Page

Forward Looking Statements	3
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)	4
Key Performance Indicators	7
Consolidated Results	8
Segment Operations	12
Corporate Items and Eliminations	31
Other Consolidated Information	34
Statement of Financial Position	36
Financial Resources and Liquidity	37
Critical Accounting Estimates	45
Other Items	46
Supplemental Information	48
Controls and Procedures	54
Other Financial Data	55
Risk Factors	56
Legal Proceedings	57
Financial Statements and Notes	59
Exhibits	113
Form 10-Q Cross Reference Index	114
Signatures	115



FORWARD LOOKING STATEMENTS

FORWARD LOOKING STATEMENTS

Our public communications and SEC filings may contain "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," “estimate,” “forecast,” "target," “preliminary,” or “range.”

Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about plans to maintain the GE dividend; statements about potential business or asset dispositions, including plans to separate GE Healthcare into a standalone company, the timing and structure for that separation, the characteristics of the business to be separated and the expected benefits to GE; plans to exit our equity ownership position in Baker Hughes, a GE company (BHGE) and the expected benefits to GE; debt repayment plans; the benefits of the new GE operating system; divestiture proceeds expectations; GE and GE Capital liquidity; future corporate performance; leverage targets; future charges and capital contributions that may be required in connection with GE Capital’s run-off insurance operations and related GE Capital portfolio actions; revenues; organic growth; cash flows and cash conversion, including the impact of working capital, contract assets and pension funding contributions; earnings per share, including the impact of the new revenue recognition accounting standard and U.S. tax reform; growth and productivity associated with our Digital and Additive businesses; profit margins; cost structure and plans to reduce costs; restructuring, goodwill impairment or other financial charges; tax rates; transaction-related synergies, proceeds and gains; returns on capital and investment; capital allocation, including organic investment, dividends and other priorities; or capital structure and access to funding, including credit ratings and outlooks and debt-to-earnings ratios.

For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

•

our success in executing and completing, including obtaining regulatory approvals and satisfying other closing conditions for, GE Industrial and GE Capital business or asset dispositions or other announced transactions, including our planned separation of GE Healthcare and dispositions of GE Transportation and BHGE, the pricing, timing, and anticipated proceeds from those or other transactions and potential trailing liabilities;


•	GE’s liquidity and the amount and timing of our GE Industrial cash flows and earnings, which may be impacted by customer, competitive, contractual and other dynamics and conditions;


•	our capital allocation plans, as such plans may change including with respect to the timing and amount of GE dividends, organic investments, including research and development, investments in Digital and capital expenditures, the repayment or allocation of our outstanding debt obligations, pension funding contributions, acquisitions, joint ventures and other strategic actions;


•	our ability to maintain our current short- and long-term credit ratings and the impact on our funding costs and competitive position if we do not do so;

•

customer actions or market developments such as reduced demand for equipment and services and other challenges in our Power business, other shifts in the competitive landscape for our products and services, changes in economic conditions, including oil prices, early aircraft retirements and other factors that may affect the level of demand and financial performance of the major industries and customers we serve;


•	changes in law, economic and financial conditions, including the effect of enactment of U.S. tax reform or other tax law changes, trade policy and tariffs, interest and exchange rate volatility, commodity and equity prices and the value of financial assets;

•

GE Capital's capital and liquidity needs, including in connection with GE Capital’s run-off insurance operations and related strategic actions that we may pursue, the impact of conditions in the financial and credit markets on GE Capital's ability to sell financial assets, GE Capital’s leverage and credit ratings, the availability and cost of GE Capital funding and GE Capital's exposure to counterparties;


•	pending and future mortgage loan repurchase claims, other litigation claims and the U.S. Department of Justice's investigation under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and other investigations in connection with WMC, which may affect our estimates of liability, including possible loss estimates;


•	our ability to launch new products in a cost-effective manner;


•	our ability to increase margins through implementation of the new GE operating system, restructuring and other cost reduction measures;


•	our ability to convert pre-order commitments/wins into orders/bookings; and the price we realize on orders/bookings since commitments/wins are stated at list prices;


•	the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of WMC, Alstom, SEC and other investigative and legal proceedings;


•	our success in integrating acquired businesses and operating joint ventures, and our ability to realize revenue and cost synergies from announced transactions, acquired businesses and joint ventures, including Alstom and BHGE;


•	the impact of potential product safety failures and related reputational effects;


•	the impact of potential information technology, cybersecurity or data security breaches;


•	the other factors that are described in "Forward-Looking Statements" in BHGE’s most recent earnings release or SEC filings; and


•	the other factors that are described in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2017.

These or other uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements. This document includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially.

2018 2Q FORM 10-Q 3



MD&A

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

PRESENTATION

The consolidated financial statements of General Electric Company (the Company) combine the industrial manufacturing and services businesses of General Electric Company (GE) with the financial services businesses of GE Capital Global Holdings, LLC (GE Capital or Financial Services).

We believe that investors will gain a better understanding of our company if they understand how we measure and talk about our results. Because of the diversity in our businesses, we present our financial statements in a three-column format, which allows investors to see our industrial operations separately from our Financial Services operations. We believe that this provides useful information to investors. When used in this report, unless otherwise indicated by the context, we use the terms to mean the following:


•	General Electric or the Company – the parent company, General Electric Company.

•

GE – the adding together of all affiliates except GE Capital, whose continuing operations are presented on a one-line basis, giving effect to the elimination of transactions among such affiliates. As GE presents the continuing operations of GE Capital on a one-line basis, certain intercompany profits resulting from transactions between GE and GE Capital have been eliminated at the GE level. We present the results of GE in the center column of our consolidated statements of earnings (loss), financial position and cash flows. An example of a GE metric is GE Industrial free cash flows (Non-GAAP).


•	General Electric Capital Corporation or GECC – predecessor to GE Capital Global Holdings, LLC.


•	GE Capital Global Holdings, LLC or GECGH – the adding together of all affiliates of GECGH, giving effect to the elimination of transactions among such affiliates.


•	GE Capital or Financial Services – refers to GECGH and is the adding together of all affiliates of GE Capital giving effect to the elimination of transactions among such affiliates. We present the results of GE Capital in the right-side column of our consolidated statements of earnings (loss), financial position and cash flows.


•	GE consolidated – the adding together of GE and GE Capital, giving effect to the elimination of transactions between the two. We present the results of GE consolidated in the left-side column of our consolidated statements of earnings (loss), financial position and cash flows.


•	GE Industrial – GE excluding the continuing operations of GE Capital. We believe that this provides investors with a view as to the results of our industrial businesses and corporate items. An example of a GE Industrial metric is GE Industrial free cash flows (Non-GAAP), as defined in Other Terms Used by GE below.

•

Industrial segment – the sum of our seven industrial reporting segments, without giving effect to the elimination of transactions among such segments and between these segments and our financial services segment. This provides investors with a view as to the results of our industrial segments, without inter-segment eliminations and corporate items. An example of an industrial segment metric is industrial segment revenue growth.

•

Baker Hughes, a GE company or BHGE – following the combination of our Oil & Gas business with Baker Hughes Incorporated, our Oil & Gas segment is comprised of our ownership interest of approximately 62.5% in the new company formed in the transaction, Baker Hughes, a GE Company (BHGE). We consolidate 100% of BHGE's revenues and cash flows, while our Oil & Gas segment profit and net income are derived net of minority interest of approximately 37.5% attributable to BHGE's Class A shareholders. References to "Baker Hughes" represent legacy Baker Hughes Incorporated operating activities which, in certain cases, have been excluded from our results for comparative purposes.


•	Total segment – the sum of our seven industrial segments and one financial services segment, without giving effect to the elimination of transactions between such segments. This provides investors with a view as to the results of all of our segments, without inter-segment eliminations and corporate items.

We integrate acquisitions as quickly as possible. Revenues and earnings from the date we complete the acquisition through the end of the fourth quarter following the acquisition are considered the acquisition effect of such businesses.

Amounts reported in billions in graphs within this report are computed based on the amounts in millions. As a result, the sum of the components reported in billions may not equal the total amount reported in billions due to rounding. Certain columns and rows within the tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers in millions.

Discussions throughout this MD&A are based on continuing operations unless otherwise noted.

The MD&A should be read in conjunction with the Financial Statements and Notes to the consolidated financial statements.

4 2018 2Q FORM 10-Q



MD&A

OTHER TERMS USED BY GE

•

Backlog and remaining performance obligation (RPO) – backlog is unfilled customer orders for products and product services (expected life of contract sales for product services). RPO, a defined term under GAAP, is backlog excluding any purchase order that provides the customer with the ability to cancel or terminate without incurring a substantive penalty, even if the likelihood of cancellation is remote based on historical experience. We plan to continue reporting backlog as we believe that it is a useful metric for investors, given its relevance to total orders.


•	Continuing earnings – we refer to the caption “earnings from continuing operations attributable to GE common shareowners” as continuing earnings.


•	Continuing earnings per share (EPS) – when we refer to continuing earnings per share, it is the diluted per-share amount of “earnings from continuing operations attributable to GE common shareowners.”

•

Digital revenues – revenues related to internally developed software (including Predix ^TM ) and associated hardware, and software solutions that improve our customers’ asset performance. These revenues are largely generated from our operating businesses and are included in their segment results. Revenues of "Non-GE Verticals" refer to GE Digital revenues from customers operating in industries where GE does not have a presence.


•	Equipment leased to others (ELTO) – rental equipment we own that is available to rent and is stated at cost less accumulated depreciation.


•	GE Capital Exit Plan - our plan, announced on April 10, 2015, to reduce the size of our financial services businesses through the sale of most of the assets of GE Capital, and to focus on continued investment and growth in our industrial businesses.


•	GE Industrial free cash flows (Non-GAAP) – GE CFOA adjusted for gross GE additions to property, plant and equipment and internal-use software, which are included in cash flows from investing activities, and excluding dividends from GE Capital, GE Pension Plan funding, and taxes related to business sales.


•	Adjusted GE Industrial free cash flows (Non-GAAP) – GE Industrial free cash flows adjusted for Oil & Gas CFOA, gross Oil & Gas additions to property, plant and equipment and internal-use software, and including t he BHGE Class B shareholder dividend.


•	GE Industrial profit margin (GAAP) – GE total revenues plus other income minus GE total costs and expenses less GE interest and other financial charges and non-operating benefit costs divided by GE total revenues plus other income.


•	Adjusted GE Industrial profit margin (Non-GAAP) – GE Industrial profit margin excluding gains (losses) and restructuring and other charges plus noncontrolling interests.

•

GE Industrial structural costs (Non-GAAP) – Industrial structural cost include segment structural costs excluding the impact of restructuring and other charges, business acquisitions and dispositions, foreign exchange, plus total Corporate operating profit excluding restructuring and other charges and gains. The Baker Hughes acquisition is represented on a pro-forma basis, which means we calculated our structural costs by including legacy Baker Hughes results for the three and six months ended June 30, 2017.


•	Net earnings (loss) – we refer to the caption “net earnings (loss) attributable to GE common shareowners” as net earnings.


•	Net earnings (loss) per share (EPS) – when we refer to net earnings (loss) per share, it is the diluted per-share amount of “net earnings attributable to GE common shareowners.”


•	Adjusted continuing earnings (Non-GAAP) – continuing earnings excluding the impact of non-operating benefit costs, after tax.


•	Adjusted continuing earnings per share (Non-GAAP) – when we refer to GE earnings per share, it is the diluted per-share amount of “adjusted continuing earnings.”


•	Adjusted earnings (Non-GAAP) – continuing earnings excluding the impact of non-operating benefit costs, gains (losses) and restructuring and other items, after tax, and the impact of U.S. tax reform.


•	Adjusted earnings per share (Non-GAAP) – when we refer to adjusted earnings per share, it is the diluted per-share amount of “adjusted earnings.”


•	Organic revenues (Non-GAAP) – revenues excluding the effects of acquisitions, dispositions and translational foreign currency exchange.


•	Product services agreements – contractual commitments, with multiple-year terms, to provide specified services for products in our Power, Renewable Energy, Oil & Gas, Aviation and Transportation installed base – for example, monitoring, maintenance, service and spare parts for a gas turbine/generator set installed in a customer’s power plant.


•	Revenues – revenues comprise sales of goods, sales of services for our industrial businesses and GE Capital revenues from services for our financial services businesses.


•	Segment profit – refers to the profit of the industrial segments and the net earnings of the financial services segment, both of which include other income. See the Segment Operations section within the MD&A for a description of the basis for segment profits.

•

Services – for purposes of the financial statement display of sales and costs of sales in our Statement of Earnings (Loss), “goods” is required by SEC regulations to include all sales of tangible products, and “services” must include all other sales, including other services activities. In our MD&A section of this report, we refer to sales under product services agreements and sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs) as sales of “services,” which is an important part of our operations.

2018 2Q FORM 10-Q 5



MD&A

NON-GAAP FINANCIAL MEASURES

In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered “non-GAAP financial measures” under the U.S. Securities and Exchange Commission (SEC) rules. Specifically, we have referred, in various sections of this report, to:


•	GE Industrial segment organic revenues


•	GE Industrial structural costs


•	GE pre-tax earnings from continuing operations, excluding GE Capital earnings (loss) from continuing operations and the corresponding effective tax rates


•	Adjusted earnings (loss)


•	Adjusted earnings (loss) per share (EPS)


•	Adjusted GE Industrial profit and profit margin (excluding certain items)


•	Adjusted Oil & Gas segment profit


•	GE Industrial Free Cash Flow (FCF) and Adjusted GE Industrial FCF


•	GE Industrial net debt

The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures are included in the Supplemental Information section within the MD&A. Non-GAAP financial measures referred to in this report are either labeled as “non-GAAP” or designated as such with an asterisk (*).

OUR OPERATING SEGMENTS

We are a global digital industrial company, transforming industry with software-defined machines and solutions that are connected, responsive and predictive, with products and services ranging from aircraft engines, locomotives, power generation and oil and gas production equipment to medical imaging, financing and industrial products. Operational and financial overviews for our operating segments are provided in the “Segment Operations” section within this MD&A.

OUR INDUSTRIAL OPERATING SEGMENTS



Power ^(a)	Aviation	Lighting ^(a)
Renewable Energy	Healthcare
Oil & Gas ^(b)	Transportation

OUR FINANCIAL SERVICES OPERATING SEGMENT



	Capital


(a)	Beginning in the third quarter of 2017, the Energy Connections business within the former Energy Connections & Lighting segment was combined with the Power segment and presented as one reporting segment called Power. As a result of this combination, our GE Lighting and Current, powered by GE (Current) businesses are now reported as a separate segment called Lighting.


(b)	Beginning in the third quarter of 2017, our Oil & Gas segment is comprised of our ownership interest of approximately 62.5% in BHGE. We consolidate 100% of BHGE's revenues and cash flows, while our Oil & Gas segment profit and net income are derived net of minority interest of approximately 37.5% attributable to BHGE's Class A shareholders.

CORPORATE INFORMATION

GE’s Internet address at www.ge.com, Investor Relations website at www.ge.com/investor-relations and our corporate blog at www.gereports.com, as well as GE’s Facebook page and Twitter accounts and other social media, including @GE_Reports, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.

6 2018 2Q FORM 10-Q



MD&A	KEY PERFORMANCE INDICATORS

KEY PERFORMANCE INDICATORS



2018 REVENUES PERFORMANCE
	Three months ended June 30		Six months ended June 30
Industrial Segment	4	%	6	%
Industrial Segment Organic (Non-GAAP)	(6	)%	(5	)%
Financial Services	(1	)%	(10	)%



GE INDUSTRIAL ORDERS
	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Orders
Equipment	$	15.4	$	14.0	$	28.4	$	26.2
Services	15.7		14.0		30.1		26.9
Total(a)	$	31.1	$	28.0	$	58.5	$	53.1

(a) Included $6.0 billion and $11.3 billion related to Baker Hughes in the three and six months ended June 30, 2018, respectively.



GE INDUSTRIAL BACKLOG
(Dollars in billions)	June 30, 2018		June 30, 2017

Backlog
Equipment	$	87.1	$	83.6
Services	289.5		267.4
Total	$	376.7	$	351.0



GE INDUSTRIAL COSTS (GAAP) AND GE INDUSTRIAL STRUCTURAL COSTS (NON-GAAP)
	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

GE Industrial costs excluding interest and financial charges and non-operating benefit costs (GAAP)	$	26.2	$	25.0	$	51.2	$	48.6
GE Industrial structural costs (Non-GAAP)	6.0		6.4		11.8		12.9



GE INDUSTRIAL PROFIT MARGINS (GAAP) AND ADJUSTED GE INDUSTRIAL PROFIT MARGINS (NON-GAAP)
	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

GE Industrial profit margins (GAAP)	9.7	%	9.3	%	8.7	%	7.3	%
Adjusted GE Industrial profit margins (Non-GAAP)	10.4	%	12.0	%	10.3	%	10.9	%



EARNINGS
	Three months ended June 30				Six months ended June 30
(Dollars in billions; per-share amounts in dollars)	2018		2017		2018			2017

Continuing earnings (loss) (GAAP)	$	0.7	$	1.0	$	1.1		$	1.1
Net earnings (loss) (GAAP)	0.6		0.9		(0.6		)	0.8
Adjusted continuing earnings (loss) (Non-GAAP)	1.3		1.4		2.2			1.9
Adjusted earnings (loss) (Non-GAAP)	1.6		1.9		3.0			3.1

Continuing earnings (loss) per share (GAAP)	$	0.08	$	0.12	$	0.13		$	0.13
Net earnings (loss) per share (GAAP)	0.07		0.10		(0.07		)	0.09
Adjusted continuing earnings (loss) per share (Non-GAAP)	0.15		0.16		0.25			0.22
Adjusted earnings (loss) per share (Non-GAAP)	0.19		0.21		0.35			0.35



GE CFOA (GAAP) AND GE INDUSTRIAL AND ADJUSTED GE INDUSTRIAL FREE CASH FLOWS (NON-GAAP)
	Six months ended June 30
(Dollars in billions)	2018			2017

GE CFOA (GAAP)	$	(0.8	)	$	3.6
GE Industrial free cash flows (Non-GAAP)	(1.7		)	(2.4		)
Adjusted GE Industrial free cash flows (Non-GAAP)	(1.4		)	(2.4		)

2018 2Q FORM 10-Q 7



MD&A	CONSOLIDATED RESULTS

CONSOLIDATED RESULTS

2018 SIGNIFICANT DEVELOPMENTS


•	In the fourth quarter of 2017, we announced our plan to significantly reduce the size of our Board of Directors at the 2018 annual shareowners meeting. On April 25, 2018, 12 directors were elected to the Board of Directors, with increased focus on relevant industry expertise, capital allocation and accounting and financial reporting.

•

During the first quarter of 2018, we recorded a reserve of $1.5 billion in discontinued operations in connection with the U.S. Department of Justice's (DOJ) ongoing investigation regarding potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) by WMC and GE Capital. See Legal Proceedings and Note 19 to the consolidated financial statements for further information.


•	On June 26, 2018, Larry Culp, former CEO of Danaher, was elected as lead director effective that same date, succeeding Jack Brennan, who is completing his last term on the Board. Mr. Culp will also chair the Board’s Management Development and Compensation Committee.


•	On July 26, 2018, we announced that Jan Hauser, GE's Vice President, Controller and Chief Accounting Officer, had communicated her intention to retire from GE. GE plans to appoint Thomas Timko, currently the chief accounting officer of General Motors Company, as her successor, effective on or about September 10, 2018.

ANNOUNCED TRANSACTIONS


•	In September 2017, we announced an agreement to sell our Industrial Solutions business within our Power segment for approximately $2.6 billion to ASEA Brown Boveri (ABB), a Swiss-based engineering company. On June 29, 2018, we completed the sale and recognized a pre-tax gain of $0.3 billion in the second quarter of 2018.


•	In February 2018, we entered into an agreement to sell our GE Lighting business in Europe, the Middle East, Africa and Turkey and our Global Automotive Lighting business to a company controlled by a former GE executive in the region. We closed substantially all of this transaction in the second quarter of 2018.


•	In April 2018, we announced an agreement to sell our Enterprise Financial Management, Ambulatory Care Management and Workforce Management assets, comprising our Healthcare segment’s Value-Based Care Division, to Veritas Capital, a private equity investment firm, for approximately $1.1 billion in cash. This transaction closed on July 10, 2018.

•

In May 2018, we announced an agreement to merge our Transportation segment with Wabtec Corp, a U.S. rail equipment manufacturer. Under the agreement, which has been approved by the Boards of Directors of Wabtec and GE, GE will receive $2.9 billion in cash at closing, and GE and its shareholders will receive a 50.1% ownership interest in the combined company, with GE holding 9.9% and GE shareholders holding the remaining 40.2%. Wabtec shareholders will retain 49.9% of the combined company. The deal is expected to close in early 2019, subject to customary closing conditions and regulatory approval.


•	In June 2018, we announced an agreement to sell our Distributed Power business within our Power segment to Advent International, a global private equity investor, for $3.3 billion. The deal is expected to close by the fourth quarter 2018, subject to customary closing conditions and regulatory approvals.

•

In June 2018, we announced the results of our strategic review and our intention to focus on our Power, Renewable Energy and Aviation businesses. We plan to separate GE Healthcare into a standalone company over the next 12 to 18 months, pursue an orderly separation from BHGE over the next two to three years and substantially reduce GE Industrial net debt* by approximately $25 billion by the end of 2020. In addition, we announced our plan for a smaller corporate headquarters focused primarily on strategy, capital allocation, talent and governance, a move which is expected to generate at least $500 million in corporate savings by the end of 2020. While we announced the strategic portfolio actions for Transportation, GE Healthcare and BHGE, these businesses have not met the accounting criteria for held for sale classification. That classification will depend on the nature and timing of the transaction.

*Non-GAAP Financial Measure

8 2018 2Q FORM 10-Q



MD&A	CONSOLIDATED RESULTS

SECOND QUARTER 2018 RESULTS

Consolidated revenues were $30.1 billion, up $1.0 billion, or 3%, for the quarter. After adjusting for incremental Baker Hughes revenues of $2.8 billion, adjusted consolidated revenues* were $27.3 billion, down $1.8 billion or 6%. The decline in revenues was a result of lower industrial segment revenues of $1.7 billion, or 6%, organically* driven principally by our Power, Renewable Energy and Oil & Gas segments, partially offset by our Aviation and Healthcare segments.

Continuing earnings per share was $0.08 due to a $0.8 billion decrease in Corporate costs, partially offset by a $0.5 billion, or 14%, decrease in industrial segment profit. Excluding net gains on business dispositions of $0.02 per share, unrealized gains on investments of $0.02 per share, restructuring and other charges of $0.08 per share and non-operating benefit costs of $0.06 per share, Adjusted earnings per share* was $0.19.

For the three months ended June 30, 2018, restructuring and other charges were $0.08 per share, including $0.01 per share related to BHGE integration and deal related costs. In total, restructuring and other items were $0.7 billion before tax, with restructuring charges totaling about $0.5 billion and businesses development charges totaling $0.2 billion. Subsequent to the Baker Hughes transaction and for the second quarter of 2018, $0.1 billion of restructuring charges related to BHGE are reported within our Oil & Gas segment.

For the three months ended June 30, 2018, GE Industrial profit was $2.7 billion and GE Industrial margins were 9.7%, up $0.2 billion, or 40 basis points, largely driven by the benefits associated with a reduction in Corporate costs of $ 0.8 billion primarily due to net gains on business dispositions of $0.3 billion, unrealized gains on investments of $0.3 billion and decreased restructuring and other costs of $0.2 billion. I ndustrial segment profit decreased $ 0.5 billion, or 14% , primarily due to lower results within our Power and Oil & Gas segments, partially offset by the performance of our Aviation and Healthcare segments. In the second quarter of 2018, we delivered $0.3 billion of structural cost* reduction, excluding the effects of acquisition and disposition activity and with Baker Hughes on a pro forma basis.

GE CFOA was $(0.8) billion and $3.6 billion for the six months ended June 30, 2018 and 2017, respectively. The decline in GE CFOA is primarily due to a $4.0 billion decrease in common dividends from GE Capital. GE CFOA was also impacted by lower earnings from Power and Oil & Gas, as well as higher cash used for working capital compared to 2017, partially offset by Aviation, Healthcare and Corporate cost reduction. Additionally, GE CFOA was negatively impacted by GE Pension Plan contributions of $0.9 billion in 2018, compared to $0.2 billion in 2017. GE did not receive a common dividend distribution from GE Capital in the second quarter of 2018, and it does not expect to receive such dividend distributions from GE Capital for the foreseeable future. Refer to the GE Cash Flows section within this MD&A for further information.

*Non-GAAP Financial Measure

2018 2Q FORM 10-Q 9



MD&A	CONSOLIDATED RESULTS

CONSOLIDATED RESULTS



REVENUES
	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Consolidated revenues	$	30.1		$	29.1		$	58.8		$	56.0

Industrial segment revenues(a)	28.7			27.6			56.1			52.8
Corporate items and Industrial eliminations	(0.6		)	(0.5		)	(1.1		)	(0.9		)
GE Industrial revenues(a)	$	28.1		$	27.1		$	55.0		$	51.9

Financial services revenues	$	2.4		$	2.4		$	4.6		$	5.1


(a)	GE Industrial refers to GE excluding the continuing operations of GE Capital. Industrial segment refers to the sum of our seven industrial reporting segments, without giving effect to corporate items or the elimination of transactions among such segments and between these segments and our financial services segment.

COMMENTARY: THREE MONTHS ENDED JUNE 30

Consolidated revenues increased $ 1.0 billion, or 3% , primarily driven by increased industrial segment revenues of $ 1.1 billion, partially offset by a slight decrease in Financial Services revenues. The overall impact of foreign currency movements on consolidated revenues was an increase of $0.6 billion. Below are descriptions of the components:

GE Industrial revenues increased $ 1.0 billion, or 4% , due to an increase in industrial segment revenues of $ 1.1 billion offset by a decrease in Corporate revenues and Industrial eliminations of $ 0.1 billion.

•

Industrial segment revenues increased $ 1.1 billion, or 4% , as increases at Oil & Gas, Aviation and Healthcare were partially offset by decreases at Power, Renewable Energy, Transportation and Lighting. This increase was driven by the net effects of acquisitions of $2.8 billion, primarily attributable to Baker Hughes, and the effects of a weaker U.S. dollar of $0.6 billion, partially offset by the net effects of dispositions of $0.6 billion, primarily attributable to the absence of Water following its sale in the third quarter of 2017. Excluding the effects of acquisitions, dispositions and foreign currency translation, industrial segment organic revenues* decreased $1.7 billion.

Financial Services revenues decreased 1% primarily due to lower gains and organic revenue declines.

COMMENTARY: SIX MONTHS ENDED JUNE 30

Consolidated revenues increased $ 2.8 billion, or 5% , primarily driven by increased industrial segment revenues of $ 3.3 billion, partially offset by decreased Financial Services revenues of $ 0.5 billion. The overall impact of foreign currency movements on consolidated revenues was an increase of $1.4 billion. Below are descriptions of the components:

GE Industrial revenues increased $ 3.1 billion, or 6% , due to an increase in industrial segment revenues of $ 3.3 billion offset by a decrease in Corporate revenues and Industrial eliminations of $ 0.2 billion.

•

Industrial segment revenues increased $ 3.3 billion, or 6% , as increases at Oil & Gas, Aviation and Healthcare were partially offset by decreases at Power, Renewable Energy, Transportation and Lighting. This increase was driven by the net effects of acquisitions of $5.5 billion, primarily attributable to Baker Hughes, and the effects of a weaker U.S. dollar of $1.4 billion, partially offset by the net effects of dispositions of $1.1 billion, primarily attributable to the absence of Water following its sale in the third quarter of 2017. Excluding the effects of acquisitions, dispositions and foreign currency translation, industrial segment organic revenues* decreased $2.6 billion.

Financial Services revenues decreased $ 0.5 billion, or 10% , primarily due to organic revenue declines and lower gains.

*Non-GAAP Financial Measure

10 2018 2Q FORM 10-Q



MD&A	CONSOLIDATED RESULTS



EARNINGS (LOSS) AND EARNINGS (LOSS) PER SHARE
	Three months ended June 30				Six months ended June 30
(Dollars in billions; per-share amounts in dollars; attributable to GE common shareowners)	2018		2017		2018		2017

Continuing earnings(a)	$	0.7	$	1.0	$	1.1	$	1.1

Continuing earnings per share	$	0.08	$	0.12	$	0.13	$	0.13

(a) Also referred to as "Earnings from continuing operations attributable to GE common shareowners"

In the below discussion, GE Industrial refers to GE excluding the continuing operations of GE Capital. Industrial segment refers to the sum of our seven industrial reporting segments, without giving effect to corporate items or the elimination of transactions among such segments and between these segments and our financial services segment.

COMMENTARY: THREE MONTHS ENDED JUNE 30

Consolidated continuing earnings decreased $ 0.3 billion due to increased provision for GE Industrial income taxes of $ 0.4 billion driven by a $0.2 billion tax charge during the second quarter related to the planned separation of our Healthcare segment, increased non-operating benefit costs of $0.1 billion and increased interest and other financial charges of $ 0.1 billion, partially offset by increased GE Industrial continuing earnings of $ 0.3 billion.

GE Industrial earnings increased $ 0.3 billion, or 12% , driven by an increase in Corporate profit of $ 0.8 billion, partially offset by a decrease in industrial segment profit of $ 0.5 billion.


•	Corporate profit increased $ 0.8 billion primarily attributable to net gains on business dispositions of $0.3 billion, unrealized gains on investments of $0.3 billion and decreased restructuring and other costs of $0.2 billion.


•	Industrial segment profit decreased $ 0.5 billion, or 14% , with decreases at Power, Renewable Energy, Oil & Gas and Transportation, partially offset by higher profit at Aviation, Healthcare and Lighting. Industrial segment organic profit* decreased $0.4 billion, primarily driven by negative variable cost productivity, lower volume and pricing pressure at Power.


•	Foreign exchange adversely affected GE Industrial profit by an insignificant amount in the second quarter of 2018.

Financial Services losses increased 20% primarily due to higher impairments primarily at EFS related to its renewables and oil & gas investments, lower gains primarily at EFS related to non-recurring 2017 gains, and costs associated with calling debt, partially offset by higher base earnings and lower corporate and restructuring costs.

COMMENTARY: SIX MONTHS ENDED JUNE 30

Consolidated continuing earnings decreased 4% due to increased GE Industrial continuing earnings of $ 0.9 billion, almost entirely offset by increased Financial Services losses of $ 0.2 billion, increased provision for GE Industrial income taxes of $ 0.4 billion driven by a $0.2 billion tax charge during the second quarter related to the planned separation of our Healthcare segment, increased non-operating benefit costs of $0.2 billion and increased interest and other financial charges of $ 0.1 billion.

GE Industrial earnings increased $ 0.9 billion, or 23% , driven by an increase in Corporate profit of $ 1.6 billion, partially offset by a decrease in industrial segment profit of $ 0.6 billion.


•	Corporate profit increased $ 1.6 billion primarily attributable to decreased restructuring and other costs of $0.9 billion, unrealized gains on investments of $0.3 billion, net gains on business dispositions of $0.2 billion and decreased adjusted Corporate operating costs* of $0.2 billion.

•

Industrial segment profit decreased $ 0.6 billion, or 10% , with decreases at Power, Oil & Gas, Renewable Energy and Lighting, partially offset by higher profit at Aviation, Healthcare and Transportation. This decrease in industrial segment profit was primarily driven by restructuring and business development costs related to Baker Hughes of $0.5 billion and the net effects of dispositions of $0.1 billion, primarily associated with the absence of Water following its sale in the third quarter of 2017, partially offset by the net effects of acquisitions $0.3 billion, largely associated with Baker Hughes. Excluding these items, industrial segment organic profit* decreased $0.3 billion, primarily driven by negative variable cost productivity, lower volume and pricing pressure at Power.


•	Foreign exchange adversely affected GE Industrial profit by $0.1 billion in the first half of 2018.

Financial Services losses increased $ 0.2 billion, or 93% , primarily due to lower gains, higher impairments, costs associated with calling debt and lower base earnings including a loss related to updates to the U.S. tax reform impact on energy investments, partially offset by lower corporate and restructuring costs.

2018 2Q FORM 10-Q 11



MD&A	CONSOLIDATED RESULTS

GE DIGITAL

GE Digital's activities are focused on assisting in the market development of our digital product offerings through software design, fulfillment and product management, while also interfacing with our customers. Digital revenues include internally developed software and associated hardware, including Predix and software solutions that improve our customers’ asset performance. These revenues and associated costs are largely generated from our operating businesses and are included in their segment results.

Revenues were $1.0 billion for the three months ended June 30, 2018, flat year over year compared to revenues for the three months ended June 30, 2017. An increase in Oil & Gas was offset by decreases in Power and Renewable Energy.

Revenues were $2.0 billion for the six months ended June 30, 2018, an increase of $0.1 billion, or 6%, compared to revenues of $1.9 billion for the six months ended June 30, 2017. Increases in Oil & Gas, Transportation, Lighting and Aviation were offset by decreases in Power and Renewable Energy.

Orders were $1.0 billion for three months ended June 30, 2018, a decrease of $0.3 billion, or 23%, compared to orders of $1.3 billion for the three months ended June 30, 2017. Decreases in Power and Aviation were offset by increases in Transportation and Healthcare.

Orders were $2.0 billion for the six months ended June 30, 2018, a decrease of $0.3 billion, or 13%, compared to orders of $2.3 billion for the six months ended June 30, 2017. Decreases in Power, Digital Core and Aviation were offset by an increase in Transportation, Healthcare, Oil & Gas and Renewable Energy.

SEGMENT OPERATIONS

REVENUES AND PROFIT

Segment revenues include sales of products and services related to the segment.

Segment profit is determined based on internal performance measures used by the Chief Executive Officer (CEO) to assess the performance of each business in a given period. In connection with that assessment, the CEO may exclude matters, such as charges for restructuring, rationalization and other similar expenses, acquisition costs and other related charges, technology and product development costs, certain gains and losses from acquisitions or dispositions, and litigation settlements or other charges, for which responsibility preceded the current management team. Subsequent to the Baker Hughes transaction, restructuring and other charges are included in the determination of segment profit for our Oil & Gas segment. See the Corporate Items and Eliminations section within this MD&A for additional information about costs excluded from segment profit.

Segment profit excludes results reported as discontinued operations and material accounting changes other than those applied retrospectively. Segment profit also excludes the portion of earnings or loss attributable to noncontrolling interests of consolidated subsidiaries, and as such only includes the portion of earnings or loss attributable to our share of the consolidated earnings or loss of consolidated subsidiaries.

Segment profit excludes or includes interest and other financial charges, non-operating benefit costs, income taxes, and preferred stock dividends according to how a particular segment’s management is measured:


•	Interest and other financial charges, income taxes, non-operating benefit costs and GE preferred stock dividends are excluded in determining segment profit for the industrial segments.


•	Interest and other financial charges, income taxes, non-operating benefit costs and GE Capital preferred stock dividends are included in determining segment profit (which we sometimes refer to as “net earnings”) for the Capital segment.

Other income is included in segment profit for the industrial segments.

Certain corporate costs, such as shared services, employee benefits, and information technology, are allocated to our segments based on usage. A portion of the remaining corporate costs is allocated based on each segment’s relative net cost of operations.

12 2018 2Q FORM 10-Q



MD&A	SEGMENT OPERATIONS



SUMMARY OF OPERATING SEGMENTS

	Three months ended June 30								Six months ended June 30
(In millions)	2018			2017			V%		2018			2017			V%

Revenues
Power(a)	$	7,579		$	9,400		(19)	%	$	14,801		$	17,341		(15	)%
Renewable Energy	1,653			2,312			(29)	%	3,299			4,079			(19	)%
Oil & Gas	5,554			2,997			85	%	10,939			6,083			80	%
Aviation	7,519			6,634			13	%	14,631			13,307			10	%
Healthcare	4,978			4,688			6	%	9,680			8,993			8	%
Transportation	942			1,077			(13)	%	1,814			2,057			(12	)%
Lighting(a)	431			473			(9)	%	887			935			(5	)%
Total industrial segment revenues	28,657			27,582			4	%	56,052			52,795			6	%
Capital	2,429			2,446			(1)	%	4,602			5,127			(10	)%
Total segment revenues	31,085			30,028			4	%	60,654			57,923			5	%
Corporate items and eliminations	(982		)	(932		)			(1,890		)	(1,945		)
Consolidated revenues	$	30,104		$	29,097		3	%	$	58,764		$	55,978		5	%

Segment profit (loss)
Power(a)	$	421		$	994		(58)	%	$	694		$	1,432		(52	)%
Renewable Energy	82			158			(48)	%	159			228			(30	)%
Oil & Gas(b)	73			120			(39)	%	(70		)	380			U
Aviation	1,475			1,374			7	%	3,078			2,647			16	%
Healthcare	926			826			12	%	1,660			1,487			12	%
Transportation	155			183			(15)	%	285			278			3	%
Lighting(a)	24			17			41	%	26			27			(4	)%
Total industrial segment profit	3,157			3,673			(14)	%	5,832			6,480			(10	)%
Capital	(207		)	(172		)	(20)	%	(422		)	(219		)	(93	)%
Total segment profit (loss)	2,950			3,502			(16)	%	5,410			6,261			(14	)%
Corporate items and eliminations	(309		)	(1,120		)			(962		)	(2,522		)
GE interest and other financial charges	(690		)	(637		)	(8)	%	(1,333		)	(1,200		)	(11	)%
GE non-operating benefit costs	(690		)	(552		)	(25)	%	(1,374		)	(1,201		)	(14	)%
GE benefit (provision) for income taxes	(525		)	(165		)	U		(637		)	(188		)	U
Earnings (loss) from continuing operations attributable to GE common shareowners	736			1,028			(28)	%	1,105			1,150			(4	)%
Earnings (loss) from discontinued operations, net of taxes	(121		)	(146		)	17	%	(1,673		)	(385		)	U
Less net earnings attributable to
noncontrolling interests, discontinued operations	—			7			U		—			7			U
Earnings (loss) from discontinued operations,
net of tax and noncontrolling interest	(121		)	(152		)	20	%	(1,673		)	(392		)	U
Consolidated net earnings (loss) attributable to the GE common shareowners	$	615		$	875		(30)	%	$	(568	)	$	758		U


(a)	Beginning in the third quarter of 2017, the Energy Connections business within the former Energy Connections & Lighting segment was combined with the Power segment and presented as one reporting segment called Power. As a result of this combination, our GE Lighting and Current, powered by GE (Current) businesses are now reported as a separate segment called Lighting.


(b)	Oil & Gas segment profit excluding restructuring and other charges* was $222 million and $402 million for the three and six months ended June 30, 2018.

*Non-GAAP Financial Measure

2018 2Q FORM 10-Q 13



MD&A	SEGMENT OPERATIONS

SEGMENT RESULTS



INDUSTRIAL SEGMENT REVENUES	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Revenues
Equipment(a)(c)	$	13.2	$	13.8	$	26.1	$	26.6
Services(b)(c)	15.4		13.8		30.0		26.2
Total(d)	$	28.7	$	27.6	$	56.1	$	52.8


(a)	$12.0 billion and $23.8 billion, excluding $1.2 billion and $2.3 billion related to Baker Hughes* for the three and six months ended June 30, 2018, respectively.


(b)	$13.8 billion and $26.9 billion, excluding $1.6 billion and $3.1 billion related to Baker Hughes* for the three and six months ended June 30, 2018, respectively.

(c)

For the purposes of the MD&A, "services" refers to sales under product services agreements and sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs). For the purposes of the financial statement display of sales and costs of sales in our Statement of Earnings (Loss), “goods” is required by SEC regulations to include all sales of tangible products, and “services” must include all other sales, including other services activities.


(d)	Industrial segment refers to the sum of our seven industrial reporting segments, without giving effect to corporate items or the elimination of transactions among such segments and between these segments and our financial services segment. Therefore, industrial segment revenues will not agree to GE revenues as shown in the Statement of Earnings (Loss).



INDUSTRIAL SEGMENT PROFIT AND PROFIT MARGIN	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Segment profit(a)	$	3.2		$	3.7		$	5.8		$	6.5
Segment profit margin	11.0		%	13.3		%	10.4		%	12.3		%


(a)	$3.2 billion and $6.1 billion, excluding an insignificant amount and $(0.2) billion related to Baker Hughes* for the three and six months ended June 30, 2018, respectively.

COMMENTARY: THREE MONTHS ENDED JUNE 30


•	Industrial segment revenues increased $ 1.1 billion, or 4% , driven by increases at Oil & Gas primarily due to the acquisition of Baker Hughes, Aviation and Healthcare, partially offset by decreases at Power, Renewable Energy, Transportation and Lighting.


•	Industrial segment profit decreased $ 0.5 billion, or 14% , driven by lower profit at Oil & Gas primarily due to restructuring costs associated with Baker Hughes, and Power driven by lower volume, unfavorable price and the absence of Water. Further decrease was due to lower profit at Renewable Energy and Transportation, partially offset by higher profit at Aviation and Healthcare.


•	Industrial segment margin decreased 230 basis points to 11.0% in 2018 from 13.3% in 2017 driven by negative variable cost productivity, price pressure, business mix. The decrease in industrial segment margin reflects decreases at Power, Oil & Gas, Renewable Energy, Aviation and Transportation, offset by increases at Lighting and Healthcare.

COMMENTARY: SIX MONTHS ENDED JUNE 30


•	Industrial segment revenues increased $ 3.3 billion, or 6% , driven by increases at Oil & Gas primarily due to the acquisition of Baker Hughes, Aviation and Healthcare, partially offset by decreases at Power, Renewable Energy, Transportation and Lighting.


•	Industrial segment profit decreased $ 0.6 billion, or 10% , driven by lower profit at Oil & Gas primarily due to restructuring costs associated with Baker Hughes, Power driven by lower volume, unfavorable price and the absence of Water. Further decrease was due to lower profit at Renewable Energy, partially offset by higher profit at Aviation, Healthcare and Transportation.


•	Industrial segment margin decreased 190 basis points to 10.4% in 2018 from 12.3% in 2017 driven by negative variable cost productivity, business mix and price pressure. The decrease in industrial segment margin reflects decreases at Oil & Gas, Power and Renewable Energy, offset by increases at Transportation, Aviation, and Healthcare.



RECONCILIATION OF INDUSTRIAL BACKLOG TO REMAINING PERFORMANCE OBLIGATION
	June 30, 2018
(Dollars in billions)	Equipment			Services			Total

Backlog	$	87.1		$	289.5		$	376.7
Adjustments	(36.2		)	(90.9		)	(127.1		)
Remaining Performance Obligation	$	51.0		$	198.6		$	249.6

Remaining performance obligation is a defined term under GAAP. See Other Terms Used section within MD&A and Note 9 to the consolidated financial statements for further information. Adjustments to reported backlog are largely driven by the Aviation business: (1) backlog includes engine contracts for which we have received purchase orders that are cancelable. We have included these in backlog as our historical experience has shown no net cancellations, as any canceled engines are typically moved by the airframer to other program customers; (2) our services backlog includes contracts that are cancelable without substantial penalty, primarily time and materials contracts; (3) backlog includes engines contracted under long-term service agreements, even if the engines have not yet been put into service. These adjustments to reported backlog are expected to be satisfied beyond one year.

*Non-GAAP Financial Measure

14 2018 2Q FORM 10-Q



MD&A	SEGMENT OPERATIONS \| POWER

POWER

OPERATIONAL OVERVIEW



SUB-SEGMENT REVENUES	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Gas Power Systems(a)	$	1.4	$	2.1	$	2.9	$	4.2
Power Services	3.2		3.6		6.0		6.2
Steam Power Systems	0.5		0.6		1.0		0.9
Energy Connections(b)	2.3		2.5		4.5		4.7
Other(c)	0.2		0.7		0.3		1.3
Total segment revenues	$	7.6	$	9.4	$	14.8	$	17.3

(a) Includes Distributed Power
(b) Includes Industrial Solutions, Grid Solutions, Power Conversion and Automation & Controls
(c) Includes Water & Process Technologies and GE Hitachi Nuclear



ORDERS	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Equipment	$	3.4	$	4.8	$	5.8	$	8.7
Services	4.0		5.1		7.2		9.1
Total	$	7.4	$	9.9	$	12.9	$	17.8



BACKLOG
(Dollars in billions)	June 30, 2018		June 30, 2017

Equipment	$	24.9	$	26.4
Services	69.4		74.0
Total	$	94.3	$	100.4



UNIT SALES
	2Q 2018	2Q 2017	V		YTD 2018	YTD 2017	V
Gas Turbines	7	21	(14	)	19	41	(22	)

2018 2Q FORM 10-Q 15



MD&A	SEGMENT OPERATIONS \| POWER

FINANCIAL OVERVIEW



SEGMENT REVENUES	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Revenues
Equipment	$	3.5		$	4.6		$	7.0		$	8.8
Services	4.1			4.8			7.8			8.5
Total	$	7.6		$	9.4		$	14.8		$	17.3

SEGMENT PROFIT AND PROFIT MARGIN	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Segment profit	$	0.4		$	1.0		$	0.7		$	1.4
Segment profit margin	5.6		%	10.6		%	4.7		%	8.3		%

2018 – 2017 COMMENTARY

The power market continued to be soft during the first half of 2018 due to energy efficiency, renewable energy penetration and delays in expected orders. We believe t he overall market for new heavy-duty gas orders in 2018 is trending to less than 30 gigawatts. In addition, excess capacity in developed markets, continued pressure in oil and gas applications and macroeconomic and geopolitical environments have created softening demand for gas turbines. AGP upgrades have also experienced decreased market demand as well as saturation in the North American market given previous penetration; however, we expect upgrade demand to continue in the Middle East, Africa and Southeast Asia markets.

THREE MONTHS ENDED JUNE 30 :

Segment revenues down $ 1.8 billion ( 19% );

Segment profit down $ 0.6 billion ( 58% ):

•

Equipment revenues decreased primarily at Gas Power Systems due to lower unit sales, including 12 fewer aeroderivative units as well as 14 fewer gas turbines and six fewer Heat Recovery Steam Generators. Services revenues decreased primarily due to the absence of Water following the sale in September 2017 as well as ten fewer AGP upgrades. Revenues also decreased due to price pressure, offset by the effects of a weaker U.S. dollar versus the euro.

•

The decrease in profit was due to lower volume including the absence of Water, negative variable cost productivity, lower transactional services revenue and negative mix in our long-term service contracts compared to the prior year. These decreases were partially offset by favorable business mix and cost reduction efforts, excluding the effects of acquisition and disposition activity and foreign exchange.

SIX MONTHS ENDED JUNE 30 :

Segment revenues down $ 2.5 billion ( 15% );

Segment profit down $ 0.7 billion ( 52% ):

•

Equipment revenues decreased primarily at Gas Power Systems due to lower unit sales, including 21 fewer aeroderivative units as well as 22 fewer gas turbines and 17 fewer Heat Recovery Steam Generators. Services revenues decreased primarily due to the absence of Water following the sale in September 2017 as well as 25 fewer AGP upgrades. Revenues also decreased due to price pressure, offset by the effects of a weaker U.S. dollar versus the euro.

•

The decrease in profit was due to lower volume including the absence of Water, negative variable cost productivity, lower transactional services revenue and negative mix in our long-term service contracts compared to the prior year. These decreases were partially offset by favorable business mix and cost reduction efforts , excluding the effects of acquisition and disposition activity and foreign exchange.

*Non-GAAP Financial Measure

16 2018 2Q FORM 10-Q



MD&A	SEGMENT OPERATIONS \| RENEWABLE ENERGY

RENEWABLE ENERGY

OPERATIONAL OVERVIEW



SUB-SEGMENT REVENUES	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Onshore Wind	$	1.3	$	2.1	$	2.6	$	3.6
Offshore Wind	0.1		0.1		0.3		0.1
Hydro	0.2		0.2		0.4		0.4
Total segment revenues	$	1.7	$	2.3	$	3.3	$	4.1



ORDERS	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Equipment	$	1.2	$	1.8	$	3.2	$	3.5
Services	0.6		0.3		0.9		0.7
Total	$	1.7	$	2.1	$	4.2	$	4.2



BACKLOG
(Dollars in billions)	June 30, 2018		June 30, 2017

Equipment	$	9.0	$	6.8
Services	7.5		5.7
Total	$	16.5	$	12.5



UNIT SALES
	2Q 2018	2Q 2017	V		YTD 2018	YTD 2017	V
Wind Turbines	351	719	(368	)	703	1,258	(555	)

2018 2Q FORM 10-Q 17



MD&A	SEGMENT OPERATIONS \| RENEWABLE ENERGY

FINANCIAL OVERVIEW



SEGMENT REVENUES	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Revenues
Equipment	$	1.1		$	1.9		$	2.3		$	3.4
Services	0.6			0.4			1.0			0.7
Total	$	1.7		$	2.3		$	3.3		$	4.1

SEGMENT PROFIT AND PROFIT MARGIN	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Segment profit	$	0.1		$	0.2		$	0.2		$	0.2
Segment profit margin	5.0		%	6.8		%	4.8		%	5.6		%

2018 – 2017 COMMENTARY

The renewable energy market remains competitive, particularly in onshore wind. The onshore wind market continues to see megawatt growth as customer preference has shifted from 1.X models to larger, more efficient units. However, overcapacity in the industry, the move to auctions in international markets and U.S. tax reform contributed to continued pricing pressure in the first half of 2018. In addition, uncertainty at the end of 2017 related to the impact of U.S. tax reform resulted in a temporary pause in project work in the first half of the year. Beginning in the third quarter of 2018, we expect project build and shipments to increase in anticipation of the expiration of Production Tax Credits (PTCs) at 100% value in 2020.

THREE MONTHS ENDED JUNE 30 :

Segment revenues down $0.7 billion ( 29% );

Segment profit down $0.1 billion ( 48% ):

•

Equipment volume decreased due to 368 fewer wind turbine shipments on a unit basis, or 38% fewer megawatts shipped, than in the prior year. Services volume increased due to 47 more repower units at Onshore Wind as well as a larger installed base resulting in increased contractual stream revenues. Revenues also decreased due to pricing pressure, partially offset by the effects of a weaker U.S. dollar versus the euro.


•	The decrease in profit was primarily due to pricing pressure.

SIX MONTHS ENDED JUNE 30 :

Segment revenues down $0.8 billion ( 19% );

Segment profit down $0.1 billion ( 30% ):

•

Equipment volume decreased due to 555 fewer wind turbine shipments on a unit basis, or 35% fewer megawatts shipped, than in the prior year. Services volume increased due to 159 more repower units at Onshore Wind as well as a larger installed base resulting in increased contractual stream revenues. Revenues also increased due to the acquisition of LM Wind in April 2017, which contributed $0.1 billion of inorganic revenue growth in the first half of 2018, and the effects of a weaker U.S. dollar versus the euro and the Chinese renminbi, partially offset by pricing pressure.


•	The decrease in profit was due to pricing pressure, partially offset by materials deflation.

18 2018 2Q FORM 10-Q



MD&A	SEGMENT OPERATIONS \| OIL & GAS

OIL & GAS

OPERATIONAL OVERVIEW



SUB-SEGMENT REVENUES	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Turbomachinery & Process Solutions (TPS)	$	1.4	$	1.6	$	2.8	$	3.2
Oilfield Services (OFS)	2.9		0.2		5.6		0.4
Oilfield Equipment (OFE)	0.6		0.7		1.3		1.4
Digital Solutions	0.7		0.5		1.3		1.0
Total segment revenues	$	5.6	$	3.0	$	10.9	$	6.1



ORDERS	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Equipment	$	2.5	$	1.4	$	4.5	$	2.2
Services	3.5		1.7		6.8		3.5
Total(a)	$	6.0	$	3.1	$	11.3	$	5.7
(a) Included $2.8 billion and $5.4 billion related to Baker Hughes for the three and six months ended June 30, 2018, respectively.



BACKLOG
(Dollars in billions)	June 30, 2018		June 30, 2017

Backlog
Equipment	$	5.3	$	5.6
Services	16.0		14.9
Total	$	21.4	$	20.5

2018 2Q FORM 10-Q 19



MD&A	SEGMENT OPERATIONS \| OIL & GAS

FINANCIAL OVERVIEW



SEGMENT REVENUES	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Revenues
Equipment(a)	$	2.2		$	1.3		$	4.4		$	2.6
Services(b)	3.4			1.7			6.5			3.5
Total	$	5.6		$	3.0		$	10.9		$	6.1
(a) $1.0 billion and $2.1 billion, excluding $1.2 billion and $2.3 billion related to Baker Hughes* for the three and six months ended June 30, 2018, respectively. (b) $1.8 billion and $3.4 billion, excluding $1.6 billion and $3.1 billion related to Baker Hughes* for the three and six months ended June 30, 2018, respectively.

SEGMENT PROFIT AND PROFIT MARGIN	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Segment profit(a)	$	0.1		$	0.1		$	(0.1	)	$	0.4
Segment profit margin(b)	1.3		%	4.0		%	(0.6		)%	6.2		%
(a) $0.1 billion and $0.2 billion, excluding an insignificant amount and $(0.2) billion related to Baker Hughes* for the three and six months ended June 30, 2018, respectively. (b) $3.7% and $2.9%, excluding (1.0)% and (4.3)% related to Baker Hughes* for the three and six months ended June 30, 2018, respectively.

2018 – 2017 COMMENTARY

Stability in the oil and gas market since the second half of 2017 has led to continued improvements in activity. North American onshore rig count has continued to grow, and international rig count has also seen moderate increases. Offshore projects remain subject to increases in customer spending behavior, and final investment decisions on liquefied natural gas (LNG) projects are also expected to start in late 2018 as the market continues to be oversupplied.

THREE MONTHS ENDED JUNE 30 :

Segment revenues up $2.6 billion ( 85% );

Segment profit down 39% :


•	The Baker Hughes acquisition in July 2017 contributed $2.8 billion of revenue growth in the second quarter of 2018. Legacy Oil & Gas equipment revenues decreased due to lower volume primarily at TPS and OFE as a result of the market conditions and lower opening backlog. These decreases were partially offset by the effects of a weaker U.S. dollar versus the euro.


•	The decrease in profit was primarily driven by restructuring and other charges, partially offset by synergies delivered from combining the two companies and favorable business mix.

SIX MONTHS ENDED JUNE 30 :

Segment revenues up $4.9 billion ( 80% );

Segment profit down $0.5 billion :


•	The Baker Hughes acquisition in July 2017 contributed $5.4 billion of revenue growth in the first half of 2018. Legacy Oil & Gas equipment and services revenues decreased due to lower volume primarily at TPS and OFE as a result of the market conditions and lower opening backlog. These decreases were partially offset by the effects of a weaker U.S. dollar versus the euro.


•	The decrease in profit was primarily driven by restructuring and other charges and unfavorable business mix, partially offset by synergies delivered from combining the two companies.

*Non-GAAP Financial Measure

20 2018 2Q FORM 10-Q



MD&A	SEGMENT OPERATIONS \| AVIATION

AVIATION

OPERATIONAL OVERVIEW



SUB-SEGMENT REVENUES	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Commercial Engines & Services	$	5.5	$	4.9	$	10.8	$	9.9
Military	1.1		0.9		2.0		1.9
Systems & Other	0.9		0.8		1.8		1.6
Total segment revenues	$	7.5	$	6.6	$	14.6	$	13.3



ORDERS	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Equipment	$	4.5	$	2.8	$	7.7	$	5.5
Services	5.0		4.6		9.9		9.1
Total	$	9.5	$	7.4	$	17.6	$	14.6



BACKLOG
(Dollars in billions)	June 30, 2018		June 30, 2017

Equipment	$	36.1	$	34.9
Services	171.9		146.9
Total	$	208.1	$	181.8



UNIT SALES
	2Q 2018		2Q 2017		V		YTD 2018		YTD 2017		V
Commercial Engines	697		627		70		1,348		1,254		94
LEAP Engines(a)	250		69		181		436		146		290
Military Engines	204		137		67		342		257		85
Spares Rate(b)	$	26.6	$	21.6	$	5.0	$	25.9	$	21.6	$	4.3
(a) LEAP engines are a subset of commercial engines (b) Commercial externally shipped spares and spares used in time & material shop visits in millions of dollars per day

2018 2Q FORM 10-Q 21



MD&A	SEGMENT OPERATIONS \| AVIATION

FINANCIAL OVERVIEW



SEGMENT REVENUES	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Revenues
Equipment	$	2.9		$	2.4		$	5.4		$	4.9
Services	4.6			4.3			9.2			8.4
Total	$	7.5		$	6.6		$	14.6		$	13.3

SEGMENT PROFIT AND PROFIT MARGIN	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Segment profit	$	1.5		$	1.4		$	3.1		$	2.6
Segment profit margin	19.6		%	20.7		%	21.0		%	19.9		%

2018 – 2017 COMMENTARY

Global passenger air travel continued to grow with revenue passenger kilometers (RPK) growth outpacing the five-year average and demand exceeding capacity. Industry-load factors remained above 80%. Air freight volume also increased, particularly in international markets. Freight capacity additions slightly exceeded freight volume growth in the first half of the year.

As of June 30, 2018, we continue to make progress on our commitment to recover on LEAP deliveries by year end. We shipped 436 LEAP engines in the first half of the year and remain on track to ship 1,100-1,200 engines in 2018.

THREE MONTHS ENDED JUNE 30 :

Segment revenues up $0.9 billion ( 13% );

Segment profit up $0.1 billion ( 7% ):


•	Equipment revenues increased due to 67 more military engine shipments and 70 more commercial units, including 181 more LEAP units partially offset by lower commercial legacy output in CFM and GE90 product lines, versus the prior year. Services revenues increased primarily due to a higher commercial spares shipment rate, as well as higher prices.


•	The increase in profit was mainly due to higher spare engine shipments, product and structural cost productivity and higher prices. These increases were partially offset by an unfavorable business mix driven by negative LEAP margin as well as higher overhaul shop costs due to increased volume and mix.

SIX MONTHS ENDED JUNE 30 :

Segment revenues up $1.3 billion ( 10% );

Segment profit up $0.4 billion ( 16% ):


•	Services revenues increased primarily due to a higher commercial spares shipment rate, as well as higher prices. Equipment revenues also increased due to 85 more military engine shipments and 94 more commercial units, including 290 more LEAP units, versus the prior year, partially offset by lower GEnx shipments and lower legacy commercial output in CFM and GE90 product lines.


•	The increase in profit was mainly due to higher prices, product and structural cost productivity and higher spare engine shipments. These increases were partially offset by an unfavorable business mix driven by negative LEAP margin as well as higher overhaul shop costs due to increased volume and mix.

22 2018 2Q FORM 10-Q



MD&A	SEGMENT OPERATIONS \| HEALTHCARE

HEALTHCARE

OPERATIONAL OVERVIEW



SUB-SEGMENT REVENUES	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Healthcare Systems	$	3.5	$	3.3	$	6.8	$	6.3
Life Sciences	1.2		1.2		2.4		2.2
Healthcare Digital	0.2		0.3		0.5		0.5
Total segment revenues	$	5.0	$	4.7	$	9.7	$	9.0



ORDERS	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Equipment	$	3.1	$	2.9	$	5.8	$	5.5
Services	2.2		2.0		4.2		4.0
Total	$	5.3	$	5.0	$	10.1	$	9.5



BACKLOG
(Dollars in billions)	June 30, 2018		June 30, 2017

Equipment	$	6.2	$	5.7
Services	11.4		11.8
Total	$	17.6	$	17.5

2018 2Q FORM 10-Q 23



MD&A	SEGMENT OPERATIONS \| HEALTHCARE

FINANCIAL OVERVIEW



SEGMENT REVENUES	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Revenues
Equipment	$	2.8		$	2.6		$	5.4		$	5.0
Services	2.2			2.1			4.3			4.0
Total	$	5.0		$	4.7		$	9.7		$	9.0

SEGMENT PROFIT AND PROFIT MARGIN	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Segment profit	$	0.9		$	0.8		$	1.7		$	1.5
Segment profit margin	18.6		%	17.6		%	17.1		%	16.5		%

2018 – 2017 COMMENTARY

The Healthcare Systems global market continues to expand at low single digit rates, driven by strength in emerging markets, as these economies continue to expand their population’s access to healthcare, and slower growth in developed markets. The Life Sciences market continues to be strong, with the Bioprocess market growing at a high single digit rate, driven by growth in biologic drugs, and the contrast agents market growing at low single digit rates.

THREE MONTHS ENDED JUNE 30 :

Segment revenues up $0.3 billion ( 6% );

Segment profit up $0.1 billion ( 12% ):

•

Services and equipment revenues increased due to higher volume in Healthcare Systems attributable to global growth in Imaging and Ultrasound in both developed regions such as the U.S. and Europe as well as developing regions such as China and emerging markets. Volume also increased in Life Sciences, driven by Bioprocess and Contrast Imaging. In addition, revenues increased due to the effects of a weaker U.S. dollar versus the euro and Chinese renminbi, partially offset by price pressure at Healthcare Systems.


•	The increase in profit was primarily driven by cost productivity due to cost reduction actions including increasing digital automation, sourcing and logistic initiatives, design engineering and prior year restructuring actions and higher volume. These increases were partially offset by price pressure at Healthcare Systems and investments in programs.

SIX MONTHS ENDED JUNE 30 :

Segment revenues up $0.7 billion ( 8% );

Segment profit up $0.2 billion ( 12% ):

•

Services and equipment revenues increased due to higher volume in Healthcare Systems attributable to global growth in Imaging and Ultrasound in both developed regions such as the U.S. and Europe as well as developing regions such as China and emerging markets. Volume increased in Life Sciences, driven by Bioprocess and Contrast Imaging. In addition, revenues increased due to the effects of a weaker U.S. dollar versus the euro and the Chinese renminbi, partially offset by price pressure at Healthcare Systems.


•	The increase in profit was primarily driven by strong volume growth and cost productivity due to cost reduction actions including increasing digital automation, sourcing and logistic initiatives, design engineering and prior year restructuring actions. These increases were partially offset by price pressure at Healthcare Systems, inflation and investments in programs.

24 2018 2Q FORM 10-Q



MD&A	SEGMENT OPERATIONS \| TRANSPORTATION

TRANSPORTATION

OPERATIONAL OVERVIEW



SUB-SEGMENT REVENUES	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Locomotives	$	0.2	$	0.4	$	0.3	$	0.9
Services	0.5		0.5		1.0		0.9
Mining	0.1		0.1		0.3		0.1
Other(a)	0.1		0.1		0.2		0.2
Total segment revenues	$	0.9	$	1.1	$	1.8	$	2.1

(a) Includes Marine, Stationary, Drilling and Digital



ORDERS	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Equipment	$	0.5	$	0.2	$	1.2	$	0.8
Services	0.6		0.5		1.4		1.1
Total	$	1.1	$	0.8	$	2.6	$	1.8



BACKLOG
(Dollars in billions)	June 30, 2018		June 30, 2017

Equipment	$	5.4	$	4.1
Services	13.0		13.9
Total	$	18.3	$	18.0



UNIT SALES
	2Q 2018	2Q 2017	V	YTD 2018	YTD 2017	V
Locomotives	54	120	(66)	114	277	(163)

2018 2Q FORM 10-Q 25



MD&A	SEGMENT OPERATIONS \| TRANSPORTATION

FINANCIAL OVERVIEW



SEGMENT REVENUES	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Revenues
Equipment	$	0.3		$	0.5		$	0.6		$	1.0
Services	0.6			0.6			1.2			1.0
Total	$	0.9		$	1.1		$	1.8		$	2.1

SEGMENT PROFIT AND PROFIT MARGIN	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Segment profit	$	0.2		$	0.2		$	0.3		$	0.3
Segment profit margin	16.5		%	17.0		%	15.7		%	13.5		%

2018 – 2017 COMMENTARY

The North American market continues to see some fleet overcapacity (which is declining) and constrained spending by the railroads limiting fleet expansion. However, total rail volume increased 5.2% during the second quarter of 2018 driven primarily by an increase in intermodal traffic ^(a) . With improving carload volume, the number of parked locomotives has decreased 31% from the prior year.

THREE MONTHS ENDED JUNE 30 :

Segment revenues down $ 0.1 billion ( 13% );

Segment profit down 15% :

•

Equipment volume decreased primarily driven by lower locomotive shipments in internationally and in North America due to continuing challenging market conditions. This decrease was partially offset by growth in mining and an increase in services revenues as railroads are running their locomotives longer, and recently unparked locomotives tend to be older units in higher need of servicing and replacement parts, driving an increase in services volume and parts shipped.


•	The decrease in profit was driven by lower equipment volume, partially offset by favorable business mix from a higher proportion of services volume.

SIX MONTHS ENDED JUNE 30 :

Segment revenues down $ 0.2 billion ( 12% );

Segment profit up 3% :

•

Equipment volume decreased primarily driven by lower locomotive shipments internationally and in North America due to continuing challenging market conditions. This decrease was partially offset by growth in mining and an increase in services revenues as railroads are running their locomotives longer, and recently unparked locomotives tend to be older units in higher need of servicing and replacement parts, driving an increase in services volume and parts shipped.


•	The increase in profit was driven by favorable business mix from a higher proportion of services volume as well as lower engineering spend and the effects of restructuring actions.

(a) Defined as when at least two modes of transportation are used to move freight.

26 2018 2Q FORM 10-Q



MD&A	SEGMENT OPERATIONS \| LIGHTING

LIGHTING

OPERATIONAL OVERVIEW



SUB-SEGMENT REVENUES	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Current	$	0.3	$	0.3	$	0.5	$	0.5
GE Lighting	0.2		0.2		0.4		0.4
Total segment revenues	$	0.4	$	0.5	$	0.9	$	0.9



ORDERS	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018		2017

Equipment	$	0.3	$	0.4	$	0.5	$	0.6
Services	—		—		—		—
Total	$	0.3	$	0.4	$	0.5	$	0.6



BACKLOG
(Dollars in billions)	June 30, 2018		June 30, 2017

Equipment	$	0.2	$	0.2
Services	—		—
Total	$	0.2	$	0.3

2018 2Q FORM 10-Q 27



MD&A	SEGMENT OPERATIONS \| LIGHTING

FINANCIAL OVERVIEW



SEGMENT REVENUES	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Revenues
Equipment	$	0.4		$	0.5		$	0.9		$	0.9
Services	—			—			—			—
Total	$	0.4		$	0.5		$	0.9		$	0.9

SEGMENT PROFIT AND PROFIT MARGIN	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Segment profit	$	—		$	—		$	—		$	—
Segment profit margin	5.6		%	3.6		%	2.9		%	2.9		%

2018 – 2017 COMMENTARY

The traditional lighting market continued to decline in the first half of 2018 with corresponding growth in LED lighting as the market shifts away from traditional lighting products in favor of more energy efficient, cost-saving options.

THREE MONTHS ENDED JUNE 30 :

Segment revenues down 9% ;

Segment profit up 41% :


•	Equipment revenues decreased due to Lighting regional exits outside of North America. Excluding the impact of regional exits, equipment revenues increased due to higher LED and Digital volume, partially offset by lower traditional lighting and solar sales, lower LED prices and product mix.


•	The increase in profit was driven by savings from restructuring and decreased investment and controllable spending, partially offset by regional exits, lower prices and product mix.

SIX MONTHS ENDED JUNE 30 :

Segment revenues down 5% ;

Segment profit down 4% :


•	Equipment revenues decreased due to Lighting regional exits outside of North America. Excluding the impact of regional exits, equipment revenues increased due to higher LED and Digital volume, partially offset by lower traditional lighting and solar sales, lower LED prices and product mix.


•	The decrease in profit was driven by regional exits, lower prices and product mix, partially offset by savings from restructuring and decreased investment and controllable spending.

28 2018 2Q FORM 10-Q



MD&A	SEGMENT OPERATIONS \| CAPITAL

CAPITAL

OPERATIONAL AND FINANCIAL OVERVIEW



SUB-SEGMENT REVENUES	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

GECAS	$	1.2		$	1.3		$	2.4		$	2.7
EFS	(0.1		)	0.1			(0.1		)	0.2
Industrial Finance and WCS(a)	0.4			0.4			0.7			0.7
Insurance	0.7			0.7			1.5			1.5
Other continuing operations	0.1			(0.1		)	0.1			—
Total segment revenues	$	2.4		$	2.4		$	4.6		$	5.1


(a)	In the second quarter of 2018, management of our Working Capital Solutions (WCS) business was transferred to our Treasury operations.



SEGMENT PROFIT(a)	Three months ended June 30						Six months ended June 30
(Dollars in billions)	2018			2017			2018			2017

Profit	$	(0.2	)	$	(0.2	)	$	(0.4	)	$	(0.2	)

(a) Interest and other financial charges, income taxes, non-operating benefit costs and GE Capital preferred stock dividends are included in

determining segment profit for the Capital segment, which is included in continuing operations. See Note 2 to the consolidated financial

statements for further information on discontinued operations.

SIGNIFICANT TRENDS & DEVELOPMENTS


•	GE Capital paid common dividends of $2.0 billion and $4.0 billion to GE in the three and six months ended June 30, 2017, respectively, and did not pay such dividends in the three or six months ended June 30, 2018. In addition, GE Capital does not expect to make a common dividend distribution to GE for the foreseeable future.

•

In 2018, we announced plans to take actions to make GE Capital smaller and more focused, including a substantial reduction in the size of GE Capital’s Energy Financial Services and Industrial Finance businesses over the next 24 months (GE Capital strategic shift). As a result, we classified financing receivables of the Energy Financial Services and Industrial Finance businesses as held for sale as we no longer intend to hold these financing receivables for the foreseeable future. See Note 6 to the consolidated financial statements for further information.

•

In the first quarter of 2018, GE Capital contributed $3.5 billion of capital to its insurance subsidiaries and expects to contribute approximately an additional $11 billion through 2024 subject to ongoing monitoring by the Kansas Insurance Department and the total amount to be contributed could increase or decrease based upon the results of reserve adequacy testing. GE maintains specified capital levels at these insurance subsidiaries under capital maintenance agreements. We perform premium deficiency testing at least annually. Any future adverse changes in our assumptions could result in an increase to future policy benefit reserves and additional contributions of capital over and above the $11 billion noted above. For example, a hypothetical five percent increase in future claim costs, holding all other assumptions constant, would result in a $1.5 billion increase to our future policy benefit reserves. Similarly, a hypothetical 25 basis point decline in expected investment yield, holding all other assumptions constant would result in a $1.0 billion increase in future policy benefit reserves. Any favorable changes to these assumptions could result in additional margin in our premium deficiency test and higher income over the remaining duration of the portfolio, including higher investment income. See Note 12 to the consolidated financial statements for further information.

•

We are actively exploring options to mitigate, reduce or eliminate our reinsurance exposures. These options include further premium increases, prudent enhancement of investment returns, transferring or terminating reinsurance arrangements, and risk-transfer transactions with third parties. Certain of these options could have a material financial impact, depending on the timing, extent of risk transfer to a third party, and negotiated terms and conditions of any ultimate arrangements.


•	During the first quarter of 2018, we recorded a reserve of $1.5 billion in discontinued operations in connection with the DOJ ongoing investigation regarding potential violations of FIRREA by WMC and GE Capital. See Legal Proceedings and Note 19 to the consolidated financial statements for further information.

2018 2Q FORM 10-Q 29



MD&A	SEGMENT OPERATIONS \| CAPITAL

2018 – 2017 COMMENTARY: THREE MONTHS ENDED JUNE 30

Capital revenues decreased primarily due to lower gains primarily at EFS and organic revenue declines.

Capital losses increased primarily due to higher impairments primarily at EFS related to its renewables and oil & gas investments, lower gains primarily at EFS related to non-recurring 2017 gains, and costs associated with calling debt, partially offset by higher base earnings and lower corporate and restructuring costs.

2018 – 2017 COMMENTARY: SIX MONTHS ENDED JUNE 30

Capital revenues decreased $0.5 billion, or 10%, primarily due to organic revenue declines and lower gains.

Capital losses increased $0.2 billion, or 93%, primarily due to lower gains, higher impairments, costs associated with calling debt and lower base earnings including a loss related to updates to the U.S. tax reform impact on energy investments, partially offset by lower corporate and restructuring costs.

30 2018 2Q FORM 10-Q



MD&A	CORPORATE ITEMS AND ELIMINATIONS



CORPORATE ITEMS AND ELIMINATIONS

REVENUES AND OPERATING PROFIT (COST)

		Three months ended June 30						Six months ended June 30
(In millions)		2018			2017			2018			2017

Revenues
	Eliminations and other	$	(982	)	$	(932	)	$	(1,890	)	$	(1,945	)
Total Corporate Items and Eliminations		$	(982	)	$	(932	)	$	(1,890	)	$	(1,945	)

Operating profit (cost)
	Gains (losses) on disposals(a)	$	309		$	—		$	243		$	2
	Restructuring and other charges(b)	(496		)	(709		)	(827		)	(1,682		)
	Unrealized gains (losses)(c)	266			—			266			—
	Eliminations and other	(389		)	(412		)	(643		)	(842		)
Total Corporate Items and Eliminations		$	(309	)	$	(1,120	)	$	(962	)	$	(2,522	)


(a)	Includes gains (losses) on disposed or held for sale businesses.


(b)	Subsequent to the Baker Hughes transaction, restructuring and other charges are included in the determination of segment profit for our Oil & Gas segment.


(c)	Amount is related to our Pivotal Software equity investment for the three and six months ended June 30, 2018.

We believe that adjusting operating corporate costs* to exclude the effects of items that are not closely associated with ongoing corporate operations (see reconciliation below), such as earnings of previously divested businesses, gains and losses on disposed and held for sale businesses, restructuring and other charges provides management and investors with a meaningful measure that increases the period-to-period comparability of our ongoing corporate costs.



CORPORATE COSTS (OPERATING)
	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Total Corporate Items and Eliminations (GAAP)	$	(309	)	$	(1,120	)	$	(962	)	$	(2,522	)
Less: restructuring and other charges	(496		)	(709		)	(827		)	(1,682		)
Less: gains (losses) on disposals	309			—			243			2
Less: unrealized gains (losses)	266			—			266			—
Adjusted total corporate costs (operating) (Non-GAAP)	$	(389	)	$	(412	)	$	(643	)	$	(842	)

2018 - 2017 COMMENTARY: THREE MONTHS ENDED JUNE 30

Revenues decreased $0.1 billion, primarily as a result of:


•	Increase in inter-segment eliminations.

Operating costs decreased $0.8 billion, primarily as a result of:


•	$0.3 billion of higher net gains from disposed and held for sale businesses, which included a $0.3 billion gain from the sale of our Industrial Solutions business to ABB in the second quarter of 2018.


•	$0.3 billion of higher unrealized gains related to our equity investment in Pivotal Software.


•	$0.2 billion of lower restructuring and other charges primarily within Oil & Gas, now reported in segment results, and Renewable Energy.

*Non-GAAP Financial Measure

2018 2Q FORM 10-Q 31



MD&A	CORPORATE ITEMS AND ELIMINATIONS

2018 - 2017 COMMENTARY: SIX MONTHS ENDED JUNE 30

Revenues increased $0.1 billion, primarily as a result of:


•	$0.1 billion decrease in inter-segment eliminations.

Operating costs decreased $1.6 billion, primarily as a result of:


•	$0.9 billion of lower restructuring and other charges primarily due to Oil & Gas and the non-recurrence of Alstom related restructuring costs in the first quarter of 2017.


•	$0.3 billion of unrealized gains related to our equity investment in Pivotal Software recorded in the second quarter of 2018.


•	$0.2 billion of higher net gains from disposed and held for sale businesses, which included a $0.3 billion gain from the sale of our Industrial Solutions business to ABB in the second quarter of 2018. These decreases were partially offset by $0.1 billion of lower gains due to held for sale adjustments primarily related to our Lighting and Aviation segments.


•	$0.2 billion of lower Corporate costs from restructuring and cost reduction actions.

RESTRUCTURING

Restructuring actions are an essential component of our cost improvement efforts to both existing operations and those recently acquired. Restructuring and other charges relate primarily to workforce reductions, facility exit costs associated with the consolidation of sales, service and manufacturing facilities, the integration of recent acquisitions, including Alstom, the Baker Hughes transaction, and certain other asset write-downs such as those associated with product line exits. We continue to closely monitor the economic environment and may undertake further restructuring actions to more closely align our cost structure with earnings and cost reduction goals.



RESTRUCTURING & OTHER CHARGES
	Three months ended June 30				Six months ended June 30
(In billions)	2018		2017		2018		2017

Workforce reductions	$	0.2	$	0.2	$	0.4	$	0.7
Plant closures & associated costs and other asset write-downs	0.3		0.3		0.5		0.5
Acquisition/disposition net charges	0.2		0.2		0.4		0.4
Goodwill impairment	—		—		—		—
Other	—		—		—		0.1
Total(a)	$	0.7	$	0.7	$	1.3	$	1.7


(a)	Subsequent to the Baker Hughes transaction, restructuring and other charges are included in the determination of segment profit for our Oil & Gas segment.

2018 - 2017 COMMENTARY: THREE MONTHS ENDED JUNE 30

For the three months ended June 30, 2018, restructuring and other charges were $0.7 billion of which approximately $0.2 billion was reported in cost of products/services and $0.4 billion was reported in selling, general and administrative expenses (SG&A). These activities were primarily at Oil & Gas, Corporate and Power. Cash expenditures for restructuring and other charges were approximately $0.4 billion for three months ended June 30, 2018. Of the total $0.7 billion restructuring and other charges, $0.2 billion was recorded in the Oil & Gas segment, which amounted to $0.1 billion net of noncontrolling interest.

For the three months ended June 30, 2017, restructuring and other charges were $0.7 billion of which approximately $0.4 billion was reported in cost of products/services and $0.3 billion was reported in SG&A. These activities were primarily at Power, Corporate and Oil & Gas. Cash expenditures for restructuring and other charges were approximately $0.4 billion for the three months ended June 30, 2017.

2018 - 2017 COMMENTARY: SIX MONTHS ENDED JUNE 30

For the six months ended June 30, 2018, restructuring and other charges were $1.3 billion of which approximately $0.5 billion was reported in cost of products/services and $0.8 billion was reported in selling, general and administrative expenses (SG&A). These activities were primarily at Oil & Gas, Corporate and Power. Cash expenditures for restructuring and other charges were approximately $0.8 billion for six months ended June 30, 2018. Of the total $1.3 billion restructuring and other charges, $0.5 billion was recorded in the Oil & Gas segment, which amounted to $0.3 billion net of noncontrolling interest.

For the six months ended June 30, 2017, restructuring and other charges were $1.7 billion of which approximately $1.1 billion was reported in cost of products/services and $0.6 billion was reported in SG&A. These activities were primarily at Power, Corporate and Oil & Gas. Cash expenditures for restructuring and other charges were approximately $1.0 billion for the six months ended June 30, 2017.

32 2018 2Q FORM 10-Q



MD&A	CORPORATE ITEMS AND ELIMINATIONS

COSTS AND GAINS NOT INCLUDED IN SEGMENT RESULTS

As discussed in the Segment Operations section within the MD&A, certain amounts are not included in industrial segment results because they are excluded from measurement of their operating performance for internal and external purposes. These costs relate primarily to restructuring and acquisition and disposition activities. The amount of costs and gains (losses) not included in segment results are as follows.



COSTS
	Three months ended June 30				Six months ended June 30
(In billions)	2018		2017		2018		2017

Power (a)	$	0.2	$	0.2	$	0.3	$	0.6
Renewable Energy	0.1		0.1		0.1		0.2
Oil & Gas(b)	—		0.1		—		0.2
Aviation	—		—		—		—
Healthcare	—		0.1		0.1		0.1
Transportation	—		—		—		0.1
Lighting (a)	—		—		—		0.1
Total	$	0.3	$	0.6	$	0.6	$	1.4



GAINS (LOSSES)
	Three months ended June 30				Six months ended June 30
(In billions)	2018		2017		2018			2017

Power (a)	$	0.3	$	—	$	0.3		$	—
Renewable Energy	—		—		—			—
Oil & Gas(b)	—		—		—			—
Aviation	—		—		—			—
Healthcare	—		—		—			—
Transportation	—		—		—			—
Lighting (a)	—		—		(0.1		)	—
Total	$	0.3	$	—	$	0.2		—


(a)	Beginning in the third quarter of 2017, the Energy Connections business within the former Energy Connections & Lighting segment was combined with the Power segment and presented as one reporting segment called Power. As a result of this combination, our GE Lighting and Current, powered by GE (Current) businesses are now reported as a separate segment called Lighting.


(b)	Subsequent to the Baker Hughes transaction, restructuring and other charges are included in the determination of segment profit for our Oil & Gas segment.

2018 2Q FORM 10-Q 33



MD&A	OTHER CONSOLIDATED INFORMATION

OTHER CONSOLIDATED INFORMATION

INCOME TAXES

GE pays the income taxes it owes in every country in which it does business. Many factors impact our income tax expense and cash tax payments. The most significant factor is that we conduct business in over 180 countries and the majority of our revenue is earned outside the U.S., including in countries with lower tax rates than in the U.S. We reinvest most of our foreign earnings overseas to be able to fund our active non-U.S. business operations. Our tax liability is also affected by U.S. and foreign tax incentives designed to encourage certain investments, like research and development; and by acquisitions, dispositions and tax law changes. On December 22, 2017, the U.S. enacted legislation commonly known as the Tax Cuts and Jobs Act (“U.S. tax reform”) that lowers the statutory tax rate on our U.S. earnings, taxes historic foreign earnings at a reduced rate of tax, creates a territorial tax system and enacts new taxes associated with global operations. Our provisional estimate of the transition tax on historic foreign earnings and the effect on our deferred taxes is described in Note 14 to the consolidated financial statements. Finally, our tax returns are routinely audited, and settlements of issues raised in these audits sometimes affect our tax rates.

GE and GE Capital file a consolidated U.S. federal income tax return. This enables GE and GE Capital to use tax deductions and credits of one member of the group to reduce the tax that otherwise would have been payable by another member of the group. The effective tax rate reflects the benefit of these tax reductions in the consolidated return. GE makes cash payments to GE Capital for tax reductions and GE Capital pays for tax increases at the time GE’s tax payments are due.

See Other Consolidated Information - Income Taxes section and Critical Accounting Estimates - Income Taxes section within MD&A in our Annual Report on Form 10-K for the year ended December 31, 2017 for further information on income taxes.

CONSOLIDATED



	Three months ended June 30				Six months ended June 30
(Dollars in billions)	2018		2017		2018	2017

Provision (benefit) for income taxes	$	0.5	$	—	0.5	(0.1)

2018 – 2017 COMMENTARY: THREE MONTHS ENDED JUNE 30

The consolidated income tax rate was 41% and (3)% for the quarters ended June 30, 2018 and 2017, respectively.

The consolidated provision for income taxes was $0.5 billion in the second quarter of 2018 and an insignificant amount of benefit in the second quarter of 2017 . The increase in tax provision was primarily due to lower benefits from global activities relative to the U.S. statutory rate including a change in deferred taxes resulting from the decision to execute an internal restructuring to separate the Healthcare business and the cost of the newly enacted base erosion and global intangible income provisions and dispositions taxed at a rate above the statutory tax rate. This was partially offset by an adjustment to the 2018 three-month provision that decreased the six- month rate to be in line with the lower projected full year rate while in 2017, the second quarter included an insignificant adjustment to increase the six-month rate to be in line with the higher projected full year rate.

The consolidated tax provision includes $0.5 billion and $0.2 billion of expense for GE (excluding GE Capital) for the second quarters of 2018 and 2017 , respectively.

2018 – 2017 COMMENTARY: SIX MONTHS ENDED JUNE 30

The consolidated income tax rate was 30% and (13)% for the six months ended June 30, 2018 and 2017, respectively.

The consolidated provision (benefit) for income taxes was $0.5 billion in the six months of 2018 and $(0.1) billion in the six months of 2017 . The increase in tax provision was primarily due to lower benefits from global activities relative to the U.S. statutory rate including a change in deferred taxes resulting from the decision to execute an internal restructuring to separate the Healthcare business and the cost of the newly enacted base erosion and global intangible income provisions, dispositions taxed at a rate above the statutory rate and by an increase in pretax income subject to tax. This was partially offset by an adjustment to the 2018 six-month provision that decreased the rate to be in line with the lower projected full year rate while in 2017, the first half included an adjustment to increase the six-month rate to be in line with the higher projected full year rate. In addition, in the first six months of 2018 there was a tax benefit to adjust the provisional estimate of the impact of U.S. tax reform primarily at Baker Hughes due to measurement period adjustments to purchase price allocation.

The consolidated tax provision includes $0.6 billion and $0.2 billion of expense for GE (excluding GE Capital) for the six months of 2018 and 2017 , respectively.

34 2018 2Q FORM 10-Q



MD&A	OTHER CONSOLIDATED INFORMATION

The effective tax rate in future periods is expected to increase given changes in our income profile including changes to GE Capital earnings.

See Note 14 to the consolidated financial statements for additional information related to income taxes.

BENEFITS FROM GLOBAL OPERATIONS

Absent the effects of U.S. tax reform, our consolidated income tax provision is reduced because of the benefits of lower-taxed global operations. The benefit was significant prior to the decrease in the U.S. statutory rate to 21% beginning in 2018. While reduced, there is still a benefit as certain non-U.S. income is subject to local country tax rates that are below the new U.S. statutory rate.

The rate of tax on our indefinitely reinvested non-U.S. earnings is below the historic 35% U.S. statutory tax rate because we have significant business operations subject to tax in countries where the tax on that income is lower than the U.S. statutory rate and because GE funds certain non-U.S. operations through foreign companies that are subject to low foreign taxes. Most of these earnings have been reinvested in active non-U.S. business operations and as of December 31, 2017, we had not decided to repatriate these earnings to the U.S. Given U.S. tax reform, substantially all of our prior unrepatriated earnings are subject to U.S. tax and accordingly we expect to have the ability to repatriate available non-U.S. cash from those earnings without additional U.S. federal tax cost and any foreign withholding taxes on a repatriation to the U.S. would potentially be partially offset by a U.S. foreign tax credit. We will update our analysis of investment in foreign earnings in 2018 as we consider the impact of U.S. tax reform.

A substantial portion of the benefit for lower-taxed non-U.S. earnings related to business operations subject to tax in countries where the tax on that income is lower than the U.S. statutory rate is derived from our GECAS aircraft leasing operations located in Ireland where the earnings are taxed at 12.5%, from our Power operations located in Switzerland and Hungary where the earnings are taxed at between 9% and 18.6%, and our Healthcare operations in Europe where tax deductions are allowed for certain intangible assets and earnings are taxed below the historic U.S. statutory rate.

Because the U.S. tax rate has been reduced to 21% beginning in 2018 and because the U.S. has adopted a territorial tax system and enacted new provisions of U.S. law related to taxation of global operations as part of U.S. tax reform, the overall tax benefit from non-U.S. operations compared to the U.S. statutory rate will be reduced or eliminated going forward as we also have non-U.S. operations taxed at close to the current U.S. statutory rate of 21% and non-U.S. operations with non-deductible losses and may incur additional taxes related to newly enacted U.S. tax provisions on global operations, as discussed below.

As part of U.S. tax reform, the U.S. has enacted a tax on “base eroding” payments from the U.S. We are evaluating the impact of this new provision on our operations and intend to undertake restructuring actions to avoid a significant impact from this provision. The U.S. has also enacted a minimum tax on foreign earnings (“global intangible low tax income”). Because we have tangible assets outside the U.S. and pay a rate of foreign tax above the minimum tax rate, we are not expecting a significant increase in tax liability from this new U.S. minimum tax. Because aspects of the new law and the effect on our operations is uncertain and because aspects of the accounting rules associated with the tax on global intangible low-taxed income have not been resolved, we have made an accrual for the current but not the deferred tax effects of this provision. Overall, we project a cost for the base erosion and global intangible low tax income provisions in 2018 that exceeds the net benefit of non-U.S. operations taxed at less than the 21% U.S. statutory tax rate.

We have not significantly adjusted our provisional estimate of the enactment of U.S. tax reform during the second quarter of 2018 as we continue to analyze information related to our operations as well as new guidance and other aspects of the enacted provisions. Based on our preliminary analysis through the second quarter of the enacted law, including advice from outside advisors, we believe the provisional estimate of the impact of enactment, as recorded in the fourth quarter of 2017 and adjusted during 2018 remains a reasonable estimate of the effects of enactment. We will finalize the impact of enactment during the second half of 2018 based on additional government guidance expected to be issued and additional analysis of our information including the filing of our 2017 tax return. However, there were discrete changes in the provisional estimate identified, primarily at Baker Hughes in connection with measurement period adjustments to purchase price allocation and the associated impact of the change in tax rate on deferred taxes that reduced the provisional amounts recorded by $0.1 billion in the first six months of 2018. Primarily all of this benefit relates to non-consolidated operations and did not affect net earnings to the company as there is an offsetting adjustment to income from noncontrolling interests. The net remaining cost also relates primarily to the revaluation of deferred taxes corresponding to measurement period adjustments to the purchase price allocation for the Baker Hughes acquisition.

DISCONTINUED OPERATIONS

Discontinued operations primarily comprise residual assets and liabilities related to our exited U.S. mortgage business (WMC), as discussed in Legal Proceedings and Notes 2 and 19 to the consolidated financial statements, as well as our mortgage portfolio in Poland and trailing liabilities associated with the sale of our GE Capital businesses as a result of the GE Capital Exit Plan (our plan announced in 2015 to reduce the size of our financial services businesses).

During the first quarter of 2018, we recorded a reserve of $1.5 billion in discontinued operations in connection with the DOJ ongoing investigation regarding potential violations of FIRREA by WMC and GE Capital. See Legal Proceedings and Note 19 to the consolidated financial statements for further information.

2018 2Q FORM 10-Q 35



MD&A	STATEMENT OF FINANCIAL POSITION

STATEMENT OF FINANCIAL POSITION

Because GE and GE Capital share certain significant elements of their Statements of Financial Position, the following discussion addresses significant captions in the consolidated statement. Within the following discussions, however, we distinguish between GE and GE Capital activities in order to permit meaningful analysis of each individual consolidating statement.

MAJOR CHANGES IN OUR FINANCIAL POSITION FOR THE SIX MONTHS ENDED
JUNE 30, 2018


•	Cash, cash equivalents and restricted cash decreased $16.3 billion .

As of June 30, 2018, GE Cash, cash equivalents and restricted cash excluding BHGE was $8.9 billion and BHGE Cash, cash equivalents and restricted cash was $4.9 billion.

GE Cash, cash equivalents and restricted cash decreased $5.0 billion due to payments of common dividends to shareowners of $2.1 billion, gross additions to PP&E and internal-use software of $1.8 billion, net repayments of borrowings of $1.2 billion (including $0.7 billion at BHGE), cash used for operating activities of $0.8 billion, BHGE net stock repurchases and dividends to noncontrolling interests of $0.5 billion, net investments in intangible assets of $0.5 billion and net settlements of derivative hedges of $0.5 billion, partially offset by proceeds from business dispositions of $2.4 billion.

GE Capital Cash, cash equivalents and restricted cash as of June 30, 2018 was $13.9 billion and decreased $11.3 billion primarily due to net repayments of borrowings of $16.5 billion and net purchases of investment securities of $3.5 billion, partially offset by net collections of financing receivables of $5.5 billion and maturities of liquidity investments of $3.9 billion.

See the Statement of Cash Flows section for additional information.


•	Investment securities decreased $2.1 billion , primarily due to maturities of liquidity portfolio investments and a decrease in net unrealized gains, partially offset by net purchases of investment securities at GE Capital. See Note 3 to the consolidated financial statements for additional information.


•	Current receivables decreased $3.4 billion, primarily due to customer collections of receivables sold by GE to GE Capital in prior periods outpacing new volume. See Note 4 to the consolidated financial statements for additional information.


•	Financing receivables - net decreased $2.0 billion, primarily due to the classification of Healthcare Equipment Finance financing receivables at GE Capital as held for sale, in connection with the GE Capital strategic shift. See Note 6 to the consolidated financial statements for additional information.


•	Property, plant and equipment - net decreased $3.0 billion, primarily due to depreciation and amortization of $2.7 billion and the classification of our Distributed Power business in our Power segment as held for sale of $0.3 billion. See Note 7 to the consolidated financial statements for additional information.


•	Goodwill decreased $1.5 billion, primarily due to the classification of our Distributed Power business in our Power segment as held for sale of $1.8 billion and the effects of currency exchange of $0.5 billion, partially offset by purchase accounting adjustments of $0.8 billion. See Note 8 to the consolidated financial statements for additional information.

•

Contract and other deferred assets increased $0.4 billion . Revenues in excess of billings increased $0.4 billion and decreased $0.1 billion for our long-term service and equipment agreements, respectively. In addition, other deferred assets increased $0.1 billion, primarily due to an increase in nonrecurring engineering costs of $0.2 billion partially offset by a decrease in deferred inventory costs of $0.1 billion. See Note 10 to the consolidated financial statements for additional information.


•	All other assets decreased $1.3 billion, primarily due to the adoption of ASU No. 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory , partially offset by the classification of Healthcare Equipment Finance financing receivables at GE Capital as held for sale. See Notes 1 and 6 to the consolidated financial statements for additional information.


•	Deferred income taxes increased $2.1 billion, primarily due to the adoption of ASU No. 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory . See Note 1 to the consolidated financial statements for additional information.


•	Borrowings decreased $19.0 billion, primarily due to net repayments of borrowings at GE Capital of $16.5 billion, net repayments of borrowings at BHGE of $0.7 billion and the effects of currency exchange of $0.5 billion. See Note 11 to the consolidated financial statements for additional information.


•	Investment contracts, insurance liabilities and insurance annuity benefits decreased $1.9 billion, primarily due to a decrease in future policy benefit reserves as a result of a decrease in unrealized gains on debt securities supporting insurance contracts. See Note 12 to the consolidated financial statements for additional information.


•	Non-current compensation and benefits decreased $1.9 billion, primarily due to principal pension plan funding of $1.0 billion.

36 2018 2Q FORM 10-Q



MD&A	FINANCIAL RESOURCES AND LIQUIDITY

FINANCIAL RESOURCES AND LIQUIDITY

LIQUIDITY AND BORROWINGS

We maintain a strong focus on liquidity. At both GE and GE Capital we manage our liquidity to help provide access to sufficient funding to meet our business needs and financial obligations throughout business cycles.

Our liquidity and borrowing plans for GE and GE Capital are established within the context of our financial and strategic planning processes and consider the liquidity necessary to fund our operating commitments, which include purchase obligations for inventory and equipment, payroll and general expenses (including pension funding). We also consider our capital allocation and growth objectives, including paying dividends, repurchasing shares, funding debt maturities and insurance obligations, investing in research and development and acquiring industrial businesses. We define our liquidity risk tolerance based on liquidity sources and uses, and our liquidity position is targeted to meet our obligations under both normal and stressed conditions.

GE cash, cash equivalents and restricted cash totaled $13.8 billion at June 30, 2018 , including $4.9 billion at BHGE. At GE, we rely primarily on free cash flows from our operating businesses, proceeds from announced dispositions and planned debt issuances. Cash generation can be subject to variability based on many factors, including seasonality, receipt of down payments on large equipment orders, timing of billings on long-term contracts, the effects of changes in end markets and our ability to execute dispositions. Our focus is on strengthening our cash position, with a balanced capital allocation plan including organic investments that generate strong returns, coupled with a competitive dividend payout ratio. We intend to maintain a disciplined financial policy and a strong credit profile, targeting $15 billion of on-balance-sheet cash by year end 2018, as well as a reduction of GE Industrial net debt* of approximately $25 billion by the end of 2020.

In 2018, GE expects to incur up to $6.0 billion of incremental long-term debt, primarily to fund the GE Pension Plan. This incremental debt is expected to consist of intercompany arrangements between GE and GE Capital, utilizing GE Capital's excess unsecured term debt. During the first six months of 2018, GE entered into two intercompany loans from GE Capital totaling $0.9 billion (utilizing a portion of GE Capital's excess unsecured term debt) to fund its required contributions to the GE Pension Plan. These loans bear the right of offset against amounts owed by GE Capital to GE under the assumed debt agreement and were priced at market terms with a weighted average interest rate and term of 4.6% and approximately 19 years, respectively.

Our 2018 capital allocation plan also considers the expected fourth quarter funding of €2.6 billion for Alstom redemption rights related to certain consolidated joint ventures. See Note 15 to the consolidated financial statements for further information.

GE has available a variety of liquidity management tools to fund its operations, including a commercial paper program, revolving credit facilities and short-term intercompany loans from GE Capital which are typically repaid within the same quarter. At GE Capital, we mainly rely on cash and short-term investments, cash generated from dispositions and cash flows from our businesses to fund our insurance obligations and debt maturities, including the current portion of long-term debt of $7.2 billion at June 30, 2018 , as well as our operating and interest costs.

Based on asset and liability management actions we have taken, GE Capital does not plan to issue any incremental GE Capital senior unsecured term debt until 2020. GE Capital expects to maintain an adequate liquidity position, primarily as a result of cash and short-term investments, cash generated from dispositions and cash flows from our businesses. During this period, we expect to continue to have excess interest costs as asset sales have outpaced our debt maturities. Additionally, as previously communicated, GE Capital expects to fund approximately $11.0 billion to our insurance subsidiaries over the next seven years, in addition to $3.5 billion which was funded in the first quarter of 2018. These contributions are subject to ongoing monitoring by the Kansas Insurance Department, and the total amount to be contributed could increase or decrease based upon the results of reserve adequacy testing. GE maintains specified capital levels at these insurance subsidiaries under capital maintenance agreements.

As of June 30, 2018 , GE Capital maintained liquidity sources of $ 15.6 billion that consisted of cash, cash equivalents and restricted cash of $ 13.9 billion, high-quality investments of $ 1.1 billion and cash, cash equivalents and restricted cash of $ 0.6 billion classified within discontinued operations. We also expect to generate incremental cash of approximately $25.0 billion from planned asset reduction actions over the next two years. Additionally, while we maintain adequate liquidity levels, we may engage in liability management actions, such as buying back debt, based on market and economic conditions in order to reduce our excess interest costs.

In 2015, senior unsecured notes and commercial paper were assumed by GE upon its merger with GE Capital resulting in an intercompany receivable and payable between GE and GE Capital. On the GE Statement of Financial Position, assumed debt is presented within borrowings with an offsetting receivable from GE Capital and on the GE Capital Statement of Financial Position, this is reflected as an intercompany payable to GE within borrowings. At June 30, 2018 , the outstanding assumed debt was $ 37.5 billion (see Note 11 to the consolidated financial statements for additional information). The following table provides a reconciliation of total short-term and long-term borrowings as reported on the respective GE and GE Capital Statements of Financial Position to borrowings originally issued by GE and GE Capital.

*Non-GAAP Financial Measure

2018 2Q FORM 10-Q 37



MD&A	FINANCIAL RESOURCES AND LIQUIDITY



June 30, 2018 (in billions)	GE			GE Capital			Consolidated(a)

Total short- and long-term borrowings	$	71.0		$	47.1		$	115.6

Debt assumed by GE from GE Capital	(37.5		)	37.5			—
Intercompany loans with right of offset	8.2			(8.2		)	—
Total intercompany payable (receivable) between GE and GE Capital	(29.3		)	29.3			—

Total borrowings issued and outstanding	$	41.7		$	76.4		$	115.6


(a)	Includes $2.5 billion elimination of other intercompany borrowings between GE and GE Capital.

The following table illustrates the primary components of borrowings originally issued and outstanding in GE and GE Capital.



(In billions)
GE	June 30, 2018		GE Capital	June 30, 2018
Commercial paper	$	3.0	Commercial paper	$	3.0
Senior notes	20.8		Senior and subordinated notes	40.8
Intercompany loans from GE Capital(a)	8.2		Senior and subordinated notes assumed by GE	37.5
Other GE borrowings	3.2		Intercompany loans to GE(a)	(8.2		)
Total GE excluding BHGE	$	35.2	Other GE Capital borrowings	3.3
BHGE borrowings	6.4
Total borrowings issued by GE	$	41.7	Total borrowings issued by GE Capital	$	76.4


(a)	The intercompany loans from GE Capital to GE bear the right of offset against amounts owed by GE Capital to GE under the assumed debt agreement.

In conjunction with the 2016 exchange of the GE Capital preferred stock into GE preferred stock and the exchange of Series A, B and C preferred stock into Series D preferred stock, GE Capital issued preferred stock to GE for which the amount and terms mirrored the GE preferred stock held by external investors ($5,495 million carrying value at June 30, 2018 ). On July 1, 2018, GE Capital and GE exchanged the existing Series D preferred stock issued to GE for new GE Capital Series D preferred stock that is mandatorily convertible into GE Capital common stock on January 21, 2021. The cash dividend on the new GE Capital preferred stock will equal the cash dividend and accretion on the GE Series D preferred stock through January 21, 2021, at which time the GE Capital preferred stock will convert to GE Capital common stock. After this conversion, GE Capital will no longer pay preferred stock dividends to GE and GE will have to rely on its own cash flows to pay dividends on the GE Series D preferred stock. The exchange of GE Capital Series D preferred stock has no impact on the GE Series D preferred stock, which remains callable for $5,694 million on January 21, 2021 or thereafter on dividend payment dates.

LIQUIDITY SOURCES

GE cash, cash equivalents and restricted cash totaled $13.8 billion at June 30, 2018 , including $4.9 billion in BHGE that can only be accessed by GE through the declaration of a dividend by BHGE's Board of Directors, our pro-rata share of BHGE stock buy-backs, and settlements of any intercompany positions. As a result of these restrictions, GE does not consider BHGE cash a freely available source of liquidity for its purposes. GE Capital maintained liquidity sources of $15.6 billion that consisted of cash, cash equivalents and restricted cash of $13.9 billion , high-quality investments of $1.1 billion and cash, cash equivalents and restricted cash of $0.6 billion classified as discontinued operations. Additionally, GE had in place $47.0 billion of committed credit lines ($40.3 billion net of offset provisions) at June 30, 2018 .



CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(In billions)	June 30, 2018			June 30, 2018

GE(a)	$	13.8	U.S.	$	9.2
GE Capital(b)	13.9		Non-U.S.	18.4

(a)

At June 30, 2018 , $4.1 billion of GE cash, cash equivalents and restricted cash was held in countries with currency controls that may restrict the transfer of funds to the U.S. or limit our ability to transfer funds to the U.S. without incurring substantial costs. These funds are available to fund operations and growth in these countries and we do not currently anticipate a need to transfer these funds to the U.S. Included in this amount was $1.1 billion of BHGE cash and equivalents, which is subject to similar restrictions.


(b)	Included $0.6 billion held in insurance and banking entities which are subject to regulatory restrictions.

Excluding cash held in countries with currency controls and cash at BHGE, total GE cash, cash equivalents and restricted cash was $6.0 billion at June 30, 2018 .

38 2018 2Q FORM 10-Q



MD&A	FINANCIAL RESOURCES AND LIQUIDITY



COMMITTED AND AVAILABLE CREDIT LINES
June 30 (In billions)	2018

Unused back-up revolving credit facility (exceeding one year)(a)	$	20.0
Revolving credit facilities (exceeding one year)(b)	22.0
Bilateral revolving credit facilities (364-day)(c)	5.1
Total committed credit lines	$	47.0
Less offset provisions (d)	(6.7		)
Total net available credit lines	$	40.3


(a)	Consisted of a $20 billion syndicated credit facility extended by 36 banks, expiring in 2021.


(b)	Consisted primarily of a $19.8 billion syndicated credit facility extended by six banks, expiring in 2020.


(c)	Consisted of credit facilities extended by 10 banks, with expiration dates ranging from September 2018 to May 2019.


(d)	Commitments under certain credit facilities in (a) and (b) may be reduced by up to $6.7 billion due to offset provisions for any bank that holds a commitment to lend under both syndicated credit facilities.

On June 22, 2018, GE entered into an unsecured revolving credit facility with six banking organizations at an initial aggregate principal commitment amount of $19.8 billion. This facility replaced the unsecured revolving credit facilities that were entered into on January 15, 2018, increasing GE’s total net available credit lines from approximately $37.5 billion to approximately $40 billion and extending the duration of its unsecured revolving credit facilities to align with the execution timeline for the new strategic plan. Under the terms of an agreement between GE Capital and GE, GE Capital has the right to compel GE to borrow under certain of these credit lines and transfer the proceeds to GE Capital as intercompany loans, which would be subject to the same terms and conditions as those between GE and the lending banks.



COMMERCIAL PAPER
(In billions)	GE		GE Capital

2018
Average borrowings during the second quarter	$	13.4	$	3.2
Maximum borrowings outstanding during the second quarter	$	15.8	$	4.0
Ending balance at June 30	$	3.0	$	3.0

2017
Average borrowings during the second quarter	$	16.0	$	5.0
Maximum borrowings outstanding during the second quarter	$	19.6	$	5.1
Ending balance at June 30	$	2.0	$	5.0

GE Capital commercial paper maturities have historically been funded principally through new commercial paper issuances, and GE's are substantially repaid within the respective quarter.

We securitize financial assets as an alternative source of funding. During 2018, we completed $0.4 billion of non-recourse issuances and $1.0 billion of non-recourse borrowings matured. At June 30, 2018 , consolidated non-recourse securitization borrowings were $1.3 billion .

FOREIGN CURRENCY

As a result of our global operations, we generate and incur a significant portion of our revenues and expenses in currencies other than the U.S. dollar. Such principal currencies are euro, the pound sterling, the Brazilian real and the Chinese renminbi. The results of operating entities reported in currencies other than U.S. dollar are translated to the U.S. dollar at the applicable exchange rate for inclusion in the financial statements. We use a number of techniques to manage the effects of currency exchange, including selective borrowings in local currencies and selective hedging of significant cross-currency transactions. The foreign currency effect arising from operating activities outside of the U.S., including the remeasurement of derivatives, can result in significant transactional foreign currency fluctuations at points in time, but will generally be offset as the underlying hedged item is recognized in earnings. The effects of foreign currency fluctuations, excluding the earnings impact of the underlying hedged item, decreased net earnings for the three months ended June 30, 2018 by less than $0.2 billion.

During the second quarter, we designated the Angolan kwanza as highly inflationary, which had an immaterial impact on our financial statements. Effective July 1, 2018, we will designate the Argentine peso as highly inflationary, for which we are currently assessing the impact on our financial statements.

2018 2Q FORM 10-Q 39



MD&A	FINANCIAL RESOURCES AND LIQUIDITY

As of June 30, 2018 , we held the U.S. dollar equivalent of $0.4 billion of cash in Angolan kwanza. As there is no liquid derivatives market for this currency, we have used Angolan kwanza to purchase $0.4 billion equivalent bonds issued by the central bank in Angola (Banco Nacional de Angola) with various maturities through 2020 to mitigate the related currency devaluation exposure risk. The bonds are denominated in Angolan kwanza as U.S. dollar equivalents, so that, upon payment of periodic interest and principal upon maturity, payment is made in Angolan kwanza, equivalent to the respective U.S. dollars at the then-current exchange rate.

See Note 17 to the consolidated financial statements for further information about our risk exposures, our use of derivatives, and the effects of this activity on our financial statements.

CREDIT RATINGS

We have relied, and may continue to rely, on the short-term and long-term debt capital markets to fund, among other things, a significant portion of our operations and significant acquisitions. The cost and availability of debt financing is influenced by our credit ratings. Moody’s Investors Service (Moody’s), Standard and Poor’s Global Ratings (S&P), and Fitch Ratings (Fitch) currently issue ratings on GE and GE Capital short- and long-term debt.

On June 26, 2018, S&P changed its rating outlook from stable to CreditWatch with negative implications for GE and GE Capital. The short- and long-term credit ratings of A-1 and A, respectively, remain unchanged.

On June 14, 2018, Fitch lowered the credit ratings of GE and GE Capital long-term unsecured debt from A+ to A. The F1 short-term rating and Negative outlook remain unchanged.

On April 25, 2018, Moody’s changed its ratings outlook to negative from stable for GE and GE Capital, and affirmed their short- and

long-term credit ratings for GE and GE Capital.

We are disclosing these updates and the ratings below to enhance understanding of our sources of liquidity and the effects of our ratings on our costs of funds. Our ratings may be subject to a revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating. For a description of some of the potential consequences of a reduction in our credit ratings, see “Risk Factors - Funding & liquidity - Failure to maintain our credit ratings, or conditions in the financial and credit markets, could adversely affect our access to capital markets, funding costs and related margins, liquidity, capital allocation plans and competitive position.”

The credit ratings of GE and GE Capital as of the date of this filing are set forth in the table below.



	Moody's	S&P	Fitch

GE
Outlook	Negative	CreditWatch Negative	Negative
Short term	P-1	A-1	F1
Long term	A2	A	A

GE Capital
Outlook	Negative	CreditWatch Negative	Negative
Short term	P-1	A-1	F1
Long term	A2	A	A

40 2018 2Q FORM 10-Q



MD&A	FINANCIAL RESOURCES AND LIQUIDITY

STATEMENT OF CASH FLOWS – SIX MONTHS ENDED JUNE 30, 2018 VERSUS 2017

We evaluate our cash flows performance by reviewing our industrial (non-GE Capital) businesses and GE Capital businesses separately. Cash from operating activities (CFOA) is the principal source of cash generation for our industrial businesses.

All other operating activities reflect cash sources and uses as well as non-cash adjustments to net earnings (loss) including those related to taxes, pensions, restructuring and gains (losses) on principal business dispositions. See Note 20 to the consolidated financial statements for further information regarding All other operating activities and All other investing activities.

GE CASH FLOWS

With respect to GE CFOA, we believe that it is useful to supplement our GE Statement of Cash Flows and to examine in a broader context the business activities that provide and require cash.

The most significant source of cash in GE CFOA is customer-related activities, the largest of which is collecting cash resulting from product or services sales. The most significant operating use of cash is to pay our suppliers, employees, tax authorities and others for a wide range of material and services. Common dividends from GE Capital represent the distribution of a portion of GE Capital retained earnings, and are distinct from cash from continuing operations within the GE Capital businesses.

In the following discussion, Net earnings for cash flows represents the adding together of Net earnings (loss), (Earnings) loss from discontinued operations and (Earnings) loss from continuing operations retained by GE Capital, excluding GE Capital common dividends paid to GE, if any.

See the Intercompany Transactions between GE and GE Capital section within the MD&A and Notes 4 and 21 to the consolidated financial statements for further information regarding certain transactions affecting our consolidated Statement of Cash Flows.

2018 – 2017 COMMENTARY

GE cash used for operating activities increased $4.4 billion primarily due to the following:


•	No common dividends were paid by GE Capital to GE in the six months ended June 30, 2018 compared with $4.0 billion in the six months ended June 30, 2017 .


•	Cash used for GE CFOA (excluding common dividends received from GE Capital in 2017) amounted to $0.8 billion and $0.4 billion in 2018 and 2017 , respectively, primarily due to the following:

•

Net earnings for cash flows plus depreciation and amortization of property, plant and equipment, amortization of intangible assets and deferred income taxes of $ 4.3 billion in 2018 compared with $2.8 billion in 2017 . Net earnings for cash flows included a pre-tax gain of $0.3 billion from the sale of our Industrial Solutions business in 2018, which is not included in GE CFOA and is instead reflected as a component of total Proceeds from principal business dispositions within Cash from (used for) investing activities. Net earnings for cash flows also included cash and non-cash pre-tax gains of $0.5 billion from other investments and sales of intangible assets in 2018 and current tax expense of $0.5 billion and $0.8 billion in 2018 and 2017, respectively.


•	Lower growth in contract and other deferred assets of $0.9 billion in 2018 compared with $2.4 billion in 2017 , primarily due to the timing of revenue recognized relative to the timing of billings and collections on both our long-term equipment and long-term service agreements and the liquidation of deferred inventory, primarily in our Power segment.

•

An increase in cash used for working capital of $2.2 billion in 2018 compared with $0.2 billion in 2017. This was primarily due to an increase in cash used for current receivables of $1.1 billion, mainly in our Renewable Energy and Aviation segments, an increase in cash used for inventories of $1.0 billion, mainly in our Oil & Gas, Renewable Energy and Aviation segments and an increase in cash used from progress collections of $1.3 billion, mainly in our Power and Aviation segments, partially offset by our Renewable Energy segment. These increases in cash used for working capital were partially offset by an increase in cash generated from accounts payable of $1.3 billion, mainly in our Aviation, Oil & Gas and Healthcare segments.


•	GE Pension Plan contributions of $0.9 billion in 2018 compared with $0.2 billion in 2017.


•	Lower taxes paid of $0.9 billion in 2018 compared with $1.3 billion in 2017.

2018 2Q FORM 10-Q 41



MD&A	FINANCIAL RESOURCES AND LIQUIDITY

GE cash used for investing activities decreased $4.7 billion primarily due to the following:


•	No business acquisitions in 2018 , compared with business acquisitions of $ 2.6 billion in 2017 , mainly driven by the acquisition of LM Wind for $1.6 billion (net of cash acquired) and ServiceMax for $ 0.9 billion (net of cash acquired).


•	Proceeds from business dispositions of $2.4 billion in 2018 , primarily from the sale of our Industrial Solutions business for $2.2 billion (net of cash transferred), compared with $0.1 billion in 2017.


•	These decreases in cash used were partially offset by following increases:


•	Technology investments in our Aviation segment of $0.6 billion in 2018, compared with $0.3 billion in 2017.


•	Net cash paid for settlements of derivative hedges of $0.5 billion in 2018.

GE cash used for financing activities increased $8.4 billion primarily due to the following:

•

A net decrease in borrowings of $ 1.2 billion in 2018 , mainly driven by net repayments of debt of $2.1 billion (including $0.7 billion at BHGE), partially offset by long-term loans from GE Capital to GE of $0.9 billion, compared with a net increase in borrowings of $11.6 billion in 2017 , mainly driven by the issuance of long-term debt of $8.6 billion, primarily to fund business acquisitions, and long-term loans from GE Capital to GE of $4.1 billion, partially offset by the settlement of the remaining portion of a 2016 short-term loan from GE Capital to GE of $1.3 billion.


•	BHGE net stock repurchases and dividends to noncontrolling interests of $0.5 billion in 2018 , compared with no such activity in 2017.


•	These increases in cash used were partially offset by the following decreases:


•	An insignificant amount of net repurchases of GE treasury shares in 2018 , compared with net repurchases of $2.7 billion in 2017 .


•	Common dividends paid to shareowners of $2.1 billion in 2018, compared with $4.2 billion in 2017.

GE CAPITAL CASH FLOWS

2018 – 2017 COMMENTARY-CONTINUING OPERATIONS:

GE Capital cash used for operating activities-continuing operations increased $2.1 billion primarily due to the following:


•	Net increase in cash collateral paid to counterparties on derivative contracts of $2.1 billion.

GE Capital cash from investing activities-continuing operations decreased $2.2 billion primarily due to the following:


•	Investment securities decreased $4.4 billion related to net maturities of $0.7 billion in 2018 compared to net maturities of $5.2 billion in 2017 .


•	Net proceeds from the sales of our discontinued operations of an insignificant amount in 2018 compared to $0.8 billion in 2017 .


•	A general reduction in funding related to discontinued operations.


•	These decreases in cash were partially offset by the following increases:


•	Higher collections of financing receivables of $2.6 billion in 2018.


•	Long-term loans from GE Capital to GE of $0.9 billion in 2018 compared to long-term loans from GE Capital to GE of $4.1 billion partially offset by the settlement of the remaining portion of a 2016 short-term loan from GE Capital to GE of $1.3 billion in 2017 .

GE Capital cash used for financing activities-continuing operations decreased $1.1 billion primarily due to the following:


•	No GE Capital common dividends paid to GE in 2018 compared to $4.0 billion in 2017.


•	A net decrease in derivative cash settlements paid of $0.2 billion


•	These decreases in cash were partially offset by higher net repayments of borrowings of $16.6 billion in 2018 compared to $13.0 billion in 2017.

42 2018 2Q FORM 10-Q



MD&A	FINANCIAL RESOURCES AND LIQUIDITY

INTERCOMPANY TRANSACTIONS BETWEEN GE AND GE CAPITAL

GE Capital, the financial arm of GE, provides financial and intellectual capital to GE’s industrial businesses and its customers. GE Capital enables GE orders by either providing direct financing for a GE transaction or by bringing market participants together that result in industrial sales. On January 16, 2018, we announced plans to take actions to make GE Capital smaller and more focused, including a substantial reduction in the size of GE Capital's Energy Financial Services and Industrial Finance businesses over the next 24 months. We will retain origination capabilities to support our industrial businesses; however, we will transition to more funding by the capital markets, including export credit agencies and financial institutions. The transactions where GE and GE Capital are directly involved are made on arm's length terms and are reported in the GE and GE Capital columns of our financial statements. These transactions include, but are not limited to, the following:


•	GE Capital dividends to GE,


•	GE Capital working capital solutions to optimize GE cash management,


•	GE Capital enabled GE industrial orders, including related GE guarantees to GE Capital,


•	GE Capital financing of GE long-term receivables, and


•	Aircraft engines, power equipment, renewable energy equipment and healthcare equipment manufactured by GE that are installed on GE Capital investments, including leased equipment.

In addition to the above transactions that primarily enable growth for the GE businesses, there are routine related party transactions, which include, but are not limited to, the following:


•	Expenses related to parent-subsidiary pension plans,


•	Buildings and equipment leased between GE and GE Capital, including sale-leaseback transactions,


•	Information technology (IT) and other services sold to GE Capital by GE,


•	Settlements of tax liabilities, and


•	Various investments, loans and allocations of GE corporate overhead costs.

CASH FLOWS

GE did not receive a common dividend distribution from GE Capital in the six months ended June 30, 2018 and it does not expect to for the foreseeable future. GE Capital paid $4.0 billion of common dividends to GE in the six months ended June 30, 2017 .

In order to manage short-term liquidity and credit exposure, GE sells current receivables to GE Capital and other third parties in part to fund the growth of our industrial businesses. During any given period, GE receives cash from the sale of receivables to GE Capital and other third parties, and it therefore forgoes the future collections of cash on receivables sold, as GE Capital collects the cash from the customer. GE also leverages GE Capital for its expertise in receivables collection services and sales of receivables to GE Capital are made on arm’s length terms. These transactions can result in cash generation or cash use in the Statement of Cash Flows. The incremental amount of cash received from sales of receivables in excess of the cash GE would have otherwise collected had these receivables not been sold represents the cash generated or used in the period relating to this activity. The impact from current receivables sold to GE Capital, including current receivables subsequently sold to third parties, decreased GE’s CFOA by $3.0 billion and $2.5 billion in the six months ended June 30, 2018 and 2017 , respectively.

As of June 30, 2018 , GE Capital had approximately $ 7.0 billion recorded on its balance sheet related to current receivables purchased from GE. Of these amounts, approximately 32% had been sold by GE to GE Capital with recourse (i.e., the GE business retains the risk of default). The evaluation of whether recourse transactions qualify for accounting derecognition is based, in part, upon the legal jurisdiction of the sale; as such, the majority of recourse transactions outside the U.S. qualify for sale treatment. The effect on GE CFOA of claims by GE Capital on receivables sold with recourse to GE has not been significant for the six months ended June 30, 2018 and 2017 .

In December 2016, GE Capital entered into a Receivables Facility with members of a bank group, designed to provide extra liquidity to GE. The Receivables Facility allows us to sell eligible current receivables on a non-recourse basis for cash and a deferred purchase price to members of the bank group. The purchase commitment of the bank group remains at $ 3.8 billion at June 30, 2018 . See Note 4 to the consolidated financial statements for further information.

2018 2Q FORM 10-Q 43



MD&A	FINANCIAL RESOURCES AND LIQUIDITY

In certain circumstances, GE provides customers primarily within our Power, Renewable Energy and Aviation businesses with extended payment terms for the purchase of new equipment, purchases of significant upgrades and for fixed billings within our long-term service contracts. Similar to current receivables, GE may sell these long-term receivables to GE Capital to manage short-term liquidity and fund growth. These transactions are made on arm's length terms and any fair value adjustments, primarily related to time value of money, are recognized within the Industrial business in the period these receivables are sold to GE Capital. GE Capital accretes interest and factoring fee income over the life of the receivables. Factoring fee income is eliminated in our consolidated results. In addition, the long-term portion of any remaining outstanding receivables as of the end of the period are reflected in All other assets within our consolidated Statement of Financial Position. Related to GE long-term customer receivables outstanding, assets at GE Capital decreased to $1.3 billion from $2.1 billion, net of deferred income of approximately $0.1 and $0.3 billion recorded in its balance sheet at June 30, 2018 and December 31, 2017 , respectively. The effect of cash generated from the sale of these long-term receivables to GE Capital decreased GE's CFOA by $0.5 billion and increased GE's CFOA by $0.3 billion in the six months ended June 30, 2018 and 2017 , respectively.

ENABLED ORDERS

Enabled orders represent the act of introducing, elevating and influencing customers and prospects that result in an industrial sale, potentially coupled with programmatic captive financing or driving incremental products or services. During the six months ended June 30, 2018 and 2017 , GE Capital enabled $ 3.0 billion and $ 6.1 billion of GE industrial orders, respectively. In 2018, orders were primarily with our Renewable Energy ($ 1.0 billion), Healthcare ($ 0.9 billion) and Transportation ($ 0.5 billion) businesses.

AVIATION

During the six months ended June 30, 2018 and 2017 , GE Capital acquired 17 aircraft (list price totaling $ 2.0 billion) and 22 aircraft (list price totaling $ 3.1 billion), respectively, from third parties that will be leased to others, which are powered by engines that were manufactured by GE Aviation and affiliates and made payments related to spare engines and engine parts to GE Aviation and affiliates of $0.3 billion and $0.1 billion, respectively. Additionally, GE Capital had $ 1.1 billion and $1.2 billion of net book value of engines, originally manufactured by GE Aviation and affiliates and subsequently leased back to GE Aviation and affiliates at June 30, 2018 and December 31, 2017 , respectively.

PENSIONS

GE Capital is a member of certain GE Pension Plans. As a result of the GE Capital Exit Plan, GE Capital will have additional funding obligations for these pension plans. These obligations are recognized as an expense in GE Capital’s other continuing operations when they become probable and estimable. There was no additional funding obligations recognized by GE Capital for the six months ended June 30, 2018 . The additional funding obligation recognized by GE Capital was $ 0.1 billion and $ 0.3 billion for the three and six months ended June 30, 2017 .

On a consolidated basis, the additional required pension funding and any related assumption fees do not affect current period earnings. Any additional required pension funding will be reflected as a reduction of the pension liability when paid.

GE GUARANTEE OF GE CAPITAL THIRD-PARTY TRANSACTIONS

In certain instances, GE provides guarantees to GE Capital transactions with third parties primarily in connection with enabled orders. In order to meet its underwriting criteria, GE Capital may obtain a direct guarantee from GE related to the performance of the third party. GE guarantees can take many forms and may include, but not be limited to, direct performance or payment guarantees, return on investment guarantees, asset value guarantees and loss pool arrangements. As of June 30, 2018 , GE had outstanding guarantees to GE Capital on $ 2.1 billion of funded exposure and $ 0.9 billion of unfunded commitments, which included guarantees issued by industrial businesses. The recorded amount of these contingent liabilities was $ 0.2 billion as of June 30, 2018 and is dependent upon individual transaction level defaults, losses and/or returns.

GE GUARANTEE OF CERTAIN GE CAPITAL DEBT

GE provides implicit and explicit support to GE Capital through commitments, capital contributions and operating support. As previously discussed, debt assumed by GE from GE Capital in connection with the merger of GE Capital into GE was $ 37.5 billion , and GE guaranteed $ 39.0 billion of GE Capital debt at June 30, 2018 .

See Note 21 to the consolidated financial statements for additional information about the eliminations of intercompany transactions between GE and GE Capital.

44 2018 2Q FORM 10-Q



MD&A	CRITICAL ACCOUNTING ESTIMATES

CRITICAL ACCOUNTING ESTIMATES

We utilized significant estimates in the preparation of the second quarter financial statements.

Please refer to the Critical Accounting Estimates section within MD&A and Note 1 to the consolidated financial statements of our Annual Report on Form 10-K Report filed on February 23, 2018, for a discussion of our accounting policies and the critical accounting estimates we use to: assess the recoverability of assets such as financing receivables and goodwill; determine the fair value of financial assets; determine our provision for income taxes and recoverability of deferred tax assets and determine the liability for future policy benefits.

REVENUE RECOGNITION ON LONG-TERM PRODUCT SERVICES AGREEMENTS

On January 1, 2018, we adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers , and the related amendments (ASC 606), which supersedes most previous U.S. GAAP revenue guidance. The standard requires us to make certain estimates that affect the amount and timing of revenue recognized in a given period, primarily related to equipment and service contracts that are recognized on an overtime basis (refer to Note 1 and Note 9 to the consolidated financial statements for further discussion of our accounting policy for these contracts). The most critical estimates relevant to our revenue accounting are related to our long-term product service agreements as discussed below.

Our revenue recognition on long-term product services agreements requires estimates of both customer payments expected to be received over the contract term as well as the costs expected to be incurred to perform required maintenance services. We routinely review estimates under product services agreements and regularly revise them to adjust for changes in outlook as described below.

We recognize revenue as we perform under these arrangements using an over time accounting model based on costs incurred relative to total expected costs. Throughout the life of a contract, this measure of progress captures the nature of the timing and extent of our underlying performance activities as our stand-ready services often fluctuate between routine inspections and maintenance, unscheduled service events and major overhauls at pre-determined usage intervals.

Customers generally pay us based on the utilization of the asset (per hour of usage for example) or upon the occurrence of a major event within the contract such as an overhaul. As a result, a significant estimate in determining expected revenues of a contract is estimating how customers will utilize their assets over the term of the agreement. Changes in customer utilization can influence the timing and extent of overhauls and other service events over the life of the contract. As a result, the revenue recognized each period is dependent on our estimate of how a customer will utilize their assets over the term of the agreement. We generally use a combination of both historical utilization trends as well as forward-looking information such as market conditions and potential asset retirements in developing our revenue estimates. This estimate of customer utilization will impact both the total contract billings and costs to satisfy our obligation to maintain the equipment. To the extent required, we limit the amount of variable consideration used to estimate our transaction price such that it is improbable that a significant revenue reversal will occur in future periods.

To develop our cost estimates, we consider the timing and extent of future maintenance and overhaul events, including the amount and cost of labor, spare parts and other resources required to perform the services. In developing our cost estimates, we utilize a combination of our historical cost experience and expected cost improvements. Cost improvements are only included in future cost estimates after savings have been observed in actual results or proven effective through an extensive regulatory or engineering approval process.

We regularly assess customer credit risk inherent in the carrying amounts of receivables and contract assets and estimated earnings, including the risk that contractual penalties may not be sufficient to offset our accumulated investment in the event of customer termination. We gain insight into future utilization and cost trends, as well as credit risk, through our knowledge of the installed base of equipment and the close interaction with our customers that comes with supplying critical services and parts over extended periods.

See Notes 1, 9 and 10 to the consolidated financial statements for further information.

2018 2Q FORM 10-Q 45



MD&A	OTHER ITEMS

OTHER ITEMS

NEW ACCOUNTING STANDARDS

ASU NO. 2018-02, INCOME STATEMENT - REPORTING COMPREHENSIVE INCOME (TOPIC 220): RECLASSIFICATION OF CERTAIN TAX EFFECTS FROM ACCUMULATED OTHER COMPREHENSIVE INCOME

In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The ASU provides that the stranded tax effects from the Tax Cuts and Jobs Act on the balance of other comprehensive income (OCI) may be reclassified to retained earnings. The ASU is effective for periods beginning after December 15, 2018, with an election to adopt early. We are evaluating the effect of the standard on our consolidated financial statements which we estimate on a preliminary basis, will increase retained earnings by approximately $2 billion.

ASU NO. 2016-02, LEASES

In February 2016, the FASB issued ASU No. 2016-02, Leases . The ASU establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. Similarly, lessors will be required to classify leases as sales-type, finance or operating, with classification affecting the pattern of income recognition. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We expect the FASB to issue new guidance that provides companies with the option to apply the provisions of the new leasing standard on January 1, 2019, without adjusting the comparative periods presented by recognizing a cumulative-effect adjustment to the opening balance of retained earnings. We are currently in the process of accumulating and evaluating all the necessary information required to properly account for our lease portfolio under the new standard. Additionally, we are implementing an enterprise-wide lease management system to support the ongoing accounting requirements. Development and testing of our selected systems solution is ongoing. We are working closely with the software system developer as the timely readiness of the lease software system is critical to ensure an efficient and effective adoption of the standard. We are evaluating additional changes to our processes and internal controls to ensure we meet the standard’s reporting and disclosure requirements. While we continue to evaluate the effect of the standard on our consolidated financial statements, the adoption of the ASU will result in the recognition of a right of use asset and related liability with an estimated immaterial effect to our retained earnings.

ASU NO. 2016-13, FINANCIAL INSTRUMENTS - CREDIT LOSSES

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses . The ASU introduces a new accounting model, the Current Expected Credit Losses model (CECL), which requires earlier recognition of credit losses and additional disclosures related to credit risk. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. This model replaces the multiple existing impairment models in current GAAP, which generally require that a loss be incurred before it is recognized. The new standard will also apply to receivables arising from revenue transactions such as contract assets and accounts receivables, as well as reinsurance recoverables at GE Capital's run-off insurance operations and is effective for fiscal years beginning after December 15, 2019. We continue to evaluate the effect of the standard on our consolidated financial statements.

MINE SAFETY DISCLOSURES

Our barite mining operations, in support of our drilling fluids products and services business, are subject to regulation by the federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977. Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this quarterly report.

46 2018 2Q FORM 10-Q



MD&A	OTHER ITEMS

IRAN THREAT REDUCTION AND SYRIA HUMAN RIGHTS ACT OF 2012

The Company is making the following disclosure pursuant to Section 13(r) of the Securities Exchange Act of 1934. Under Section 13(r) of the Securities Exchange Act of 1934, enacted in 2012, GE is required to disclose in its periodic reports if it or any of its affiliates knowingly engaged in business activities relating to Iran, even if those activities are conducted in accordance with authorizations subsequently issued by the U.S. Government. Reportable activities include investments that significantly enhance Iran’s ability to develop petroleum resources valued at $20 million or more in the aggregate during a twelve-month period. Reporting is also required for transactions related to Iran’s domestic production of refined petroleum products or Iran’s ability to import refined petroleum products valued at $5 million or more in the aggregate during a twelve-month period.

In January 2016, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) issued General License H authorizing U.S.-owned or controlled foreign entities to engage in transactions with Iran if these entities meet the requirements of the general license. On May 8, 2018, President Trump announced that the United States will cease participation in the Joint Comprehensive Plan of Action (JCPOA) and begin re-imposing the U.S. nuclear-related sanctions. On June 27, 2018, OFAC revoked General License H and added Section 560.537 to the Iranian Transactions and Sanctions Regulations (ITSR), which authorizes all transactions and activities that are ordinarily incident and necessary to the winding down of activities previously approved under General License H through November 4, 2018. Prior to May 8, 2018, certain non-U.S. affiliates of GE conducted limited activities as described below in accordance with General License H. Non-U.S. affiliates of GE expect to wind down activities in Iran by November 4, which may include the collection of payments for previously completed work. All of these activities are conducted in accordance with all applicable laws and regulations.

A non-U.S. affiliate of GE’s Oil & Gas business received four purchase orders during the second quarter of 2018 for the sale of goods pursuant to General License H. The purchase orders cover the sale of valves and parts for industrial machinery and equipment used in gas plants, petrochemical plants and gas production projects in Iran, and were all received prior to May 8, 2018. The four purchase orders are individually valued at €0.1 million ($0.2 million), less than €0.1 million ($0.1 million), less than €0.1 million ($0.1 million), and less than €0.1 million ($0.1 million). The non-U.S. affiliate has two additional previously unreported purchase orders from the fourth quarter of 2017, valued at €0.1 million ($0.2 million) and less than €0.1 million ($0.1 million). This non-U.S. affiliate attributed €10.5 million ($12.3 million) in gross revenues and €1.4 million ($1.7 million) in net profits during the quarter ending June 30, 2018 against previously reported transactions.

A second non-U.S. affiliate of GE’s Oil & Gas business received two purchase orders during the second quarter of 2018 covering the sale of valves and other spare parts for use in the petrochemical industry in Iran. These two purchase orders were received prior to May 8, 2018 and are individually valued at €0.1 million ($0.1 million) and less than €0.1 million ($0.1 million). This non-U.S. affiliate attributed less than €0.1 million ($0.1 million) in gross revenues and less than €0.1 million ($0.1 million) in net profits during the quarter ending June 30, 2018 against previously reported transactions.

A third non-U.S. affiliate of GE’s Oil & Gas business attributed €0.3 million ($0.3 million) in gross revenues and €0.1 million ($0.2 million) in net profits during the quarter ending June 30, 2018 against a previously reported transaction involving the sale of films to be used in the inspection of pipelines in Iran.

A non-U.S. affiliate of GE’s Power business attributed €0.1 million ($0.1 million) in gross revenues and €0.1 million ($0.1 million) in net profits during the quarter ending June 30, 2018 against a previously reported received purchase order for the sale of compressor parts to a petrochemical company in Iran. This non-U.S. affiliate also recognized costs totaling €1.0 million ($1.1 million) against a previously reported transaction for the sale of a spare rotor.

A second non-U.S. affiliate of GE's Power business received two purchase orders during the second quarter of 2018 for the sale of protection relays for an Iranian oil refinery project. These two purchase orders were received prior to May 8, 2018 and are individually valued at €0.1 million ($0.1 million) and less than €0.1 million ($0.1 million). This affiliate attributed less than €0.1 million ($0.1 million) in gross revenues and less than €0.1 million ($0.1 million) in net profits during the quarter ending June 30, 2018 against a previously reported transaction.

These non-U.S. affiliates do not intend to continue the activities described above beyond November 4, 2018. The Company will wind down all of these activities before that date in full compliance with U.S. sanctions.

For additional information on business activities related to Iran, please refer to the Other Items section within MD&A in our quarterly report on Form 10-Q for the quarter ended March 31, 2018.

2018 2Q FORM 10-Q 47



MD&A	SUPPLEMENTAL INFORMATION

SUPPLEMENTAL INFORMATION

FINANCIAL MEASURES THAT SUPPLEMENT U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES MEASURES (NON-GAAP FINANCIAL MEASURES)

In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with GAAP. Certain of these data are considered “non-GAAP financial measures” under SEC rules. Specifically, we have referred, in various sections of this report, to:


•	GE Industrial segment organic revenues


•	GE Industrial structural costs


•	GE pre-tax earnings from continuing operations, excluding GE Capital earnings (loss) from continuing operations and the corresponding effective tax rates


•	Adjusted earnings (loss)


•	Adjusted earnings (loss) per share (EPS)


•	Adjusted GE Industrial profit and profit margin (excluding certain items)


•	Adjusted Oil & Gas segment profit


•	GE Industrial Free Cash Flows (FCF) and Adjusted GE Industrial FCF


•	GE Industrial net debt

The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures follow.

48 2018 2Q FORM 10-Q



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GE INDUSTRIAL SEGMENT ORGANIC REVENUES (NON-GAAP)
	Three months ended June 30						Six months ended June 30
(In millions)	2018		2017		V%		2018		2017		V%

GE Industrial segment revenue (GAAP)	$	28,657	$	27,582	4	%	$	56,052	$	52,795	6	%
Adjustments:
Acquisitions	2,859		84				5,584		91
Business dispositions (other than dispositions acquired for investment)	2		588				3		1,070
Currency exchange rate(a)	553		—				1,406		—
GE Industrial segment organic revenue (Non-GAAP)	$	25,242	$	26,910	(6)	%	$	49,059	$	51,634	(5	)%
(a) Translational foreign exchange

Organic revenue growth* measures revenue growth excluding the effects of acquisitions, business dispositions and currency exchange rates. We believe that this measure provides management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and currency exchange, which activities are subject to volatility and can obscure underlying trends. We also believe that presenting organic revenue growth* separately for our industrial businesses provides management and investors with useful information about the trends of our industrial businesses and enables a more direct comparison to other non-financial businesses and companies. Management recognizes that the term "organic revenue growth" may be interpreted differently by other companies and under different circumstances. Although this may have an effect on comparability of absolute percentage growth from company to company, we believe that these measures are useful in assessing trends of the respective businesses or companies and may therefore be a useful tool in assessing period-to-period performance trends.



GE INDUSTRIAL STRUCTURAL COSTS (NON-GAAP)

	Three months ended June 30									Six months ended June 30
(In millions)	2018			2017			V$			2018			2017			V$

GE Industrial costs excluding interest and other financial charges and non-operating benefit costs (GAAP)	$	26,208		$	24,950		$	1,258		$	51,234		$	48,597		$	2,636
Less: Segment variable costs	19,639			18,566						38,396			35,498
Less: Segment restructuring & other charges	241			13						521			25
Less: Segment acquisitions/dispositions structural costs and impact from foreign exchange	247			(327		)				552			(703		)
Less: Corporate restructuring & other charges	496			709						827			1,682
Add: Corporate revenue (ex. GE-GE Capital eliminations), other income and noncontrolling interests	(130		)	363						310			785
Less: Corporate (gains) losses on disposals	(309		)	—						(243		)	(2		)
Less: Corporate unrealized (gains) losses	(266		)	—						(266		)	—
GE Industrial structural costs (Non-GAAP)	$	6,031		$	6,352		$	(322	)	$	11,756		$	12,882		$	(1,126	)

GE Industrial structural costs* includes segment structural costs excluding the impact of restructuring and other charges, business acquisitions and dispositions, foreign exchange, plus total Corporate operating profit excluding restructuring and other charges and gains. The Baker Hughes acquisition is represented on a pro-forma basis, which means we calculated our structural costs by including legacy Baker Hughes results for the three and six months ended June 30, 2017.
Segment variable costs are those costs within our industrial segments that vary with volume. The most significant variable costs would be material and direct labor costs incurred to produce our products and deliver our services that are recorded in the Statement of Earnings line items of cost of goods and cost of services sold.
We believe that GE Industrial structural costs* is a meaningful measure of cost performance as it is broader than selling, general and administrative costs and represents the total costs in the Industrial segments and Corporate that generally do not vary with volume and excludes the effect of segment acquisitions, dispositions, and foreign exchange movements.
This measure was first introduced in March 2017 as disclosed in our Form 8-K filed on March 22, 2017.

*Non-GAAP Financial Measure

2018 2Q FORM 10-Q 49



MD&A	SUPPLEMENTAL INFORMATION



GE PRE-TAX EARNINGS FROM CONTINUING OPERATIONS, EXCLUDING GE CAPITAL EARNINGS (LOSS) FROM CONTINUING OPERATIONS AND THE CORRESPONDING EFFECTIVE TAX RATES (NON-GAAP)
	Three months ended June 30						Six months ended June 30
(Dollars in millions)	2018			2017			2018			2017

GE earnings (loss) from continuing operations before income taxes (GAAP)	$	1,127		$	1,150		$	1,646		$	1,189
Less: GE Capital earnings (loss) from continuing operations	(207		)	(172		)	$	(422	)	$	(219	)
GE Industrial earnings (loss) from continuing operations before income taxes (Non-GAAP)	1,334			1,322			$	2,068		$	1,408

GE provision for income taxes (GAAP)	$	525		$	165		$	637		$	188
GE effective tax rate, excluding GE Capital earnings (Non-GAAP)	39		%	12		%	31		%	13		%

We believe that the GE effective tax rate is best analyzed in relation to GE earnings before income taxes excluding the GE Capital net earnings* from continuing operations, as GE tax expense does not include taxes on GE Capital earnings. Management believes that in addition to the Consolidated and GE Capital tax rates shown in Note 13 to the consolidated financial statements of the Annual Report on Form 10-K for the year ended December 31, 2017, this supplemental measure provides investors with useful information as it presents the GE effective tax rate that can be used in comparing the GE results to other non-financial services businesses.



ADJUSTED EARNINGS (LOSS) (NON-GAAP)
	Three months ended June 30								Six months ended June 30
(Dollars in millions)	2018			2017			V%		2018			2017			V%

Consolidated earnings (loss) from continuing operations attributable to GE common shareowners (GAAP)	$	736		$	1,028		(28	)%	$	1,105		$	1,150		(4	)%
Non-operating benefits costs (pre-tax) (GAAP)	(690		)	(552		)			(1,374		)	(1,201		)
Tax effect on non-operating benefit costs(a)	145			193					289			420
Less: non-operating benefit costs (net of tax)	(545		)	(359		)			(1,085		)	(781		)
Adjusted continuing earnings (Non-GAAP)	$	1,281		$	1,387		(8	)%	$	2,190		$	1,931		13	%

Less: GE Capital earnings (loss) from continuing operations attributable to GE common shareowners (GAAP)	(207		)	(172		)			(422		)	(219		)
Adjusted GE Industrial earnings (Non-GAAP)	$	1,488		$	1,558		(4	)%	$	2,613		$	2,150		22	%
Gains (losses) and impairments for businesses held for sale (pre-tax)	309			—					243			2
Tax effect on gains (losses) and impairments for businesses held for sale(b)	(125		)	—					(101		)	(1		)
Less: gains (losses) and impairments for businesses held for sale (net of tax)	185			—					142			1
Restructuring & other charges (pre-tax)	(645		)	(709		)			(1,166		)	(1,682		)
Tax effect on restructuring & other(b)	(72		)	213					61			505
Less: restructuring & other (net of tax)	(716		)	(496		)			(1,106		)	(1,177		)
Unrealized gains (losses) (pre-tax)	266			—					266			—
Tax effect on unrealized gains (losses)(a)	(56		)	—					(56		)	—
Less: unrealized gains (losses) (net of tax)	210			—					210			—
Less: GE Industrial U.S. tax reform enactment adjustment	(24		)	—					(55		)	—
Adjusted GE Industrial earnings excluding certain items (Non-GAAP)	$	1,834		$	2,054		(11	)%	$	3,421		$	3,326		3	%

GE Capital earnings (loss) from continuing operations attributable to GE common shareowners (GAAP)	(207		)	(172		)	(20	)%	(422		)	(219		)	(93	)%
Less: GE Capital U.S. tax reform enactment adjustment	—			—					(45		)	—
Adjusted GE Capital earnings (Non-GAAP)	$	(207	)	$	(172	)	(20	)%	$	(377	)	$	(219	)	(72	)%

Adjusted GE Industrial earnings excluding certain items (Non-GAAP)	$	1,834		$	2,054		(11	)%	$	3,421		$	3,326		3	%
Add: Adjusted GE Capital earnings (Non-GAAP)	(207		)	(172		)			(377		)	(219		)
Adjusted earnings (Non-GAAP)	$	1,627		$	1,883		(14	)%	$	3,044		$	3,107		(2	)%

(a) The tax effect was calculated using a 21% and 35% U.S. federal statutory tax rate in 2018 and 2017, respectively, based on its applicability to such cost.
(b) The tax effect presented includes both the rate for the relevant item as well as other direct and incremental tax charges.
Adjusted earnings* excludes non-operating benefit costs, gains, and restructuring and other items, after tax, excluding the effect of U.S. tax reform enactment adjustment. The service cost of our pension and other benefit plans are included in adjusted earnings, which represents the ongoing cost of providing pension benefits to our employees. The components of non-operating benefit costs are mainly driven by capital allocation decisions and market performance, and we manage these separately from the operational performance of our businesses. Gains and restructuring and other items are impacted by the timing and magnitude of gains associated with dispositions, and the timing and magnitude of costs associated with restructuring activities. We believe that the retained costs in Adjusted earnings* provides management and investors a useful measure to evaluate the performance of the total company, and increases period-to-period comparability. We believe that presenting Adjusted Industrial earnings separately for our financial services businesses also provides management and investors with useful information about the relative size of our industrial and financial services businesses in relation to the total company.

*Non-GAAP Financial Measure

50 2018 2Q FORM 10-Q



MD&A	SUPPLEMENTAL INFORMATION



ADJUSTED EARNINGS (LOSS) PER SHARE (EPS) (NON-GAAP)
	Three months ended June 30								Six months ended June 30
	2018			2017			V%		2018			2017			V%

Consolidated EPS from continuing operations attributable to GE common shareowners (GAAP)	$	0.08		$	0.12		(33	)%	0.13			0.13			—	%
Non-operating benefits costs (pre-tax) (GAAP)	(0.08		)	(0.06		)			(0.16		)	(0.14		)
Tax effect on non-operating benefit costs(a)	0.02			0.02					0.03			0.05
Less: non-operating benefit costs (net of tax)	(0.06		)	(0.04		)			(0.12		)	(0.09		)
Adjusted continuing EPS (Non-GAAP)	$	0.15		$	0.16		(6	)%	$	0.25		$	0.22		14	%

Less: GE Capital EPS from continuing operations attributable to GE common shareowners (GAAP)	(0.02		)	(0.02		)			(0.05		)	(0.02		)
Adjusted GE Industrial EPS (Non-GAAP)	$	0.17		$	0.18		(6	)%	$	0.30		$	0.24		25	%
Gains (losses) and impairments for businesses held for sale (pre-tax)	0.04			—					0.03			—
Tax effect on gains (losses) and impairments for businesses held for sale(b)	(0.01		)	—					(0.01		)	—
Less: gains (losses) and impairments for businesses held for sale (net of tax)	0.02			—					0.02			—
Restructuring & other charges (pre-tax)	(0.07		)	(0.08		)			(0.13		)	(0.19		)
Tax effect on restructuring & other(b)	(0.01		)	0.02					0.01			0.06
Less: restructuring & other charges (net of tax)	(0.08		)	(0.06		)			(0.13		)	(0.13		)
Unrealized gains (losses) (pre-tax)	0.03			—					0.03			—
Tax effect on unrealized gains (losses)(a)	(0.01		)	—					(0.01		)	—
Less: unrealized gains (losses) (net of tax)	0.02			—					0.02			—
Less: GE Industrial U.S. tax reform enactment adjustment	—			—					(0.01		)	—
Adjusted GE Industrial EPS excluding certain item (Non-GAAP)	$	0.21		$	0.23		(9	)%	$	0.39		$	0.38		3	%

GE Capital EPS from continuing operations attributable to GE common shareowners (GAAP)	(0.02		)	(0.02		)	—	%	(0.05		)	(0.02		)	U
Less: GE Capital U.S. tax reform enactment adjustment	—			—					(0.01		)	—
Adjusted GE Capital EPS (Non-GAAP)	$	(0.02	)	$	(0.02	)	—	%	$	(0.04	)	$	(0.02	)	(100	)%

Adjusted GE Industrial EPS excluding certain item (Non-GAAP)	$	0.21		$	0.23		(9	)%	$	0.39		$	0.38		3	%
Add: Adjusted GE Capital EPS (Non-GAAP)	(0.02		)	(0.02		)			(0.04		)	(0.02		)
Adjusted EPS (Non-GAAP)(c)	$	0.19		$	0.21		(10	)%	$	0.35		$	0.35		—	%

(a) The tax effect was calculated using a 21% and 35% U.S. federal statutory tax rate in 2018 and 2017, respectively, based on its applicability to such cost.
(b) The tax effect presented includes both the rate for the relevant item as well as other direct and incremental tax charges.
(c) Earnings-per-share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total.
Adjusted EPS* excludes non-operating benefit costs, gains, and restructuring and other items, after tax, excluding the effects of U.S. tax reform enactment adjustment. The service cost of our pension and other benefit plans are included in adjusted earnings, which represents the ongoing cost of providing pension benefits to our employees. The components of non-operating benefit costs are mainly driven by capital allocation decisions and market performance, and we manage these separately from the operational performance of our businesses. Gains and restructuring and other items are impacted by the timing and magnitude of gains associated with dispositions, and the timing and magnitude of costs associated with restructuring activities. We believe that the retained costs in Adjusted EPS* provides management and investors a useful measure to evaluate the performance of the total company, and increases period-to-period comparability. We also use Adjusted EPS* as a performance metric at the company level for our annual executive incentive plan for 2018. We believe that presenting Adjusted Industrial EPS separately for our financial services businesses also provides management and investors with useful information about the relative size of our industrial and financial services businesses in relation to the total company.

*Non-GAAP Financial Measure

2018 2Q FORM 10-Q 51



MD&A	SUPPLEMENTAL INFORMATION



ADJUSTED GE INDUSTRIAL PROFIT AND PROFIT MARGIN (EXCLUDING CERTAIN ITEMS) (NON-GAAP)
	Three months ended June 30						Six months ended June 30
(Dollars in millions)	2018			2017			2018			2017

GE total revenue (GAAP)	$	28,079		$	27,129		$	54,973		$	51,909

Costs
GE total costs and expenses (GAAP)	$	27,588		$	26,139		$	53,941		$	50,999
Less: GE interest and other financial charges (GAAP)	690			637			1,333			1,200
Less: non-operating benefit costs (GAAP)	690			552			1,374			1,201
GE Industrial costs excluding interest and other financial charges and non-operating benefit costs (GAAP)	$	26,208		$	24,950		$	51,234		$	48,597

Less: restructuring and other charges	645			709			1,300			1,682
Add: noncontrolling interests	(133		)	(42		)	(96		)	(148		)
Adjusted GE Industrial costs (Non-GAAP)	$	25,430		$	24,199		$	49,838		$	46,767

Other Income
GE other income (GAAP)	$	843		$	332		$	1,036		$	498
Less: unrealized gains (losses)	266			—			266			—
Less: gains (losses) and impairments for businesses held for sale	309			—			243			2
Adjusted GE other income (Non-GAAP)	$	268		$	332		$	527		$	497

GE Industrial profit (GAAP)	$	2,714		$	2,511		$	4,775		$	3,810
GE Industrial profit margins (GAAP)	9.7		%	9.3		%	8.7		%	7.3		%

Adjusted GE Industrial profit (Non-GAAP)	$	2,917		$	3,262		$	5,662		$	5,639
Adjusted GE Industrial profit margins (Non-GAAP)	10.4		%	12.0		%	10.3		%	10.9		%

We have presented our Adjusted GE Industrial profit* and profit margin* excluding gains and impairments for businesses held for sale, restructuring and other charges, noncontrolling interests and unrealized gains on Pivotal equity investment. We believe that GE Industrial profit and profit margin adjusted for these items are meaningful measures because they increase the comparability of period-to-period results.



ADJUSTED OIL & GAS SEGMENT PROFIT (NON-GAAP)
	Three months ended June 30							Six months ended June 30
(In millions)	2018			2017		V%		2018			2017		V%

Reported segment profit (GAAP)	$	73		$	120	(39	)%	$	(70	)	$	380	U
Less: restructuring & other charges (GE share)	(148		)	—				(473		)	—
Adjusted Oil & Gas segment profit (Non-GAAP)	$	222		$	120	85	%	$	402		$	380	6	%

We believe that this measure provides management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations of our Oil & Gas segment by excluding the effect of Oil & Gas restructuring and other charges as it increases the comparability of period to period results.

*Non-GAAP Financial Measure

52 2018 2Q FORM 10-Q



MD&A	SUPPLEMENTAL INFORMATION



GE INDUSTRIAL FREE CASH FLOWS (FCF) AND ADJUSTED GE INDUSTRIAL FCF (NON-GAAP)
	Six months ended June 30
(Dollars in millions)	2018			2017
GE CFOA (GAAP)	$	(773	)	$	3,586
Add: gross additions to PP&E	(1,651		)	(1,958		)
Add: gross additions to internal-use software	(172		)	(258		)
Less: dividends from GE Capital	—			4,016
Less: GE Pension Plan funding	(921		)	(217		)
Less: taxes related to business sales	(17		)	(51		)
GE Industrial Free Cash Flows (Non-GAAP)	$	(1,658	)	$	(2,379	)

Less: Oil & Gas CFOA	433			—
Less: Oil & Gas gross additions to PP&E	(399		)	—
Less: Oil & Gas gross additions to internal-use software	(17		)	—
Add: BHGE Class B shareholder dividend	253			—
Adjusted GE Industrial Free Cash Flows (Non-GAAP)	$	(1,423	)	$	(2,379	)

In 2018, GE transitioned from reporting an Adjusted GE Industrial CFOA metric to measuring itself on a GE Industrial Free Cash Flows basis*. This metric includes GE CFOA plus investments in property, plant and equipment and additions to internal-use software; this metric excludes any dividends received from GE Capital and any cash received from dispositions of property, plant and equipment and internal-use software.

We believe that investors may also find it useful to compare GE’s Industrial free cash flows* performance without the effects of cash used for taxes related to business sales and contributions to the GE Pension Plan. We believe that this measure will better allow management and investors to evaluate the capacity of our industrial operations to generate free cash flows. In addition, we report Adjusted GE Industrial Free Cash Flows* in order to provide a more fair representation of the cash that we are entitled to utilize in a given period. We also use Adjusted GE Industrial Free Cash Flows* as a performance metric at the company-wide level for our annual executive incentive plan for 2018.

Management recognizes that the term free cash flows may be interpreted differently by other companies and under different circumstances. Although this may have an effect on comparability of absolute percentage growth from company to company, we believe that these measures are useful in assessing trends of the respective businesses or companies and may therefore be a useful tool in assessing period-to-period performance trends.

GE INDUSTRIAL NET DEBT (NON-GAAP)

In this document we use GE Industrial net debt*. We cannot provide an equivalent GAAP guidance range for our Industrial net debt target, which is calculated based on rating agency methodologies, without unreasonable effort. GE Industrial net debt reflects the total of gross debt, after-tax pension contributions, adjustments for operating lease obligations, and adjustments for 50% of preferred stock, less 75% of GE’s cash balance. There is significant uncertainty on the timing and amount of events that could give rise to items included in the determination of this metric, including the timing of pension funding, proceeds from dispositions, and the impact of interest rates on our pension assets and liabilities.

*Non-GAAP Financial Measure

2018 2Q FORM 10-Q 53



OTHER

CONTROLS AND PROCEDURES

Under the direction of our Chief Executive Officer and Chief Financial Officer, we evaluated our disclosure controls and procedures and internal control over financial reporting and concluded that (i) our disclosure controls and procedures were effective as of June 30, 2018, and (ii) no change in internal control over financial reporting occurred during the quarter ended June 30, 2018, that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting.

Effective January 1, 2018, we adopted the new revenue guidance under ASC Topic 606, Revenue from Contracts with Customers , using the full retrospective method of adoption. The adoption of this guidance required the implementation of new accounting policies and processes, including enhancements to our information systems, which changed the Company’s internal controls over financial reporting for revenue recognition and related disclosures for both our recast historical financial statements and current period reporting.

54 2018 2Q FORM 10-Q



OTHER FINANCIAL DATA

OTHER FINANCIAL DATA

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS



Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of our share repurchase program(a)	Approximate dollar value of shares that may yet be purchased under our share repurchase program(a)
(Shares in thousands)

2018
April	904	$	13.67	904
May	1,614	14.37		1,614
June	1,339	13.42		1,339
Total	3,857	$	13.88	3,857	$	20.8	billion

(a)

Shares were repurchased through the GE Share Repurchase Program that we announced on April 10, 2015 (the Program). Under the Program, we are authorized to repurchase up to $50 billion of our common stock through 2018 and, as of June 30, 2018 , we had repurchased a total of approximately $29.2 billion under the Program. The Program is flexible and shares will be acquired with a combination of borrowings and free cash flow from the public markets and other sources, including GE Stock Direct, a stock purchase plan that is available to the public.

2018 2Q FORM 10-Q 55



RISK FACTORS

RISK FACTORS

The risk factors set forth below update the corresponding risk factors in our Annual Report on Form 10-K for the year ended December 31, 2017. In addition to the risk factors below, you should carefully consider the risk factors discussed in our most recent Form 10-K report, which could materially affect our business, financial position and results of operations.

Business portfolio - The success of our business depends on achieving our strategic objectives, including through dispositions or other business separations, acquisitions and business integrations and joint ventures.

As previously announced, we are pursuing a variety of asset and business sales, including the planned separation of GE Healthcare and dispositions of GE Transportation and BHGE. As we seek to sell or separate certain assets or businesses, we may encounter difficulty in finding buyers, implementing separation plans or executing alternative exit strategies on acceptable terms, which could delay or prevent the accomplishment of our strategic and financial objectives. We may dispose of assets or businesses at a price or on terms that are less favorable than we had anticipated, or with the exclusion of assets that must be divested or run off separately. We may also face limitations in the form of regulatory or governmental approvals that prevent certain prospective purchasers from completing transactions with us, or arising from our debt or other contractual obligations that limit our ability to complete certain asset or business dispositions. The effect of these transactions over time will reduce the Company’s cash flow and earnings capacity and result in a less diversified portfolio of businesses, and we expect that GE dividends in the future will be reduced from their current levels as these transactions are completed. Executing on these transactions can divert senior management time and resources from other pursuits. Dispositions or other business separations may also involve continued financial involvement in the divested business, such as through continuing equity ownership, transition service agreements, guarantees, indemnities or other current or contingent financial obligations. Under these arrangements, performance by the divested businesses or other conditions outside our control could materially affect our future financial results.

With respect to acquisitions, joint ventures and business integrations, we may not achieve expected returns and other benefits as a result of integration and collaboration challenges related to personnel, IT systems or other factors. For example, our anticipated returns from mergers and acquisitions such as the Alstom acquisition in 2015 or the combination of our Oil & Gas business with Baker Hughes that we completed in July 2017 include cost and growth synergy benefits over a multi-year period that we may not fully realize. As a result of these and other acquisitions over time, we have recorded significant goodwill and other intangible assets on our balance sheet, and if we are not able to realize the value of these assets we may be required to incur charges relating to the impairment of these assets. We also participate in a number of joint ventures with other companies or government enterprises in various markets around the world, including joint ventures where we may have a lesser degree of control over the business operations, which may expose us to additional operational, financial, legal or compliance risks.

Funding & liquidity - Failure to maintain our credit ratings, or conditions in the financial and credit markets, could adversely affect our access to capital markets, funding costs and related margins, liquidity, capital allocation plans and competitive position.

We rely on cash from operations and proceeds from planned dispositions and business separations, as well as access to the short- and long-term debt markets, to fund our operations, maintain liquidity and meet our financial obligations and capital allocation priorities, such as funding GE dividend payments. In particular, we rely on significant short-term borrowings in the commercial paper market to fund our operations on an intra-quarter basis. If we do not meet our cash flow objectives, whether through improved cash performance in our businesses or successful execution of planned dispositions and other portfolio actions, our financial condition could be adversely affected. Our access to the debt markets, and to the commercial paper markets as a tier-1 issuer in particular, depends on our credit ratings. For additional discussion about our current credit ratings, refer to the Financial Resources and Liquidity - Liquidity and Borrowings - Credit Ratings section of this report. There can be no assurance that we will be able to maintain our credit ratings. Failure to do so could adversely affect our cost of funds and related margins, liquidity, competitive position and, potentially, access to capital markets. For example, a downgrade of our credit ratings causing a loss of tier-1 commercial paper issuer status would reduce our borrowing capacity in the commercial paper markets, and such a downgrade could require us to draw on operating credit lines or take other actions that increase our cost of funds to replace intra-quarter funding and liquidity. A significant increase in our cost of capital could require us to consider changes to our capital allocation plans, such as our planned dividend levels. In addition, under various debt and derivative instruments, guarantees and covenants, we could be required to post additional capital or collateral in the event of a ratings downgrade, which would increase the impact of a ratings downgrade on our liquidity and capital position.

External conditions in the financial and credit markets may also limit the availability of funding at particular times or increase the cost of funding, which could adversely affect our business, financial position and results of operations. Factors that may affect the availability of funding or cause an increase in our funding costs include disruptions in the commercial paper market, and potential market impacts arising in the United States, Europe or China from developments in sovereign debt situations, currency movements or other potential market disruptions. If GE or GE Capital's cost of funding were to increase, it may adversely affect our competitive position and result in lower net interest margins, earnings and cash flows as well as lower returns on shareowners' equity and invested capital.

56 2018 2Q FORM 10-Q



RISK FACTORS

GE Capital - A smaller GE Capital continues to have exposure to credit, insurance and other risks and, in the event of future adverse developments, may not be able to meet its business and financial objectives without taking further actions at GE Capital or additional capital contributions by GE.

To fund the statutory capital contributions that it expects to make to its run-off insurance operations over the next several years, as well as to meet its other obligations, GE Capital plans to rely on its existing liquidity and generate additional cash through sales or other portfolio actions, including reducing the size of its Energy Financial Services and Industrial Finance businesses. As previously disclosed, we also anticipate that GE will contribute $3 billion of capital to GE Capital in 2019. However, as GE Capital’s excess liquidity from past disposition proceeds runs off, and as future earnings are reduced as a result of business or other asset sales, the risk will increase that future adverse developments could cause liquidity or funding stress for GE Capital. For example, it is possible that future requirements for capital contributions to the insurance operations will be greater than currently estimated or could be accelerated by regulators, or that related strategic actions that we may pursue could require further financial charges (as discussed in in the GE Capital Segment Operations section within the MD&A). It is also possible that contingent liabilities and loss estimates from GE Capital’s continuing or discontinued operations (including the WMC matters described in the Legal Proceedings section of this report) will need to be recognized or will increase in the future and will become payable. These or other such developments would increase the likelihood of GE Capital facing liquidity or funding stress in meeting those and its other obligations. If GE Capital is unable to increase its capital levels over time, it may also face credit ratings downgrades that increase its interest costs or limit its ability to access to external funding in the future. Moreover, GE Capital has exposure to many different industries and counterparties, including sovereign governments, and routinely executes transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks and other institutional clients. Many of these transactions expose GE Capital to credit risk in the event of default of its counterparty or client. If conditions in the financial markets deteriorate, they may adversely affect the business and results of operations of GE Capital, as well as the soundness of financial institutions, governments and other counterparties we deal with. In addition, GE Capital's credit risk may be increased when the value of collateral held cannot be realized through sale or is liquidated at prices insufficient to recover the full amount of the loan or derivative exposure due to it. There can be no assurance that future liabilities, losses or impairments to the carrying value of financial assets would not materially and adversely affect GE Capital's business, financial position, results of operations and capacity to provide financing to support orders from GE's industrial businesses, or that factors causing sufficiently severe stress at GE Capital would not require GE to make capital contributions to GE Capital in the future.

LEGAL PROCEEDINGS

The following information supplements and amends our discussion set forth under “Legal Proceedings” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018. We also incorporate the information reported under "Legal Proceedings" in Baker Hughes, a GE company's most recent Form 10-K report and updates in its Form 10-Q reports.

WMC. At June 30, 2018, there were two pending lawsuits in which our discontinued U.S. mortgage business, WMC, is a party. The adverse parties in these cases are securitization trustees or parties claiming to act on their behalf. The complaints and counterclaims in these actions generally assert claims for breach of contract, indemnification, and/or declaratory judgment, and seek specific performance (repurchase) and/or monetary damages. Beginning in the fourth quarter 2013, WMC entered into settlements that reduced its exposure on claims asserted in certain securitizations, and the claim amounts reported herein reflect the effect of these settlements.

One lawsuit is pending in the United States District Court for the District of Connecticut. TMI Trust Company (TMI), as successor to Law Debenture Trust Company of New York, is asserting claims on approximately $800 million of mortgage loans, and alleges losses on these loans in excess of $425 million. Trial in this case commenced on January 16, 2018. The parties have concluded their presentation of evidence and delivered closing arguments on June 12, 2018.

At June 30, 2018, one case was pending against WMC in New York State Supreme Court. This lawsuit was initiated by Deutsche Bank in the second quarter 2013 and names as defendants WMC and Barclays Bank PLC. It involves claims against WMC on approximately $1,000 million of mortgage loans and does not specify the amount of damages sought. In September 2016, WMC and Deutsche Bank agreed to settle all claims arising out of the two securitizations at issue in this lawsuit, subject to judicial approvals. In October 2016, Deutsche Bank filed petitions for instruction in California state court seeking judicial instructions that Deutsche Bank’s entry into the settlement agreements was a reasonable exercise of its discretion and approving the distribution of settlement proceeds pursuant to the terms of each trust’s governing documents. Bondholders in these two securitizations filed objections to the proposed settlements, and the court approved both settlements over the bondholder objections on April 3, 2018. The court issued an order approving the settlements on May 14, 2018, and the objecting bondholders filed notices of appeal on July 10, 2018. A second case (JPMAC-2), also filed in New York State Supreme Court, was initiated by BNY Mellon (BNY) in November 2013 and named as defendants WMC, J.P. Morgan Mortgage Acquisition Corporation and JPMorgan Chase Bank, N.A. In this case, BNY asserted claims on approximately $1,300 million of mortgage loans, and sought to recover damages in excess of $600 million. On September 18, 2015, the court granted defendants’ motion to dismiss this case on statute of limitations grounds, and the plaintiff filed a notice of appeal in October 2015. As previously reported, in the fourth quarter 2017 JPMorgan and WMC reached a settlement with the trustee in JPMAC-2, subject to court approval, and the trustee filed an action in Minnesota state court seeking such approval. The court approved this settlement in the first quarter 2018, and the underlying lawsuit was dismissed on June 12, 2018.

2018 2Q FORM 10-Q 57



LEGAL PROCEEDINGS

The amount of the claim at issue in the TMI case (discussed above) reflects the purchase price or unpaid principal balances of the mortgage loans at issue at the time of purchase and does not give effect to pay downs, accrued interest or fees, or potential recoveries based upon the underlying collateral. All of the mortgage loans involved in this lawsuit are included in WMC’s reported claims at June 30, 2018. See Note 19 to the consolidated financial statements for further information.

In December 2015, we learned that, as part of continuing industry-wide investigation of subprime mortgages, the Civil Division of the U.S. Department of Justice (DOJ) is investigating potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) by WMC and its affiliates arising out of the origination, purchase or sale of residential mortgage loans between January 1, 2005 and December 31, 2007. The Justice Department subsequently issued subpoenas to WMC and GE Capital, and we are cooperating with the Justice Department’s investigation, including providing documents and witnesses for interviews. Following DOJ's assertion that WMC and GE Capital violated FIRREA in connection with WMC’s origination and sale of subprime mortgage loans in 2006 and 2007, WMC and GE Capital are exploring whether an acceptable settlement of this matter can be reached. In the event that an acceptable settlement cannot be reached, we believe DOJ would initiate legal proceedings against WMC and GE Capital. WMC and GE Capital believe they would have defenses to any such lawsuit.

Alstom legacy matters. In connection with our acquisition of Alstom’s Thermal, Renewables and Grid businesses in November 2015, we are subject to legacy legal proceedings and legal compliance risks that relate to claimed anti-competitive conduct or improper payments by Alstom in the pre-acquisition period. See Note 19 to the consolidated financial statements for further information.

Shareholder lawsuits. Since November 2017, several putative class actions under the federal securities laws have been filed against GE and certain affiliated individuals. All of those actions filed to date have been consolidated into a single action currently pending in the U.S. District Court for the Southern District of New York (Hachem v. GE et al.). In May 2018, the court appointed Sjunde AP-Fonden (AP7) as Lead Plaintiff and Kessler Topaz Meltzer & Check, LLP as Lead Counsel for the consolidated shareholder actions. In July 2018, AP7 filed the Third Amended Consolidated Class Action Complaint naming as defendants GE, Jeffrey R. Immelt, Jeffrey S. Bornstein, Jamie S. Miller, Keith S. Sherin, Jan R. Hauser and Richard A. Laxer. It alleges violations of Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 related to insurance reserves and accounting for long-term service agreements and seeks damages on behalf of shareowners who acquired GE stock between February 27, 2013 and January 23, 2018.

Since February 2018, six shareholder derivative lawsuits have also been filed against current and former GE executive officers and members of GE’s Board of Directors and GE (as nominal defendant). Two of the lawsuits (consolidated as the Gammel case) were filed in New York state court, one lawsuit (the Bennett case) was filed in Massachusetts state court and three lawsuits (consolidated as the Raul case) were filed in the U.S. District Court for the Southern District of New York. The lawsuits allege violations of securities laws, breaches of fiduciary duties, unjust enrichment, waste of corporate assets, abuse of control and gross mismanagement. The allegations relate to substantially the same facts as those underlying the securities class actions described above, as well as the oversight of past GE practices regarding the use of its corporate aircraft. The Bennett complaint also includes a claim for professional negligence and accounting malpractice against GE’s auditor, KPMG. The plaintiffs seek unspecified damages and improvements in GE’s corporate governance and internal procedures. In June 2018, GE filed a motion to dismiss the Gammel case on behalf of all defendants.

In June 2018, an additional lawsuit was filed in New York state court derivatively on behalf of participants in the GE Retirement Savings Plan (the GE RSP), and alternatively as a class action on behalf of shareowners who acquired GE stock between February 26, 2013 and January 24, 2018, alleging violations of Section 11 of the Securities Act of 1933 based on alleged misstatements and omissions related to insurance reserves and performance of GE’s business segments in a GE RSP registration statement and documents incorporated therein by reference.

In July 2018, an additional putative class action was filed in New York state court naming as defendants GE, Jeffrey R. Immelt, Jeffrey S. Bornstein, Jan R. Hauser, John L. Flannery, Douglas A. Warner III and KPMG. It alleges violations of Sections 11, 12 and 15 of the Securities Act of 1933 based on alleged misstatements related to insurance reserves and performance of GE’s business segments in GE Stock Direct Plan registration statements and documents incorporated therein by reference and seeks damages on behalf of shareowners who acquired GE stock between July 20, 2015 and July 19, 2018 through the GE Stock Direct Plan.

These cases are at an early stage; we believe we have defenses to the claims and are responding accordingly.

GE Retirement Savings Plan class actions. On September 27, 2017, three individual plaintiffs filed a putative class action lawsuit in the U.S. District Court for the Southern District of California with claims regarding the oversight of GE’s 401(k) plan (the GE RSP). From October 30 to November 15, 2017, three similar class action suits were filed in the U.S. District Court for the District of Massachusetts. All four actions have been consolidated into a single action in the District of Massachusetts. The consolidated complaint names as defendants GE, GE Asset Management, current and former GE and GE Asset Management employees who served on fiduciary bodies responsible for overseeing the GE RSP during the class period and current and former members of GE's Board of Directors. Like similar lawsuits that have been brought against other companies in recent years, this action alleges that the defendants breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) in their oversight of the GE RSP, principally by retaining five proprietary funds that plaintiffs allege were underperforming as investment options for plan participants and charging higher management fees than some alternative funds. The plaintiffs seek unspecified damages on behalf of a class of GE RSP participants and beneficiaries from October 30, 2011 through the date of any judgment. In April, GE filed a motion to dismiss on behalf of all defendants.

58 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS

FINANCIAL STATEMENTS AND NOTES



Statement of Earnings (Loss)			60
Consolidated Statement of Comprehensive Income (Loss)			64
Statement of Financial Position			66
Statement of Cash Flows			68
Notes to Consolidated Financial Statements			70
	1	Basis of Presentation and Summary of Significant Accounting Policies	70
	2	Businesses Held for Sale and Discontinued Operations	73
	3	Investment Securities	75
	4	Current Receivables	76
	5	Inventories	77
	6	GE Capital Financing Receivables and Allowance for Losses on Financing Receivables	77
	7	Property, Plant and Equipment	78
	8	Acquisitions, Goodwill and Other Intangible Assets	78
	9	Revenues	83
	10	Contract and Other Deferred Assets and Progress Collections and Deferred Income	86
	11	Borrowings	87
	12	Investment contracts, insurance liabilities and insurance annuity benefits	88
	13	Postretirement Benefit Plans	89
	14	Income Taxes	90
	15	Shareowners’ Equity	91
	16	Earnings Per Share Information	93
	17	Financial Instruments and Non-Recurring Fair Value Measurements	95
	18	Variable Interest Entities	99
	19	Commitments, Guarantees, Product Warranties and Other Loss Contingencies	101
	20	Cash Flows Information	104
	21	Intercompany Transactions	105
	22	Guarantor Financial Information	106

2018 2Q FORM 10-Q 59



FINANCIAL STATEMENTS

FINANCIAL STATEMENTS



STATEMENT OF EARNINGS (LOSS)
(UNAUDITED)
	Three months ended June 30
	General Electric Company and consolidated affiliates
(In millions; per-share amounts in dollars)	2018			2017

Revenues
Sales of goods	$	18,000		$	18,360
Sales of services	10,093			8,715
GE Capital revenues from services	2,011			2,022
Total revenues (Note 9)	30,104			29,097

Costs and expenses
Cost of goods sold	14,932			15,253
Cost of services sold	7,492			6,370
Selling, general and administrative expenses	4,488			4,152
Interest and other financial charges	1,295			1,174
Investment contracts, insurance losses and insurance annuity benefits	669			657
Non-operating benefit costs	693			561
Other costs and expenses	68			133
Total costs and expenses	29,636			28,300

Other income	864			330
GE Capital earnings (loss) from continuing operations	—			—

Earnings (loss) from continuing operations before income taxes	1,331			1,127
Benefit (provision) for income taxes	(542		)	38
Earnings (loss) from continuing operations	789			1,164
Earnings (loss) from discontinued operations, net of taxes (Note 2)	(121		)	(146		)
Net earnings (loss)	669			1,019
Less net earnings (loss) attributable to noncontrolling interests	(132		)	(38		)
Net earnings (loss) attributable to the Company	800			1,057
Preferred stock dividends	(185		)	(182		)
Net earnings (loss) attributable to GE common shareowners	$	615		$	875

Amounts attributable to GE common shareowners
Earnings (loss) from continuing operations	$	789		$	1,164
Less net earnings (loss) attributable to noncontrolling interests,
continuing operations	(132		)	(45		)
Earnings (loss) from continuing operations attributable to the Company	921			1,210
Preferred stock dividends	(185		)	(182		)
Earnings (loss) from continuing operations attributable
to GE common shareowners	736			1,028
Earnings (loss) from discontinued operations, net of taxes	(121		)	(146		)
Less net earnings (loss) attributable to
noncontrolling interests, discontinued operations	—			7
Net earnings (loss) attributable to GE common shareowners	$	615		$	875

Per-share amounts (Note 16)
Earnings (loss) from continuing operations
Diluted earnings (loss) per share	$	0.08		$	0.12
Basic earnings (loss) per share	$	0.08		$	0.12

Net earnings (loss)
Diluted earnings (loss) per share	$	0.07		$	0.10
Basic earnings (loss) per share	$	0.07		$	0.10

Dividends declared per common share	$	0.12		$	0.24

Amounts may not add due to rounding.

See accompanying notes.

60 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS



STATEMENT OF EARNINGS (LOSS) (CONTINUED)
(UNAUDITED)

	Three months ended June 30
	GE(a)						Financial Services (GE Capital)
(In millions; per-share amounts in dollars)	2018			2017			2018			2017

Revenues
Sales of goods	$	17,960		$	18,423		$	31		$	33
Sales of services	10,120			8,706			—			—
GE Capital revenues from services	—			—			2,398			2,413
Total revenues	28,079			27,129			2,429			2,446

Costs and expenses
Cost of goods sold	14,898			15,322			24			27
Cost of services sold	6,979			5,836			546			520
Selling, general and administrative expenses	4,331			3,792			312			490
Interest and other financial charges	690			637			772			771
Investment contracts, insurance losses and insurance annuity benefits	—			—			694			682
Non-operating benefit costs	690			552			3			9
Other costs and expenses	—			—			79			144
Total costs and expenses	27,588			26,139			2,432			2,641

Other income	843			332			—			—
GE Capital earnings (loss) from continuing operations	(207		)	(172		)	—			—

Earnings (loss) from continuing operations before income taxes	1,127			1,150			(3		)	(195		)
Benefit (provision) for income taxes	(525		)	(165		)	(17		)	202
Earnings (loss) from continuing operations	602			985			(20		)	7
Earnings (loss) from discontinued operations, net of taxes (Note 2)	(121		)	(152		)	(66		)	(146		)
Net earnings (loss)	482			833			(86		)	(138		)
Less net earnings (loss) attributable to noncontrolling interests	(133		)	(42		)	2			4
Net earnings (loss) attributable to the Company	615			875			(88		)	(142		)
Preferred stock dividends	—			—			(185		)	(182		)
Net earnings (loss) attributable to GE common shareowners	$	615		$	875		$	(273	)	$	(324	)

Amounts attributable to GE common shareowners:
Earnings (loss) from continuing operations	$	602		$	985		$	(20	)	$	7
Less net earnings (loss) attributable to noncontrolling interests,
continuing operations	(133		)	(42		)	2			(3		)
Earnings (loss) from continuing operations attributable to the Company	736			1,028			(22		)	10
Preferred stock dividends	—			—			(185		)	(182		)
Earnings (loss) from continuing operations attributable
to GE common shareowners	736			1,028			(207		)	(172		)
Earnings (loss) from discontinued operations, net of taxes	(121		)	(152		)	(66		)	(146		)
Less net earnings (loss) attributable to
noncontrolling interests, discontinued operations	—			—			—			7
Net earnings (loss) attributable to GE common shareowners	$	615		$	875		$	(273	)	$	(324	)


(a)	Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. See Note 1.

Amounts may not add due to rounding.

In the consolidating data on this page, “GE” means the basis of consolidation as described in Note 1 to the consolidated financial statements; “GE Capital” means GE Capital Global Holdings, LLC (GECGH) and all of their affiliates and associated companies. Separate information is shown for “GE” and “Financial Services (GE Capital).” Transactions between GE and GE Capital have been eliminated from the “General Electric Company and consolidated affiliates” columns on the prior page.

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FINANCIAL STATEMENTS



STATEMENT OF EARNINGS (LOSS)
(UNAUDITED)
	Six months ended June 30
	General Electric Company
	and consolidated affiliates
(In millions; per-share amounts in dollars)	2018			2017

Revenues
Sales of goods	$	35,282		$	35,104
Sales of services	19,685			16,587
GE Capital revenues from services	3,797			4,286
Total revenues	58,764			55,978

Costs and expenses
Cost of goods sold	29,112			29,550
Cost of services sold	14,837			12,304
Selling, general and administrative expenses	8,692			8,439
Interest and other financial charges	2,580			2,313
Investment contracts, insurance losses and insurance annuity benefits	1,299			1,291
Non-operating benefit costs	1,381			1,212
Other costs and expenses	188			323
Total costs and expenses	58,089			55,431

Other income	1,069			527
GE Capital earnings (loss) from continuing operations	—			—

Earnings (loss) from continuing operations before income taxes	1,744			1,074
Benefit (provision) for income taxes	(515		)	142
Earnings (loss) from continuing operations	1,229			1,217
Earnings (loss) from discontinued operations, net of taxes (Note 2)	(1,673		)	(385		)
Net earnings (loss)	(444		)	832
Less net earnings (loss) attributable to noncontrolling interests	(98		)	(142		)
Net earnings (loss) attributable to the Company	(347		)	974
Preferred stock dividends	(222		)	(216		)
Net earnings (loss) attributable to GE common shareowners	$	(568	)	$	758

Amounts attributable to GE common shareowners
Earnings (loss) from continuing operations	$	1,229		$	1,217
Less net earnings (loss) attributable to noncontrolling interests,
continuing operations	(98		)	(149		)
Earnings (loss) from continuing operations attributable to the Company	1,327			1,366
Preferred stock dividends	(222		)	(216		)
Earnings (loss) from continuing operations attributable
to GE common shareowners	1,105			1,150
Earnings (loss) from discontinued operations, net of taxes	(1,673		)	(385		)
Less net earnings (loss) attributable to noncontrolling interests,
discontinued operations	—			7
Net earnings (loss) attributable to GE common shareowners	$	(568	)	$	758

Per-share amounts (Note 15)
Earnings (loss) from continuing operations
Diluted earnings (loss) per share	$	0.13		$	0.13
Basic earnings (loss) per share	$	0.13		$	0.13

Net earnings (loss)
Diluted earnings (loss) per share	$	(0.07	)	$	0.09
Basic earnings (loss) per share	$	(0.07	)	$	0.09

Dividends declared per common share	$	0.24		$	0.48

Amounts may not add due to rounding.

See accompanying notes.

62 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS



STATEMENT OF EARNINGS (LOSS)
(UNAUDITED)

	Six months ended June 30
	GE(a)						Financial Services (GE Capital)
(In millions; per-share amounts in dollars)	2018			2017			2018			2017

Revenues
Sales of goods	$	35,233		$	35,192		$	63		$	62
Sales of services	19,740			16,717			—			—
GE Capital revenues from services	—			—			4,539			5,065
Total revenues	54,973			51,909			4,602			5,127

Costs and expenses
Cost of goods sold	29,070			29,651			50			50
Cost of services sold	13,834			11,352			1,072			1,082
Selling, general and administrative expenses	8,330			7,595			655			1,062
Interest and other financial charges	1,333			1,200			1,592			1,582
Investment contracts, insurance losses and insurance annuity benefits	—			—			1,339			1,318
Non-operating benefit costs	1,374			1,201			7			11
Other costs and expenses	—			—			212			358
Total costs and expenses	53,941			50,999			4,926			5,461

Other income	1,036			498			—			—
GE Capital earnings (loss) from continuing operations	(422		)	(219		)	—			—

Earnings (loss) from continuing operations before income taxes	1,646			1,189			(324		)	(334		)
Benefit (provision) for income taxes	(637		)	(188		)	122			330
Earnings (loss) from continuing operations	1,009			1,002			(202		)	(4		)
Earnings (loss) from discontinued operations, net of taxes (Note 2)	(1,673		)	(392		)	(1,618		)	(388		)
Net earnings (loss)	(664		)	610			(1,821		)	(392		)
Less net earnings (loss) attributable to noncontrolling interests	(96		)	(148		)	(2		)	6
Net earnings (loss) attributable to the Company	(568		)	758			(1,819		)	(398		)
Preferred stock dividends	—			—			(222		)	(216		)
Net earnings (loss) attributable to GE common shareowners	$	(568	)	$	758		$	(2,041	)	$	(614	)

Amounts attributable to GE common shareowners:
Earnings (loss) from continuing operations	$	1,009		$	1,002		$	(202	)	$	(4	)
Less net earnings (loss) attributable to noncontrolling interests,
continuing operations	(96		)	(148		)	(2		)	(1		)
Earnings (loss) from continuing operations attributable to the Company	1,105			1,150			(201		)	(3		)
Preferred stock dividends	—			—			(222		)	(216		)
Earnings (loss) from continuing operations attributable
to GE common shareowners	1,105			1,150			(422		)	(219		)
Earnings (loss) from discontinued operations, net of taxes	(1,673		)	(392		)	(1,618		)	(388		)
Less net earnings (loss) attributable to noncontrolling interests,
discontinued operations	—			—			—			7
Net earnings (loss) attributable to GE common shareowners	$	(568	)	$	758		$	(2,041	)	$	(614	)


(a)	Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. See Note 1.

Amounts may not add due to rounding.

In the consolidating data on this page, “GE” means the basis of consolidation as described in Note 1 to the consolidated financial statements; “GE Capital” means GE Capital Global Holdings, LLC (GECGH) or its predecessor General Electric Capital Corporation (GECC) and all of their affiliates and associated companies. Separate information is shown for “GE” and “Financial Services (GE Capital).” Transactions between GE and GE Capital have been eliminated from the “General Electric Company and consolidated affiliates” columns on the prior page.

2018 2Q FORM 10-Q 63



FINANCIAL STATEMENTS



GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Net earnings (loss)	$	669		$	1,019		$	(444	)	$	832
Less net earnings (loss) attributable to noncontrolling interests	(132		)	(38		)	(98		)	(142		)
Net earnings (loss) attributable to the Company	$	800		$	1,057		$	(347	)	$	974

Other comprehensive income (loss)
Investment securities	$	24		$	243		$	124		$	191
Currency translation adjustments	(1,669		)	517			(838		)	1,328
Cash flow hedges	(81		)	(10		)	(26		)	9
Benefit plans	941			560			1,658			1,610
Other comprehensive income (loss)	(784		)	1,310			918			3,138
Less other comprehensive income (loss) attributable to noncontrolling interests	(213		)	1			(53		)	7
Other comprehensive income (loss) attributable to the Company	$	(571	)	$	1,309		$	971		$	3,131

Comprehensive income (loss)	$	(115	)	$	2,329		$	474		$	3,970
Less comprehensive income (loss) attributable to noncontrolling interests	(345		)	(37		)	(151		)	(135		)
Comprehensive income (loss) attributable to the Company	$	229		$	2,366		$	625		$	4,105

Amounts presented net of taxes.

Amounts may not add due to rounding.

See accompanying notes.

64 2018 2Q FORM 10-Q



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2018 2Q FORM 10-Q 65



FINANCIAL STATEMENTS



STATEMENT OF FINANCIAL POSITION
	General Electric Company and consolidated affiliates
(In millions, except share amounts)	June 30, 2018			December 31, 2017
	(Unaudited)
Assets
Cash, cash equivalents and restricted cash(a)	$	27,674		$	43,967
Investment securities (Note 3)	36,611			38,696
Current receivables (Note 4)	20,797			24,209
Inventories (Note 5)	20,473			19,419
Financing receivables – net (Note 6)	8,384			10,336
Other GE Capital receivables	6,505			6,301
Property, plant and equipment – net (Note 7)	50,866			53,874
Receivable from GE Capital	—			—
Investment in GE Capital	—			—
Goodwill (Note 8)	82,464			83,968
Other intangible assets – net (Note 8)	19,728			20,273
Contract and other deferred assets (Note 10)	20,787			20,356
All other assets	27,631			28,949
Deferred income taxes (Note 14)	10,891			8,819
Assets of businesses held for sale (Note 2)	4,905			4,164
Assets of discontinued operations (Note 2)	5,053			5,912
Total assets(b)	$	342,769		$	369,245

Liabilities and equity
Short-term borrowings (Note 11)	$	14,419		$	24,036
Accounts payable, principally trade accounts	15,026			15,172
Progress collections and deferred income	20,701			22,117
Dividends payable	1,053			1,052
Other GE current liabilities	15,168			16,919
Non-recourse borrowings of consolidated securitization entities (Note 11)	1,322			1,980
Long-term borrowings (Note 11)	99,832			108,575
Investment contracts, insurance liabilities and insurance annuity benefits (Note 12)	36,233			38,136
Non-current compensation and benefits	39,693			41,630
All other liabilities	21,046			20,784
Liabilities of businesses held for sale (Note 2)	1,198			1,248
Liabilities of discontinued operations (Note 2)	1,949			706
Total liabilities(b)	267,639			292,355

Redeemable noncontrolling interests (Note 15)	3,376			3,391

Preferred stock (5,939,874 shares outstanding at both June 30, 2018 and December 31, 2017)	6			6
Common stock (8,691,081,000 and 8,680,571,000 shares outstanding at June 30, 2018 and December 31, 2017, respectively)	702			702
Accumulated other comprehensive income (loss) – net attributable to GE(c)
Investment securities	21			(102		)
Currency translation adjustments	(5,446		)	(4,661		)
Cash flow hedges	36			62
Benefit plans	(8,043		)	(9,702		)
Other capital	37,352			37,384
Retained earnings	114,913			117,245
Less common stock held in treasury	(84,471		)	(84,902		)
Total GE shareowners’ equity	55,069			56,030
Noncontrolling interests(d) (Note 15)	16,685			17,468
Total equity (Note 15)	71,754			73,498
Total liabilities, redeemable noncontrolling interests and equity	$	342,769		$	369,245


(a)	Includes restricted cash of $725 million and $668 million at June 30, 2018 and December 31, 2017 , respectively.

(b)

Our consolidated assets at June 30, 2018 included total assets of $4,051 million of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs. These assets included current receivables and net financing receivables of $1,428 million within continuing operations and assets of discontinued operations of $275 million . Our consolidated liabilities at June 30, 2018 included liabilities of certain VIEs for which the VIE creditors do not have recourse to GE. These liabilities included non-recourse borrowings of consolidated securitization entities (CSEs) of $(624) million within continuing operations. See Note 18.


(c)	The sum of accumulated other comprehensive income (loss) (AOCI) attributable to the Company was $(13,432) million and $(14,404) million at June 30, 2018 and December 31, 2017 , respectively.


(d)	Included AOCI attributable to noncontrolling interests of $(279) million and $(226) million at June 30, 2018 and December 31, 2017 , respectively.

Amounts may not add due to rounding.

See accompanying notes.

66 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS



STATEMENT OF FINANCIAL POSITION (CONTINUED)
	GE(a)						Financial Services (GE Capital)
(In millions, except share amounts)	June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017
	(Unaudited)						(Unaudited)
Assets
Cash, cash equivalents and restricted cash(b)	$	13,805		$	18,822		$	13,868		$	25,145
Investment securities (Note 3)	928			569			35,758			38,231
Current receivables (Note 4)	14,537			14,638			—			—
Inventories (Note 5)	20,412			19,344			62			75
Financing receivables - net (Note 6)	—			—			16,392			21,967
Other GE Capital receivables	—			—			16,031			16,945
Property, plant and equipment – net (Note 7)	22,668			23,963			28,964			30,595
Receivable from GE Capital(c)	29,309			39,844			—			—
Investment in GE Capital	11,667			13,493			—			—
Goodwill (Note 8)	81,481			82,985			984			984
Other intangible assets – net (Note 8)	19,473			20,014			255			259
Contract and other deferred assets (Note 10)	20,787			20,356			—			—
All other assets	10,947			13,627			17,260			15,606
Deferred income taxes (Note 14)	9,411			7,815			1,475			999
Assets of businesses held for sale (Note 2)	4,573			3,799			—			—
Assets of discontinued operations (Note 2)	—			—			5,053			5,912
Total assets	$	259,997		$	279,267		$	136,102		$	156,716

Liabilities and equity
Short-term borrowings (Note 11)(c)	$	8,319		$	14,548		$	10,866		$	19,602
Accounts payable, principally trade accounts	20,329			21,851			1,839			1,853
Progress collections and deferred income	20,988			22,221			—			—
Dividends payable	1,053			1,052			—			—
Other GE current liabilities	15,168			16,919			—			—
Non-recourse borrowings of consolidated securitization entities (Note 11)	—			—			1,322			1,980
Long-term borrowings (Note 11)(c)	62,640			67,040			64,241			73,614
Investment contracts, insurance liabilities and insurance annuity benefits (Note 12)	—			—			36,762			38,587
Non-current compensation and benefits	38,924			40,820			760			801
All other liabilities	16,363			16,873			6,580			5,886
Liabilities of businesses held for sale (Note 2)	1,198			1,248			—			—
Liabilities of discontinued operations (Note 2)	77			23			1,872			683
Total liabilities	185,059			202,595			124,243			143,007

Redeemable noncontrolling interests (Note 15)	3,376			3,391			—			—

Preferred stock (5,939,874 shares outstanding at both June 30, 2018 and December 31, 2017)	6			6			6			6
Common stock (8,691,081,000 and 8,680,571,000 shares outstanding at June 30, 2018 and December 31, 2017, respectively)	702			702			—			—
Accumulated other comprehensive income (loss) - net attributable to GE
Investment securities	21			(102		)	29			(99		)
Currency translation adjustments	(5,446		)	(4,661		)	(224		)	(225		)
Cash flow hedges	36			62			67			54
Benefit plans	(8,043		)	(9,702		)	(509		)	(524		)
Other capital	37,352			37,384			12,880			12,806
Retained earnings	114,913			117,245			(581		)	1,476
Less common stock held in treasury	(84,471		)	(84,902		)	—			—
Total GE shareowners’ equity	55,069			56,030			11,667			13,493
Noncontrolling interests (Note 15)	16,493			17,252			192			217
Total equity (Note 15)	71,562			73,282			11,860			13,709
Total liabilities, redeemable noncontrolling interests and equity	$	259,997		$	279,267		$	136,102		$	156,716


(a)	Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. See Note 1.


(b)	GE restricted cash was $394 million and $611 million at June 30, 2018 and December 31, 2017, respectively, and GE Capital restricted cash was $331 million and $57 million at June 30, 2018 and December 31, 2017, respectively.


(c)	In 2015, senior unsecured notes and commercial paper were assumed by GE upon its merger with GE Capital, resulting in an intercompany receivable and payable between GE and GE Capital. See Note 11.

Amounts may not add due to rounding.

2018 2Q FORM 10-Q 67



FINANCIAL STATEMENTS



STATEMENT OF CASH FLOWS
(UNAUDITED)
	Six months ended June 30
	General Electric Company and consolidated affiliates
(In millions)	2018			2017

Cash flows – operating activities
Net earnings (loss)	$	(444	)	$	832
(Earnings) loss from discontinued operations	1,673			385
Adjustments to reconcile net earnings (loss)
to cash provided from operating activities
Depreciation and amortization of property, plant and equipment	2,695			2,318
Amortization of intangible assets	1,171			1,083
(Earnings) loss from continuing operations retained by GE Capital	—			—
Deferred income taxes	(405		)	(571		)
Decrease (increase) in contract and other deferred assets	(856		)	(2,387		)
Decrease (increase) in GE current receivables	2,926			2,168
Decrease (increase) in inventories	(1,588		)	(642		)
Increase (decrease) in accounts payable	258			(767		)
Increase (decrease) in GE progress collections	(949		)	420
All other operating activities	(2,240		)	91
Cash from (used for) operating activities – continuing operations	2,240			2,930
Cash from (used for) operating activities – discontinued operations	(293		)	(895		)
Cash from (used for) operating activities	1,947			2,035

Cash flows – investing activities
Additions to property, plant and equipment	(3,320		)	(3,293		)
Dispositions of property, plant and equipment	1,770			2,166
Additions to internal-use software	(184		)	(273		)
Net decrease (increase) in GE Capital financing receivables	837			1,053
Proceeds from sale of discontinued operations	29			789
Proceeds from principal business dispositions	2,368			145
Net cash from (payments for) principal businesses purchased	—			(2,643		)
All other investing activities	1,164			6,453
Cash from (used for) investing activities – continuing operations	2,665			4,397
Cash from (used for) investing activities – discontinued operations	151			(2,089		)
Cash from (used for) investing activities	2,816			2,309

Cash flows – financing activities
Net increase (decrease) in borrowings (maturities of 90 days or less)	(2,043		)	812
Newly issued debt (maturities longer than 90 days)	542			9,036
Repayments and other debt reductions (maturities longer than 90 days)	(16,419		)	(13,905		)
Net dispositions (purchases) of GE shares for treasury	(6		)	(2,732		)
Dividends paid to shareowners	(2,236		)	(4,332		)
All other financing activities	(752		)	(968		)
Cash from (used for) financing activities – continuing operations	(20,913		)	(12,089		)
Cash from (used for) financing activities – discontinued operations	—			1,909
Cash from (used for) financing activities	(20,913		)	(10,181		)
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash	(285		)	538
Increase (decrease) in cash, cash equivalents and restricted cash	(16,436		)	(5,299		)
Cash, cash equivalents and restricted cash at beginning of year	44,724			50,384
Cash, cash equivalents and restricted cash at June 30	28,288			45,085
Less cash, cash equivalents and restricted cash of discontinued operations at June 30	615			526
Cash, cash equivalents and restricted cash of continuing operations at June 30	$	27,674		$	44,559

Amounts may not add due to rounding.

See accompanying notes.

68 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS



STATEMENT OF CASH FLOWS (CONTINUED)
(UNAUDITED)
	Six months ended June 30
	GE(a)						Financial Services (GE Capital)
(In millions)	2018			2017			2018			2017

Cash flows – operating activities
Net earnings (loss)	$	(664	)	$	610		$	(1,821	)	$	(392	)
(Earnings) loss from discontinued operations	1,673			392			1,618			388
Adjustments to reconcile net earnings (loss)
to cash provided from operating activities
Depreciation and amortization of property, plant and equipment	1,595			1,192			1,086			1,127
Amortization of intangible assets	1,141			1,049			30			34
(Earnings) loss from continuing operations retained by GE Capital(b)	422			4,242			—			—
Deferred income taxes	153			(623		)	(558		)	52
Decrease (increase) in contract and other deferred assets	(856		)	(2,387		)	—			—
Decrease (increase) in GE current receivables	(125		)	1,009			—			—
Decrease (increase) in inventories	(1,599		)	(636		)	14			(9		)
Increase (decrease) in accounts payable	266			(1,039		)	(85		)	(117		)
Increase (decrease) in GE progress collections	(779		)	473			—			—
All other operating activities	(2,001		)	(696		)	(439		)	880
Cash from (used for) operating activities – continuing operations	(773		)	3,586			(154		)	1,964
Cash from (used for) operating activities – discontinued operations	—			—			(293		)	(894		)
Cash from (used for) operating activities	(773		)	3,586			(447		)	1,069

Cash flows – investing activities
Additions to property, plant and equipment	(1,651		)	(1,958		)	(1,732		)	(1,704		)
Dispositions of property, plant and equipment	332			572			1,439			1,829
Additions to internal-use software	(172		)	(258		)	(11		)	(14		)
Net decrease (increase) in GE Capital financing receivables	—			—			5,451			2,824
Proceeds from sale of discontinued operations	—			—			29			789
Proceeds from principal business dispositions	2,368			145			—			—
Net cash from (payments for) principal businesses purchased	—			(2,643		)	—			—
All other investing activities	(886		)	(527		)	529			4,136
Cash from (used for) investing activities – continuing operations	(9		)	(4,670		)	5,705			7,860
Cash from (used for) investing activities – discontinued operations	—			—			151			(2,089		)
Cash from (used for) investing activities	(9		)	(4,670		)	5,856			5,771

Cash flows – financing activities
Net increase (decrease) in borrowings (maturities of 90 days or less)	(1,165		)	306			(1,593		)	332
Newly issued debt (maturities longer than 90 days)	1,058			12,780			394			356
Repayments and other debt reductions (maturities longer than 90 days)	(1,085		)	(1,529		)	(15,394		)	(13,705		)
Net dispositions (purchases) of GE shares for treasury	(6		)	(2,732		)	—			—
Dividends paid to shareowners	(2,089		)	(4,184		)	(147		)	(4,164		)
All other financing activities	(742		)	(271		)	(9		)	(692		)
Cash from (used for) financing activities – continuing operations	(4,028		)	4,370			(16,749		)	(17,872		)
Cash from (used for) financing activities – discontinued operations	—			—			—			1,909
Cash from (used for) financing activities	(4,028		)	4,370			(16,749		)	(15,964		)
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash	(206		)	261			(79		)	277
Increase (decrease) in cash, cash equivalents and restricted cash	(5,017		)	3,548			(11,419		)	(8,846		)
Cash, cash equivalents and restricted cash at beginning of year	18,822			11,083			25,902			39,301
Cash, cash equivalents and restricted cash at June 30	13,805			14,631			14,483			30,455
Less cash, cash equivalents and restricted cash of discontinued operations at June 30	—			—			615			526
Cash, cash equivalents and restricted cash of continuing operations at June 30	$	13,805		$	14,631		$	13,868		$	29,928


(a)	Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis.


(b)	Represents GE Capital earnings (loss) from continuing operations attributable to the Company, net of GE Capital common dividends paid to GE.

Amounts may not add due to rounding.

In the consolidating data on this page, “GE” means the basis of consolidation as described in Note 1 to the consolidated financial statements; "GE Capital" means GE Capital Global Holdings, LLC (GECGH) and all of their affiliates and associated companies. Separate information is shown for “GE” and “Financial Services (GE Capital).” Transactions between GE and GE Capital have been eliminated from the “Consolidated” columns and are discussed in Note 21.

2018 2Q FORM 10-Q 69



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements represent the consolidation of General Electric Company (the Company) and all companies that we directly or indirectly control, either through majority ownership or otherwise. See Note 1 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017 that discusses our consolidation and financial statement presentation. As used in this report on Form 10-Q (Report), “GE” represents the adding together of all affiliated companies except GE Capital (GE Capital or Financial Services), whose continuing operations are presented on a one-line basis; GE Capital consists of GE Capital Global Holdings, LLC (GECGH) and all of its affiliates; and “Consolidated” represents the adding together of GE and GE Capital with the effects of transactions between the two eliminated.

We have reclassified certain prior-period amounts to conform to the current-period presentation. Certain columns and rows may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers in millions. Unless otherwise indicated, information in these notes to the consolidated financial statements relates to continuing operations.

INTERIM PERIOD PRESENTATION

The consolidated financial statements and notes thereto are unaudited. These statements include all adjustments (consisting of normal recurring accruals) that we considered necessary to present a fair statement of our results of operations, financial position and cash flows. The results reported in these consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in our consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31, 2017 .

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Please refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies, to the consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31, 2017 for the discussion of our significant accounting policies as well as the additional revenue accounting policy information provided in Note 9, reflective of our adoption of ASC 606.

ACCOUNTING CHANGES

On January 1, 2018, we adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers , and the related amendments (ASC 606), which supersedes most previous U.S. GAAP revenue guidance. We elected to adopt the new standard on a retrospective basis to ensure a consistent basis of presentation within our consolidated financial statements for all periods reported. In addition, we elected the practical expedient for contract modifications, which essentially means that the terms of the contract that existed at the beginning of the earliest period presented can be assumed to have been in place since the inception of the contract (i.e., not practical to separately evaluate the effects of all prior contract modifications).

ASC 606 requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time based on when control of goods and services transfers to a customer. As a result of the adoption of the standard, we recorded significant changes in the timing of revenue recognition and in the classification between revenues and costs. The financial statement effect of the adoption was a decrease to our previously reported retained earnings as of January 1, 2016 of $4,240 million and a decrease to our previously reported revenues and earnings (loss) from continuing operations of $2,224 million and $2,668 million , respectively, for the year ended December 31, 2017 and $220 million and $1,182 million , respectively, for the year ended December 31, 2016. The effect on our statement of financial position was principally comprised of changes to our contract assets, inventories, deferred taxes, deferred income and progress collections balances resulting in an $8,317 million decrease to previously reported total assets as of December 31, 2017.

70 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As discussed in prior filings, some of the impacts of adopting the ASC 606 are:

Long-Term Service Agreements - For our long-term service agreements, we will continue to recognize revenue over time using percentage of completion based on costs incurred relative to total expected costs. We will also continue to record cumulative effect adjustments resulting from changes to our estimated contract billings or costs (excluding those resulting from contract modifications as discussed below). Our accounting will be impacted by various changes in the new revenue standard including (1) accounting for contract modifications and their related impacts and (2) changes in the accounting scope and term of our contracts.


•	Modifications - Under the new revenue standard, contract modifications will generally be accounted for as if we entered into a new contract, resulting in prospective recognition of changes to our estimates of contract billings and costs. That is, cumulative effect adjustments will generally no longer be recognized in the period that modifications occur.

There was limited guidance for accounting for contract modifications under prior U.S. GAAP. As a result, our previous method of accounting for contract modifications was developed with the objective of accounting for the nature of the contract modifications. Generally, contract modifications were accounted for as cumulative effect adjustments, which reflected an update to the contract margin for the impact of the modification (i.e., changes to estimates of future contract billings and costs); however, modifications that substantially changed the economics of the arrangement were effectively accounted for as a new contract.

•

Scope and term - The new revenue standard provides more prescriptive guidance on identifying the elements of long-term service type contracts that should be accounted for as separate performance obligations. Application of this guidance, which focuses on understanding the nature of the arrangement, including our customers' discretion in purchasing decisions, has resulted in changes to the scope of elements included in our accounting model for long-term service agreements. For example, significant equipment upgrades offered as part of our long-term service agreements will generally be accounted for as separate performance obligations under the new revenue standard.

Also, the term of our contracts is now defined as the shorter of the stated term or the term not subject to customer termination without substantive penalty. Over this contract term, we estimate our revenues and related costs, including estimates of fixed and variable payments related to asset utilization and related costs to fulfill our performance obligations. Historically, our accounting for long-term contracts did not reflect an expectation that a contract would be terminated prior to the stated term, particularly when the probability of termination was considered remote. Under prior U.S. GAAP, while termination rights were considered, more emphasis was placed on expected outcomes (i.e., use of best estimates). For example, we used historical experience with similar types of contracts as well as other evidence (e.g., customer intent, economic compulsion and future plans for operating the asset) to determine the contract term for application of our accounting model.

These changes to our long-term service agreement accounting have significantly impacted all of our industrial businesses except for Renewable Energy, Healthcare, and Lighting and were some of the drivers in the reduction of the related contract asset balance of $8,255 million as of December 31, 2017. While these contract asset balances have been reduced due to the accounting changes, the economics and cash impact of these contracts remain unchanged.

Aviation Commercial Engines - For Aviation Commercial engines our previous method applied contract-specific estimated margin rates, which included the effect of estimated cost improvements over time, to costs incurred to determine the amount of revenue that should be recognized. The new revenue standard will result in a significant change from our previous long-term contract accounting model. While we will continue to recognize revenue at delivery, each engine is now accounted for as a separate performance obligation, reflecting the contractually stated price and manufacturing cost of each engine. The most significant effect of this change is on our new engine launches, where the cost of earlier production units is higher than the cost of later production units driven by expected cost improvements over the life of the engine program, which will generally result in lower earnings or increased losses on our early program engine deliveries to our customers. The effect of this change reduced the related contract asset balance of $1,755 million as of December 31, 2017.

All Other Large Equipment - For the remainder of our equipment businesses, the new revenue standard’s emphasis on transfer of control rather than risks and rewards has resulted in an accelerated timing of revenue recognition versus our previous accounting for certain products. While this change impacts all our businesses, our Renewable Energy business was most significantly impacted on a year over year basis with certain of their products recognized at an earlier point in time compared to historical standards. Our policy under ASC 605 was to defer recognition until all risk had transferred to the customer, which was generally upon product installation or customer acceptance. For these equipment contracts, the customer has control of the equipment in advance of the related installation or acceptance event based on our evaluation of the indicators provided in ASC 606. Consistent with our industry peers, certain of our businesses’ products have transitioned either to a point in time or over time recognition based on the nature of the arrangement. This change in timing of revenue had an effect on inventory, contract assets and progress collections to reflect the transfer of control at an earlier point in time.

Refer to our Form 8-K filed on April 13, 2018 for supplemental information on the effect of the adoption of ASC 606 to our financial statements.

2018 2Q FORM 10-Q 71



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On January 1, 2018, we adopted ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . The ASU requires the service cost component of the net periodic costs for pension and postretirement plans to be presented in the same line item in the statement of earnings as other employee-related compensation costs. The non-service related costs are now required to be presented separately from the service cost component. This change to the income statement has been reflected on a retrospective basis and had no effect on continuing or net income. The new standard also added guidance requiring entities to exclude these non-service related costs from capitalization in inventory or other internally-developed assets on a prospective basis, which is not expected to have a significant effect.

On January 1, 2018 we adopted ASU No. 2016-18, Statement of Cash Flows: Restricted Cash . The ASU requires the changes in the total of cash and restricted cash to be presented in the statement of cash flows. In addition, when cash and restricted cash are presented on separate lines on the balance sheet, an entity is required to reconcile the totals in the statement of cash flows to the related line items in the balance sheet. While not a direct effect of the adoption of the standard, to simplify the reconciliation of the statement of cash flows to the cash balances presented in our statement of financial position, we have elected to present cash and restricted cash as a single line on the balance sheet, which resulted in an increase of $668 million and $654 million to our previously reported December 31, 2017 and December 31, 2016 cash balances, respectively. The change to our cash balances and cash flows has been reflected on a retrospective basis for all periods presented.

On January 1, 2018, we adopted ASU No. 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory . The ASU eliminates the deferral of the tax effects of intra-entity asset transfers other than inventory and was required to be adopted on a modified retrospective basis. As a result, the tax expense from the intercompany sale of assets, other than inventory, and associated changes to deferred taxes will be recognized when the sale occurs even though the pre-tax effects of the transaction have not been recognized as they are eliminated in consolidation. This change to our income tax provision has been reflected as a $464 million cumulative catch up adjustment to increase retained earnings as of January 1, 2018 and is not reflected in periods prior to this date.

On January 1, 2018, we adopted ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments . The ASU is required to be reflected on a retrospective basis and provides guidance on the classification of certain cash receipts and cash payments, including requiring cash payments for debt prepayment or debt extinguishment costs be classified as financing activities and payments from a beneficial interest in securitization transactions be classified as investing activities. As part of the adoption, we will reclassify $553 million of cash receipts from our beneficial interest in securitized trade receivables within our consolidated statement of cash flows from cash inflows from operating activities to cash inflows from investing activities for the year ended December 31, 2017 (no effect to periods prior to 2017). The adoption of the ASU did not have a significant effect on our GE Industrial cash flows.

On January 1, 2018 we adopted ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The ASU provides guidance related to the recognition and measurement of financial assets and financial liabilities with changes primarily affecting equity investments and disclosure of financial instruments. Under the new guidance, equity investments with readily determinable fair value, except those accounted for under the equity method of accounting, will be measured at fair value with changes in fair value recognized in earnings. The adoption had an insignificant impact to retained earnings and other comprehensive income.

Effective January 1, 2018, we voluntarily changed the cost method of the GE U.S. inventories that were previously measured on a last-in, first-out (LIFO) basis to first-in, first-out (FIFO) basis. We believe the FIFO method is a preferable measure for our inventories as it is expected to better reflect the current value of inventory reported in the consolidated statement of financial position, improve the matching of costs of goods sold with related revenue, and provide for greater consistency and uniformity across our operations with respect to the method of inventory valuation. While this change will also require us to make a conforming change for U.S. income tax purposes, all existing GE businesses previously using LIFO are expected to be in a deflationary cost environment due to the manufacturing life cycle of the products and continuous reduction in the manufacturing costs due to better efficiencies, which would significantly decrease the tax benefit that LIFO would otherwise provide. Prior to the change and as reported in our 2017 10-K, LIFO was used for approximately 32% of GE inventories as of December 31, 2017.

As required by U.S. GAAP, we have reflected this change in accounting principle on a retrospective basis resulting in changes to the

historical periods presented. The retrospective application of the change resulted in a decrease to our January 1, 2016 retained

earnings of $105 million and a decrease to our net loss from continuing operations by $13 million , $28 million and $124 million for the three months ended June 30, 2017, six months ended June 30, 2017 and the year ended December 31, 2017, respectively, and a decrease to our net earnings from continuing operations by $147 million for the year ended December 31, 2016. This change did not affect our previously reported cash flows from operating, investing or financing activities.

72 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS

ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE

On November 13, 2017, the Company announced its intention to exit approximately $20 billion of assets over the next one to two years . Since this announcement, GE has classified various businesses across our Power, Lighting, Aviation and Healthcare segments as held for sale. As these businesses met the criteria for held for sale, we presented these businesses as a single asset and liability in our financial statements and recognized a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less cost to sell. To date, we have recorded a cumulative pre-tax loss on the planned disposals of $1,132 million ( $1,087 million after-tax), that was primarily recorded in the fourth quarter of 2017. In the first half of 2018, we closed certain of these transactions within our Power and Lighting segments for total net proceeds of $ 2,420 million, recognized a pre-tax gain of $ 238 million in the caption “Other income” in our consolidated Statement of Earnings (Loss) ($ 13 million after-tax) and liquidated $546 million of our previously recorded valuation allowance. These transactions are subject to customary working capital and other post-close adjustments.

While we announced the strategic portfolio actions for Transportation, GE Healthcare and BHGE, these businesses have not met the accounting criteria for held for sale classification. That classification will depend on the nature and timing of the transaction.



FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE
(In millions)	June 30, 2018			December 31, 2017

Assets
Current receivables(a)	$	414		$	612
Inventories	687			931
Property, plant, and equipment – net	709			931
Goodwill	2,410			1,619
Other intangible assets – net	403			403
Contract assets	741			619
Valuation allowance on disposal group classified as held for sale (b)	(530		)	(1,000		)
Other assets	71			49
Assets of businesses held for sale	$	4,905		$	4,164

Liabilities
Accounts payable	$	498		$	602
Progress collections and deferred income	349			179
Non-current compensation and benefits	46			162
Other liabilities	304			305
Liabilities of businesses held for sale	$	1,198		$	1,248

(a)

Included transactions in our industrial businesses that were made on an arms-length basis with GE Capital, including GE current receivables sold to GE Capital of $ 332 million and $ 366 million at June 30, 2018 and December 31, 2017 , respectively. These intercompany balances included within our held for sale businesses are reported in the GE and GE Capital columns of our financial statements, but are eliminated in deriving our consolidated financial statements.


(b)	We adjusted the carrying value to fair value less cost to sell for certain held for sale businesses.

DISCONTINUED OPERATIONS

Discontinued operations primarily relate to our financial services businesses . Discontinued operations primarily comprise residual assets and liabilities related to our exited U.S. mortgage business (WMC) , our mortgage portfolio in Poland, and trailing liabilities associated with the sale of our GE Capital businesses as a result of the GE Capital Exit Plan (our plan announced in 2015 to reduce the size of our financial services businesses). Results of operations, financial position and cash flows for these businesses are separately reported as discontinued operations for all periods presented. See Note 19 for further information about indemnifications and further discussion on WMC.

2018 2Q FORM 10-Q 73



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS
	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Operations
Total revenues and other income (loss)	$	4		$	9		$	(1,468	)	$	88

Earnings (loss) from discontinued operations before income taxes	$	(156	)	$	(216	)	$	(1,730	)	$	(412	)
Benefit (provision) for income taxes(a)	35			66			54			128
Earnings (loss) from discontinued operations, net of taxes	$	(121	)	$	(150	)	$	(1,676	)	$	(284	)

Disposal
Gain (loss) on disposal before income taxes	$	—		$	8		$	4		$	(19	)
Benefit (provision) for income taxes(a)	—			(3		)	(1		)	(81		)
Gain (loss) on disposal, net of taxes	$	—		$	4		$	3		$	(100	)

Earnings (loss) from discontinued operations, net of taxes(b)(c)	$	(121	)	$	(146	)	$	(1,673	)	$	(385	)

(a)

GE Capital's total tax benefit (provision) for discontinued operations and disposals included current tax benefit (provision) of $132 million and $253 million for the three months ended June 30, 2018 and 2017 , respectively, and $123 million and $(323) million for the six months ended June 30, 2018 and 2017, respectively, including current U.S. Federal tax benefit (provision) of $37 million and $68 million for the three months ended June 30, 2018 and 2017 , respectively and $61 million and $(519) million for the six months ended June 30, 2018 and 2017, respectively. The deferred tax benefit (provision) was $(97) million and $(190) million for the three months ended June 30, 2018 and 2017 , respectively and $(70) million and $370 million for the six months ended June 30, 2018 and 2017, respectively.

(b)

The sum of GE Industrial earnings (loss) from discontinued operations, net of taxes, and GE Capital earnings (loss) from discontinued operations, net of taxes, after adjusting for earnings (loss) attributable to noncontrolling interests related to discontinued operations, is reported within earnings (loss) from discontinued operations, net of taxes, in the GE Industrial column of the Consolidated Statement of Earnings (Loss).


(c)	Earnings (loss) from discontinued operations attributable to the Company, before income taxes, was $(156) million and $(215) million for the three months ended June 30, 2018 and 2017 , respectively, and $(1,726) million and $(438) million for the six months ended June 30, 2018 and 2017, respectively.



(In millions)	June 30, 2018		December 31, 2017

Assets
Cash, cash equivalents and restricted cash	$	615	$	757
Investment securities	425		647
Deferred income taxes	885		951
Financing receivables held for sale	2,912		3,215
Other assets	217		342
Assets of discontinued operations	$	5,053	$	5,912

Liabilities
Accounts payable	47		51
Borrowings	—		1
Other liabilities	1,903		654
Liabilities of discontinued operations	$	1,949	$	706

74 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. INVESTMENT SECURITIES

Substantially all of our investment securities are classified as available-for-sale and comprise mainly investment-grade debt securities supporting obligations to annuitants and policyholders in our run-off insurance operations. We do not have any securities classified as held-to-maturity.



	June 30, 2018									December 31, 2017
(In millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value(a)		Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value(a)

Debt
U.S. corporate	$	22,052	$	2,537	$	(235	)	$	24,354	$	20,104	$	3,775	$	(35	)	$	23,843
Non-U.S. corporate	2,827		63		(37		)	2,852		5,455		86		(13		)	5,528
State and municipal	3,653		393		(56		)	3,990		3,775		534		(40		)	4,269
Mortgage and asset-backed	3,260		50		(66		)	3,244		2,820		81		(23		)	2,878
Government and agencies	1,576		64		(27		)	1,612		1,927		75		(2		)	2,000
Equity (b)	559		—		—			559		166		12		—			178
Total	$	33,926	$	3,107	$	(422	)	$	36,611	$	34,246	$	4,564	$	(114	)	$	38,696


(a)	Included $928 million and $569 million of investment securities held by GE at June 30, 2018 and December 31, 2017, respectively, of which $524 million and $141 million are equity securities with readily determinable fair value.

(b)

These securities have readily determinable fair values and subsequent to the adoption of ASU 2016-01 on January 1, 2018, changes in fair value are recorded to earnings. Net unrealized gains (losses) recorded to earnings related to these securities were $293 million and $29 million for the three months ended and $276 million and $29 million for the six months ended June 30, 2018 and 2017, respectively.

Investments with a fair value of $4,268 million and $4,413 million were classified within Level 3 (significant inputs to the valuation model are unobservable) at June 30, 2018 and December 31, 2017, respectively. The remaining investments are substantially all classified within Level 2 (determined based on significant observable inputs). During the six months ended June 30, 2018 and 2017, there were no significant transfers into or out of Level 3 .

In addition to equity securities with readily determinable fair value, we hold $594 million of equity securities without readily determinable fair value at June 30, 2018 that are classified within "All other assets" in our Statement of Financial Position and are recorded at cost less impairment and adjusted for observable price changes for identical or similar instruments. We recorded fair value increases of $ 35 million and $43 million to those securities based on observable transactions and impairments of $10 million and $15 million for the three and six months ended June 30, 2018, respectively.



ESTIMATED FAIR VALUE AND GROSS UNREALIZED LOSSES OF AVAILABLE-FOR-SALE DEBT SECURITIES
	In loss position for
	Less than 12 months					12 months or more
(In millions)	Estimated fair value		Gross unrealized losses			Estimated fair value		Gross unrealized losses

June 30, 2018
U.S. corporate	$	5,536	$	(170	)	$	566	$	(65	)
Non-U.S. corporate	1,043		(33		)	1,282		(5		)
State and municipal	317		(6		)	282		(50		)
Mortgage and asset-backed	1,826		(47		)	384		(19		)
Government and agencies	488		(26		)	109		(1		)
Total	$	9,210	$	(282	)	$	2,623	$	(140	)

December 31, 2017
U.S. corporate	$	502	$	(6	)	$	605	$	(30	)
Non-U.S. corporate	1,169		(4		)	3,685		(10		)
State and municipal	48		(1		)	272		(39		)
Mortgage and asset-backed	979		(11		)	318		(12		)
Government and agencies	395		(2		)	69		—
Total	$	3,093	$	(23	)	$	4,949	$	(91	)

Unrealized losses are not indicative of the amount of credit loss that would be recognized and at June 30, 2018 are primarily due to increases in market yields subsequent to our purchase of the securities. We presently do not intend to sell the vast majority of our debt securities that are in an unrealized loss position and believe that it is not more likely than not that we will be required to sell the vast majority of these securities before anticipated recovery of our amortized cost. The methodologies and significant inputs used to measure the amount of credit loss for our debt securities during 2018 have not changed.

2018 2Q FORM 10-Q 75



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Total pre-tax, other-than-temporary impairments on debt securities recognized in earnings were an insignificant amount for the three and six months ended June 30, 2018 and 2017.



CONTRACTUAL MATURITIES OF INVESTMENT IN AVAILABLE-FOR-SALE DEBT SECURITIES
(EXCLUDING MORTGAGE AND ASSET-BACKED SECURITIES)

(In millions)	Amortized cost		Estimated fair value

Due
Within one year	$	1,903	$	1,910
After one year through five years	3,098		3,192
After five years through ten years	6,268		6,673
After ten years	18,900		21,105

We expect actual maturities to differ from contractual maturities because borrowers have the right to call or prepay certain obligations.

Although we generally do not have the intent to sell any specific securities at the end of the period, in the ordinary course of managing our investment securities portfolio, we may sell securities prior to their maturities for a variety of reasons, including diversification, credit quality, yield and liquidity requirements and the funding of claims and obligations to policyholders. Gross realized gains on available-for-sale debt securities were $9 million and $14 million , and gross realized losses were $(3) million and $(2) million in the three months ended June 30, 2018 and 2017, respectively. Gross realized gains on available-for-sale debt securities were $22 million and $109 million , and gross realized losses were $(3) million and $(3) million in the six months ended June 30, 2018 and 2017, respectively.

Proceeds from investment securities sales and early redemptions by issuers totaled $385 million and $701 million in the three months ended June 30, 2018 and 2017, respectively primarily from sales of U.S. Corporate, state and municipal securities and mortgage and asset backed securities and $706 million and $1,774 million in the six months ended June 30, 2018 and 2017, respectively primarily from sales of U.S. Corporate, mortgage and asset backed securities and state and municipal securities.

NOTE 4. CURRENT RECEIVABLES



	Consolidated(a)(b)						GE(c)
(In millions)	June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017

Current receivables	$	21,715		$	25,282		$	15,438		$	15,693
Allowance for losses	(918		)	(1,073		)	(901		)	(1,055		)
Total	$	20,797		$	24,209		$	14,537		$	14,638

(a)

Included GE industrial customer receivables sold to a GE Capital affiliate and recorded on GE Capital’s balance sheet of $ 7,025 million and $ 10,370 million at June 30, 2018 and December 31, 2017 , respectively. The consolidated total included a deferred purchase price receivable of $ 413 million and $ 388 million at June 30, 2018 and December 31, 2017 , respectively, related to our Receivables Facility (described below).

(b)

In order to manage credit exposure, the Company sells additional current receivables to third parties outside the Receivables Facility, substantially all of which are serviced by the Company. The outstanding balance of these current receivables was $ 2,694 million and $ 2,541 million at June 30, 2018 and December 31, 2017 , respectively. Of these balances, $ 1,641 million and $ 1,621 million was sold by GE to GE Capital prior to the sale to third parties at June 30, 2018 and December 31, 2017 , respectively. At June 30, 2018 and December 31, 2017 , our maximum exposure to loss under the limited recourse arrangements is $ 50 million and $ 90 million, respectively.


(c)	GE current receivables balances at June 30, 2018 and December 31, 2017 , before allowance for losses, included $ 10,518 million and $ 10,452 million, respectively, from sales of goods and services to customers. The remainder of the balances primarily relates to supplier advances, revenue sharing programs and other non-income based tax receivables.

RECEIVABLES FACILITY

The Company has a $ 3,750 million revolving Receivables Facility under which receivables are sold directly to third-party purchasers. The third-party purchasers have no recourse to other assets of the Company in the event of non-payment by the debtors. Where the purchasing entity is a bank multi-seller commercial paper conduit, assets transferred by other parties to that entity form a majority of the entity’s assets. Upon sale of the receivables, we receive proceeds of cash and a deferred purchase price (DPP). The DPP is an interest in specified assets of the purchasers (the receivables sold by GE Capital) that entitles GE Capital to the residual cash flows of those specified assets.

76 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the six months ended June 30, 2018 , GE Industrial sold current receivables of $ 11,355 million to GE Capital, which GE Capital sold immediately to third parties under the Receivables Facility. GE Capital continues to service the current receivables for the purchasers. The Company received total cash collections of $ 11,245 million on previously sold current receivables owed to the purchasing entities. The purchasing entities invested $11,204 million , including $10,009 million of collections to purchase newly originated current receivables from the Company. In addition, the purchase of additional receivables by the purchasing entities increased their DPP obligation to the Company by $94 million and they paid $ 69 million to reduce their DPP obligation. During the six months ended June 30, 2018 , the Company recorded a loss of $ 69 million on sales of current receivables to the third party purchasers.

At June 30, 2018 and December 31, 2017 , GE Capital, under the Receivables Facility, serviced $ 3,332 million and $3,222 million of transferred receivables that remain outstanding, respectively. During the six months ended June 30, 2018 , the purchasers paid GE Capital servicing fees of $16 million.

Given the short-term nature of the underlying receivables, discount rates and prepayments are not factors in determining the value of the DPP. Collections on the DPP are presented within Cash flows from investing activities in the GE Capital and consolidated columns in the Statement of Cash Flows. As the performance of the transferred current receivables is similar to the performance of our other current receivables, delinquencies are not expected to be significant.

NOTE 5. INVENTORIES



(In millions)	June 30, 2018		December 31, 2017

Raw materials and work in process	$	10,812	$	10,131
Finished goods	9,427		8,847
Unbilled shipments	234		441
Total Inventories	$	20,473	$	19,419

NOTE 6. GE CAPITAL FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES



FINANCING RECEIVABLES, NET
(In millions)	June 30, 2018			December 31, 2017

Loans, net of deferred income	$	13,371		$	17,404
Investment in financing leases, net of deferred income	3,059			4,614
	16,430			22,018
Allowance for losses	(38		)	(51		)
Financing receivables – net	$	16,392		$	21,967

W e manage our GE Capital financing receivables portfolio using delinquency and nonaccrual data as key performance indicators. At June 30, 2018 , $779 million ( 4.7% ), $387 million ( 2.4% ) and $304 million ( 1.9% ) of financing receivables were over 30 days past due, over 90 days past due and on nonaccrual, respectively. Of the $304 million of nonaccrual financing receivables at June 30, 2018 , the vast majority are secured by collateral and $194 million are currently paying in accordance with the contractual terms. At December 31, 2017 , $550 million ( 2.5% ), $140 million ( 0.6% ) and $252 million ( 1.1% ) of financing receivables were over 30 days past due, over 90 days past due and on nonaccrual, respectively.

The recorded investment in impaired loans at June 30, 2018 and December 31, 2017 was $350 million and $286 million , respectively. The method used to measure impairment for these loans is primarily based on collateral value. At June 30, 2018 , troubled debt restructurings included in impaired loans were $133 million .

2018 2Q FORM 10-Q 77



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The GE Capital financing receivables portfolio includes $2,248 million and $4,148 million of current receivables purchased from GE with recourse and $1,100 million and $1,141 million of financing receivables that are guaranteed by GE, of which $248 million and $239 million of these loans are on nonaccrual at June 30, 2018 and December 31, 2017, respectively. These nonaccrual loans are impaired and are measured based on market and collateral value at a consolidated level, however, are not impaired loans at GE Capital because of the GE guarantee. Financing receivables that are guaranteed by GE are not included in the GE Capital nonaccrual data and financing receivables purchased from GE with recourse are not included in the GE Capital delinquency and nonaccrual data . In addition to the allowance for loan losses recorded at GE Capital, an additional allowance for loan losses of $160 and $161 million was recorded at GE and on a consolidated level for guaranteed loans at June 30, 2018 and December 31, 2017, respectively.

In connection with the strategic shift to make GE Capital smaller and more focused, we classified $2,231 million of Energy Financial Services financing receivables as held for sale at December 31, 2017, as we no longer intend to hold these financing receivables for the foreseeable future. The related held for sale balance at June 30, 2018 is $1,986 million . Pre-tax provisions for losses on financing receivables of $14 million and $137 million and write-offs of $14 million and $156 million were recorded for the six months ended June 30, 2018, and for the twelve months ended December 31, 2017, respectively to reduce the carrying value of the financing receivables to the lower of cost or fair value, less cost to sell.

Additionally, in connection with the GE Capital strategic shift, we classified $1,434 million of Healthcare Equipment Finance financing receivables as held for sale at June 30, 2018, and write-offs of $7 million were recorded at June 30, 2018, to reduce the carrying value of the financing receivables to the lower of cost or fair value, less cost to sell.

NOTE 7. PROPERTY, PLANT AND EQUIPMENT



(In millions)	June 30, 2018			December 31, 2017

Original cost	$	87,216		$	89,607
Less accumulated depreciation and amortization	(36,350		)	(35,733		)
Property, plant and equipment – net	$	50,866		$	53,874

Consolidated depreciation and amortization on property, plant and equipment was $1,395 million and $1,125 million in the three months ended June 30, 2018 and 2017 , respectively and $2,695 million and $2,318 million in the six months ended June 30, 2018 and 2017, respectively.

NOTE 8. ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

LM WIND POWER

On April 20, 2017 , we acquired LM Wind Power, the Danish maker of rotor blades for approximately $1,700 million. The purchase price allocation resulted in goodwill of $1,593 million and amortizable intangible assets of $206 million.

BAKER HUGHES

On July 3, 2017, GE completed the combination of GE’s Oil & Gas business (GE Oil & Gas) with Baker Hughes Incorporated (Baker Hughes). As part of the transaction, GE contributed GE Oil & Gas and $7,498 million in cash in exchange for an ownership interest of approximately 62.5% in the new combined company. The operating assets of the new combined company are held through a partnership named Baker Hughes, a GE company, LLC (BHGE LLC). GE holds an economic interest of approximately 62.5% in this partnership, and Baker Hughes’ former shareholders hold an ownership interest of approximately 37.5% through a newly NYSE listed corporation, Baker Hughes, a GE company (BHGE), which controls the partnership. In turn, GE holds a controlling, voting interest of approximately 62.5% in BHGE through Class B Common Stock, which grants voting rights but no economic rights. Baker Hughes’ former shareholders received one share of BHGE Class A Common Stock and a special one-time cash dividend of $17.50 per share at closing. Total consideration was $24,798 million , including the $7,498 million cash contribution.

78 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Baker Hughes acquisition has been accounted for as a business combination, using the acquisition method. The net assets of Baker Hughes’ contributed businesses were recorded at their fair value, and GE Oil & Gas continues at its historical or carryover basis. We recorded noncontrolling interest of $16,235 million for the approximate 37.5% ownership interest in the combined company held by BHGE’s Class A shareholders. The noncontrolling interest is recorded at fair value for the portion attributable to Baker Hughes and at our historical cost for the portion attributable to GE Oil & Gas. The fair value of the noncontrolling interest associated with the acquired net assets was determined by the publicly traded share price of Baker Hughes at the close of the transaction. The impact of recognizing the noncontrolling interest in GE Oil & Gas resulted in an increase to additional paid in capital of $94 million . In the prior year, we disclosed that the impact of recognizing the noncontrolling interest was a decrease to additional paid in capital of $126 million . The primary reason for the change from prior year is the adoption of ASC 606 in the first quarter of 2018.

The tables below present the fair value of the consideration exchanged and the allocation of purchase price to the major classes of assets and liabilities of the acquired Baker Hughes business and the associated fair value of preexisting noncontrolling interest related to the acquired net assets of Baker Hughes.



PURCHASE PRICE
(In millions)	July 3, 2017

Cash consideration	$	7,498
Fair value of the Class A Shares in BHGE issued to Baker Hughes shareholders	17,300
Total consideration for Baker Hughes	$	24,798



IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED
(In millions)	July 3, 2017

Cash and cash equivalents	$	4,133
Accounts receivable	2,342
Inventories	1,712
Property, plant, and equipment - net	4,514
Other intangible assets - net	4,005
All other assets	1,335
Accounts payable	(1,245		)
Borrowings	(3,370		)
Deferred taxes (a)	(249		)
All other liabilities	(2,487		)
Total identifiable net assets	10,690
Fair value of existing noncontrolling interest	(35		)
Goodwill	14,143
Total allocated purchase price	$	24,798


(a)	Includes an increase of approximately $980 million primarily related to fair value adjustments to identifiable assets and liabilities (excluding goodwill) partially offset by a tax asset of approximately $553 million associated with the recognition of foreign tax credits.

The fair value of intangible assets and related useful lives in the purchase price allocation included:



(In millions)	Fair value		Estimated useful life (in years)
Trade name - Baker Hughes	$	2,100	Indefinite life
Customer-related	1,240		15
Patents and technology	465		10
Trademarks - Other	45		10
Capitalized software	64		2
In-process research and development	70		Indefinite life
Favorable lease contracts	21		10
Total	$	4,005

The above goodwill represents future economic benefits expected to be recognized from combining the operations of GE Oil & Gas and Baker Hughes, including expected future synergies and operating efficiencies. Goodwill resulting from the acquisition has been allocated to our Oil & Gas reporting units, of which $67 million is deductible for tax purposes.

During the six months ended June 30, 2018, the Company made measurement period adjustments to reflect facts and circumstances in existence as of the acquisition date. These adjustments resulted in an increase in goodwill of approximately $787 million primarily due to reductions in the fair value of property, plant and equipment of $362 million , equity method investments of $228 million and intangible assets of $123 million , as well as an increase to other liabilities of $315 million primarily related to uncertain tax positions, warranty and other sundry liabilities. The increase in goodwill was partially offset by deferred tax adjustments of $251 million . As a result of the decrease in property, plant and equipment and intangible assets during the six months ended June 30, 2018, we recorded a cumulative decrease to depreciation and amortization expense of $33 million . In addition, we reclassified certain legacy Baker Hughes business balances to conform to our presentation.

2018 2Q FORM 10-Q 79



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INCOME TAXES

BHGE LLC is treated as a disregarded entity for U.S. federal income tax purposes and, accordingly, does not incur any material current or deferred U.S. federal income taxes. BHGE LLC’s foreign subsidiaries, however, are expected to incur current and deferred foreign income taxes.

At closing, GE and BHGE, entered into a Tax Matters Agreement. The Tax Matters Agreement governs the administration and allocation between the parties of tax liabilities and benefits arising prior to, as a result of, and subsequent to the transaction. GE will be responsible for certain taxes related to the formation of the transaction undertaken by GE and Baker Hughes and their respective subsidiaries. We have assumed approximately $33 million of tax obligations of Baker Hughes related to the formation of the transaction.

The Tax Matters Agreement will also provide for the sharing of certain tax benefits arising from the transaction. GE will be entitled to 100% of these tax benefits to the extent that GE has borne certain taxes related to the formation of the transaction. Thereafter, these tax benefits will be shared by GE and BHGE in accordance with their ownership of the partnership, which will initially be approximately 62.5% and approximately 37.5% , respectively.

INTEGRATION AND ACQUISITION COSTS

Integration and acquisition costs of $ 50 million and $ 85 million in the three months ended June 30, 2018 and June 30, 2017, respectively and $96 million and $151 million in the six months ended June 30, 2018 and June 30, 2017, respectively were expensed as incurred and were reported as selling, general and administrative expenses.

UNAUDITED PRO FORMA INFORMATION

The following unaudited pro forma information has been presented as if the Baker Hughes transaction occurred on January 1, 2016. This information has been prepared by combining the historical results of the Company and historical results of Baker Hughes. The unaudited pro forma combined financial data for all periods presented were adjusted to give effect to proforma events that i) are directly attributable to the aforementioned transaction, ii) factually supportable, and iii) expected to have a continuing impact on the consolidated results of operations.

The unaudited combined pro forma results do not include any incremental cost savings that may result from the integration. The adjustments are based on information available to the Company at this time. Accordingly, the adjustments are subject to change and the impact of such changes may be material. The unaudited combined pro forma information is for informational purposes only.

The pro forma information is not necessarily indicative of what the combined company’s results actually would have been had the acquisition been completed as of the beginning of the periods as indicated. In addition, the unaudited pro forma information does not purport to project the future results of the combined company.



	Three months ended June 30				Six months ended June 30
(In millions)	2018		2017		2018		2017

Revenues	$	30,104	$	31,499	$	58,764	$	60,640
Earnings (loss) from continuing operations	832		1,014		1,311		982

Significant adjustments to the pro forma information above include recognition of non-recurring direct incremental integration and acquisition costs in the three and six month period ended June 30, 2017; the amortization associated with an estimate of the acquired intangible assets; and the depreciation associated with the fair value step-up of property, plant and equipment.

80 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GOODWILL



CHANGES IN GOODWILL BALANCES
(In millions)	Balance at January 1, 2018		Acquisitions		Dispositions, currency exchange and other			Balance at June 30, 2018

Power	$	25,269	$	—	$	(2,083	)	$	23,186
Renewable Energy	4,093		—		(31		)	4,062
Oil & Gas	23,943		—		673			24,616
Aviation	10,008		—		(36		)	9,972
Healthcare	17,306		—		(35		)	17,272
Transportation	902		—		(8		)	894
Lighting (a)	—		—		—			—
Capital	984		—		—			984
Corporate	1,463		—		15			1,478
Total	$	83,968	$	—	$	(1,504	)	$	82,464


(a)	Substantial majority of Lighting segment classified as held for sale in the fourth quarter of 2017.

Goodwill balances decreased by $1,504 million in 2018, primarily as a result of the reclassification of the Distributed Power business within our Power segment to Assets of businesses held for sale and currency effects of a stronger U.S. dollar, partially offset by adjustments to the allocation of purchase price associated with our acquisitions of Baker Hughes and LM Wind Power.

We perform our annual impairment test of goodwill in the third quarter for all of our reporting units. In addition, to our annual testing, we also test goodwill for impairment between annual impairment testing dates whenever events or circumstances occur, that, in our judgment, could more likely than not reduce the fair value of one or more of our reporting units below its carrying amount.

In assessing the possibility that a reporting unit’s fair value has been reduced below its carrying amount due to the occurrence of events or circumstances between annual impairment testing dates, we consider all available evidence, including (i) the results of our impairment testing from the most recent testing date (in particular, the magnitude of the excess of fair value over carrying value observed), (ii) downward revisions to internal forecasts or decreases in market multiples (and the magnitude thereof), if any, and (iii) declines in our market capitalization (and the magnitude and duration of those declines), if any. As a result of this assessment, we performed an interim step-one impairment test at our Power Generation and Grid Solutions reporting units within our Power segment in the second quarter of 2018. The results of the analysis indicated that fair value was in excess of carrying value by approximately 10% for our Power Generation reporting unit and 9% at our Grid Solutions reporting unit. The goodwill associated with our Power Generation and Grid Solutions reporting units was $19,041 million and $4,586 million , respectively, representing approximately 23% and 6% of our total goodwill at June 30, 2018.

Also, in the second quarter of 2018, as a result of classifying a significant portion of Healthcare Equipment Finance’s financing receivables as assets held for sale, we performed an interim step-one impairment test at our Industrial Finance reporting unit within our Capital segment. The results of the analysis indicated that fair value was in excess of carrying value by approximately 12% . While the goodwill of this reporting unit is not currently impaired, there could be an impairment in the future as a consequence of the disposition of these financing receivables classified as assets held for sale. The goodwill associated with our Industrial Finance reporting unit was $ 111 million at June 30, 2018.

As of June 30, 2018, we believe goodwill is recoverable for all of our reporting units. However, the Power and Oil & Gas markets continue to be challenging which could result in changes in our projected future earnings and net cash flows at these businesses

as a result of sustained declines in macroeconomic or business conditions affecting our reporting units and there can be no assurances that goodwill will not be impaired in future periods. The planned sale of our Distributed Power business is not expected to materially affect the goodwill impairment test results for our Power Generation reporting unit noted above.

OTHER INTANGIBLE ASSETS



OTHER INTANGIBLE ASSETS - NET
(In millions)	June 30, 2018		December 31, 2017

Intangible assets subject to amortization	$	17,499	$	18,056
Indefinite-lived intangible assets(a)	2,230		2,217
Total	$	19,728	$	20,273


(a)	Indefinite-lived intangible assets principally comprise trademarks/trade names and in-process research and development.

2018 2Q FORM 10-Q 81



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



INTANGIBLE ASSETS SUBJECT TO AMORTIZATION
	June 30, 2018							December 31, 2017
(In millions)	Gross carrying amount		Accumulated amortization			Net		Gross carrying amount		Accumulated amortization			Net

Customer-related(a)	$	10,400	$	(3,332	)	$	7,070	$	10,614	$	(3,095	)	$	7,521
Patents and technology	10,694		(4,133		)	6,561		10,271		(3,899		)	6,372
Capitalized software	8,137		(5,167		)	2,970		8,064		(4,974		)	3,089
Trademarks	1,181		(502		)	679		1,280		(421		)	859
Lease valuations	161		(85		)	77		170		(80		)	89
All other	239		(96		)	142		218		(92		)	125
Total	$	30,813	$	(13,315	)	$	17,499	$	30,618	$	(12,561	)	$	18,056


(a)	Balance includes payments made to our customers, primarily within our Aviation business.

Intangible assets subject to amortization decreased by $ 557 million in the six months ended June 30, 2018 , primarily as a result of amortization, currency effects of a stronger U.S. dollar and the reclassification of the Distributed Power business to Assets of businesses held for sale, partially offset by the acquisition of a technology intangible asset of $632 million at our Aviation business and the capitalization of new software across several business platforms .

GE amortization expense related to intangible assets subject to amortization was $ 540 million and $ 530 million in the three months ended June 30, 2018 and 2017 , respectively and $1,141 million and $1,049 million for the six months ended June 30, 2018 and 2017, respectively. GE Capital amortization expense related to intangible assets subject to amortization was $ 15 million and $ 14 million in the three months ended June 30, 2018 and 2017 , respectively and $ 30 million and $ 34 million for the six months ended June 30, 2018 and 2017, respectively.

82 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. REVENUES

REVENUES FROM THE SALE OF EQUIPMENT

PERFORMANCE OBLIGATIONS SATISFIED OVER TIME

We recognize revenue on agreements for the sale of customized goods including power generation equipment, larger oil drilling equipment projects, military development contracts, locomotive units, and long-term construction projects on an over time basis. We recognize revenue using percentage of completion based on costs incurred relative to total expected costs. Our estimate of costs to be incurred to fulfill our promise to a customer is based on our history of manufacturing or constructing similar assets for customers and is updated routinely to reflect changes in quantity or pricing of the inputs. We recognize revenue as we customize the customer's equipment during the manufacturing or integration process and obtain right to payment for work performed. We provide for potential losses on any of these agreements when it is probable that we will incur the loss.

Our billing terms for these over-time contracts vary, but are generally based on achieving specified milestones. The differences between the timing of our revenue recognized (based on costs incurred) and customer billings (based on contractual terms) results in changes to our contract asset or contract liability positions (see Note 10 for further information).

PERFORMANCE OBLIGATIONS SATISFIED AT A POINT IN TIME

We recognize revenue on agreements for non-customized equipment including commercial aircraft engines, healthcare equipment, resource extraction equipment and other goods we manufacture on a standardized basis for sale to the market at a point in time. We recognize revenue at the point in time that the customer obtains control of the good, which is generally no earlier than when the customer has physical possession of the product. We use proof of delivery for certain large equipment with more complex logistics, whereas the delivery of other equipment is estimated based on historical averages of in-transit periods (i.e., time between shipment and delivery).

In situations where arrangements include customer acceptance provisions based on seller or customer-specified objective criteria, we recognize revenue when we have concluded that the customer has control of the goods and that acceptance is likely to occur. We generally do not provide for anticipated losses on point in time transactions prior to transferring control of the equipment to the customer.

Our billing terms for these point in time equipment contracts vary and generally coincide with delivery to the customer; however, within certain businesses, we receive progress payments from customers for large equipment purchases, which is generally to reserve production slots.

REVENUES FROM THE SALE OF SERVICES

Consistent with our discussion in the MD&A and the way we manage our businesses, we refer to sales under product services agreements and sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs) as sales of “services,” which is an important part of our operations.

PERFORMANCE OBLIGATIONS SATISFIED OVER TIME

We enter into long-term product service agreements with our customers primarily within our Aviation, Power, Oil & Gas and Transportation segments. These agreements require us to provide preventative maintenance, overhauls, and standby "warranty-type" services that include certain levels of assurance regarding asset performance and uptime throughout the contract periods, which generally range from 5 to 25 years . We account for items that are integral to the maintenance of the equipment as part of our service related performance obligation, unless the customer has a substantive right to make a separate purchasing decision (e.g., equipment upgrade). We recognize revenue as we perform under the arrangements using percentage of completion based on costs incurred relative to total expected costs. Throughout the life of a contract, this measure of progress captures the nature, timing and extent of our underlying performance activities as our stand-ready services often fluctuate between routine inspections and maintenance, unscheduled service events and major overhauls at pre-determined usage intervals. Contract modifications that extend or revise contract terms are not uncommon and generally result in our recognizing the impact of the revised terms prospectively over the remaining life of the modified contract (i.e., effectively like a new contract).

2018 2Q FORM 10-Q 83



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our billing terms for these arrangements are generally based on the utilization of the asset (e.g., per hour of usage) or upon the occurrence of a major maintenance event within the contract, such as an overhaul. The differences between the timing of our revenue recognized (based on costs incurred) and customer billings (based on contractual terms) results in changes to our contract asset or contract liability positions (see Note 10 for further information).

Changes in customer utilization can influence the timing and extent of overhauls and other service events over the life of the contract. As a result, the revenue recognized each period is dependent on our estimate of how customers will utilize their assets over the term of the agreement. We generally use a combination of both historical utilization trends as well as forward-looking information such as market conditions and potential asset retirements in developing our revenue estimates. This estimate of customer utilization will impact both the total contract billings and costs to satisfy our obligation to maintain the equipment. In developing our cost estimates, we utilize a combination of our historical cost experience and expected cost improvements. Cost improvements are generally only included in future cost estimates after savings have been observed in actual results or proven to be effective through an extensive regulatory engineering approval process.

We also enter into long-term product services agreements in our Healthcare and Renewable Energy segments. Revenues are recognized for these arrangements on a straight line basis consistent with the nature, timing and extent of our services, which primarily relate to routine maintenance and as needed product repairs. Our billing terms for these contracts vary, but we generally invoice periodically as services are provided.

PERFORMANCE OBLIGATIONS SATISFIED AT A POINT IN TIME

We sell certain tangible products, largely spare equipment, through our services businesses. We recognize revenues and bill our customers for this equipment at the point in time that the customer obtains control of the good, which is at the point in time we deliver the spare part to the customer.

DISAGGREGATED REVENUES



EQUIPMENT & SERVICES REVENUES(a)

	Three months ended June 30
(In millions)	2018						2017
	Equipment Revenues		Services Revenues		Total Revenues		Equipment Revenues		Services Revenues		Total Revenues

Power	$	3,513	$	4,066	$	7,579	$	4,629	$	4,771	$	9,400

Renewable Energy	1,102		551		1,653		1,922		390		2,312

Oil & Gas	2,189		3,366		5,554		1,273		1,724		2,997

Aviation	2,908		4,610		7,519		2,350		4,284		6,634

Healthcare	2,812		2,166		4,978		2,634		2,054		4,688

Transportation	305		637		942		510		567		1,077

Lighting	416		15		431		457		16		473

Total Industrial Segment Revenues	$	13,245	$	15,411	$	28,657	$	13,776	$	13,806	$	27,582



EQUIPMENT & SERVICES REVENUES(a)

	Six months ended June 30
(In millions)	2018						2017
	Equipment Revenues		Services Revenues		Total Revenues		Equipment Revenues		Services Revenues		Total Revenues

Power	$	7,037	$	7,764	$	14,801	$	8,813	$	8,527	$	17,341

Renewable Energy	2,306		993		3,299		3,428		651		4,079

Oil & Gas	4,417		6,522		10,939		2,564		3,519		6,083

Aviation	5,447		9,183		14,631		4,949		8,358		13,307

Healthcare	5,419		4,261		9,680		4,958		4,035		8,993

Transportation	571		1,243		1,814		1,009		1,048		2,057

Lighting	860		27		887		908		29		935

Total Industrial Segment Revenues	$	26,058	$	29,994	$	56,052	$	26,628	$	26,167	$	52,795


(a)	Revenues classification consistent with our MD&A defined Services revenue

84 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



SUB-SEGMENT REVENUES

	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Power
Gas Power Systems	$	1,401		$	2,106		$	2,936		$	4,210
Power Services	3,178			3,591			6,010			6,200
Steam Power Systems	529			552			988			927
Energy Connections	2,304			2,487			4,519			4,686
Other	167			664			348			1,318
Power Revenues	$	7,579		$	9,400		$	14,801		$	17,341

Renewable Energy
Onshore Wind	$	1,336		$	2,062		$	2,596		$	3,607
Hydro	176			196			409			383
Offshore Wind	141			54			294			89
Renewable Energy Revenues	$	1,653		$	2,312		$	3,299		$	4,079

Oil & Gas
Turbomachinery & Process Solutions (TPS)	$	1,391		$	1,572		$	2,839		$	3,235
Oilfield Services (OFS)	2,884			228			5,561			440
Oilfield Equipment (OFE)	617			681			1,281			1,397
Digital Solutions	662			517			1,258			1,010
Oil & Gas Revenues	$	5,554		$	2,997		$	10,939		$	6,083

Aviation
Commercial Engines & Services	$	5,534		$	4,918		$	10,806		$	9,889
Military	1,073			938			2,044			1,867
Systems & Other	911			778			1,780			1,551
Aviation Revenues	$	7,519		$	6,634		$	14,631		$	13,307

Healthcare
Healthcare Systems	$	3,493		$	3,273		$	6,824		$	6,306
Life Sciences	1,244			1,161			2,369			2,174
Healthcare Digital	241			253			487			514
Healthcare Revenues	$	4,978		$	4,688		$	9,680		$	8,993

Transportation
Locomotives	$	177		$	422		$	348		$	877
Services	530			486			1,036			891
Mining	137			89			253			136
Other	98			80			178			153
Transportation Revenues	$	942		$	1,077		$	1,814		$	2,057

Lighting
Current	$	268		$	254		$	484		$	487
GE Lighting	163			219			403			449
Lighting Revenues	$	431		$	473		$	887		$	935

Total Industrial Segment Revenues	$	28,657		$	27,582		$	56,052		$	52,795
Capital Revenues (a)	2,429			2,446			4,602			5,127
Corporate items and eliminations	(982		)	(932		)	(1,890		)	(1,945		)
Consolidated Revenues (a)	$	30,104		$	29,097		$	58,764		$	55,978


(a)	Includes $2,361 million and $4,478 million for the three months ended June 30, 2018 and 2017, respectively, and $2,389 million and $5,004 million for the six months ended June 30, 2018 and 2017, respectively, of revenues at GE Capital outside of the scope of ASC 606.

REMAINING PERFORMANCE OBLIGATION

As of June 30, 2018, the aggregate amount of the contracted revenues allocated to our unsatisfied (or partially unsatisfied) performance obligations was $249,574 million . We expect to recognize revenue as we satisfy our remaining performance obligations as follows:


•	Equipment - total remaining performance obligation of $50,982 million of which 53% , 71% and 93% is expected to be satisfied within 1 , 2 and 5 years , respectively, and the remaining thereafter.


•	Service - total remaining performance obligation of $198,592 million of which 17% , 54% , 77% and 88% is expected to be recognized within 1 , 5 , 10 and 15 years , respectively, and the remaining thereafter.


•	Contract modifications could affect both the timing to complete as well as the amount to be received as we fulfill the related remaining performance obligations.

2018 2Q FORM 10-Q 85



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. CONTRACT & OTHER DEFERRED ASSETS AND PROGRESS COLLECTIONS & DEFERRED INCOME



June 30, 2018 (In millions)	Power		Aviation		Oil & Gas		Renewable Energy		Transportation		Other(a)		Total

GE
Revenues in excess of billings
Long-term product service agreements(b)	$	3,821	$	2,527	$	505	$	—	$	491	$	—	$	7,344
Equipment contract revenues(c)	4,247		416		1,059		297		207		506		6,733
Total contract assets	8,067		2,943		1,564		297		698		506		14,076

Deferred inventory costs(d)	996		554		244		1,288		36		335		3,453
Nonrecurring engineering costs(e)	142		1,834		14		23		95		21		2,128
Customer advances and other	1		1,127		—		—		1		—		1,129
Contract and other deferred assets	$	9,207	$	6,457	$	1,823	$	1,608	$	830	$	862	$	20,787



December 31, 2017 (In millions)	Power		Aviation		Oil & Gas		Renewable Energy		Transportation		Other(a)		Total

GE
Revenues in excess of billings
Long-term product service agreements(b)	$	3,357	$	2,614	$	517	$	1	$	413	$	—	$	6,902
Equipment contract revenues(c)	4,757		280		1,095		295		76		371		6,874
Total contract assets	8,115		2,893		1,612		296		488		371		13,775

Deferred inventory costs(d)	1,304		564		358		950		43		359		3,579
Nonrecurring engineering costs(e)	122		1,696		—		—		87		—		1,905
Customer advances and other	—		1,098		—		—		—		—		1,098
Contract and other deferred assets	$	9,539	$	6,251	$	1,971	$	1,246	$	619	$	729	$	20,356


(a)	Primarily includes our Healthcare segment


(b)	Long-term product service agreement balances are presented net of related billings in excess of revenues of $5,043 million and $5,498 million at June 30, 2018 and December 31, 2017, respectively.


(c)	Included in this balance are amounts due from customers for the sale of service upgrades, which we collect through higher fixed or usage-based fees from servicing the equipment under long-term product service agreements. Amounts due from these financing arrangements totaled $799 million and $748 million , as of June 30, 2018 and December 31, 2017, respectively.


(d)	Represents cost deferral for shipped goods (such as components for wind turbine assembly within our Renewable Energy segment) and labor and overhead costs on time and material service contracts (primarily originating in Power and Aviation) and other costs for which the criteria for revenue recognition has not yet been met.


(e)	Includes costs incurred prior to production (e.g., requisition engineering) for equipment production contracts, primarily within our Aviation segment, which are allocated ratably to each unit produced.

Contract and other deferred assets increased $431 million in 2018, which was largely driven by a change in estimated profitability of $133 million within our long-term product service agreements, primarily due to an increase at Power ( $223 million ) partially offset by a decrease at Aviation ( $140 million ). In addition, revenue in excess of billings on our long-term product service agreements increased $309 million , primarily at Power ( $241 million ), and non-recurring engineering costs increased $223 million , primarily at Aviation ( $138 million ). Our equipment related contract assets decreased $141 million , primarily due to a decrease at Power ($ 510 million), partially offset by increases at Healthcare ( $138 million ), Aviation ( $136 million ) and Transportation ( $132 million ), and deferred inventory costs decreased $126 million due to decreases at Power ( $308 million ) and Oil & Gas ( $114 million ), partially offset by an increase at Renewable Energy ( $338 million ), due to the timing of revenue recognized for work performed relative to the timing of billings.



PROGRESS COLLECTIONS & DEFERRED INCOME

(In millions)	June 30, 2018		December 31, 2017

GE Contract Liabilities

Progress collections	$	17,190	$	18,310
Deferred income	3,798		3,911
Total progress collections & deferred income	$	20,988	$	22,221

Revenues recognized for balances that were included in our contract liabilities at the beginning of the period were $9,609 million and $9,182 million for the six months ended June 30, 2018 and 2017, respectively .

86 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. BORROWINGS



(In millions)	June 30, 2018			December 31, 2017

Short-term borrowings
GE
Commercial paper	$	3,010		$	3,000
Current portion of long-term borrowings	3,125			9,452
Other	2,183			2,095
Total GE short-term borrowings	8,319			14,548

GE Capital
Commercial paper	3,018			5,013
Current portion of long-term borrowings(a)	4,408			5,781
Intercompany payable to GE	2,749			8,310
Other	691			497
Total GE Capital short-term borrowings	10,866			19,602

Eliminations	(4,766		)	(10,114		)
Total short-term borrowings	$	14,419		$	24,036

Long-term borrowings
GE
Senior notes(b)	$	58,460		$	62,724
Subordinated notes	2,897			2,913
Other	1,283			1,403
Total GE long-term borrowings	62,640			67,040

GE Capital
Senior notes	36,519			40,754
Subordinated notes	175			208
Intercompany payable to GE(c)	26,560			31,533
Other(a)	988			1,118
Total GE Capital long-term borrowings	64,241			73,614

Eliminations(c)	(27,050		)	(32,079		)
Total long-term borrowings	$	99,832		$	108,575
Non-recourse borrowings of consolidated securitization entities(d)	$	1,322		$	1,980
Total borrowings	$	115,573		$	134,591


(a)	Included $260 million and $988 million of short- and long-term borrowings, respectively, at June 30, 2018 and $348 million and $1,118 million of short- and long-term borrowings, respectively, at December 31, 2017 , of funding secured by aircraft and other collateral. Of this, $320 million and $458 million is non-recourse to GE Capital at June 30, 2018 and December 31, 2017 , respectively.


(b)	Included $6,191 million and $6,206 million of BHGE senior notes at June 30, 2018 and December 31, 2017 , respectively. Total BHGE borrowings were $6,446 million and $7,225 million at June 30, 2018 and December 31, 2017 , respectively.

(c)

Included a reduction of $8,190 million and $7,271 million for long-term intercompany loans from GE Capital to GE at June 30, 2018 and December 31, 2017 , respectively, which bear the right of offset against amounts owed under the assumed debt agreement. Excluding intercompany loans, total long-term assumed debt was $34,750 million and $38,804 million at June 30, 2018 and December 31, 2017 , respectively. The $8,190 million of intercompany loans collectively have a weighted average interest rate of 3.6% and term of approximately 15 years, and can be prepaid at any time, in whole or in part, by GE without premium or penalty.


(d)	Included $361 million and $621 million of current portion of long-term borrowings at June 30, 2018 and December 31, 2017 , respectively. See Note 17 for further information.

On April 10, 2015, GE provided a full and unconditional guarantee on the payment of the principal and interest on all tradable senior and subordinated outstanding long-term debt securities and all commercial paper issued or guaranteed by GE Capital. At June 30, 2018 , the Guarantee applies to $39,044 million of GE Capital debt.

See Note 17 for further information about borrowings and associated interest rate swaps.

2018 2Q FORM 10-Q 87



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. INVESTMENT CONTRACTS, INSURANCE LIABILITIES AND INSURANCE ANNUITY BENEFITS

Insurance and investment contract liabilities comprise mainly obligations to policyholders and annuitants in our run-off insurance activities.



(In millions)	June 30, 2018			December 31, 2017

Future policy benefit reserves
Long-term care insurance contracts	$	16,380		$	16,522
Structured settlement annuities with life contingencies and other contracts	9,544			9,448
Shadow adjustments(a)	2,704			4,582
	28,628			30,552
Investment contracts	2,482			2,569
Claim reserves(b)	5,233			5,094
Unearned premiums and other	419			372
	36,762			38,587
Eliminations	(529		)	(451		)
Total	$	36,233		$	38,136


(a)	To the extent that unrealized gains on debt securities supporting our insurance contracts would result in a premium deficiency should those gains be realized, an increase in future policy benefit reserves is recorded, with an offsetting amount recorded in Other comprehensive income, net of taxes.


(b)	Includes $3,754 million and $3,590 million related to long-term care insurance contracts and $359 million and $364 million related to short-duration contracts, net of eliminations, at June 30, 2018 and December 31, 2017, respectively.

During 2017, in response to elevated claim experience for a portion of our long-term care insurance contracts that was most pronounced for policyholders with higher attained ages, we initiated a comprehensive review of premium deficiency assumptions across all insurance products, which included reconstructing our future claim cost assumptions for long-term care contracts utilizing trends observed in our emerging experience for older claimant ages and later duration policies. Certain of our long-term care policyholders only recently started to reach the prime claim paying period and our new claim cost assumptions considered the emerging credibility of this claim data. In addition to the adverse impact from the increased expected future claim cost assumptions over a long-term horizon, our premium deficiency assumptions considered mortality, length of time a policy will remain in force and both near-term and longer-term investment return expectations. Future investment yields estimated in 2017 were lower than in previous premium deficiency tests, primarily due to the effect of near-term yields on approximately $14.5 billion of future expected capital contributions. The indicated premium deficiency resulted in a $9,481 million pre-tax charge to earnings in the fourth quarter of 2017.

In response to the premium deficiency, our future policy benefit reserves at December 31, 2017 were unlocked and updated to reflect our most recent assumptions. Our future policy benefit reserves are subject to premium deficiency testing at least annually, which we expect to perform in the second half of the year. Any future adverse changes in our assumptions could result in an increase to future policy benefit reserves. Any favorable changes to these assumptions could result in additional margin in our premium deficiency test and higher income over the remaining duration of the portfolio, including higher investment income.

Claim reserves included incurred claims of $1,004 million and $975 million for the six months ended June 30, 2018 and 2017, of which $1 million and $32 million related to the recognition of adjustments to prior year claim reserves arising from our periodic reserve evaluation, in the six months ended June 30, 2018 and 2017, respectively. Paid claims were $904 million and $864 million in the six months ended June 30, 2018 and 2017, respectively. The vast majority of paid claims relate to prior year insured events primarily as a result of the length of time long-term care policyholders remain on claim.

When insurance companies cede insurance risk to third parties, such as reinsurers, they are not relieved of their primary obligation to policyholders and cedents. When losses on ceded risks give rise to claims for recovery, we establish allowances for probable losses on such receivables from reinsurers as required. Reinsurance recoverables, net are included in the caption “Other GE Capital receivables” on our consolidated Statement of Financial Position, and amounted to $2,448 million and included $751 million related to ceded claim reserves at June 30, 2018. Reinsurance recoverables amounted to $2,458 million and included $715 million related to ceded claim reserves at December 31, 2017. The vast majority of our remaining net reinsurance recoverables are secured by assets held in a trust for which we are the beneficiary.

We recognize reinsurance recoveries as a reduction of the consolidated Statement of Earnings (Loss) caption “Investment contracts, insurance losses and insurance annuity benefits.” Reinsurance recoveries were $56 million and $109 million for the three months ended June 30, 2018 and 2017, respectively, and $117 million and $235 million for the six months ended June 30, 2018 and 2017, respectively.

88 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our run-off insurance subsidiaries are required to prepare statutory financial statements in accordance with statutory accounting practices that differ in certain respects from GAAP. Statutory accounting practices are set forth by the National Association of Insurance Commissioners as well as state laws, regulation and general administrative rules. In the fourth quarter of 2017 we recorded a premium deficiency pre-tax charge to earnings of $9,481 million on a GAAP basis. For statutory accounting purposes, the Kansas Insurance Department approved our request for a permitted statutory accounting practice to recognize the reserve increase over a seven -year period. As a result, GE Capital contributed capital to its insurance subsidiaries of $3.5 billion in the first quarter of 2018 and expects to contribute approximately an additional $11 billion through 2024 subject to ongoing monitoring by the Kansas Insurance Department. GE is required to maintain specified capital levels at these insurance subsidiaries under capital maintenance agreements.

NOTE 13. POSTRETIREMENT BENEFIT PLANS

We sponsor a number of pension and retiree health and life insurance benefit plans. Principal pension plans are the GE Pension Plan and the GE Supplementary Pension Plan. Principal retiree benefit plans provide health and life insurance benefits to certain eligible participants and these participants share in the cost of the healthcare benefits. Other pension plans include the U.S. and non-U.S. pension plans with pension assets or obligations greater than $50 million . Smaller pension plans and other retiree benefit plans are not material individually or in the aggregate.



EFFECT ON OPERATIONS OF PENSION PLANS
	Principal pension plans
	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Service cost for benefits earned	$	203		$	254		$	435		$	543
Prior service cost amortization	36			72			72			145
Expected return on plan assets	(820		)	(849		)	(1,640		)	(1,698		)
Interest cost on benefit obligations	667			712			1,333			1,429
Net actuarial loss amortization	943			697			1,894			1,407
Curtailment loss	—			—			—			43			(a)
Pension plans cost	$	1,029		$	886		$	2,094		$	1,869


(a)	Curtailment loss resulting from our intent to sell the Industrial Solutions business within our Power segment.



	Other pension plans
	Three months ended June 30							Six months ended June 30
(In millions)	2018				2017			2018				2017

Service cost for benefits earned	$	99			$	123		$	194			$	274
Prior service credit amortization	(2		)		(1		)	(2		)		(2		)
Expected return on plan assets	(359		)		(301		)	(717		)		(595		)
Interest cost on benefit obligations	156				145			312				287
Net actuarial loss amortization	83				107			165				210
Settlement gain	(6		)	(a)	—			(6		)	(a)	—
Pension plans cost (income)	$	(29	)		$	73		$	(54	)		$	174


(a)	Settlement gain resulting from the sale of the Industrial Solutions business within our Power segment.



EFFECT ON OPERATIONS OF PRINCIPAL RETIREE BENEFIT PLANS
	Principal retiree benefit plans
	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Service cost for benefits earned	$	16		$	26		$	29		$	52
Prior service credit amortization	(58		)	(43		)	(114		)	(86		)
Expected return on plan assets	(7		)	(9		)	(14		)	(18		)
Interest cost on benefit obligations	49			56			98			113
Net actuarial gain amortization	(20		)	(20		)	(40		)	(41		)
Curtailment loss	—			—			—			3			(a)
Retiree benefit plans cost (income)	$	(20	)	$	10		$	(41	)	$	23


(a)	Curtailment loss resulting from our intent to sell the Industrial Solutions business within our Power segment.

The components of net periodic benefit costs other than the service cost component are included in the line item "non-operating benefit costs" in our consolidated Statement of Earnings (Loss).

2018 2Q FORM 10-Q 89



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14. INCOME TAXES

Our consolidated effective income tax rates were 29.5% and (13.2)% during the six months ended June 30, 2018 and 2017, respectively. The rate for 2018 was higher than the U.S. statutory rate primarily due to a change in deferred taxes resulting from the decision to execute an internal restructuring to separate the Healthcare business and the cost of the newly enacted base erosion and global intangible income provisions in excess of the benefit from other global activities and dispositions taxed at a rate above the statutory rate. This was partially offset by an adjustment to decrease the 2018 six-month tax rate to be in line with the lower expected full-year rate and U.S. business credits. The rate for 2017 benefited from the tax difference on global activities and U.S. business credits partially offset by an adjustment to increase the 2017 six-month tax rate to be in line with the higher expected full-year rate.

On December 22, 2017, the U.S. enacted legislation commonly known as the Tax Cuts and Jobs Act (“U.S. tax reform”) that lowered the statutory tax rate on U.S. earnings to 21%, taxes historic foreign earnings at a reduced rate of tax, establishes a territorial tax system and enacts new taxes associated with global operations.

The impact of enactment of U.S. tax reform has been recorded on a provisional basis as the legislation provides for additional guidance to be issued by the U.S. Department of the Treasury on several provisions including the computation of the transition tax. Guidance during 2018 could impact the information required for and the calculation of the transition tax charge and could affect decisions that affect the tax on various U.S. and foreign items, which would further impact the final amounts included in the transition charge and impact the revaluation of deferred taxes. In addition, analysis performed and conclusions reached as part of the tax return filing process and additional guidance on accounting for U.S. tax reform could affect the provisional amount.

Additionally, as part of tax reform, the U.S. has enacted a minimum tax on foreign earnings (“global intangible low tax income”). We have not made an accounting policy election on the deferred tax treatment and, consequently, we have not made an accrual for the deferred tax aspects of this provision.

With the enactment of U.S. tax reform, we recorded, for the period ending December 31, 2017, tax expense of $4,512 million to reflect our provisional estimate of both the transition tax on historic foreign earnings ( $1,155 million including $2,925 million at GE and $(1,770) million at GE Capital) and the revaluation of deferred taxes ( $3,357 million including $1,980 million at GE and $1,377 million at GE Capital). We have not significantly adjusted our provisional estimate of the enactment of U.S. tax reform during the second quarter of 2018 as we continue to analyze information related to our operations as well as new guidance and other aspects of the enacted provisions. Based on our preliminary analysis through the second quarter of the enacted law, including advice from outside advisors, we believe the provisional estimate of the impact of enactment, as recorded in the fourth quarter of 2017 and adjusted during 2018 remains a reasonable estimate of the effects of enactment. We will finalize the impact of enactment during the second half of 2018 based on additional government guidance expected to be issued and additional analysis of our information including the filing of our 2017 tax return. However, there were discrete changes in the provisional estimate identified primarily at Baker Hughes in connection with the measurement period adjustments to purchase price allocation and the associated impact of the change in tax rate on deferred taxes that reduced the provisional amounts recorded by $79 million in the first six months of 2018. Of this benefit, $134 million relates to non-consolidated operations and did not affect net earnings attributable to the company as there is an offsetting adjustment in income from noncontrolling interests. The net remaining cost of $55 million also relates primarily to the revaluation of deferred taxes corresponding to measurement period adjustments to the purchase price allocation for the Baker Hughes acquisition.

Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining our tax expense and in evaluating our tax positions. We assess our income tax positions and record tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting date.



UNRECOGNIZED TAX BENEFITS
(In millions)	June 30, 2018		December 31, 2017

Unrecognized tax benefits	$	5,130	$	5,449
Portion that, if recognized, would reduce tax expense and effective tax rate(a)	3,745		3,626
Accrued interest on unrecognized tax benefits	860		810
Accrued penalties on unrecognized tax benefits	188		158
Reasonably possible reduction to the balance of unrecognized tax benefits
in succeeding 12 months	0-1,300		0-1,100
Portion that, if recognized, would reduce tax expense and effective tax rate(a)	0-1,200		0-900


(a)	Some portion of such reduction may be reported as discontinued operations.

The Internal Revenue Service (IRS) is currently auditing our consolidated U.S. income tax returns for 2012 - 2013 and has begun the audit for 2014-2015. In addition, certain other U.S. tax deficiency issues and refund claims for previous years are still unresolved. It is reasonably possible that a portion of the unresolved items could be resolved during the next 12 months, which could result in a decrease in our balance of "unrecognized tax benefits" - that is, the aggregate tax effect of differences between tax return positions and the benefits recognized in our financial statements. We believe that there are no other jurisdictions in which the outcome of unresolved issues or claims is likely to be material to our results of operations, financial position or cash flows. We further believe that we have made adequate provision for all income tax uncertainties.

90 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15. SHAREOWNERS’ EQUITY



	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Preferred stock issued	$	6		$	6		$	6		$	6
Common stock issued	$	702		$	702		$	702		$	702
Accumulated other comprehensive income (loss)
Beginning balance	$	(12,862	)	$	(16,766	)	$	(14,404	)	$	(18,588	)
Other comprehensive income (loss) before reclassifications
Investment securities - net of deferred taxes of $(17), $146, $48 and $159(a)	31			291			141			309
Currency translation adjustments (CTA) - net of deferred taxes of $190, $(207), $41 and $(241)	(2,049		)	482			(1,217		)	740
Cash flow hedges - net of deferred taxes of $(39), $(8), $(7) and $(2)	(131		)	44			(27		)	64
Benefit plans - net of deferred taxes of $56, $32, $55 and $133	182			25			126			499
Total	$	(1,967	)	$	843		$	(977	)	$	1,612
Reclassifications from other comprehensive income
Investment securities - net of deferred taxes of $0, $(25), $(2) and $(61)(b)	(7		)	(48		)	(16		)	(118		)
Currency translation on dispositions - net of deferred taxes of $0, $(1), $0 and $(541)(b)	380			34			378			588
Cash flow hedges - net of deferred taxes of $22, $(10), $7 and $(9)(c)	50			(54		)	—			(55		)
Benefit plans - net of deferred taxes of $218, $270 $436 and $558(d)	758			536			1,533			1,110
Total	$	1,182		$	467		$	1,895		$	1,525
Other comprehensive income (loss)	(784		)	1,310			918			3,138
Less other comprehensive income (loss) attributable to noncontrolling interests	(213		)	1			(53		)	7
Other comprehensive income (loss), net, attributable to GE	(571		)	1,309			971			3,131
Ending Balance	$	(13,432	)	$	(15,457	)	$	(13,432	)	$	(15,457	)
Other capital
Beginning balance	37,339			37,448			37,384			37,224
Gains (losses) on treasury stock dispositions and other	13			20			(32		)	244
Ending Balance	$	37,352		$	37,468		$	37,352		$	37,468
Retained earnings
Beginning balance(e)	115,477			131,544			117,245			133,856
Net earnings (loss) attributable to the Company	800			1,057			(347		)	974
Dividends and other transactions with shareowners	(1,231		)	(2,265		)	(2,309		)	(4,393		)
Redemption value adjustment on redeemable noncontrolling interests(f)	(133		)	(66		)	(176		)	(167		)
Other changes(g)	—			—			500			—
Ending Balance	$	114,913		$	130,270		$	114,913		$	130,270
Common stock held in treasury
Beginning balance	(84,697		)	(84,833		)	(84,902		)	(83,038		)
Purchases	(58		)	(1,261		)	(143		)	(3,620		)
Dispositions	284			477			574			1,041
Ending Balance	$	(84,471	)	$	(85,617	)	$	(84,471	)	$	(85,617	)
Total equity
GE shareowners' equity balance	55,069			67,372			55,069			67,372
Noncontrolling interests balance	16,685			1,634			16,685			1,634
Total equity balance at June 30	$	71,754		$	69,006		$	71,754		$	69,006

(a)

Included adjustments of $534 million and $(90) million for the three months ended June 30, 2018 and 2017 and $1,472 million and $(189) million for the six months ended June 30, 2018 and 2017, respectively, to investment contracts, insurance liabilities and annuity benefits in our run-off insurance operations to reflect the effects that would have been recognized had the related unrealized investment securities holding gains been realized. See Note 12 for further information.

(b)

Recorded in "Total revenues" and "Other income" and income taxes in "Benefit (provision) for income taxes" in our consolidated Statement of Earnings (Loss). Currency translation gains and losses on dispositions included zero and $(2) million for the three months ended June 30, 2018 and 2017, and zero and $510 million for the six months ended June 30, 2018 and 2017, respectively, in earnings (loss) from discontinued operations, net of taxes.


(c)	Cash flow hedges primarily includes impact of foreign exchange contracts and gains and losses on interest rate derivatives, primarily recorded in GE Capital revenue from services, interest and other financial charges and other costs and expenses. See Note 17 for further information.


(d)	Primarily includes amortization of actuarial gains and losses, amortization of prior service cost and curtailment gain and loss. These components are included in the computation of net periodic pension cost. See Note 13 for further information.


(e)	January 1, 2018 amount has been adjusted to reflect retrospective adoption of ASC 606 ( $8,061 million ) and preferable accounting change from LIFO to FIFO ( $377 million ).


(f)	Amount of redemption value adjustment on redeemable noncontrolling interest shown net of deferred taxes.


(g)	On January 1, 2018, we adopted several new accounting standards on a modified retrospective basis. Cumulative impact of these changes was recorded in the opening retained earnings and it increased our retained earnings by $500 million , primarily due to an increase of $464 million related to ASU 2016-16. See Note 1 for further information.

2018 2Q FORM 10-Q 91



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SHARES OF GE PREFERRED STOCK

On January 20, 2016, we issued $5,694 million of GE Series D preferred stock following an exchange offer for existing GE series A, B and C. The Series D preferred stock bear a fixed interest rate of 5.00% through January 21, 2021 and floating rate equal to three-month LIBOR plus 3.33% thereafter. The Series D preferred stock are callable on January 21, 2021. Following the exchange offer, $250 million of GE Series A, B and C preferred stock still remain outstanding with an initial average fixed dividend rate of 4.07% . The total carrying value of GE preferred stock at June 30, 2018 was $5,495 million and will increase to $5,944 million through periodic accretion. Dividends on GE preferred stock are payable semi-annually, in June and December and accretion is recorded on a quarterly basis. Dividends on GE preferred stock totaled $185 million , including cash dividends of $147 million , and $182 million , including cash dividends of $147 million , in the three months ended June 30, 2018 and 2017, respectively and $222 million , including cash dividends of $147 million , and $216 million , including cash dividends of $147 million , in the six months ending June 30, 2018 and 2017, respectively.

In conjunction with the 2016 exchange of the GE Capital preferred stock into GE preferred stock and the exchange of Series A, B and C preferred stock into Series D preferred stock, GE Capital issued preferred stock to GE for which the amount and terms mirrored the GE preferred stock held by external investors ( $5,495 million carrying value at June 30, 2018). On July 1, 2018, GE Capital and GE exchanged the existing Series D preferred stock issued to GE for new Series D preferred stock which is mandatorily convertible into GE Capital common stock on January 21, 2021. The cash dividend on the new GE Capital preferred stock will equal the cash dividend and accretion on the GE Series D preferred stock through January 21, 2021, at which time the GE Capital preferred stock will convert to GE Capital common stock. The exchange of GE Capital Series D preferred stock has no impact on the GE Series D preferred stock, which remains callable for $5,694 million on January 21, 2021 or thereafter on dividend payment dates. Additionally, there were no changes to the existing Series A, B or C preferred stock issued to GE.

NONCONTROLLING INTERESTS

Noncontrolling interests in equity of consolidated affiliates include common shares in consolidated affiliates and preferred stock issued by our affiliates.



CHANGES TO NONCONTROLLING INTERESTS
	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Beginning balance	$	17,228		$	1,639		$	17,468		$	1,663
Net earnings (loss)	(15		)	14			52			20
Dividends	(81		)	(22		)	(164		)	(31		)
Other(a)	(446		)	2			(669		)	(18		)
Ending balance at June 30	$	16,685		$	1,634		$	16,685		$	1,634


(a)	Includes impact of AOCI, acquisitions, dispositions and BHGE stock repurchases.

REDEEMABLE NONCONTROLLING INTERESTS

Redeemable noncontrolling interests presented in our Statement of Financial Position include common shares issued by our affiliates that are redeemable at the option of the holder of those interests.

As part of the Alstom acquisition in 2015, we formed three joint ventures in grid technology, renewable energy, and global nuclear and French steam power. Noncontrolling interests in these joint ventures hold certain redemption rights. Our retained earnings is adjusted for subsequent changes in the redemption value of the noncontrolling interest in these entities to the extent that the redemption value exceeds the carrying amount of the noncontrolling interest.

Alstom holds redemption rights with respect to its interest in the grid technology and renewable energy joint ventures, which, if exercised, would require us to purchase all of their interest during September 2018 or September 2019. Alstom also holds similar redemption rights for the global nuclear and French steam power joint venture that are exercisable during the first quarter of 2021 or the first quarter of 2022. The redemption price would generally be equal to Alstom's initial investment plus annual accretion of 3% for the grid technology and renewable energy joint ventures and plus annual accretion of 2% for the nuclear and French steam power joint venture, with potential upside sharing based on an EBITDA multiple. Alstom also holds additional redemption rights in other limited circumstances as well as a call option to require GE to sell all of its interests in the renewable energy joint venture at the higher of fair value or Alstom's initial investment plus annual accretion of 3% during the month of May in the years 2017 through 2019 and also upon a decision to IPO the joint venture.

92 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GE holds a call option on Alstom's interest in the global nuclear and French steam power joint venture at the same amount as Alstom's redemption price in the event that Alstom exercises its put option in the grid technology or renewable energy joint ventures. GE also has call options on Alstom's interest in the three joint ventures in other limited circumstances. In addition, the French Government holds a preferred interest in the global nuclear and French steam power joint venture, giving it certain protective rights.

In January 2018, Alstom informed us that they intend to exercise their redemption rights with respect to the grid technology and renewable energy joint ventures in September 2018. Pursuant to an agreement signed between Alstom and GE in May 2018, if Alstom exercises its redemption rights in September 2018 with respect to the grid technology and renewable energy joint ventures, GE will be deemed to have exercised its option to acquire Alstom’s interest in the nuclear and French steam power joint venture. The price that GE would be required to pay, would be €1,832 million for the grid technology joint venture, €638 million for the renewable energy joint venture, and €125 million for the nuclear and French steam power joint venture. The transfer of all interests would occur in October 2018.



CHANGES TO REDEEMABLE NONCONTROLLING INTERESTS
	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Beginning balance	$	3,549		$	3,046		$	3,391		$	3,017
Net earnings (loss)	(116		)	(53		)	(149		)	(162		)
Dividends	(6		)	—			(19		)	(11		)
Redemption value adjustment	133			67			198			167
Other	(184		)	125			(45		)	175
Balance at June 30(a)	$	3,376		$	3,185		$	3,376		$	3,185


(a)	Included $3,019 million and $2,894 million related to the Alstom joint ventures at June 30, 2018 and 2017, respectively.

OTHER

Common dividends from GE Capital to GE were zero and $2,105 million, including cash dividends of $2,016 million in the three months ended June 30, 2018 and 2017, respectively, and zero and $4,105 million , including cash dividends of $4,016 million for the six months ended June 30, 2018 and 2017, respectively.

NOTE 16. EARNINGS PER SHARE INFORMATION



	Three months ended June 30
	2018						2017
(In millions; per-share amounts in dollars)	Diluted			Basic			Diluted			Basic

Amounts attributable to the Company:
Consolidated
Earnings from continuing operations for per-share calculation(a)(b)	$	919		$	920		$	1,204		$	1,204
Preferred stock dividends	(185		)	(185		)	(182		)	(182		)
Earnings from continuing operations attributable to common shareowners for per-share calculation(a)(b)	$	734		$	735		$	1,022		$	1,022
Loss from discontinued operations for per-share calculation(a)(b)	(125		)	(125		)	(157		)	(157		)
Net earnings attributable to GE common shareowners for per-share calculation(a)(b)	$	614		$	615		$	869		$	869

Average equivalent shares
Shares of GE common stock outstanding	8,688			8,688			8,671			8,671
Employee compensation-related shares (including stock options)	11			—			89			—
Total average equivalent shares	8,699			8,688			8,760			8,671

Per-share amounts
Earnings from continuing operations	$	0.08		$	0.08		$	0.12		$	0.12
Loss from discontinued operations	(0.01		)	(0.01		)	(0.02		)	(0.02		)
Net earnings	0.07			0.07			0.10			0.10

2018 2Q FORM 10-Q 93



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




	Six months ended June 30
	2018						2017
(In millions; per-share amounts in dollars)	Diluted			Basic			Diluted			Basic

Amounts attributable to the Company:
Consolidated
Earnings from continuing operations for per-share calculation(a)(b)	$	1,321		$	1,322		$	1,355		$	1,354
Preferred stock dividends	(222		)	(222		)	(216		)	(216		)
Earnings from continuing operations attributable to common shareowners for per-share calculation(a)(b)	$	1,099		$	1,100		$	1,139		$	1,138
Loss from discontinued operations for per-share calculation(a)(b)	(1,680		)	(1,679		)	(399		)	(400		)
Net earnings attributable to GE common shareowners for per-share calculation(a)(b)	$	(574	)	$	(573	)	$	747		$	747

Average equivalent shares
Shares of GE common stock outstanding	8,686			8,686			8,695			8,695
Employee compensation-related shares (including stock options)	9			—			94			—
Total average equivalent shares	8,694			8,686			8,789			8,695

Per-share amounts
Earnings from continuing operations	$	0.13		$	0.13		$	0.13		$	0.13
Loss from discontinued operations	(0.19		)	(0.19		)	(0.05		)	(0.05		)
Net earnings	(0.07		)	(0.07		)	0.09			0.09


(a)	Our unvested restricted stock unit awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities. For the three and six months ended June 30, 2018 and 2017, pursuant to the two-class method, as a result of excess dividends in respect to the current period earnings, losses were not allocated to the participating securities.


(b)	Included an insignificant amount of dividend equivalents in each of the periods presented.

F or the three months ended June 30, 2018 and 2017 , approximately 411 million and 33 million of outstanding stock awards were not included in the computation of diluted earnings per share because their effect was antidilutive. For the six months ended June 30, 2018 and 2017, approximately 407 million and 26 million of outstanding stock awards were not included in the computation of diluted earnings per share because their effect was antidilutive.

Earnings per share amounts are computed independently for earnings from continuing operations, loss from discontinued operations and net earnings. As a result, the sum of per-share amounts from continuing operations and discontinued operations may not equal the total per-share amounts for net earnings.

94 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. FINANCIAL INSTRUMENTS

The following table provides information about assets and liabilities not carried at fair value. The table excludes finance leases, equity investments without readily determinable fair value and non-financial assets and liabilities. Substantially all of the assets discussed below are considered to be Level 3. The vast majority of our liabilities’ fair value can be determined based on significant observable inputs and thus considered Level 2. Few of the instruments are actively traded and their fair values must often be determined using financial models. Realization of the fair value of these instruments depends upon market forces beyond our control, including marketplace liquidity.



	June 30, 2018				December 31, 2017
(In millions)	Carrying amount (net)		Estimated fair value		Carrying amount (net)		Estimated fair value

GE
Assets
Notes receivable	$	680	$	680	$	700	$	700
Liabilities
Borrowings(a)(b)	33,460		32,905		34,473		35,416
Borrowings (debt assumed)(a)(c)	37,499		41,339		47,114		53,502

GE Capital
Assets
Loans	13,345		13,319		17,363		17,331
Other commercial mortgages	1,615		1,662		1,489		1,566
Loans held for sale	3,217		3,219		3,274		3,274
Liabilities
Borrowings(a)(d)(e)(f)	47,121		49,538		55,353		60,415
Investment contracts	2,482		2,769		2,569		2,996


(a)	See Note 11.


(b)	Included $ 130 million and $ 217 million of accrued interest in estimated fair value at June 30, 2018 and December 31, 2017 , respectively.


(c)	Included $ 650 million and $ 696 million of accrued interest in estimated fair value at June 30, 2018 and December 31, 2017 , respectively.


(d)	Fair values exclude interest rate and currency derivatives designated as hedges of borrowings. Had they been included, the fair value of borrowings at June 30, 2018 and December 31, 2017 would have been reduced by $ 1,255 million and $ 1,754 million, respectively.


(e)	Included $ 485 million and $ 731 million of accrued interest in estimated fair value at June 30, 2018 and December 31, 2017 , respectively.


(f)	Excluded $ 29,309 million and $ 39,844 million of net intercompany payable to GE at June 30, 2018 and December 31, 2017 , respectively.



NOTIONAL AMOUNTS OF LOAN COMMITMENTS

(In millions)	June 30, 2018		December 31, 2017

Ordinary course of business lending commitments(a)	$	1,052	$	1,105
Unused revolving credit lines	149		198


(a)	Excluded investment commitments of $ 731 million and $ 677 million at June 30, 2018 and December 31, 2017 , respectively.

2018 2Q FORM 10-Q 95



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DERIVATIVES AND HEDGING

FORMS OF HEDGING

In this section we explain the hedging methods we use and their effects on our financial statements.

Cash flow hedges – We use cash flow hedging primarily to reduce or eliminate the effects of foreign exchange rate changes on purchase and sale contracts in our industrial businesses and to convert foreign currency debt that we have issued in our financial services business back to our functional currency.

As part of our ongoing effort to reduce borrowings, we may repurchase debt that was in a cash flow hedge accounting relationship. At the time of determining that the debt cash flows are probable of not occurring any related OCI will be released to earnings.

Fair value hedges – These derivatives are used to hedge the effects of interest rate and currency exchange rate changes on debt that we have issued.

Net investment hedges – We invest in foreign operations that conduct their financial services activities in currencies other than the U.S. dollar. We hedge the currency risk associated with those investments primarily using non-derivative instruments such as debt denominated in a foreign currency and short-term currency exchange contracts under which we receive U.S. dollars and pay foreign currency.

Economic hedges – These derivatives are not designated as hedges from an accounting standpoint (and therefore we do not apply hedge accounting to the relationship) but otherwise serve the same economic purpose as other hedging arrangements. We use economic hedges when we have exposures to currency exchange risk for which we are unable to meet the requirements for hedge accounting or when changes in the carrying amount of the hedged item are already recorded in earnings in the same period as the derivative making hedge accounting unnecessary. Even though the derivative is an effective economic hedge, there may be a net effect on earnings in each period due to differences in the timing of earnings recognition between the derivative and the hedged item.

NOTIONAL AMOUNT OF DERIVATIVES

The notional amount of a derivative is the number of units of the underlying (for example, the notional principal amount of the debt in an interest rate swap). The notional amount is used to compute interest or other payment streams to be made under the contract and is a measure of our level of activity. We generally disclose derivative notional amounts on a gross basis. The majority of the outstanding notional amount of $147 billion at June 30, 2018 is related to managing interest rate and currency risk between financial assets and liabilities in our financial services business. The remaining derivative notional amount primarily relates to hedges of anticipated sales and purchases in foreign currency, commodity purchases and contractual terms in contracts that are considered embedded derivatives.

The table below provides additional information about how derivatives are reflected in our financial statements. Derivative assets and liabilities are recorded at fair value exclusive of interest earned or owed on interest rate derivatives, which is presented separately on our Statement of Financial Position. Cash collateral and securities held as collateral represent assets that have been provided by our derivative counterparties as security for amounts they owe us (derivatives that are in an asset position).

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FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



FAIR VALUE OF DERIVATIVES

	June 30, 2018						December 31, 2017
(In millions)	Assets			Liabilities			Assets			Liabilities

Derivatives accounted for as hedges
Interest rate contracts	$	1,452		$	267		$	1,862		$	148
Currency exchange contracts	181			93			160			70
	1,632			360			2,021			218

Derivatives not accounted for as hedges
Interest rate contracts	37			2			93			8
Currency exchange contracts	1,514			2,864			1,111			2,043
Other contracts	74			108			139			91
	1,625			2,975			1,343			2,143

Gross derivatives recognized in statement of financial position
Gross derivatives	3,257			3,334			3,364			2,361
Gross accrued interest	273			(12		)	469			(38		)
	3,530			3,322			3,833			2,323

Amounts offset in statement of financial position
Netting adjustments(a)	(2,044		)	(2,043		)	(1,457		)	(1,456		)
Cash collateral(b)	(955		)	(763		)	(1,529		)	(578		)
	(2,999		)	(2,807		)	(2,986		)	(2,034		)

Net derivatives recognized in statement of financial position
Net derivatives	530			515			847			289

Amounts not offset in statement of financial position
Securities held as collateral(c)	(102		)	—			(405		)	—

Net amount	$	429		$	515		$	441		$	289

Derivatives are classified in the captions "All other assets" and "All other liabilities" and the related accrued interest is classified in "Other GE Capital receivables" and "All other liabilities" in our Statement of Financial Position.


(a)	The netting of derivative receivables and payables is permitted when a legally enforceable master netting agreement exists. Amounts include fair value adjustments related to our own and counterparty non-performance risk. At June 30, 2018 and December 31, 2017 , the cumulative adjustment for non-performance risk was $(1) million and $(1) million , respectively.


(b)	Excluded excess cash collateral received and posted of $218 million and $425 million at June 30, 2018 , respectively, and $10 million and $255 million at December 31, 2017 , respectively. Excess cash collateral posted includes initial margin for cleared trades.


(c)	Excluded excess securities collateral received of $7 million and $16 million at June 30, 2018 and December 31, 2017 , respectively.

2018 2Q FORM 10-Q 97



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EFFECTS OF DERIVATIVES ON EARNINGS

All derivatives are marked to fair value on our balance sheet, whether they are designated in a hedging relationship for accounting purposes or are used as economic hedges.



	Three months ended June 30									Six months ended June 30
(In millions)	Effect on hedging instrument			Effect on underlying			Effect on earnings (a)			Effect on hedging instrument			Effect on underlying			Effect on earnings

2018
Cash flow hedges	$	(161	)	$	162		$	—		$	(19	)	$	20		$	1
Fair value hedges	(225		)	195			(30		)	(922		)	866			(56		)
Net investment hedges(b)	816			(810		)	6			213			(205		)	8
Economic hedges(c)	(1,248		)	1,244			(3		)	(783		)	670			(113		)
Total							$	(27	)							$	(160	)

2017
Cash flow hedges	$	34		$	(34	)	$	—		$	56		$	(56	)	$	—
Fair value hedges	(57		)	2			(56		)	(282		)	164			(118		)
Net investment hedges(b)	(487		)	490			3			(1,050		)	1,063			13
Economic hedges(c)	979			(1,180		)	(200		)	641			(956		)	(315		)
Total							$	(253	)							$	(420	)

The amounts in the table above generally do not include associated derivative accruals in income or expense.


(a)	For cash flow and fair value hedges, the effect on earnings is primarily related to ineffectiveness. For net investment hedges, the effect on earnings is related to ineffectiveness and spot-forward differences.

(b)

Both non-derivatives and derivatives hedging instruments are included. The carrying value of non-derivative instruments designated as net investment hedges was $(20,750) million and $(24,232) million at June 30, 2018 and 2017, respectively. Total pre-tax reclassifications from CTA to gain (loss) was zero and $59 million at June 30, 2018 and 2017, respectively. Total pre-tax reclassifications from CTA to gain (loss) included zero and $59 million recorded in discontinued operations at June 30, 2018 and 2017, respectively.


(c)	Net effect is substantially offset by the change in fair value of the hedged item that will affect earnings in future periods.

Changes in the fair value of cash flow hedges are recorded in a separate component of equity (referred to below as Accumulated Other Comprehensive Income, or AOCI) and are recorded in earnings in the period in which the hedged transaction occurs. The table below summarizes this activity by hedging instrument.



CASH FLOW HEDGE ACTIVITY
	Gain (loss) recognized in AOCI									Gain (loss) reclassified from AOCI into earnings
	for the three months ended June 30									for the three months ended June 30
(In millions)	2018			2017			2016			2018			2017			2016

Interest rate contracts	$	(3	)	$	3		$	12		$	(4	)	$	(6	)	$	(26	)
Currency exchange contracts	(158		)	32			1			(68		)	71			40
Commodity contracts	—			(2		)	(1		)	—			—			(1		)
Total(a)	$	(162	)	$	34		$	12		$	(72	)	$	65		$	14




CASH FLOW HEDGE ACTIVITY
	Gain (loss) recognized in AOCI								Gain (loss) reclassified from AOCI into earnings
	for the six months ended June 30									for the six months ended June 30
(In millions)	2018			2017		2016				2018			2017			2016

Interest rate contracts	$	(7	)	$	2	$	31			$	(6	)	$	(15	)	$	(55	)
Currency exchange contracts	(13		)	54		(77)				(1		)	79			(13		)
Commodity contracts	—			—		—				—			—			(3		)
Total(a)	$	(20	)	$	56	$	(45	)		$	(7	)	$	64		$	(71	)


(a)	Gain (loss) is recorded in "GE Capital revenues from services", "Interest and other financial charges", "Sales of goods", "Cost of goods sold" and "Other costs and expenses" in our Statement of Earnings when reclassified.

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FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The total pre-tax amount in AOCI related to cash flow hedges of forecasted transactions was a $80 million gain at June 30, 2018 . We expect to transfer $61 million loss to earnings as an expense in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions. In the six mo nths ended June 30, 2018, 2017 a nd 2016 , we recognized insignificant gains and losses related to hedged forecasted transactions and firm commitments that did not occur by the end of the originally specified period. At June 30, 2018, 2017 and 2016, the maximum term of derivative instruments that hedge forecasted transactions was 14 years , 15 years and 16 years , respectively.

For cash flow hedges, the amount of ineffectiveness in the hedging relationship and amount of the changes in fair value of the derivatives that are not included in the measurement of ineffectiveness were insignificant for each reporting period.

COUNTERPARTY CREDIT RISK

Fair values of our derivatives can change significantly from period to period based on, among other factors, market movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not make payments to us according to the terms of our agreements) on an individual counterparty basis. Where we have agreed to netting of derivative exposures with a counterparty, we net our exposures with that counterparty and apply the value of collateral posted to us to determine the exposure. We actively monitor these net exposures against defined limits and take appropriate actions in response, including requiring additional collateral.

As discussed above, we have provisions in certain of our master agreements that require counterparties to post collateral (typically, cash or U.S. Treasury securities) when our receivables due from the counterparties, measured at current market value, exceeds specified limits. The fair value of such collateral was $1,057 million at June 30, 2018 , of which $955 million was cash and $102 million was in the form of securities held by a custodian for our benefit. Under certain of these same agreements, we post collateral to our counterparties for our derivative obligations, the fair value of cash collateral posted was $763 million at June 30, 2018 . At June 30, 2018 , our exposures to counterparties (including accrued interest), net of collateral we hold, was $358 million . This excludes exposures related to embedded derivatives.

Additionally, our master agreements typically contain mutual downgrade provisions that provide the ability of each party to require termination if the long-term credit rating of the counterparty were to fall below A-/A3 or other ratings levels agreed upon with the counterparty. In certain of these master agreements, each party also has the ability to require termination if the short-term rating of the counterparty were to fall below A-1/P-1. Our master agreements also typically contain provisions that provide termination rights upon the occurrence of certain other events, such as a bankruptcy or events of default by one of the parties. If an agreement was terminated under any of these circumstances, the termination amount payable would be determined on a net basis and could also take into account any collateral posted. The net amount of our derivative liability, after consideration of collateral posted by us and outstanding interest payments was $463 million at June 30, 2018 . This excludes exposure related to embedded derivatives.

NOTE 18. VARIABLE INTEREST ENTITIES

A VIE is an entity that has one of three characteristics: (1) it is controlled by someone other than its shareowners or partners, (2) its shareowners or partners are not economically exposed to the entity's earnings (for example, they are protected against losses), or (3) it was thinly capitalized when it was formed.

In the normal course of business we become involved with VIEs either because we help create them or we invest in them. Our VIEs either provide goods and services to customers or provide financing to third parties for the purchase of GE goods and services. If we control the VIE, we consolidate it and provide disclosure below. However, if the VIE is a business and use of its assets is not limited to settling its liabilities, ongoing disclosures are not required.

CONSOLIDATED VARIABLE INTEREST ENTITIES

Our most significant consolidated VIEs are four joint ventures used to complete acquisitions. The newest of these, BHGE LLC was formed as part of the Baker Hughes transaction. BHGE LLC owns the operating assets of GE Oil & Gas and Baker Hughes. BHGE LLC is a VIE as we hold an economic interest of approximately 62.5% in the partnership, but we hold no voting or participating rights through our direct economic ownership. BHGE LLC is a SEC Registrant with separate filing requirements with the SEC and its separate financial information can be obtained from www.sec.gov.

2018 2Q FORM 10-Q 99



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The remaining three joint ventures were formed as part of the Alstom acquisition. These joint ventures include grid technology, renewable energy, and global nuclear and French steam power and have combined assets, liabilities and redeemable non-controlling interest as of June 30, 2018 and December 31, 2017 of $15,200 million , $9,927 million and $3,019 million and $16,344 million , $11,463 million and $3,065 million , respectively. These joint ventures are considered VIEs because the equity held by Alstom does not participate fully in the earnings of the ventures due to contractual features allowing Alstom to sell their interests back to GE (see Note 14 for further information). We consolidate these joint ventures because we control all their significant activities. These joint ventures are in all other respects regular businesses and are therefore exempt from ongoing disclosure requirements for consolidated VIEs provided below.

The table below provides information about consolidated VIEs that are subject to ongoing disclosure requirements. Substantially all of these entities were created to help our customers finance the purchase of GE goods and services or to purchase GE customer notes receivable arising from sales of GE goods and services. These entities have no features that could expose us to losses that could significantly exceed the difference between the consolidated assets and liabilities.



ASSETS AND LIABILITIES OF CONSOLIDATED VIEs
			GE Capital
(In millions)	GE		Customer Notes receivables(a)		Other(b)		Total

June 30, 2018
Assets
Financing receivables, net	$	—	$	—	$	1,003	$	1,003
Current receivables	76		418		—		494
Other assets	524		1,012		1,271		2,807
Total	$	600	$	1,429	$	2,274	$	4,304

Liabilities
Borrowings	$	44	$	—	$	1,154	$	1,198
Non-recourse borrowings	—		610		14		624
Other liabilities	257		663		584		1,504
Total	$	301	$	1,274	$	1,751	$	3,326

December 31, 2017
Assets
Financing receivables, net	$	—	$	—	$	792	$	792
Current receivables	59		570		—		630
Investment securities	—		—		918		918
Other assets	586		1,182		1,920		3,688
Total	$	646	$	1,752	$	3,630	$	6,028

Liabilities
Borrowings	$	39	$	—	$	1,027	$	1,066
Non-recourse borrowings	—		669		16		685
Other liabilities	345		1,021		1,525		2,891
Total	$	384	$	1,690	$	2,568	$	4,642


(a)	Two funding vehicles established to purchase customer notes receivable from GE, one of which is partially funded by third-party debt.

(b)

In January 2018, ownership of the equity shares of Electric Insurance Company ("EIC") were distributed to GE Capital by a bankruptcy trustee. We have previously reported EIC as a VIE because we received a 100% beneficial interest in the assets, liabilities and operations of EIC, related to an interim distribution in 2001. As EIC is now a consolidated voting interest entity we removed EIC from our VIE disclosure. In 2017, $1,470 million of assets and $959 million of liabilities were included related to EIC.

Total revenues from our consolidated VIEs were $164 million and $256 million for the three months ended June 30, 2018 and 2017 and $338 million and $508 million for the six months ended June 30, 2018 and 2017, respectively. Related expenses consisted primarily of cost of goods and services of $60 million and $83 million for the three months ended June 30, 2018 and 2017 and $133 million and $178 million for the six months ended June 30, 2018 and 2017, respectively.

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FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Where we provide servicing for third-party investors, we are contractually permitted to commingle cash collected from customers on financing receivables sold to third-party investors with our own cash prior to payment to third-party investors, provided our short-term credit rating does not fall below A-1/P1. These third-party investors also owe us amounts for purchased financial assets and scheduled interest and principal payments. At June 30, 2018 and December 31, 2017, the amounts of commingled cash owed to the third-party investors were $ 23 million and $ 61 million, respectively.

UNCONSOLIDATED VARIABLE INTEREST ENTITIES

We become involved with unconsolidated VIEs primarily through assisting in the formation and financing of the entity. We do not consolidate these entities because we do not have power over decisions that significantly affect their economic performance. Our investments in unconsolidated VIEs, at June 30, 2018 and December 31, 2017 were $4,987 million and $5,833 million , respectively. Substantially all of these investments are held by Energy Financial Services. Obligations to make additional investments in these entities are not significant.

NOTE 19. COMMITMENTS, GUARANTEES, PRODUCT WARRANTIES AND OTHER LOSS CONTINGENCIES

COMMITMENTS

The GE Capital Aviation Services (GECAS) business in GE Capital has placed multiple-year orders for various Boeing, Airbus and other aircraft manufacturers with list prices approximating $ 35,930 million and secondary orders with airlines for used aircraft of approximately $ 3,171 million at June 30, 2018 . In our Aviation segment, we have committed to provide financing assistance of $ 2,834 million of future customer acquisitions of aircraft equipped with our engines.

GUARANTEES

Our guarantees are provided in the ordinary course of business. We underwrite these guarantees considering economic, liquidity and credit risk of the counterparty. We believe that the likelihood is remote that any such arrangements could have a significant adverse effect on our financial position, results of operations or liquidity. We record liabilities for guarantees at estimated fair value, generally the amount of the premium received, or if we do not receive a premium, the amount based on appraisal, observed market values or discounted cash flows. Any associated expected recoveries from third parties are recorded as other receivables, not netted against the liabilities.

At June 30, 2018 , we were committed under the following guarantee arrangements beyond those provided on behalf of VIEs. See Note 18.

Credit Support. We have provided $ 1,731 million of credit support on behalf of certain customers or associated companies, predominantly joint ventures and partnerships, using arrangements such as standby letters of credit and performance guarantees. These arrangements enable these customers and associated companies to execute transactions or obtain desired financing arrangements with third parties. Should the customer or associated company fail to perform under the terms of the transaction or financing arrangement, we would be required to perform on their behalf. Under most such arrangements, our guarantee is secured, usually by the asset being purchased or financed, or possibly by certain other assets of the customer or associated company. The length of these credit support arrangements parallels the length of the related financing arrangements or transactions. The liability for such credit support was $ 77 million at June 30, 2018 .

Indemnification Agreements – Continuing Operations. We have agreements that require us to fund up to $ 230 million at June 30, 2018 under residual value guarantees on a variety of leased equipment. Under most of our residual value guarantees, our commitment is secured by the leased asset. The liability for these indemnification agreements was $ 6 million at June 30, 2018 .

At June 30, 2018 , we also had $ 2,006 million of other indemnification commitments, substantially all of which relate to representations and warranties in sales of businesses or assets. The liability for these indemnification commitments was $ 259 million at June 30, 2018 .

Indemnification Agreements – Discontinued Operations. At June 30, 2018 , we provided specific indemnifications to buyers of GE Capital’s assets that, in the aggregate, represent substantially all of the maximum potential claim of $ 2,599 million . The majority of these indemnifications relate to the sale of businesses and assets under the GE Capital Exit Plan. We have recorded related liabilities of $ 333 million , which incorporates our evaluation of risk and the likelihood of making payments under the indemnities. The recognized liabilities represent the estimated fair value of the indemnities when issued as adjusted for any subsequent probable and estimable losses. In addition, in connection with the 2015 public offering and sale of Synchrony Financial, GE Capital indemnified Synchrony Financial and its directors, officers, and employees against the liabilities of GECC's businesses other than historical liabilities of the businesses that are part of Synchrony Financial's ongoing operations.

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FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contingent Consideration. These are agreements to provide additional consideration to a buyer or seller in a business combination if contractually specified conditions related to the acquisition or disposition are achieved. Amount of contingent consideration was insignificant at June 30, 2018 .

PRODUCT WARRANTIES

We provide for estimated product warranty expenses when we sell the related products. Because warranty estimates are forecasts that are based on the best available information – mostly historical claims experience – claims costs may differ from amounts provided. An analysis of changes in the liability for product warranties follows.



	Six months ended June 30
(In millions)	2018			2017

Balance at January 1	$	2,348		$	1,929
Current-year provisions	371			354
Expenditures	(452		)	(412		)
Other changes(a)	142			108
Balance as of June 30	$	2,410		$	1,979

( a) Primarily includes effect of currency exchange and acquisitions.

OTHER LOSS CONTINGENCIES

LEGAL MATTERS

WMC. During the fourth quarter of 2007, we completed the sale of WMC, our U.S. mortgage business. WMC substantially discontinued all new loan originations by the second quarter of 2007, and was never a loan servicer. In connection with the sale, WMC retained certain representation and warranty obligations related to loans sold to third parties prior to the disposal of the business and contractual obligations to repurchase previously sold loans that had an early payment default. All claims received by WMC for early payment default have either been resolved or are no longer being pursued.

The remaining active claims have been brought by securitization trustees or administrators seeking recovery from WMC for alleged breaches of representations and warranties on mortgage loans that serve as collateral for residential mortgage-backed securities (RMBS). At June 30, 2018, such claims consisted of $307 million of individual claims generally submitted before the filing of a lawsuit (compared to $462 million at December 31, 2017) and $875 million of additional claims asserted against WMC in litigation without making a prior claim (Litigation Claims) (compared to $3,198 million at December 31, 2017). The total amount of these claims, $1,182 million , reflects the purchase price or unpaid principal balances of the loans at the time of purchase and does not give effect to pay downs or potential recoveries based upon the underlying collateral, which in many cases are substantial, nor to accrued interest or fees. WMC believes that repurchase claims brought based upon representations and warranties made more than six years before WMC was notified of the claim would be disallowed in legal proceedings under applicable law and the June 11, 2015 decision of the New York Court of Appeals in ACE Securities Corp. v. DB Structured Products, Inc., on the statute of limitations period governing such claims.

Reserves related to repurchase claims made against WMC were $294 million at June 30, 2018, reflecting a net decrease to reserves in the six months ended June 30, 2018 of $122 million due to settlements. The reserve estimate takes into account recent settlement activity and is based upon WMC’s evaluation of the remaining exposures as a percentage of estimated lifetime mortgage loan losses within the pool of loans supporting each securitization for which timely claims have been asserted in litigation against WMC. Settlements in prior periods reduced WMC’s exposure on claims asserted in certain securitizations and the claim amounts reported above give effect to these settlements. During the first quarter of 2018, we also recorded a reserve of $1,500 million in connection with the U.S. Department of Justice's (DOJ) ongoing investigation regarding potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) by WMC and GE Capital discussed in Legal Proceedings. This charge was recorded in the first quarter based upon our estimate of the loss contingency at that time, including the status of our settlement discussions with the DOJ in the first quarter and an assessment of prior settlements reached in similar matters. There were no changes to this estimate in the second quarter of 2018.



ROLLFORWARD OF THE RESERVE RELATED TO REPURCHASE CLAIMS

	Three months ended June 30					Six months ended June 30
(In millions)	2018			2017		2018			2017

Balance, beginning of period	$	342		$	626	$	416		$	626
Provision	5			10		5			10
Claim resolutions / rescissions	(53		)	—		(127		)	—
Balance, end of period	$	294		$	636	$	294		$	636

102 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Given the significant litigation activity and WMC’s continuing efforts to resolve the lawsuits involving claims made against WMC, it is difficult to assess whether future losses will be consistent with WMC’s past experience. Adverse changes to WMC’s assumptions supporting the reserve may result in an increase to these reserves. WMC estimates a range of reasonably possible loss from $0 to approximately $500 million over its recorded reserve at June 30, 2018. This estimate involves significant judgment and may not reflect the range of uncertainties and unpredictable outcomes inherent in litigation, including the matters discussed in Legal Proceedings and potential changes in WMC’s legal strategy. This estimated range of reasonably possible loss excludes any possible loss associated with an adverse court decision on the applicable statute of limitations, as well as any additional loss beyond the amount of our current reserve for the FIRREA investigation, as we are unable at this time to develop such a meaningful estimate. With respect to the FIRREA investigation, this inability to develop a meaningful estimate of any additional loss beyond the amount of our current reserve reflects, among other factors, the wide variety and broad range of penalties and other sanctions incurred by various financial institutions in proceedings and settlements involving claims made under FIRREA by the DOJ, and the possibility WMC will file for bankruptcy in the event of a finding of liability in the TMI case discussed in Legal Proceedings. In the event of a WMC bankruptcy, GE Capital would be required to reassess its WMC consolidation analysis depending upon the specific facts and circumstances at that time, which might result in GE Capital no longer consolidating WMC’s assets and liabilities in its financial statements. In that circumstance, GE and GE Capital at that time would have to assess their direct exposure, if any, for purposes of determining their respective WMC-related loss contingencies. It is possible, however, that the ultimate liability of GE Capital and/or WMC could be higher than our current reserve if a negotiated settlement of the FIRREA investigation cannot be reached at a level commensurate with the reserve, or if we face adverse litigation outcomes if a negotiated settlement cannot be reached.

Adverse court decisions, including in cases not involving WMC, could result in new claims and lawsuits on additional loans. However, WMC continues to believe that it has defenses to the claims asserted in litigation, including, for example, based on causation and materiality requirements and applicable statutes of limitations. It is not possible to predict the outcome or impact of these defenses and other factors, any of which could materially affect the amount of any loss ultimately incurred by WMC on these claims.

WMC has also received indemnification demands, nearly all of which are unspecified, from depositors/underwriters/sponsors of RMBS in connection with lawsuits brought by RMBS investors concerning alleged misrepresentations in the securitization offering documents to which WMC is not a party, or, in two cases, involving mortgage loan repurchase claims made against RMBS sponsors. WMC believes that it has defenses to these demands.

To the extent WMC is required to repurchase loans, WMC’s loss also would be affected by several factors, including pay downs, accrued interest and fees, and the value of the underlying collateral. The reserve and estimate of possible loss reflect judgment, based on currently available information, and a number of assumptions, including economic conditions, claim and settlement activity, pending and threatened litigation, court decisions regarding WMC’s legal defenses, indemnification demands, government activity, and other variables in the mortgage industry. Actual losses arising from claims against WMC could exceed these amounts and additional claims and lawsuits could result if actual claim rates, governmental actions, litigation and indemnification activity, adverse court decisions, actual settlement rates or losses WMC incurs on repurchased loans differ from its assumptions. Adverse developments under any of these scenarios, or a finding of liability in the TMI case discussed above, could be in an amount exceeding the total value of WMC's assets and could result in WMC filing for bankruptcy.

Alstom legacy matters . On November 2, 2015, we acquired the Thermal, Renewables and Grid businesses from Alstom. Prior to the acquisition, the seller was the subject of two significant cases involving anti-competitive activities and improper payments: (1) in January 2007, Alstom was fined €65 million by the European Commission for participating in a gas insulated switchgear cartel that operated from 1988 to 2004 (that fine was later reduced to €59 million ), and (2) in December 2014, Alstom pled guilty in the United States to multiple violations of the Foreign Corrupt Practices Act and paid a criminal penalty of $772 million . As part of GE’s accounting for the acquisition, we established a reserve amounting to $858 million for legal and compliance matters related to the legacy business practices that were the subject of these and related cases in various jurisdictions. At June 30, 2018, this reserve balance was $921 million . The increase is primarily driven by foreign currency movements.

Regardless of jurisdiction, the allegations relate to claimed anti-competitive conduct or improper payments in the pre-acquisition period as the source of legal violations and/or damages. Given the significant litigation and compliance activity related to these matters and our ongoing efforts to resolve them, it is difficult to assess whether the disbursements will ultimately be consistent with the reserve established. The estimation of this reserve involved significant judgment and may not reflect the full range of uncertainties and unpredictable outcomes inherent in litigation and investigations of this nature. Damages sought may include disgorgement of profits on the underlying business transactions, fines and/or penalties, interest, or other forms of resolution. Factors that can affect the ultimate amount of losses associated with these matters include the way cooperation is assessed and valued, prosecutorial discretion in the determination of damages, formulas for determining fines and penalties, the duration and amount of legal and investigative resources applied, and political and social influences within each jurisdiction, among other considerations. Actual losses arising from claims in these matters could exceed the amount provided. At this time, we are unable to develop a meaningful estimate of the range of reasonably possible additional losses for this exposure.

2018 2Q FORM 10-Q 103



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ENVIRONMENTAL MATTERS

Our operations, like operations of other companies engaged in similar businesses, involve the use, disposal and cleanup of substances regulated under environmental protection laws. We are involved in numerous remediation actions to clean up hazardous wastes as required by federal and state laws. Liabilities for remediation costs exclude possible insurance recoveries and, when dates and amounts of such costs are not known, are not discounted. When there appears to be a range of possible costs with equal likelihood, liabilities are based on the low end of such range. It is reasonably possible that our environmental remediation exposure will exceed amounts accrued. However, due to uncertainties about the status of laws, regulations, technology and information related to individual sites, such amounts are not reasonably estimable. For further information, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 .

NOTE 20. CASH FLOWS INFORMATION

Changes in operating assets and liabilities are net of acquisitions and dispositions of principal businesses.

Amounts reported in the “Proceeds from sales of discontinued operations” and “Proceeds from principal business dispositions” lines in the Statement of Cash Flows are net of cash transferred and include certain deal-related costs. Amounts reported in the “Net cash from (payments for) principal businesses purchased” line are net of cash acquired and include certain deal-related costs and debt assumed and immediately repaid in acquisitions. Amounts reported in the “All other operating activities” line in the Statement of Cash Flows reflect cash sources and uses as well as non-cash adjustments to net income including those related to taxes, pension, gains (losses) on principal business dispositions, and restructuring and other charges. Certain supplemental information related to our cash flows is shown below.



	Six months ended June 30
(In millions)	2018			2017

All other operating activities
(Gains) losses on purchases and sales of business interests(a)	$	(280	)	$	(42	)
Income taxes(b)	(388		)	(482		)
Principal pension plans(c)	1,052			1,542
Other postretirement benefit plans(d)	(669		)	(279		)
Restructuring and other charges(e)	403			584
Other(f)	(2,119		)	(2,018		)
	$	(2,001	)	$	(696	)
All other investing activities
Derivative settlements (net)(g)	$	(489	)	$	—
Investments in intangible assets (net)	(533		)	(363		)
Other	136			(164		)
	$	(886	)	$	(527	)
Net dispositions (purchases) of GE shares for treasury
Open market purchases under share repurchase program	$	(134	)	$	(3,325	)
Other purchases	(9		)	(19		)
Dispositions	136			612
	$	(6	)	$	(2,732	)


(a)	Included a pre-tax gain on sales of businesses reclassified to Proceeds from principal business dispositions within Cash flows from investing activities of $(305) million for Industrial Solutions in the six months ended June 30, 2018 . See Note 2.


(b)	Reflected the effects of current tax expense of $484 million and $810 million and net cash paid during the year for income taxes of $(873) million and $(1,292) million for the six months ended June 30 , 2018 and 2017, respectively. Cash flows effects of deferred tax provisions (benefits) are shown separately within Cash flows from operating activities in the Statement of Cash Flows.


(c)	Reflected the effects of pension costs of $2,094 million and $1,869 million and employer contributions of $(1,042) million and $(327) million for the six months ended June 30 , 2018 and 2017, respectively. See Note 13.


(d)	Reflected the effects of other postretirement plans costs (income) of $(95) million and $197 million and employer contributions of $(574) million and $(476) million for the six months ended June 30 , 2018 and 2017, respectively. See Note 13.


(e)	Reflected the effects of restructuring and other charges of $1,225 million and $1,603 million and restructuring and other cash expenditures of $(822) million and $(1,019) million for the six months ended June 30 , 2018 and 2017, respectively. Excludes non-cash adjustments reflected as Depreciation and amortization of property, plant and equipment in the Statement of Cash Flows.


(f)	Included other adjustments to net income, such as cash and non-cash gains and losses from other investments and sales of intangible assets, write-downs of assets, the impacts of acquisition accounting and changes in other assets and other liabilities classified as operating activities, such as the timing of payments of employee-related liabilities, contract-related costs and customer allowances.


(g)	Excluded net derivative settlements of $(512) million in the six months ended June 30 , 2017. The classification of the settlement of derivative instruments was changed from operating cash flows to investing cash flows in the second half of 2017.

104 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 21. INTERCOMPANY TRANSACTIONS

Transactions between related companies are made on arm's length terms and are reported in the respective GE and GE Capital columns of our financial statements, but are eliminated in deriving our consolidated financial statements. These transactions include, but are not limited to, the following:


•	GE Capital dividends to GE,


•	GE Capital working capital solutions to optimize GE cash management,


•	GE Capital enabled GE industrial orders, including related GE guarantees to GE Capital,


•	GE Capital financing of GE long-term receivables, and


•	Aircraft engines, power equipment, renewable energy equipment and healthcare equipment manufactured by GE that are installed on GE Capital investments, including leased equipment.

In addition to the above transactions that primarily enable growth for the GE businesses, there are routine related party transactions, which include, but are not limited to, the following:


•	Expenses related to parent-subsidiary pension plans,


•	Buildings and equipment leased between GE and GE Capital, including sale-leaseback transactions,


•	Information technology (IT) and other services sold to GE Capital by GE


•	Settlements of tax liabilities, and


•	Various investments, loans and allocations of GE corporate overhead costs.

Presented below is a walk of intercompany eliminations from the combined GE and GE Capital totals to the consolidated cash flows from continuing operations.



	Six months ended June 30
(In millions)	2018			2017

Cash from (used for) operating activities-continuing operations
Combined	$	(927	)	$	5,550
GE current receivables sold to GE Capital	3,115			1,301
GE Capital dividends to GE	—			(4,016		)
Other reclassifications and eliminations(a)	52			95
Total cash from (used for) operating activities-continuing operations	$	2,240		$	2,930
Cash from (used for) investing activities-continuing operations
Combined	$	5,696		$	3,190
GE current receivables sold to GE Capital	(4,093		)	(1,612		)
GE Capital long-term loans to GE	920			4,075
GE Capital short-term loan to GE	—			(1,329		)
Other reclassifications and eliminations(a)	143			73
Total cash from (used for) investing activities-continuing operations	$	2,665		$	4,397
Cash from (used for) financing activities-continuing operations
Combined	$	(20,778	)	$	(13,502	)
GE current receivables sold to GE Capital	978			311
GE Capital dividends to GE	—			4,016
GE Capital long-term loans to GE	(920		)	(4,075		)
GE Capital short-term loan to GE	—			1,329
Other reclassifications and eliminations(a)	(194		)	(168		)
Total cash from (used for) financing activities-continuing operations	$	(20,913	)	$	(12,089	)


(a)	Includes eliminations of other cash flows activities, including financing of long-term receivables of $737 million and $(347) million in the six months ended June 30, 2018 and 2017 respectively, and various investments, loans and allocations of GE corporate overhead costs.

2018 2Q FORM 10-Q 105



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22. GUARANTOR FINANCIAL INFORMATION

GUARANTOR AND NON-GUARANTOR CONDENSED CONSOLIDATING FINANCIAL INFORMATION

On October 26, 2015, GE Capital International Funding Company Unlimited Company, formerly GE Capital International Funding Company (the Issuer), then a finance subsidiary of General Electric Capital Corporation, settled its previously announced private offers to exchange (the Exchange Offers) the Issuer’s new senior unsecured notes for certain outstanding debt securities of General Electric Capital Corporation.

The new notes that were issued were fully and unconditionally, jointly and severally guaranteed by both the Company and GE Capital International Holdings Limited (GECIHL) (each a Guarantor, and together, the Guarantors).

Under the terms of a registration rights agreement entered into in connection with the Exchange Offers, the Issuer and the Company agreed to file a registration statement with the U.S. Securities and Exchange Commission (SEC) for an offer to exchange new senior notes of the Issuer registered with the SEC and guaranteed by the Guarantors for certain of the Issuer’s outstanding unregistered senior notes. This exchange was completed in July 2016.

PRESENTATION

In connection with the registration of the senior notes, the Company is required to provide certain financial information regarding the Issuer and the Guarantors of the registered securities. Included are the Condensed Consolidating Statements of Earnings and Comprehensive Income for the three and six months ended June 30, 2018 and 2017 , Condensed Consolidating Statements of Financial Position as of June 30, 2018 and December 31, 2017 and Condensed Consolidating Statements of Cash Flows for the six months ended June 30, 2018 and 2017 for:


•	General Electric Company (the Parent Company Guarantor) - prepared with investments in subsidiaries accounted for under the equity method of accounting and excluding any inter-segment eliminations;


•	GE Capital International Funding Company Unlimited Company (the Subsidiary Issuer) – finance subsidiary for debt;


•	GE Capital International Holdings Limited (GECIHL) (the Subsidiary Guarantor) - prepared with investments in non-guarantor subsidiaries accounted for under the equity method of accounting;


•	Non-Guarantor Subsidiaries - prepared on an aggregated basis excluding any elimination or consolidation adjustments and includes predominantly all non-cash adjustments for cash flows;


•	Consolidating Adjustments - adjusting entries necessary to consolidate the Parent Company Guarantor with the Subsidiary Issuer, the Subsidiary Guarantor and Non-Guarantor Subsidiaries and in the comparative periods, this category includes the impact of new accounting policies adopted as described in Note 1 ; and


•	Consolidated - prepared on a consolidated basis.

106 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED JUNE 30, 2018 (UNAUDITED)

(in millions)	Parent Company Guarantor			Subsidiary Issuer		Subsidiary Guarantor			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

Revenues
Sales of goods and services	$	7,947		$	—	$	—		$	41,000		$	(20,854	)	$	28,093
GE Capital revenues from services	—			233		326			2,593			(1,141		)	2,011
Total revenues	7,947			233		326			43,593			(21,995		)	30,104

Costs and expenses
Interest and other financial charges	1,868			230		617			1,381			(2,801		)	1,295
Other costs and expenses	11,692			—		—			38,372			(21,722		)	28,341
Total costs and expenses	13,560			230		617			39,753			(24,523		)	29,636
Other income (loss)	1,621			—		—			2,970			(3,727		)	864
Equity in earnings (loss) of affiliates	4,442			—		(127		)	12,249			(16,563		)	—
Earnings (loss) from continuing operations before income taxes	450			3		(418		)	19,059			(17,763		)	1,331
Benefit (provision) for income taxes	471			—		—			(1,162		)	150			(542		)
Earnings (loss) from continuing operations	921			3		(418		)	17,897			(17,613		)	789
Earnings (loss) from discontinued operations, net of taxes	(121		)	—		(63		)	—			63			(121		)
Net earnings (loss)	800			3		(482		)	17,897			(17,550		)	669
Less net earnings (loss) attributable to noncontrolling interests	—			—		—			(116		)	(16		)	(132		)
Net earnings (loss) attributable to the Company	800			3		(482		)	18,013			(17,534		)	800
Other comprehensive income (loss)	(571		)	—		(94		)	(2,509		)	2,603			(571		)
Comprehensive income (loss) attributable to the Company	$	229		$	3	$	(575	)	$	15,503		$	(14,931	)	$	229



CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED JUNE 30, 2017 (UNAUDITED)

(in millions)	Parent Company Guarantor			Subsidiary Issuer			Subsidiary Guarantor			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

Revenues
Sales of goods and services	$	8,080		$	—		$	—		$	37,615		$	(18,621	)	$	27,075
GE Capital revenues from services	—			173			188			2,589			(928		)	2,022
Total revenues	8,080			173			188			40,204			(19,549		)	29,097

Costs and expenses
Interest and other financial charges	767			159			489			1,221			(1,463		)	1,174
Other costs and expenses	8,571			—			9			37,570			(19,023		)	27,126
Total costs and expenses	9,338			159			497			38,791			(20,486		)	28,300
Other income (loss)	57			—			—			28,005			(27,732		)	330
Equity in earnings (loss) of affiliates	2,028			—			450			13,982			(16,460		)	—
Earnings (loss) from continuing operations before income taxes	828			14			141			43,400			(43,255		)	1,127
Benefit (provision) for income taxes	375			(2		)	—			(230		)	(105		)	38
Earnings (loss) from continuing operations	1,203			12			141			43,170			(43,361		)	1,164
Earnings (loss) from discontinued operations, net of taxes	(146		)	—			(5		)	3			2			(146		)
Net earnings (loss)	1,057			12			136			43,172			(43,359		)	1,019
Less net earnings (loss) attributable to noncontrolling interests	—			—			—			16			(54		)	(38		)
Net earnings (loss) attributable to the Company	1,057			12			136			43,156			(43,304		)	1,057
Other comprehensive income (loss)	1,309			—			32			(25,537		)	25,505			1,309
Comprehensive income (loss) attributable to the Company	$	2,366		$	12		$	168		$	17,619		$	(17,799	)	$	2,366

2018 2Q FORM 10-Q 107



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE SIX MONTHS ENDED JUNE 30, 2018 (UNAUDITED)

(in millions)	Parent Company Guarantor			Subsidiary Issuer			Subsidiary Guarantor			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

Revenues
Sales of goods and services	$	15,651		$	—		$	—		$	78,980		$	(39,664	)	$	54,967
GE Capital revenues from services	—			441			551			4,151			(1,346		)	3,797
Total revenues and other income (loss)	15,651			441			551			83,131			(41,010		)	58,764

Costs and expenses
Interest and other financial charges	3,248			436			1,164			2,645			(4,912		)	2,580
Other costs and expenses	19,829			—			—			76,515			(40,835		)	55,509
Total costs and expenses	23,077			436			1,163			79,160			(45,746		)	58,089
Other income (loss)	1,896			—			—			1,097			(1,924		)	1,069
Equity in earnings (loss) of affiliates	7,034			—			493			12,090			(19,617		)	—
Earnings (loss) from continuing operations before income taxes	1,503			5			(119		)	17,159			(16,804		)	1,744
Benefit (provision) for income taxes	(177		)	(1		)	—			(562		)	225			(515		)
Earnings (loss) from continuing operations	1,326			4			(119		)	16,596			(16,579		)	1,229
Earnings (loss) from discontinued operations, net of taxes	(1,673		)	—			(81		)	1			79			(1,673		)
Net earnings (loss)	(347		)	4			(200		)	16,597			(16,500		)	(444		)
Less net earnings (loss) attributable to noncontrolling interests	—			—			—			(121		)	24			(98		)
Net earnings (loss) attributable to the Company	(347		)	4			(200		)	16,719			(16,523		)	(347		)
Other comprehensive income (loss)	971			—			(55		)	(1,631		)	1,686			971
Comprehensive income (loss) attributable to the Company	$	625		$	4		$	(254	)	$	15,087		$	(14,837	)	$	625




CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE SIX MONTHS ENDED JUNE 30, 2017 (UNAUDITED)

(in millions)	Parent Company Guarantor			Subsidiary Issuer			Subsidiary Guarantor		Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

Revenues
Sales of goods and services	$	16,872		$	—		$	—	$	73,705		$	(38,886	)	$	51,691
GE Capital revenues from services	—			329			374		4,859			(1,275		)	4,286
Total revenues and other income (loss)	16,872			329			374		78,564			(40,161		)	55,978

Costs and expenses
Interest and other financial charges	1,677			309			943		2,303			(2,920		)	2,313
Other costs and expenses	18,200			—			22		73,510			(38,615		)	53,118
Total costs and expenses	19,877			309			965		75,813			(41,534		)	55,431
Other income (loss)	111			—			—		32,625			(32,209		)	527
Equity in earnings (loss) of affiliates	3,736			—			692		50,664			(55,093		)	—
Earnings (loss) from continuing operations before income taxes	843			20			101		86,040			(85,929		)	1,074
Benefit (provision) for income taxes	519			(2		)	115		(699		)	210			142
Earnings (loss) from continuing operations	1,362			17			215		85,341			(85,719		)	1,217
Earnings (loss) from discontinued operations, net of taxes	(388		)	—			278		3			(278		)	(385		)
Net earnings (loss)	974			17			493		85,344			(85,997		)	832
Less net earnings (loss) attributable to noncontrolling interests	—			—			—		(32		)	(110		)	(142		)
Net earnings (loss) attributable to the Company	974			17			493		85,377			(85,887		)	974
Other comprehensive income (loss)	3,131			—			649		(26,994		)	26,345			3,131
Comprehensive income (loss) attributable to the Company	$	4,105		$	17		$	1,142	$	58,383		$	(59,542	)	$	4,105

108 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



CONDENSED CONSOLIDATING STATEMENT OF FINANCIAL POSITION
JUNE 30, 2018 (UNAUDITED)

(In millions)	Parent Company Guarantor		Subsidiary Issuer		Subsidiary Guarantor		Non- Guarantor Subsidiaries		Consolidating Adjustments			Consolidated

Assets
Cash, cash equivalents and restricted cash	$	1,852	$	—	$	3	$	26,452	$	(634	)	$	27,674
Investment securities	—		—		—		37,429		(818		)	36,611
Receivables - net	38,831		17,348		32,799		78,684		(131,976		)	35,686
Inventories	4,790		—		—		21,093		(5,411		)	20,473
Property, plant and equipment - net	5,816		—		—		46,488		(1,438		)	50,866
Investment in subsidiaries(a)	281,298		—		78,171		724,902		(1,084,371		)	—
Goodwill and intangible assets	8,374		—		—		88,376		5,443			102,193
All other assets	9,503		16		19		225,997		(171,321		)	64,214
Assets of discontinued operations	—		—		—		—		5,053			5,053
Total assets	$	350,465	$	17,364	$	110,991	$	1,249,421	$	(1,385,473	)	$	342,769

Liabilities and equity
Short-term borrowings	$	167,290	$	—	$	47,189	$	12,832	$	(212,892	)	$	14,419
Accounts payable	12,833		—		—		49,954		(47,762		)	15,026
Other current liabilities	11,270		9		3		32,525		(6,885		)	36,922
Long-term and non-recourse borrowings	62,642		15,912		35,007		49,529		(61,936		)	101,154
All other liabilities	41,361		422		154		66,957		(10,724		)	98,169
Liabilities of discontinued operations	—		—		—		—		1,949			1,949
Total Liabilities	295,396		16,343		82,352		211,797		(338,249		)	267,639

Redeemable noncontrolling interests	—		—		—		2,513		862			3,376

GE shareowners' equity	55,069		1,021		28,639		1,033,711		(1,063,371		)	55,069
Noncontrolling interests	—		—		—		1,400		15,285			16,685
Total equity	55,069		1,021		28,639		1,035,111		(1,048,086		)	71,754
Total liabilities, redeemable noncontrolling interests and equity	$	350,465	$	17,364	$	110,991	$	1,249,421	$	(1,385,473	)	$	342,769


(a)	Included within the subsidiaries of the Subsidiary Guarantor are cash and cash equivalent balances of $8,819 million and net assets of discontinued operations of $3,329 million .

2018 2Q FORM 10-Q 109



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



CONDENSED CONSOLIDATING STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 2017

(In millions)	Parent Company Guarantor		Subsidiary Issuer		Subsidiary Guarantor		Non- Guarantor Subsidiaries		Consolidating Adjustments			Consolidated

Assets
Cash, cash equivalents and restricted cash	$	3,472	$	—	$	3	$	41,236	$	(743	)	$	43,967
Investment securities	1		—		—		39,809		(1,113		)	38,696
Receivables - net	50,923		17,316		32,381		87,776		(147,551		)	40,846
Inventories	4,587		—		—		22,215		(7,383		)	19,419
Property, plant and equipment - net	5,808		—		—		48,516		(450		)	53,874
Investment in subsidiaries(a)	277,929		—		77,488		715,936		(1,071,353		)	—
Goodwill and intangible assets	8,014		—		—		90,226		6,002			104,242
All other assets	30,737		16		32		236,771		(205,269		)	62,288
Assets of discontinued operations	—		—		—		—		5,912			5,912
Total assets	$	381,472	$	17,332	$	109,904	$	1,282,485	$	(1,421,948	)	$	369,245

Liabilities and equity
Short-term borrowings	$	191,807	$	—	$	46,033	$	22,603	$	(236,407	)	$	24,036
Accounts payable	8,126		—		—		77,509		(70,462		)	15,172
Other current liabilities	11,892		8		3		28,218		(34		)	40,088
Long-term and non-recourse borrowings	71,023		16,632		34,730		55,367		(67,197		)	110,556
All other liabilities	42,594		475		128		66,293		(7,694		)	101,797
Liabilities of discontinued operations	—		—		—		—		706			706
Total Liabilities	325,442		17,116		80,894		249,991		(381,088		)	292,355

Redeemable noncontrolling interests	—		—		—		2,627		764			3,391

GE shareowners' equity	56,030		216		29,010		1,028,311		(1,057,537		)	56,030
Noncontrolling interests	—		—		—		1,556		15,912			17,468
Total equity	56,030		216		29,010		1,029,867		(1,041,625		)	73,498
Total liabilities, redeemable noncontrolling interests and equity	$	381,472	$	17,332	$	109,904	$	1,282,485	$	(1,421,948	)	$	369,245


(a)	Included within the subsidiaries of the Subsidiary Guarantor are cash and cash equivalent balances of $15,225 million and net assets of discontinued operations of $4,318 million .

110 2018 2Q FORM 10-Q



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2018 (UNAUDITED)

(In millions)	Parent Company Guarantor			Subsidiary Issuer			Subsidiary Guarantor			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

Cash flows – operating activities
Cash from (used for) operating activities - continuing operations	$	12,625		$	(268	)	$	(117	)	$	8,330		$	(18,330	)	$	2,240
Cash from (used for) operating activities - discontinued operations	(1,673		)	—			—			1,381			(1		)	(293		)
Cash from (used for) operating activities	10,952			(268		)	(117		)	9,711			(18,331		)	1,947

Cash flows – investing activities
Cash from (used for) investing activities – continuing operations	12,523			268			(882		)	(22,097		)	12,852			2,665
Cash from (used for) investing activities – discontinued operations	—			—			—			151			—			151
Cash from (used for) investing activities	12,523			268			(882		)	(21,946		)	12,852			2,816

Cash flows – financing activities
Cash from (used for) financing activities – continuing operations	(25,094		)	—			999			(2,406		)	5,588			(20,913		)
Cash from (used for) financing activities – discontinued operations	—			—			—			—			—			—
Cash from (used for) financing activities	(25,094		)	—			999			(2,406		)	5,588			(20,913		)
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash	—			—			—			(285		)	—			(285		)
Increase (decrease) in cash, cash equivalents and restricted cash	(1,620		)	—			—			(14,926		)	110			(16,436		)
Cash, cash equivalents and restricted cash at beginning of year	3,472			—			3			41,993			(743		)	44,724
Cash, cash equivalents and restricted cash at June 30	1,852			—			3			27,067			(634		)	28,288
Less cash, cash equivalents and restricted cash of discontinued operations at June 30	—			—			—			(615		)	—			(615		)
Cash, cash equivalents and restricted cash of continuing operations at June 30	$	1,852		$	—		$	3		$	26,452		$	(634	)	$	27,674

2018 2Q FORM 10-Q 111



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2017 (UNAUDITED)

(In millions)	Parent Company Guarantor			Subsidiary Issuer			Subsidiary Guarantor			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

Cash flows – operating activities
Cash from (used for) operating activities - continuing operations	$	10,330		$	25		$	225		$	105,269		$	(112,919	)	$	2,930
Cash from (used for) operating activities - discontinued operations	(388		)	—			—			(507		)	—			(895		)
Cash from (used for) operating activities	9,942			25			225			104,761			(112,919		)	2,035

Cash flows – investing activities
Cash from (used for) investing activities – continuing operations	(24,692		)	(25		)	608			(52,457		)	80,963			4,397
Cash from (used for) investing activities – discontinued operations	—			—			—			(2,089		)	—			(2,089		)
Cash from (used for) investing activities	(24,692		)	(25		)	608			(54,545		)	80,963			2,309

Cash flows – financing activities
Cash from (used for) financing activities – continuing operations	16,447			—			(833		)	(60,697		)	32,994			(12,089		)
Cash from (used for) financing activities – discontinued operations	—			—			—			1,909			—			1,909
Cash from (used for) financing activities	16,447			—			(833		)	(58,789		)	32,994			(10,181		)
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash	—			—			—			538			—			538
Increase (decrease) in cash, cash equivalents and restricted cash	1,697			—			1			(8,035		)	1,037			(5,299		)
Cash, cash equivalents and restricted cash at beginning of year	2,729			—			41			49,204			(1,590		)	50,384
Cash, cash equivalents and restricted cash at June 30	4,426			—			42			41,169			(552		)	45,085
Less cash, cash equivalents and restricted cash of discontinued operations at June 30	—			—			—			526			—			526
Cash, cash equivalents and restricted cash of continuing operations at June 30	$	4,426		$	—		$	42		$	40,643		$	(552	)	$	44,559

112 2018 2Q FORM 10-Q



OTHER ITEMS

EXHIBITS



Exhibit 10(a)	Employment Agreement between Michael Holston and General Electric Company, effective April 9, 2018.
Exhibit 10(b)	Credit Agreement dated as of June 22, 2018 among General Electric Company, as the borrower, JPMorgan Chase Bank, N.A. and Citibank, N.A., as co-administrative agents, and the lenders party thereto.
Exhibit 11 Exhibit 12(a) Exhibit 12(b)	Computation of Per Share Earnings.* Computation of Ratio of Earnings to Fixed Charges. Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
Exhibit 31(a)	Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended.
Exhibit 31(b)	Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended.
Exhibit 32	Certification Pursuant to 18 U.S.C. Section 1350.
Exhibit 95	Mine Safety Disclosure.
Exhibit 101	The following materials from General Electric Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, formatted in XBRL (eXtensible Business Reporting Language); (i) Statement of Earnings (Loss) for the three and six months ended June 30, 2018 and 2017, (ii) Consolidated Statement of Comprehensive Income (Loss) for the three and six months ended June 30, 2018 and 2017, (iii) Statement of Financial Position at June 30, 2018 and December 31, 2017, (v) Statement of Cash Flows for the six months ended June 30, 2018 and 2017, and (iv) Notes to Consolidated Financial Statements.

	*	Data required by Financial Accounting Standards Board Accounting Standards Codification 260, Earnings Per Share , is provided in Note 16 to the Consolidated Financial Statements in this Report.

2018 2Q FORM 10-Q 113



OTHER ITEMS

FORM 10-Q CROSS REFERENCE INDEX



Item Number		Page(s)
Part I – FINANCIAL INFORMATION
Item 1.	Financial Statements	59-112

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4-53

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	Not applicable(a)

Item 4.	Controls and Procedures	54

Part II – OTHER INFORMATION
Item 1.	Legal Proceedings	57-58

Item 1A.	Risk Factors	56-57

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

Item 3.	Defaults Upon Senior Securities	Not applicable

Item 4.	Mine Safety Disclosures	46

Item 5.	Other Information	Not applicable

Item 6.	Exhibits	113

Signatures		115


(a)	There have been no significant changes to our market risk since December 31, 2017 . For a discussion of our exposure to market risk, refer to our Annual Report on Form 10-K for the year ended December 31, 2017 .

114 2018 2Q FORM 10-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		General Electric Company (Registrant)
July 27, 2018		/s/ Jan R. Hauser
Date		Jan R. Hauser Vice President and Controller Duly Authorized Officer and Principal Accounting Officer

2018 2Q FORM 10-Q 115

Exhibit 10(a)

EMPLOYMENT AGREEMENT

This Employment Agreement (the "Agreement") is made and entered into effective as of February 16, 2018 by and between Michael Holston ("you") and General Electric Company (the "Company"). Your employment will be subject to the terms and conditions set forth herein.

1. Employment as General Counsel.

a. Effective on or before April 9, 2018, you will begin your employment with the Company as Senior Vice-President, General Counsel and Secretary, reporting directly to the Company's Chief Executive Officer (the “Effective Date”). You agree to perform such duties and services as the CEO or the Board may, from time to time, reasonably assign to you consistent with your position.

b. You agree that you will serve the Company faithfully, diligently and to the best of your ability, that you will devote your full business time, energy and skills exclusively to the business and affairs of the Company, and that you will not participate in any activity detrimental to the best interests of the Company.

c. Your principal office will be in Boston, MA, but you will travel to other locations as necessary to fulfill your employment obligations under this Agreement. The Company will provide relocation assistance in accordance with the Company's policies and practices applicable to similarly situated officers.

2. Compensation. As full compensation for all services provided and duties performed, you will receive the following:

a. Base Salary . You will receive an annual base salary of $1,500,000 ("Base Salary"), payable by the Company in accordance with its normal payroll practices.

b. Annual Incentive Bonus. You will be eligible to receive an annual incentive bonus, under the Company's Annual Executive Incentive Program ("AEIP"), with a target of 100% of your Base Salary, determined and paid in accordance with the Company's normal procedures.

c. Long Term Incentive Award. You will be eligible to participate in the Company's annual long-term incentive equity grant program beginning with the 2018 performance year. The grant date for your 2018 award will occur on the first MDCC meeting after the Effective Date, and will have a targeted grant value of $2.75 million. Awards after 2018 will be in the range of $2.5- 3.0 million, as determined in accordance with normal Company procedures. The awards shall be delivered in equity (RSUs, stock options and/or performance stock units) and have terms and conditions consistent with awards made to other similarly situated officers of the Company.

d. New Hire Award. As further consideration for your joining the Company, and in recognition of your anticipated contribution to the Company, you will receive the following:


(i)	A one-time lump sum payment of $1,500,000, less all applicable withholdings and deductions, payable on or before 30 days from the Effective Date. Should you leave the Company Without Good Reason (as defined in paragraph 3) within two years of the Effective Date, you will be required to reimburse this payment to the Company

(ii)

An award of 800,000 stock options, which will vest in three equal tranches on the first, second and third anniversary of the grant date (which will occur on the first Management Development and Compensation Committee ("MDCC") meeting after the Effective Date). The terms and conditions for this stock option award shall be in accordance with the Company's standard grant provisions for similarly situated officers of the Company and as otherwise expressly stated below.

(iii)

An award of 250,000 Restricted Stock Units ("RSUs"), which will vest in three equal tranches on the first, second and third anniversary of the grant date (which will occur on the first MDCC meeting after the Effective Date). The terms and conditions for this RSU award shall be in accordance with the Company's standard grant provisions for similarly situated officers of the Company and as otherwise expressly stated below.

e. Employee Benefits. You will be eligible to participate in all employee benefit plans generally available to similarly situated officers of the Company.

3. Termination. Your employment with the Company shall be "at-will" and may be terminated hereunder by you, the Company, or the Board at any time and for any reason, subject to the provisions of this Section. Upon termination of your Employment, you shall be entitled to the compensation and benefits described in this Section, and shall have no further rights to any compensation or any other benefits from the Company.

a. Termination for Cause or Without Good Reason. Your employment hereunder may be terminated by the Company or the Board for Cause or by you without Good Reason. If your employment is terminated by the Company or the Board for Cause or by you without Good Reason, you shall be entitled to receive: (1) any accrued but unpaid Base Salary which shall be paid in accordance with the Company's regular payroll procedures; (2) reimbursement for properly incurred and unreimbursed business expenses, which shall be subject to and paid in accordance with the Company's expense reimbursement policy; and (3) such employee benefits (including equity compensation), if any, to which you may be entitled under the Company's employee benefit plans; provided that, in no event shall you be entitled to any payments in the nature of severance or termination payment (collectively referred to as the " Accrued Amounts ").

b. Termination Without Cause or for Good Reason. Your employment hereunder may be terminated by you for Good Reason or by the Company or the Board without Cause. In the event of such termination, you shall be entitled to receive the Accrued Amounts and, subject to your compliance with your obligations under this Agreement and your execution of a release of claims in favor of the Company and its respective officers and directors in a form provided by the Company (the " Release "), you shall be entitled to receive:


(i)	the vesting of the new hire awards of stock options and RSUs described in 2.d.(ii) and (iii) above shall accelerate, and the stock options so vested shall be exercisable through the end of the second calendar year following the year in which termination occurs.


(ii)	if the termination occurs on or before May 1, 2021, then the vesting of any and all long-term incentive awards granted under

2.c. above shall accelerate, and any stock options so vested shall be exercisable through the end of the fifth calendar year following

the year in which termination occurs.


(iii)	if the termination occurs on or before May 1, 2021, then you will receive a lump sum payment equal to 24 months of Base Salary and AEIP (calculated at target), less all applicable deductions and withholdings, paid within 60 days of your Termination Date. If the termination occurs after May 1, 2021, then you will receive the

standard severance package applicable to similarly situated officers of the Company, which includes 12 months of Base Salary.

c. " Cause " shall mean the occurrence of any of the following: (1) your failure to perform your duties (other than any such failure resulting from incapacity due to physical or mental disability) or comply with any valid and legal directive of the Company or the Board; (2) your engagement, or the discovery of your having engaged, in dishonesty, illegal conduct, or misconduct, which, in each case, materially harms or is reasonably likely to materially harm the Company; (3) your conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes a misdemeanor involving moral turpitude; (4) your willful or grossly negligent unauthorized disclosure of Confidential Information (as defined below); (5) your material breach of any material obligation under this Agreement or any other written agreement between you and the Company; or (6) your material failure to comply with the Company's written policies or rules, as they may be in effect from time to time. Should the Company believe you have engaged in conduct that violates sub-paragraphs (1), (5) or (6), it will provide you with written notice of the circumstances providing grounds for termination for Cause and you will have at least 30 calendar days from the date on which such notice is provided to cure such circumstances.

d. " Good Reason " shall mean the occurrence of any of the following, in each case without your written consent: (1) a material and permanent reduction in your Base Salary; (2) any material breach by the Company of any material provision of this Agreement or any material provision of any other agreement between you and the Company; (3) a change of control which, for purposes of this Agreement, shall occur if (a) a person/entity acquires ownership of GE stock that, together with prior holdings, constitutes at least 50% of the total fair market value or total voting power of GE's outstanding shares or (b) within a 36-month period beginning on or after the Effective Date, GE divests 40% or more of its total assets (excluding any asset sales occurring as part of the $20 billion divestiture plan the Company announced on November 13, 2017) based on total gross fair market value; or (4) a material, adverse change in your authority, duties, or responsibilities (other than temporarily while the you are physically or mentally incapacitated or as required by applicable law); provided, however, you cannot terminate your employment for Good Reason unless you have provided written notice to the Company and the Board of the existence of the circumstances providing grounds for termination for Good Reason and the Company and the Board have had at least 30 calendar days from the date on which such notice is provided to cure such circumstances. Such written notice to the Company and the Board may be given at any time, and the Company hereby agrees that no waiver or estoppel will be sought for the assertion of rights under this paragraph at any time within the 36-month-period, following the initial existence of the facts and circumstances that provide the basis for termination under this paragraph.

e. Notice of Termination. Any termination of employment hereunder by any party shall be communicated by written notice of termination (" Notice of Termination ") to the other party hereto. The Notice of Termination shall specify:


(i)	The termination provision of this Agreement relied upon;


(ii)	To the extent applicable, a summary of the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated; and


(iii)	The applicable Termination Date.


f.	Termination Date. Your "Termination Date" shall be


(i)	If the Company or the Board terminates your employment hereunder for Cause, the date the Notice of Termination is delivered to you;


(ii)	If the Company or the Board terminates your employment hereunder without Cause, the date specified in the Notice of Termination, which shall be no less than 30 calendar days following the date on which the Notice of Termination is delivered; provided that, the Company may provide you compensation in lieu of notice; and

(iii)

If you terminate your employment hereunder with or without Good Reason, the date specified in your Notice of Termination, which shall be no less than 30 calendar days following the date on which the Notice of Termination is delivered; provided that, the Company may waive all or any part of the 30-day notice period and provide you with payment in lieu thereof by giving written notice to you. For all purposes of this Agreement, your Termination Date shall be the date determined by the Company.

g. Notwithstanding anything contained herein, the Termination Date shall not occur until the date on which you incur a "separation from service" within the meaning of Section 409A.


4.	Non- Competition: Non- Solicitation.

a. By executing this Agreement, you acknowledge that your employment responsibilities provide you with the opportunity to be introduced to, become familiar with and learn information about the Company's proprietary and confidential information that provides a competitive advantage to the Company, and that during your employment you will provide unique services to the Company. You further agree that given the nature of the Company's businesses and current communications technology, you can provide services from virtually any geographic location. Therefore, you further agree that during your employment and for a period of 12 months after the termination of your employment with the Company (howsoever terminated), you will not, for or on behalf of yourself or any person or entity with which you may become associated in any manner, whether as a partner, owner, employee, agent, consultant or otherwise, enter into or accept an employment position, provide services to, consult with, or engage in any other business arrangement with an organization or person that competes with the Company.

b. You agree that during your employment, and for a period of 12 months after the termination of your employment with the Company (howsoever terminated), you will not, for or on behalf of yourself or any person or entity with which you may become associated in any manner, whether as a partner, owner, employee, agent, consultant or otherwise (i) directly or indirectly solicit, employ or retain, or have, cause, or assist any other person or entity to solicit, employ or retain any person who is employed by or providing services to the Company or who was employed by or provided services to the Company Group within the 12 - month period immediately prior to the Termination Date; or (ii) otherwise induce or attempt to induce any individual to terminate or diminish employment or service with the Company; unless such individual was laid off or otherwise involuntarily terminated by the Company.

c. You represent and warrant to the Company and the Board that your execution and delivery of this Agreement and the performance hereunder will not be restricted by, or violate, any contract, arrangement, policy or understanding with any person, including any former employer. You further agree that you will not use any confidential information of any former employer in performing your duties to the Company Group.

5. Confidentiality . You acknowledge that you now have and will have access to and become acquainted with proprietary and confidential information, which may include trade secrets, regarding the Company and its customers ("Confidential Information") that constitutes a valuable asset of the Company and that is not available to the public. Confidential Information includes, but is not limited to, means any and all information or data, including, without limitation, trade secrets, know-how, theories, technical, operating, marketing, financial or other business information, plans, business and strategies, source codes, software programs, computer systems, algorithms, formulae, concepts, creations, costs, plans, materials, enhancements, research, specifications, works of authorship, techniques, documentation, models and systems, sales and pricing techniques, designs, inventions, discoveries, products, improvements, modifications, methodology, processes, concepts, records, files, memoranda, reports, plans, proposals, price lists, product development, project procedures, client, supplier and employee lists and data and other personally identifiable information, disclosed by or on behalf of the Company in connection herewith that is confidential, proprietary or otherwise not publicly available, whether prepared or furnished by or on behalf of the Company, and irrespective of the form or manner of communication (whether written, verbal, electronic or otherwise), and regardless of whether such information is specifically marked as confidential or proprietary, and irrespective of whether such information is furnished before, on or after the Effective Date. The term "Confidential Information" shall be deemed to include any and all notes, analyses, compilations, copies, reports, summaries, studies, communications, memoranda, forecasts, financials, evaluations, interpretations or other documents, materials or records, in any form or medium, prepared by you or on your behalf or that contain, reflect or are derived from or based upon, in whole or in part, any information furnished to you. Confidential Information shall not include information that becomes part of the public domain through no breach of your obligations to the Company or any misconduct of a third party.

6. Permitted Conduct. Nothing in this Agreement shall prohibit or restrict you from lawfully (a) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by any governmental or regulatory agency, entity, or official(s) (collectively, "Governmental Authorities") regarding a possible violation of any law; (b) responding to any inquiry or legal process directed to you individually (and not directed to the Company Group) from any such Governmental Authorities; (c) testifying, participating or otherwise assisting in an action or proceeding by any such Governmental Authorities relating to a possible violation of law; or (d) making any other disclosures that are protected under the whistleblower provisions of any applicable law.

7. Injunctive Relief. You acknowledge and agree that if any provision of Sections 4 or 5 hereof are violated, the Company Group will immediately and irreparably be harmed, will not have an adequate remedy at law and will be entitled to seek immediate relief enjoining such violation or threatened violation (including, without limitation, temporary and permanent injunctions and/or a decree of specific performance) in any court or judicial body having jurisdiction over such claim, without the necessity of showing any actual damage or posting any bond or furnishing any other security. Any such relief shall be in advance of and in aid of arbitration pursuant to Section 8, and without first having to initiate arbitration and/or empanel and arbitrator.

8. Arbitration. Except with respect to any claim that seeks injunctive or other equitable relief in aid of arbitration pursuant to Section 7, claims that any party to this Agreement now has or in the future may have against any other party that are covered by the Company's alternative dispute resolution process (Solutions), including, without limitation, contract claims, tort claims, claims for compensation, statutory employment claims, penalties or restitution and any other claim under any federal, state or local statute, constitution, regulation, rule, ordinance or common law that is not excluded under Solutions, in each case, directly or indirectly arising out of or related to this Agreement, your employment with the Company, the termination of your employment with the Company, or your performance of duties for the Company, are subject to and will be resolved by binding arbitration and not by a court or jury. Each party hereby irrevocably consents and agrees to arbitrate any such covered claims through binding arbitration, and forever waives and gives up its right to have a judge or jury decide any covered claims.


9.	Miscellaneous .

a. Notice. Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, or by overnight carrier to the parties at the addresses set forth below (or such other addresses as specified by the parties by like notice): If to the Company: General Electric Company, Attention: Raghu Krishnamoorthy, Senior Vice President, Human Resources at 33-41 Farnsworth St, Boston, MA 02210 If To You: Attention: Michael Holston [ADDRESS]

b. Entire Agreement. This Agreement contains the entire understanding and agreement of the parties with respect to the subject matter hereof, and as of the Effective Date, supersedes all negotiations, proposals and agreements (whether written or oral) between them (or their respective affiliates or representatives) relating to the subject matter hereof, except as specifically provided herein. No agreements or representations (whether oral or otherwise, express or implied) that are not expressly set forth in, but that relate to the subject matter of, this Agreement have been made by either party. Any amendments to this Agreement must be in writing and signed by the Chief Executive Officer or his/her delegee.

c. Severability. If any one or more of the provisions of this Agreement is invalid, illegal or unenforceable in any respect, it will be ineffective only to the extent of such invalidity, illegality or unenforceability, and will not in any way affect or impair the validity, legality and enforceability of the balance of such provision or any other provision contained herein. Each party will endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provision(s) (or such portion thereof) with such valid, legal and enforceable provision(s), the economic effect of which on the respective parties is as close as possible to that of the invalid, illegal or unenforceable provision(s).

d. Governing Law. This Agreement shall be construed and interpreted according to the laws of the state of New York.

e. Withholding. The Company may withhold from any amounts payable to you under this Agreement any amounts which are required to be withheld for federal, state or local taxes.

10. Section 409A. The Agreement shall be interpreted and operated to reflect the intent of the parties that all provisions of the Agreement shall comply with Section 409A of the Internal Revenue Code of 1986, as amended, and any regulations thereunder ("Section 409A"). The Company Group shall not have any liability or obligation to you with respect to any taxes that may become payable by you pursuant to Section 409A. Notwithstanding anything in this Agreement to the contrary, if you are a "specified employee" for purposes of Section 409A and if payment of any amounts under this Agreement is required to be delayed for a period of six months after separation from service pursuant to Section 409A, payment of such amounts shall be delayed as required by Section 409A, and the accumulated amounts shall be paid in a lump sum payment within 15 days after the end of the six-month period, or if earlier, upon your death. For all purposes under this Agreement, reference to your "termination of employment" (and corollary terms) with the Company shall be construed to refer to your "separation from service" (as defined by Section 409A), and any right to installment payments under this Agreement shall be treated as a right to a series of separate payments. In the event that any payment under this Agreement may be paid in two calendar years, depending on the timing of execution of a Release, such payment shall be made in the later calendar year. With regard to any provision herein that provides for reimbursement of costs and expenses or in - kind benefits, except as permitted by Section 409A, (a) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (b) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year; and (c) such payments shall be made on or before the last day of your taxable year following the taxable year in which the expense was incurred.

IN WITNESS WHEREOF, the parties have executed or caused to be executed this Agreement as of the Effective Date.

General Electric Company

/s/ Raghu Krishnamoorthy

Name:

Title:

Michael Holston

/s/ Michael J. Holston

Exhibit 10(b)

EXECUTION VERSION

CREDIT AGREEMENT

dated as of

June 22, 2018

Among

GENERAL ELECTRIC COMPANY,

as the Borrower,

JPMORGAN CHASE BANK, N.A.

and

CITIBANK, N.A.,

as Co-Administrative Agents,

And

The Lenders Party Hereto

JPMORGAN CHASE BANK, N.A., CITIBANK, N.A., BNP PARIBAS, GOLDMAN SACHS BANK USA, BANK OF AMERICA, N.A., and MORGAN STANLEY SENIOR FUNDING, INC., as Joint Bookrunners and Joint Lead Arrangers

BNP PARIBAS, GOLDMAN SACHS BANK USA, BANK OF AMERICA, N.A., and MORGAN STANLEY SENIOR FUNDING, INC., as Syndication Agents

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TABLE OF CONTENTS



			Page
ARTICLE I	DEFINITIONS			1
Section 1.01.		Defined Terms		1
Section 1.02.		Classification of Loans and Borrowings		14
Section 1.03.		Terms Generally		14
ARTICLE II	THE CREDITS			14
Section 2.01.		Commitments; Additional Commitments		14
Section 2.02.		Loans and Borrowings		16
Section 2.03.		Requests for Borrowings		17
Section 2.04.		Funding of Borrowings		18
Section 2.05.		Interest Elections		18
Section 2.06.		Termination and Reduction of Commitments		19
Section 2.07.		Repayment of Loans; Evidence of Debt		20
Section 2.08.		Prepayment of Loans		21
Section 2.09.		Fees		22
Section 2.10.		Interest		23
Section 2.11.		Alternate Rate of Interest		23
Section 2.12.		Increased Costs		24
Section 2.13.		Taxes		25
Section 2.14.		Payments Generally		28
Section 2.15.		Replacement of Lenders		29
Section 2.16.		Break Funding Payments		30
Section 2.17.		Illegality		30
ARTICLE III	REPRESENTATIONS OF BORROWER			30
ARTICLE IV	CONDITIONS			32
Section 4.01.		Closing Date		32
Section 4.02.		Each Credit Event		33
ARTICLE V	AFFIRMATIVE COVENANTS			33
Section 5.01.		Financial Statements and Notices		34

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ARTICLE VI	NEGATIVE COVENANTS		34
Section 6.01.		Fundamental Changes	34
ARTICLE VII	EVENTS OF DEFAULT		35
ARTICLE VIII	THE ADMINISTRATIVE AGENT		36
ARTICLE IX	MISCELLANEOUS		38
Section 9.01.		Notices	38
Section 9.02.		Waivers; Amendments	38
Section 9.03.		Expenses; Indemnity	39
Section 9.04.		Successors and Assigns	40
Section 9.05.		Counterparts; Integration; Effectiveness	43
Section 9.06.		Governing Law; Jurisdiction	43
Section 9.07.		Headings	44
Section 9.08.		Confidentiality	44
Section 9.09.		WAIVER OF JURY TRIAL	44
Section 9.10.		Judgment Currency	45
Section 9.11.		USA PATRIOT Act	45
Section 9.12.		No Fiduciary Duty	45

Section 9.13.		Acknowledgement and Consent to Bail-In of EEA Financial Institutions	46

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SCHEDULES:

Schedule 2.01 Commitments

EXHIBITS:

Exhibit A Form of Assignment and Acceptance

Exhibit B-1 Form of Increased Facility Activation Notice

Exhibit B-2 Form of New Lender Supplement

Exhibit C-1 Form of Tax Certificate (For Non-U.S. Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Exhibit C-2 Form of Tax Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Exhibit C-3 Form of Tax Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Exhibit C-4 Form of Tax Certificate (For Non-U.S. Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

CREDIT AGREEMENT (this “ Agreement ”), dated as of June 22, 2018, among GENERAL ELECTRIC COMPANY (the “ Borrower ”), the Lenders (as defined below) party hereto and JPMorgan Chase Bank, N.A., as the Administrative Agent (as defined below).

The parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Defined Terms . As used in this Agreement, the following terms have the meanings specified below:

“ Administrative Agent ” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders hereunder. The Administrative Agent may act through one or more affiliates in London.

“ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“ Affiliate ” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“ Anti-Corruption Laws ” means all laws, rules and regulations of any jurisdiction applicable to the Borrower and its affiliated companies from time to time concerning or relating to bribery or corruption.

“ Anti-Money Laundering Laws ” has the meaning given to such term in paragraph (h) of Article III.

“ Applicable Law ” or “ Applicable Laws ” means, with respect to any Person, laws, common law, statutes, judgments, decrees, rules, constitutions, treaties, conventions, regulations, codes, ordinances, orders, and legally enforceable requirements of all Governmental Authorities, in each case, applicable to such Person.

“ Applicable Margin ” has the meaning set forth in the Fee Letter.

“ Assignment and Acceptance ” means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

“ Availability Period ” means, with respect to the making of any Revolving Loans, the period from and including the Closing Date to but excluding the earlier of (a) the date that is 30 days prior to the Final Maturity Date (or if such date is not a Business Day, the first Business Day after such date) and (b) the date of the termination of the relevant Commitments.

“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“ Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“ Bank Secrecy Act ” means The Currency and Foreign Transactions Reporting Act (31 U.S.C. §§ 5311-5330), as amended.

“ Bilateral Credit Facilities ” means, collectively (a) the Revolving Credit Agreement, dated January 15, 2018, by and among General Electric Company as the Borrower and Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC as the Lenders, (b) the Revolving Credit Agreement, dated January 15, 2018, by and among General Electric Company as the Borrower and Morgan Stanley Senior Funding, Inc. as the Lender, and (c) the Revolving Credit Agreement, dated January 15, 2018, by and among General Electric Company as the Borrower and Citibank, N.A. as the Lender.

“ Board ” means the Board of Governors of the Federal Reserve System of the United States of America (or any successor).

“ Borrower ” has the meaning given to such term in the preamble hereto.

“ Borrowing ” means Loans of the same Type, made to the Borrower, made, converted or continued on the same date and, in the case of Non-Prime Loans, as to which a single Interest Period is in effect.

“ Borrowing Date ” means any Business Day specified by the Borrower as a date on which the Borrower requests the Lenders to make Loans hereunder.

“ Borrowing Request ” means a request by the Borrower for a Borrowing in accordance with Section 2.03.

“ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, the term “ Business Day ” shall also exclude when used in connection with a Eurodollar Loan, any day on which banks are not open for dealings in Dollar deposits in the London and New York interbank markets.

“ Change Event ” has the meaning given to such term in Section 2.12.

“ Change in Law ” has the meaning given to such term in Section 2.12.

“ Closing Date ” has the meaning given to such term in Section 4.01.

“ Co-Administrative Agents ” means the Co-Administrative Agents identified on the cover page of this Agreement.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Commitment ” means, with respect to each Lender, Delayed Draw Term Commitment and Revolving Commitment of such Lender to make Loans hereunder, as such commitment may be (a) reduced from time to time pursuant to Sections 2.01(a), 2.06 or 2.08(c), (b) increased from time to time pursuant to Section 2.01(b) and (c) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01, in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, or in the New Lender Supplement pursuant to which such Lender shall have become a party hereto, as applicable.

“ Commitment Fee ” has the meaning given to such term in Section 2.09(a).

“ Conduit Lender ” means any special purpose corporation organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument; provided , that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender, and provided, further, that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 2.12, 2.13, 2.16 or 9.03 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment.

“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

“ Credit Exposure ” means, with respect to any Lender at any time, the outstanding principal amount of such Lender’s Loans at such time.

“ Debt Issuance Payment Amount ” has the meaning assigned to such term in Section 2.08(c)(ii).

“ Default ” means any event or condition which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“ Defaulting Lender ” means any Lender, as reasonably determined by the Administrative Agent, that has (a) failed to fund any portion of its Loans (other than at the direction or request of any regulatory authority) within three Business Days of the date required to be funded by it hereunder, (b) notified the Borrower, the Administrative Agent or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or generally under other agreements in which it commits to extend credit, (c) failed, within three Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e) (i) become or is insolvent or has a parent company that has become or is insolvent, (ii) become the subject of a public bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a public bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or (iii) become the subject of a Bail-In Action, unless in the case of clauses (a), (b) and (c) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding has not been satisfied.

Notwithstanding anything to the contrary above, a Lender (other than a Lender which is the subject of a Bail-In Action) will not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interests in, or other exercise of control over, such Lender or its parent company by any Governmental Authority. In the event that the Administrative Agent and the Borrower each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then such Lender shall no longer be deemed to be a Defaulting Lender.

“ Delayed Draw Availability Period ” means, with respect to the making of any Delayed Draw Term Loans, the period from and including the Closing Date to March 29, 2019.

“ Delayed Draw Term Commitment ” means, with respect to each Lender, the Commitment of such Lender to make Delayed Draw Term Loans hereunder in an aggregate amount not to exceed the amount set forth opposite such Lender’s name on the Commitment Schedule, or in the Assignment and Acceptance pursuant to which such Lender assumed its Delayed Draw Term Commitment, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. The aggregate amount of the Lenders’ Delayed Draw Term Commitments (immediately prior to the incurrence of any Delayed Draw Term Loans) is $4,950,000,000.

“ Delayed Draw Term Lender ” means a Lender with a Delayed Draw Term Commitment or an outstanding Delayed Draw Term Loan.

“ Delayed Draw Term Loans ” has the meaning given to such term in Section 2.01(a)(i)(A).

“ Disqualified Institution ” means: (a) any Person identified in writing to the Administrative Agent by the Borrower on or prior to the date that is five Business Days prior to the Closing Date and (b) any Affiliate of any Person described in clause (a) above that is identifiable solely by similarity of its name. The list of Disqualified Institutions (other than any identifiable Affiliate (solely on the basis of such Affiliate’s similarity of name)) included in this definition shall be made available to any Lender who specifically requests a copy thereof from the Administrative Agent.

“ Disposition ” or “ Dispose ” means the sale, transfer, assignment, or other disposition by the Borrower or its Subsidiaries to any person (other than any of the Borrower’s direct or indirect Subsidiaries) of any assets of the Borrower or its Subsidiaries, including a disposition of assets effected by the issuance of equity securities of a Subsidiary (other than (i) assets disposed of in the ordinary course of business, (ii) disposals of obsolete property or other property that is no longer useful in its business or (iii) assets disposed of pursuant to securitization, factoring, receivables financing and/or similar financing arrangements).

“ Dollars ” or “ $ ” refers to lawful money of the United States of America.

“ EEA Financial Institution ” means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“ EEA Resolution Authority ” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“ Environmental Laws ” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements with any Governmental Authority, relating in any way to pollution, the protection of the environment, including natural resources, or health and safety, or to pollutants, contaminants or chemicals or any toxic or otherwise hazardous substances, materials or wastes.

“ Equity Interests ” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

“ ERISA ” means the Employee Retirement Income Security Act of 1974 and any regulations issued pursuant thereto, as amended from time to time.

“ ERISA Event ” means, in each case with respect to the Plan, (a) a Lien of the PBGC shall be filed against the Borrower under Section 4068 of ERISA and such Lien shall remain undischarged for a period of 180 days after the date of filing, (b) the Borrower shall fail to pay, within 90 days of the due date, any material amount which it shall have become liable to pay to the PBGC or to the Plan under Title IV of ERISA, (c) a determination that the Plan is in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA), (d) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to the Plan,(e) the receipt by the Borrower from the PBGC or a plan administrator of any notice relating to the intention to terminate or cause a trustee to be appointed to administer the Plan and such proceeding shall not have been dismissed or (f) conditions contained in Section 303(k)(1)(A) of ERISA for imposition of a lien shall have been met with respect to the Plan and a lien is placed on the Plan that remains undischarged for a period of 90 days.

“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time. “ Eurodollar ” means, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Eurodollar Rate.

“ Eurodollar Rate ” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on the Reuters Capital Markets Report Screen LIBOR01 (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to Dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for Dollar deposits with a maturity comparable to such Interest Period; provided that if the rate appearing on such screen at such time shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

“ Event of Default ” has the meaning assigned to such term in Article VI.

“ Exchange Rate ” means the rate at which a currency may be exchanged into Dollars as of the last Business Day any fiscal quarter end, as set forth on the applicable Reuters currency page with respect to such currency. In the event that such rate does not appear on the applicable Reuters currency page, the Exchange Rate with respect to any currency other than Dollars shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Borrower or, in the absence of such agreement, such Exchange Rate shall instead be the Administrative Agent’s spot rate of exchange in the London interbank or other market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 10:00 a.m., local time, at such date for the purchase of Dollars with such currency, for delivery two Business Days later; provided , that if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any reasonable method it deems appropriate to determine such rate, and such determination shall be conclusive absent manifest error.

“ Excluded Debt Issuance ” means the issuance or incurrence of any debt by the Borrower or its Subsidiaries (i) to refinance, replace or retire indebtedness under this Agreement, the Syndicated Credit Facility or any other existing indebtedness of the Borrower or its Subsidiaries (or any debt that was incurred to refinance, replace or retire such debt), together, in each case, with accrued and unpaid interest and any expenses, costs, premiums or other amounts payable in connection with such refinancings, replacement or retirement; provided that the outstanding drawn amount of any such refinancing, replacement or retirement debt shall not at any time exceed the amount of the respective commitments existing as of the Closing Date under such existing indebtedness of the Borrower or its Subsidiaries that was refinanced, replaced or retired by such refinancing, replacement or retirement debt, (ii) to fund pension obligations in an aggregate amount not to exceed $3,000,000,000 (as reduced by the amount of intercompany funding used to fund pension obligations completed after the Closing Date), (iii) in respect of intercompany debt among the Borrower and its Subsidiaries or among Subsidiaries of the Borrower, (iv) constituting any securitization, factoring, receivables financing and/or similar financing arrangements, in each case, in the ordinary course of business, (v) constituting debt of (x) any joint venture, (y) any non-majority owned subsidiary of the Borrower or (z) Baker Hughes, a GE company, LLC and its Subsidiaries; provided that, notwithstanding the foregoing, this clause (v) shall not include any debt that is guaranteed by the Borrower, or (vi) to fund any short-term overdraft advances in the ordinary course of business.

“ Excluded Equity Issuance ” means the (a) issuances of equity or equity-linked securities in connection with (i) employee stock option plans, deferred compensation plans, retirement plans, employee stock ownership or purchase plans or similar equity-based compensation plans and, in each case, any hedging or similar arrangements related to any of the foregoing, (ii) any acquisition or other similar investment, (iii) any directors’ qualifying shares and/or other nominal amounts required to be held by persons other than the Borrower or its Subsidiaries under Applicable Law and (b) issuances by the Borrower to any of its Subsidiaries.

“ Excluded Taxes ” means, with respect to the Administrative Agent, any Lender, or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on (or measured by) its net income or net profits and franchise taxes (imposed in lieu of net income taxes) by any jurisdiction as a result of such party being organized or resident, having its principal office or applicable lending office or doing business in such jurisdiction or having any other present or former connection with such jurisdiction (other than a business or other connection deemed to arise solely from such person having executed, delivered, become a party to, or performed its obligations or received a payment under, or enforced and/or engaged in any activities contemplated with respect to, this Agreement), (b) any withholding or taxes attributable to any person’s failure to comply with any of Section 2.13(e), (f) and (i) of this Agreement, (c) any tax that is imposed pursuant to a law in effect at the time such Lender becomes a party to this Agreement or designates a new lending office, except to the extent that such Lender or its assignor, if any, was entitled, immediately prior to such designation of a new lending office or assignment, to receive additional amounts from the Borrower with respect to any tax pursuant to Section 2.13 and other than pursuant to an assignment request of the Borrower under Section 2.15, (d) any tax in the nature of the branch profits tax within the meaning of Section 884(a) of the Code and any similar tax imposed by any jurisdiction and (e) any withholding taxes that are imposed by reason of or pursuant to FATCA.

“ Exposure ” has the meaning given to such term in Section 2.01(a)(ii).

“ Facility ” means (a) the Delayed Draw Term Loans and Delayed Draw Term Commitments, and (b) the Revolving Loans and the Revolving Commitments, in each case, provided to or for the benefit of the Borrower pursuant to the terms of this Agreement.

“ FATCA ” means Sections 1471–1474 of the Code as of the date of this Agreement (or any successor Code provisions that are substantively similar thereto and which do not impose criteria that are materially more onerous than those contained in such Sections as of the date of this Agreement), any current or future regulations issued thereunder or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreements implementing any of the foregoing and any fiscal or regulatory legislation, rules or practices adopted pursuant to any of the foregoing.

“ Federal Funds Effective Rate ” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it; provided that if the rate so published or quoted at such time shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

“ Fee Letter ” means that certain fee letter, dated the date hereof, by and among the Borrower and the Original Lenders.

“ Final Maturity Date ” means December 31, 2020.

“ First Reduction Date ” means March 29, 2019.

“ Fitch ” means Fitch, Inc. or any successor.

“ GAAP ” means generally accepted accounting principles in the United States of America.

“ Governmental Authority ” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“ Increased Facility Activation Notice ” means a notice substantially in the form of Exhibit B-1.

“ Increased Facility Closing Date ” means any Business Day designated as such in an Increased Facility Activation Notice.

“ Indebtedness ” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments and (c) all guarantees by such Person of Indebtedness of others.

“ Indemnified Taxes ” means Taxes (other than Excluded Taxes and Other Taxes) that are imposed in respect of a payment by, or on account of an obligation of, the Borrower hereunder.

“ Indemnitee ” has the meaning given to such term in Section 9.03(b).

“ Initial Commitments ” means the Commitments of a Lender at the time it became a party to this Agreement as a Lender.

“ Interest Election Request ” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.05.

“ Interest Payment Date ” means (a) with respect to any Prime Loan, the last day of each March, June, September and December and (b) with respect to any Non-Prime Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Non-Prime Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.

“ Interest Period ” means, with respect to any Non-Prime Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six (or, to the extent made available by all the Lenders, twelve) months thereafter, as the Borrower may elect; provided , that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Non-Prime Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

“ Lead Arrangers ” means the Joint Bookrunners and Joint Lead Arrangers identified on the cover page of this Agreement.

“ Lenders ” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to a New Lender Supplement or an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance; provided , that unless the context otherwise requires, each reference herein to the Lenders shall be deemed to include any Conduit Lender.

“ Loans ” means, collectively, the Delayed Draw Term Loans and the Revolving Loans made by the Lenders to the Borrower pursuant to this Agreement.

“ Local Time ” means, with respect to any Borrowing or payment made by the Borrower, New York City time or London time, as the case may be.

“ Mandatory Payment Amount ” means the sum of (a) 39% of all Net Disposition Proceeds, (b) 100% of all Net Debt Proceeds and (c) 100% of all Net Equity Proceeds.

“ Material Adverse Effect ” means a material adverse effect on (a) the business, property, operations or financial condition of the Borrower and its Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or the rights or remedies of the Administrative Agent or the Lenders hereunder; provided that, with respect to Environmental Laws, matters of noncompliance that are disclosed on any public filings filed pursuant to the Securities Exchange Act of 1934 shall not constitute a Material Adverse Effect.

“ Moody’s ” means Moody’s Investors Service, Inc. or any successor.

“ Net Debt Proceeds ” means the cash proceeds (net of all fees and expenses incurred in connection therewith, including, without limitation, attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or commissions and brokerage, consultants and other customary fees and charges incurred in connection with such issuance or sale and net of Taxes paid or payable and reasonably estimated to be payable as a result of such issuance or sale) received by the Borrower or any of its Subsidiaries from the issuance or incurrence of (x) new debt securities (including hybrid securities or convertible debt securities) under (i) the Indenture, dated as of October 9, 2012, between the Borrower and The Bank of New York Mellon as the trustee thereunder, (ii) any other shelf registration statement of the Borrower or any of its Subsidiaries filed with the Securities Exchange Commission after the date hereof or (iii) a private placement or other indenture or offering document, or (y) debt pursuant to any credit facility (with the commitments thereunder deemed to be fully drawn upon effectiveness); provided , that, no cash proceeds arising from debt issued or incurred by the Subsidiaries of the Borrower shall constitute Net Debt Proceeds unless the aggregate amount of all such net cash proceeds shall exceed $500,000,000 (and thereafter, only net cash proceeds in excess of such amount shall constitute Net Debt Proceeds hereunder); provided , further, that Net Debt Proceeds shall exclude all cash proceeds received by the Borrower or any of its Subsidiaries in connection with (i) the Syndicated Credit Facility, (ii) additional credit facilities in an aggregate amount not to exceed $8,000,000,000 (or the USD Equivalent) and (iii) any Excluded Debt Issuance.

“ Net Disposition Proceeds ” means with respect to any Disposition, the cash proceeds (net of (i) selling costs and out-of-pocket expenses (including reasonable broker’s fees or commissions, legal fees, accountants’ fees, investment banking fees, survey costs, title insurance premiums, related search and recording charges, other customary expenses and brokerage, consultant and other customary fees actually incurred and paid to unaffiliated third parties in connection therewith and Taxes (including income taxes) in connection with such Disposition), (ii) amounts provided as a reserve in accordance with GAAP against any liabilities under any indemnification obligation or purchase price adjustment associated with such Disposition and (iii) cash escrows from the sale price for such Disposition) received by the Borrower or any of its Subsidiaries; provided , that, with respect to any proceeds from a Disposition received by GE Capital Global Holdings, LLC (“ GECGH ”), such proceeds shall only constitute Net Disposition Proceeds to the extent of the portion of the proceeds that is distributed by GECGH to the Borrower as a dividend or distribution at the time of such Disposition.

“ Net Equity Proceeds ” means the cash proceeds (net of all fees and expenses incurred in connection therewith, including, without limitation, attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or commissions and brokerage, consultants and other customary fees and charges incurred in connection with such issuance or sale and net of Taxes paid or payable and reasonably estimated to be payable as a result of such issuance or sale) received by the Borrower from the issuance of equity (other than an Excluded Equity Issuance) by the Borrower.

“ Non-U.S. Lender ” has the meaning given to such term in Section 2.13(e) .

“ New Lender ” has the meaning given to such term in Section 2.01(b)(ii) .

“ New Lender Supplement ” has the meaning given to such term in Section 2.01(b)(ii) .

“ Non-Prime ”, when used in reference to any Loan or Borrowing, refers to a Loan or Borrowing other than a Prime Loan or Prime Borrowing.

“ OFAC ’’ means the Office of Foreign Assets Control of the United States Department of the Treasury.

“ Original Lender ” means each Lender that is a party to this Agreement as a Lender on the Closing Date.

“ Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, this Agreement, except any such Taxes that are imposed with respect to an assignment (other than an assignment made pursuant to Section 2.13(g) or 2.15) and as a result of a present or former connection between any Lender or Administrative Agent and the jurisdiction imposing such Tax (other than connections arising from the Lender or Administrative Agent having executed, delivered, become a party to, performed its obligations under, received payments under, or enforced this Agreement), excluding, for the avoidance of doubt, Excluded Taxes.

“ Participant ” has the meaning given to such term in Section 9.04(e).

“ Participant Register ” has the meaning given to such term in Section 9.04(e).

“ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity thereto performing similar functions.

“ PDF ”, when used in reference to notices via e-mail attachment, means portable document format or a similar electronic file format.

“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Plan ” means the General Electric Pension Plan.

“ Prime ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Prime Rate.

“ Prime Rate ” means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

“ Proposed Borrowing ” has the meaning given to such term in Section 2.01(a).

“ Proposed Loan ” has the meaning given to such term in Section 2.01(a).

“ Public Debt Rating ” means, as of any date, the rating that has been most recently announced by any of Standard & Poor’s Financial Services LLC, Moody’s Investors Service, Inc. or Fitch, Inc., as the case may be, for any class of non-credit enhanced long-term senior unsecured debt issued by the Borrower or, if any such rating agency shall have issued more than one such rating, the lowest such rating issued by such rating agency.

“ Reduction Amount ” has the meaning set forth in Section 2.08(c)(i).

“ Register ” has the meaning set forth in Section 9.04.

“ Regulation U ” means Regulation U of the Board as in effect from time to time.

“ Related Parties ” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“ Required Lenders ” means, at any time, Lenders having Credit Exposures and unused Commitments representing more than 50% of the sum of the total Credit Exposures and unused Commitments at such time.

“ Required Delayed Draw Lenders ” means, at any time, Lenders having Credit Exposures with respect to Delayed Draw Loans and unused Delayed Draw Term Commitments representing more than 50% of the sum of the total Credit Exposures with respect to Delayed Draw Loans and unused Delayed Draw Term Commitments at such time.

“ Revolving Lender ” means a Lender with a Revolving Commitment or outstanding Revolving Loans.

“ Required Revolving Lenders ” means, at any time, Lenders having Credit Exposures with respect to Revolving Loans and unused Revolving Commitments representing more than 50% of the sum of the total Credit Exposures with respect to Revolving Loans and unused Revolving Commitments at such time.

“ Revolving Commitments ” mean, with respect to each Lender, the Commitment of such Lender to make Revolving Loans hereunder as set forth on the Commitment Schedule, or in the Assignment and Acceptance pursuant to which such Lender assumed its Revolving Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Sections 2.06, 2.08, 2.12 and 2.15, (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04 or (c) increased pursuant to Section 2.01(b). The aggregate amount of the Lenders’ Revolving Commitments (immediately prior to the incurrence of any Revolving Loans) is $14,850,000,000.

“ Revolving Loans ” has the meaning given to such term in Section 2.01(a)(i)(C).

“ S&P ” means Standard & Poor’s Ratings Services or any successor.

“ Sanctioned Country ” means a country or territory which at any time is the subject or target of any Sanctions.

“ Sanctioned Person ” means, at any time, any (a) Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, the United Nations Security Council or any similar list maintained by the European Union or any EU member state, (b) any Governmental Authority of any Sanctioned Country, (c) any Person located, organized or resident in a Sanctioned Country or (d) any Person directly or indirectly 50% or more owned by, or otherwise controlled by, any Person referenced in clauses (a) or (b).

“ Sanctions ” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the European Union, France or Her Majesty’s Treasury of the United Kingdom.

“ Second Reduction Date ” means December 31, 2019.

“ Subsidiary ” means, with respect to any Person (the “ parent ”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more Subsidiaries of the parent or by the parent and one or more Subsidiaries of the parent. Unless otherwise specified, all references to a “Subsidiary” in this Agreement shall refer to a Subsidiary of the Borrower.

“ Syndicated Credit Facility ” means that certain $20,000,000,000 Five-Year Credit Facility, dated as of May 9, 2016 (as amended, restated, supplemented or otherwise modified, refinanced or replaced from time to time), by and among the Borrower and the lenders party thereto.

“ Syndication Agents ” means the Syndication Agents identified on the cover page of this Agreement.

“ Taxes ” means any and all present or future taxes, levies, imposts, duties, deductions, or withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“ Third Reduction Date ” means June 30, 2020.

“ Total Outstanding Amount ” has the meaning given to such term in Section 2.01(a).

“ Transactions ” means the execution, delivery and performance by the Borrower of this Agreement, the borrowing of Loans and the use of the proceeds thereof.

“ Type ”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Eurodollar Rate or the Prime Rate.

“ USD Equivalent ” means, with respect to an amount denominated in Euros, the amount of dollars that may be purchased with such amount of Euros at the Exchange Rate in effect on the Closing Date.

“ Withholding Agent ” means the Borrower and the Administrative Agent.

“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

SECTION 1.02. Classification of Loans and Borrowings . For purposes of this Agreement, Loans may be classified and referred to by Type (e.g., “ Eurodollar Loans ”). Borrowings also may be classified and referred to by Type (e.g., “ a Eurodollar Borrowing ”).

SECTION 1.03. Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (b) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof and (c) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.

ARTICLE II

THE CREDITS

SECTION 2.01. Commitments; Additional Commitments .

(a) Subject to the terms and conditions set forth herein, each Lender agrees to make (A) term loans in Dollars to the Borrower during the Delayed Draw Availability Period (each such Loan, a “ Delayed Draw Term Loan ”) in an aggregate principal amount that will not result in exceeding such Lender’s Delayed Draw Commitments and (B) Revolving Loans in Dollars to the Borrower during the Availability Period (each such Loan, a “ Revolving Loan ”) in an aggregate principal amount that will not result in such Lender’s Credit Exposure in respect of the Revolving Loans exceeding such Lender’s Revolving Commitments. To the extent repaid (or prepaid), the Delayed Draw Term Loans may not be reborrowed. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans, except that no borrowing or reborrowing may occur after the Availability Period. The Loans shall in each case be Prime Loans or Eurodollar Loans, as the Borrower shall request. Notwithstanding the foregoing or the terms and conditions of the Syndicated Credit Facility:

(i) the outstanding principal amount from time to time of each Lender’s (or its applicable lending affiliate’s) pro rata amount of all borrowings under the Syndicated Credit Facility (such outstanding pro rata borrowings, the “ Syndicated Borrowings ”) shall be deemed to constitute utilization of such Lender’s Commitments hereunder (such outstanding deemed utilization of Commitments, the “ Deemed Utilization ”) and such Lender’s Commitments shall be, for such time as such Deemed Utilization is outstanding, reduced on a dollar for dollar basis by the amount of the Deemed Utilization, first , to reduce such Lender’s Revolving Commitment in full and second , to reduce such Lender’s outstanding and unused Delayed Draw Term Commitment; provided , that any prepayments or repayments of the Syndicated Borrowings that result in a decrease of the Deemed Utilization shall increase such Lender’s Commitments on a dollar for dollar basis by the amount of such decrease, first , to increase such Lender’s previously outstanding and unused Delayed Draw Term Commitment in full and second , to increase such Lender’s Revolving Commitment; and

(ii) solely for purposes of this Agreement, the Commitments hereunder and the determination of Availability hereunder, at the time of a proposed borrowing hereunder (the “ Proposed Loan ”), any Lender’s aggregate outstanding principal amount of Loans (after giving effect to the Proposed Loan) plus such Lender’s Syndicated Borrowings (the “ Exposure ”), shall not at any time exceed the sum of such Lender’s Commitments and pro rata share of outstanding Delayed Draw Term Loans hereunder (after giving effect to the Deemed Utilization at such time) at such time. For the avoidance of doubt, such Lender’s (or its applicable lending affiliate’s) commitments under the Syndicated Credit Facility shall in no way be modified or affected by this Section 3(a)(ii).

If, on the date that a proposed borrowing under the Syndicated Credit Facility (the “ Proposed Borrowing ”) is intended to be funded, the sum of (i) any Lender’s Loans then outstanding under this Agreement, plus (ii) any Deemed Utilizations made on or prior to such date plus (iii) such Lender’s (or its applicable lending affiliate’s) pro rata amount of such Proposed Borrowing under the Syndicated Credit Facility would exceed such Lender’s then outstanding Commitments plus the then outstanding Delayed Draw Term Loans of such Lender, if any (such sum of outstanding Commitments and Delayed Draw Term Loans, the “ Total Outstanding Amount ”), then the Borrower shall be required to repay, first , the Revolving Loans (with the proceeds of the Proposed Borrowing or otherwise) in an aggregate amount sufficient to reduce such sum for such Lender to an amount that does not exceed the Total Outstanding Amount of such Lender and, second , the Delayed Draw Term Loans (with the proceeds of the Proposed Borrowing or otherwise) in an aggregate amount sufficient to reduce such sum for such Lender to an amount that does not exceed the Total Outstanding Amount of such Lender, in each case, together with any accrued interest on the principal amount prepaid on the date of such prepayment, and the Borrower agrees and hereby directs and instructs the Administrative Agent and the Lenders, to settle such repayment and Proposed Borrowing on a net basis, and the Lenders hereby agree, and direct and instruct the Administrative Agent to, settle such borrowings under the Syndicated Credit Facility on a net basis; provided , that, prior to delivery of a borrowing notice to the administrative agent under the Syndicated Credit Facility for the Proposed Borrowing, the Borrower shall notify the Administrative Agent of a prepayment hereunder in accordance with Section 2.08(a)(ii) (it being understood that failure to deliver such notice shall not impair the right of the Administrative Agent and the Lenders to net settle such repayment and the Proposed Borrowing as provided above).

(b) (i) The Borrower and any one or more Lenders (including New Lenders) may, with the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed), at any time after the Closing Date, agree that such Lenders shall obtain or increase the amount of their Delayed Draw Term Commitments and Revolving Commitments, on a pro rata basis, by executing and delivering to the Administrative Agent an Increased Facility Activation Notice specifying (a) the amount of such increase and (b) the applicable Increased Facility Closing Date. Notwithstanding the foregoing, without the consent of the Required Lenders (such consent not to be unreasonably withheld or delayed), (i) the aggregate amount of the total Commitments may not be increased by an amount greater than $200,000,000, (ii) each increase effected pursuant to this paragraph shall be in a minimum amount of at least $5,000,000 and (iii) no more than eight Increased Facility Closing Dates may be selected by the Borrower during the term of this Agreement. No Lender shall have any obligation to participate in any increase described in this paragraph unless it agrees in writing to do so in its sole discretion. The Administrative Agent shall promptly give notice to all Lenders of any such increase.

(i) Any additional bank, financial institution or other entity which, with the consent of the Borrower and the Administrative Agent, elects to become a “Lender” under this Agreement in connection with any transaction described in Section 2.01(b)(i) shall execute a New Lender Supplement (each, a “ New Lender Supplement ”), substantially in the form of Exhibit B-2, whereupon such bank, financial institution or other entity (a “ New Lender ”) shall become a Lender for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement.

(ii) On each Increased Facility Closing Date with respect to which there are Revolving Loans then outstanding, the New Lender(s) under such Facility and/or the Lenders that have increased their Revolving Commitments shall make Loans, the proceeds of which will be used to prepay the Revolving Loans of other Lenders under such Facility, so that, after giving effect thereto, the resulting Loans outstanding under such Facility are allocated ratably among the Lenders under such Facility in accordance with Section 2.02 based on their respective unused Commitments under such Facility after giving effect to such Increased Facility Closing Date.

SECTION 2.02. Loans and Borrowings .

(a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective unused Commitments. Subject to Section 2.11, each Borrowing shall be comprised entirely of Prime Loans or Eurodollar Loans as the Borrower may request in accordance herewith.

(b) The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that, other than any Commitment made by a Lender through a Conduit Lender as described in the definition thereof, which Commitment shall be the joint obligation of such Conduit Lender and its designating Lender, the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(c) Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(d) At the commencement of each Interest Period for any Eurodollar Borrowing such Borrowing shall be in an aggregate amount that is an integral multiple of $5,000,000 and not less than $25,000,000. At the time that each Prime Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000; provided that a Prime Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of ten Eurodollar Borrowings.

(e) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing of (i) Delayed Draw Term Loans if the Interest Period requested with respect thereto would end after the Final Maturity Date or (ii) Revolving Loans if the Interest Period requested with respect thereto would end after the Final Maturity Date.

SECTION 2.03. Requests for Borrowings . To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Local Time, three Business Days before the date of the proposed Borrowing or (b) in the case of a Prime Borrowing, not later than 10:00 a.m., New York City time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy or email with PDF attachment to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i) whether the requested Borrowing is to be a Borrowing of Revolving Loans or Delayed Draw Term Loans;

(ii) the aggregate amount and currency of the requested Borrowing;

(iii) the date of such Borrowing, which shall be a Business Day;

(iv) whether such Borrowing is to be a Prime Borrowing or a Eurodollar Borrowing;

(v) in the case of a Non-Prime Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “ Interest Period ”; and

(vi) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.04.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be a Prime Borrowing. If no Interest Period is specified with respect to any requested Non-Prime Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04. Funding of Borrowings .

(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds in the applicable currency by 1:00 p.m., Local Time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent and designated by the Borrower in the applicable Borrowing Request.

(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed time of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then (x) the Administrative Agent shall notify the Borrower of such inaction promptly following the Administrative Agent’s discovery of such inaction and (y) the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the Federal Funds Effective Rate (or, in the case of Eurodollar Loans, such other customary overnight rate as shall be specified by the Administrative Agent) or (ii) in the case of the Borrower, the interest rate applicable to such Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

SECTION 2.05. Interest Elections .

(a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Non-Prime Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Non- Prime Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.

(b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy or email with PDF attachment to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.

(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

(i) the Borrower and the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be a Prime Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Non-Prime Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “ Interest Period ”.

If any such Interest Election Request requests a Non-Prime Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(d) If the Borrower fails to deliver a timely Interest Election Request with respect to a Non-Prime Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to a Prime Borrowing.

SECTION 2.06. Termination and Reduction of Commitments .

(a) (i) Unless previously reduced or terminated pursuant to this Section 2.06 or Section 2.08, each Lender’s Delayed Draw Term Commitments shall be permanently reduced by the principal amount of each Delayed Draw Term Loans funded hereunder and shall expire and terminate on the last day of the Delayed Draw Availability Period and (ii) unless previously reduced or terminated pursuant to this Section 2.06 or Section 2.08, each Lender’s Revolving Commitments shall terminate on the last day of the Availability Period.

(b) The Borrower may at any time terminate, or from time to time reduce, any of the Delayed Draw Term Commitments or Revolving Commitments; provided that (i) each reduction of such Commitments shall be in an amount that is an integral multiple of $10,000,000 and not less than $50,000,000 and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.08, the total Credit Exposures in respect of the Revolving Loans would exceed the total Revolving Commitments.

(c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce any of the Delayed Draw Term Commitments or Revolving Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the applicable Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of such Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or the closing of a capital markets transaction, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of such Commitments shall be permanent. Each reduction of such Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

SECTION 2.07. Repayment of Loans; Evidence of Debt .

(a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each (i) Delayed Draw Term Loan on the Final Maturity Date in the applicable currency and (ii) Revolving Loan on the Final Maturity Date in the applicable currency.

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender to the Borrower, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof. The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans to it in accordance with the terms of this Agreement.

(d) Any Lender may reasonably request that Loans made by it to the Borrower be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent and the Borrower. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.08. Prepayment of Loans .

(a) Voluntary Prepayments . (i) Subject to prior notice in accordance with paragraph (ii) of this Section 2.08(a), the Borrower may at its option, at any time, without premium or penalty of any kind (other than any payments required under Section 2.16), prepay, in whole or in part, any Borrowings in the applicable currency.

(i) The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy or email with PDF attachment) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Local Time, on the date three Business Days prior to the date of prepayment or (ii) in the case of prepayment of a Prime Borrowing, not later than 10:00 a.m., Local Time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of Delayed Draw Term Commitments or Revolving Commitments, as applicable, as contemplated by Section 2.06, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.06. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.10.

(b) [Reserved].

(i) Each Lender’s outstanding aggregate Commitments and/or Loans shall be automatically reduced and prepaid, if applicable, on (1) the First Reduction Date, in accordance with Section 2.08(c)(ii) below, to an amount equal to the lower of (A) 75% of such Lender’s Initial Commitments and (B) an amount equal to the difference between such Lender’s Initial Commitments and such Lender’s pro rata amount of the Mandatory Payment Amount accumulated from the Closing Date up to the First Reduction Date, (2) the Second Reduction Date, in accordance with Section 2.08(c)(iii) below, to an amount equal to the lower of (A) 37.5% of such Lender’s Initial Commitments and (B) an amount equal to the difference between such Lender’s Initial Commitments and such Lender’s pro rata amount of the Mandatory Payment Amount accumulated from the Closing Date up to the Second Reduction Date and (3) the Third Reduction Date, in accordance with Section 2.08(c)(iii) below, to an amount equal to the lower of (A) 25% of such Lender’s Initial Commitments and (B) the amount equal to the difference between such Lender’s Initial Commitments and such Lender’s pro rata amount of the Mandatory Payment Amount accumulated from the Closing Date up to the Third Reduction Date (each such amount set forth in each of the foregoing clauses (1) through (3), a “ Reduction Amount ”). Each such repayment of Loans shall be accompanied by payment of accrued interest on the amount so repaid on the applicable Reduction Date. The Borrower shall provide notice of such reductions in the manner set forth in Section 2.06(c).

(ii) On the First Reduction Date, the applicable Reduction Amount shall be applied, first , to permanently reduce the Delayed Draw Term Commitments; second , to the extent no Delayed Draw Term Commitments remain outstanding, to permanently reduce the Revolving Commitments to a level not less than the then outstanding Revolving Loans; third , to the extent no Commitments are outstanding in excess of outstanding Revolving Loans, to repay outstanding Revolving Loans and commensurately permanently reduce the Revolving Commitments; fourth , to the extent no Revolving Loans are outstanding, to repay outstanding Delayed Draw Term Loans and fifth , to the extent no Loans are outstanding, any remaining amounts may be retained by the Borrower.

(iii) On each of the Second Reduction Date and the Third Reduction Date, the applicable Reduction Amount shall be applied, first , to permanently reduce the Revolving Commitments to a level not less than the then outstanding Revolving Loans; second , to the extent no Commitments are outstanding in excess of outstanding Revolving Loans, to repay outstanding Revolving Loans and commensurately permanently reduce the Revolving Commitments; third , to the extent no Revolving Loans are outstanding, to repay outstanding Delayed Draw Term Loans, and fourth , to the extent no Loans are outstanding, any remaining amounts may be retained by the Borrower.

(iv) To the extent the sum of (i) the Loans then outstanding under this Agreement, plus (ii) any Deemed Utilizations made on or prior to such date, exceeds the Total Outstanding Amount, then the Borrower shall prepay first , the Revolving Loans in an aggregate amount sufficient to reduce such sum to an amount that does not exceed the Total Outstanding Amount and, second , the Delayed Draw Term Loans in an aggregate amount sufficient to reduce such sum to an amount that does not exceed the Total Outstanding Amount, in each case, accompanied by accrued interest to the extent required by Section 2.10 but shall be without premium or penalty of any kind (other than any payments required under Section 2.16); provided further that any such prepayment may be satisfied in accordance with Section 2.01 or this Section 2.08.

SECTION 2.09. Fees . (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee (such fee, the “ Commitment Fee ”) in Dollars, which shall accrue at a rate per annum equal to the Applicable Margin under the caption “ Commitment Fee Rate ” on the average daily unused amount of the sum of the unused Delayed Draw Term Commitment and unused Revolving Commitment (disregarding for purposes of such calculation any Deemed Utilization or “reductions” of Commitments in connection therewith) of such Lender during the period from and including the Closing Date to but excluding the date on which such Delayed Draw Term Commitment or Revolving Commitment, as applicable, terminates. Accrued Commitment Fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Delayed Draw Term Commitments or Revolving Commitments, as applicable, terminate, commencing on the first such date to occur after the Closing Date. All Commitment Fees shall be computed on the basis of a year of 365 or 366 days, as the case may be, and shall be payable for the actual number of days elapsed (including the first business day but excluding the last day).

(a) The Borrower agrees to pay the fees set forth in the Fee Letter.

(b) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

(c) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution as appropriate to the Lenders. Fees paid shall not be refundable under any circumstances.

SECTION 2.10. Interest .

(a) The Loans comprising each Prime Borrowing shall bear interest at a rate per annum equal to the Prime Rate plus the Applicable Margin.

(b) The Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to the Eurodollar Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin.

(c) Accrued interest on each Loan shall be payable in the applicable currency in arrears on each Interest Payment Date for such Loan; provided that (i) in the event of any repayment or prepayment of any Loan (other than a prepayment of a Prime Loan prior to the end of the Availability Period or the Delayed Draw Availability Period, as applicable), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment, (ii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion and (iii) all accrued interest on a Loan shall be payable upon termination of the Commitments applicable to such Loan and upon the Final Maturity Date.

(d) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Prime Rate or Eurodollar Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.11. Alternate Rate of Interest . If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period; or

(b) the Administrative Agent is advised by the Required Lenders that the Eurodollar Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lender or Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Non-Prime Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as a Prime Borrowing; provided that if the circumstances giving rise to such notice affect fewer than all Types of Borrowings, then the other Types of Borrowings shall be permitted. If, prior to the commencement of any Interest Period, the Administrative Agent determines (which determination shall be conclusive absent manifest error) that (i) the circumstances set forth in clause (a) above are unlikely to be temporary or (ii) the supervisor for the administrator of the Eurodollar Rate or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the Eurodollar Rate may no longer be used for determining interest rates for loans, then reasonably promptly after such determination, the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or facsimile. The Administrative Agent and the Borrower shall endeavor to establish an alternate rate of interest to the Eurodollar Rate that gives due consideration to the then evolving or existing market convention for determining a rate of interest for syndicated loans in the United States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable; provided that, if such alternate rate of interest as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement. Notwithstanding anything to the contrary in Section 9.02, such amendment shall become effective without any further action or consent of any other party to this Agreement so long as the Administrative Agent shall not have received, within five Business Days of the date notice of such alternate rate of interest is provided to the Lenders, a written notice from the Required Lenders stating that such Required Lenders object to such amendment. Until an alternate rate of interest shall be determined in accordance with this Section 2.11, (x) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (y) if any Borrowing Request requests a Eurodollar Borrowing, at the Borrower’s discretion, such Borrowing Notice may be revoked by the Borrower or the Borrowing thereunder may be made as a Prime Borrowing; provided that if the circumstances giving rise to such notice affect fewer than all Types of Borrowings, then the other Types of Borrowings shall be permitted.

SECTION 2.12. Increased Costs . In the event that by reason of any change after the date of this Agreement in Applicable Law or regulation or in the interpretation thereof by any Governmental Authority charged with the administration, application or interpretation thereof, or by reason of the adoption or enactment after the date of this Agreement of any requirement or directive (whether or not having the force of law) of any Governmental Authority (each a “ Change Event ”); provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith, but only in the event that the applicable Change Event results in the applicable Lender being in a materially different adverse position than exists as of the Closing Date with respect to any of the items described in categories (a) and (b) below and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall be deemed to be a “Change in Law , ” regardless of the date enacted, adopted or issued (collectively, a “ Change in Law ”):

(a) any Lender shall, with respect to this Agreement, be subject to any tax, levy, impost, charge, fee, duty, deduction or withholding of any kind whatsoever (other than (i) any Indemnified Taxes or Other Taxes in respect of which additional amounts are payable (or would be so payable but for an exception under Section 2.13 ) pursuant to Section 2.13 ; or (ii) Excluded Taxes); or

(b) any reserve, capital adequacy, special deposit, liquidity or similar requirements should be imposed on either the commitments to lend or the foreign claims of deposits of any Lender;

and if any of the above-mentioned measures shall result in a material increase in the cost to such Lender of making or maintaining its Loans or Commitments or a material reduction in the amount of principal or interest received or receivable by such Lender in respect thereof, then upon prompt written notification (which shall include the date of effectiveness of such change, adoption or enactment) and demand being made by such Lender for such additional cost or reduction, the Borrower shall pay to such Lender, within 30 days of such demand being made by such Lender, such additional cost or reduction; provided , however , that the Borrower shall not be responsible for any such cost or reduction that may accrue to such Lender with respect to the period between the occurrence of the event which gave rise to such cost or reduction and the date on which notification is given by such Lender to the Borrower; and provided , further , that the Borrower shall not be obligated to pay such Lender any such additional cost or reduction unless such Lender certifies to the Borrower that at such time such Lender shall be generally assessing such amounts on a non-discriminatory basis against borrowers under agreements having provisions similar to this Section; and provided , further , that any such additional cost or reduction allocated to any Loan or Commitment shall not exceed the Borrower’s pro rata share of all costs attributable to all loans or advances or commitments to all borrowers by such Lender that collectively result in the consequences for which such Lender is to be compensated by the Borrower. Within 30 days of receipt of such notification, the Borrower will pay such additional costs as may be applicable to the period subsequent to notification or prepay in full all Loans to it outstanding under this Agreement so affected by such additional costs, together with interest and fees accrued thereon to the date of prepayment in full. Such Lender shall use reasonable efforts (consistent with its internal policy applied on a non-discriminatory basis and legal and regulatory restrictions) to designate a different applicable lending office for the Loans made by it and its Commitments or to take other appropriate actions if such designation or actions, as the case may be, will avoid the need for, or reduce the amount of, any increased costs to the Borrower incurred under this Section, and will not, in the opinion of such Lender, be otherwise disadvantageous to such Lender.

SECTION 2.13. Taxes .

(a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction or withholding for any Taxes, except as required by law; provided that if the applicable Withholding Agent shall be required to deduct or withhold any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions and withholdings (including deductions or withholdings applicable to additional sums payable under this Section) the Administrative Agent or Lender (as the case may be) receives from the Borrower an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) the applicable Withholding Agent shall make such deductions or withholdings and (iii) the applicable Withholding Agent shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law. For the avoidance of doubt, a Tax imposed by reason of or pursuant to FATCA is a Tax required by law to be deducted or withheld.

(b) In addition, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with Applicable Law.

(c) The Borrower shall indemnify the Administrative Agent and each Lender, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender, as the case may be (other than any penalties, interest and expenses resulting from any bad faith, gross negligence or willful misconduct of the Administrative Agent or such Lender), whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(d) As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement shall deliver to the Borrower and the Administrative Agent, at the time or times prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by Applicable Law as will permit such payments to be made without withholding or at a reduced rate. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Without limiting the generality of the foregoing, (i) each Lender (or Assignee or Participant) that is a “United States person” as defined in Section 7701(a)(30) of the Code shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of IRS Form W-9 certifying that such Lender (or Assignee or Participant) is exempt from U.S. federal backup withholding tax, (ii) each Lender (or Assignee or Participant) that is not a “United States person” as defined in Section 7701(a)(30) of the Code (a “ Non-U.S. Lender ”) shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of IRS Form W-8BEN or W-8BEN-E, Form W-8ECI or Form W- 8IMY (together with any applicable underlying IRS forms), and, in the case of a Non-U.S. Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, a certificate substantially in the form of Exhibit C-1, C-2, C-3 or C-4, as applicable, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on payments under this Agreement, and (iii) if a payment made to a Lender under this Agreement would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable documentation or reporting requirements of FATCA (including those required pursuant to Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent, such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with its obligations under FATCA, to determine that such Lender has or has not complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment (and, solely for purposes of this Section 2.13(e)(iii), “ FATCA ” shall include any amendments made to FATCA after the date of this Agreement). Such forms and documentation shall be delivered by each Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation) and from time to time thereafter upon the request of the Borrower or the Administrative Agent. In addition, each Lender shall deliver such forms and documentation promptly upon the expiration, obsolescence or invalidity of any form or documentation previously delivered by such Lender. Each Lender shall promptly notify the Borrower and the Administrative Agent at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower or the Administrative Agent (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this Section, a Lender shall not be required to deliver any form and documentation pursuant to this Section that such Lender is not legally able to deliver.

(f) Any Non-U.S. Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Non-U.S. Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower and the Administrative Agent to determine the withholding or deduction required to be made.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(g) The Administrative Agent and each Lender shall use reasonable efforts (consistent with its internal policy applied on a non-discriminatory basis and legal and regulatory restrictions) to designate a different applicable lending office for the Loans made by it and its Commitments or to take other appropriate actions if such designation or actions, as the case may be, will avoid the need for, or reduce the amount of, any payments the Borrower is required to make under this Section 2.13, and will not, in the opinion of the Administrative Agent or such Lender, be otherwise disadvantageous to the Administrative Agent or such Lender.

(h) Each Lender shall severally indemnify the Administrative Agent within 10 days after written demand therefor, (i) for the full amount of any Taxes attributable to such Lender that are payable or paid by the Administrative Agent and (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(e) relating to the maintenance of a Participant Register, in each case, including reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (h).

(i) With respect to payments made by the Borrower to the Administrative Agent for the benefit, or on account of any Lender (or Participant), (i) each Administrative Agent that is a “United States person” as defined in Section 7701(a)(30) of the Code will provide an IRS Form W-9, and (ii) each Administrative Agent that is not a “ United States person ” as defined in Section 7701(a)(30) of the Code will provide an IRS Form W-8IMY (a) certifying its status as a qualified intermediary, (b) assuming primary withholding responsibility for purposes of chapters 3 and 4 of the Code, and (c) either (1) assuming primary IRS Form 1099 reporting and backup withholding responsibility or (2) assuming reporting responsibility as a participating FFI or registered deemed-compliant FFI with respect to accounts that it maintains and that are held by specified U.S. persons as permitted under Treasury Regulations Section 1.6049-4(c)(4)(i) or (c)(4)(ii) in lieu of IRS Form 1099 reporting. No Administrative Agent shall be permitted to make the election described in Section 1471(b)(3) of the Code.

(j) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.13 (including by the payment of additional amounts pursuant to this Section 2.13), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.13 with respect to Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 2.13(j) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority, other than any penalties, interest or other charges resulting from any bad faith, negligence or willful misconduct of such indemnified party) in the event that such indemnified party is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

SECTION 2.14. Payments Generally .

(a) Unless otherwise specified herein, the Borrower shall make each payment required to be made by it hereunder (including under Section 2.12, 2.13, 2.16, or otherwise) prior to 1:00 p.m., Local Time, on the date when due and in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York, or at such other office as directed by the Administrative Agent, except that payments pursuant to Sections 2.12, 2.13, 2.16 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute in like funds any such payments received by for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in the currency in which the applicable payment obligation is due. If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

(b) If any Lender shall, by exercising any right of counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans hereunder resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans under a Facility and accrued interest thereon than the proportion received by any other Lender within such Facility, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders within such Facility to the extent necessary so that the benefit of all such payments made under such Facility shall be shared by the Lenders within such Facility ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(c) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment from the Borrower is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Federal Funds Effective Rate.

(d) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(b) or 2.14(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.15. Replacement of Lenders . If any Lender requests compensation, or is entitled to payments, under Section 2.12 or Section 2.13 or is affected in the manner described in Section 2.17 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 2.12 or Section 2.13(g), or if any Lender is a Defaulting Lender, then the Borrower may, at its sole expense and effort (in the case of a claim for compensation under, or payments pursuant to, Section 2.12 or Section 2.13 or in the case of illegality under Section 2.17) or at the expense and effort of any such Defaulting Lender, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld or delayed, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under, or payments pursuant to, Section 2.12 or Section 2.13 or from illegality under Section 2.17, such assignment will result in a reduction in such compensation or payments or eliminate the illegality, as the case may be. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.16. Break Funding Payments . In the event of (a) the payment of any principal of any Non-Prime Loan other than on the last day of the Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice is permitted to be revocable under Section 2.08(b) and is revoked in accordance herewith), or (d) the assignment of any Non-Prime Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.15, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Non- Prime Loan, the loss to any Lender attributable to any such event shall be deemed to include an amount reasonably determined by such Lender to be equal to the excess, if any, of (i) the amount of interest that such Lender would pay for a deposit equal to the principal amount of such Loan for the period from the date of such payment, conversion, failure or assignment to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow, convert or continue, the duration of the Interest Period that would have resulted from such borrowing, conversion or continuation) if the interest rate payable on such deposit were equal to the Eurodollar Rate for such Interest Period, over (ii) the amount of interest (as reasonably determined by such Lender) that such Lender would earn on such principal amount for such period if such Lender were to invest such principal amount for such period at the interest rate that would be bid by such Lender (or an affiliate of such Lender) for deposits in the relevant currency from other banks in the eurocurrency market at the commencement of such period. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 15 days after receipt thereof.

SECTION 2.17. Illegality . Notwithstanding any other provision herein, if the adoption of or any change in Applicable Law or regulation or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Non-Prime Loans as contemplated by this Agreement, (a) the Commitment of such Lender hereunder to make Non-Prime Loans, continue Non-Prime Loans as such and convert Prime Loans into Non-Prime Loans shall forthwith be canceled and (b) such Lender’s Loans then outstanding as Non-Prime Loans, if any, shall be converted automatically to Prime Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion or repayment of a Non-Prime Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 2.16. If circumstances subsequently change so that any affected Lender shall determine that it is no longer so affected, such Lender will promptly notify the Borrower and the Administrative Agent, and upon receipt of such notice, the obligations of such Lender to make or continue Non-Prime Loans or to convert Prime Loans into Non-Prime Loans shall be reinstated.

ARTICLE III

REPRESENTATIONS OF BORROWER

The Borrower represents for and as to itself as follows:

(a) The Borrower has been duly organized and is validly existing and, if applicable, in good standing under the laws of the jurisdiction of its organization, and the Borrower has all requisite power and authority to conduct its business, to own its properties and to execute, deliver and perform its obligations under this Agreement.

(b) The execution, delivery and performance by the Borrower of this Agreement (i) has been duly authorized by all necessary corporate action and (ii) does not and will not violate any provision of any law or regulation, or contractual or corporate restrictions, in each case, binding on the Borrower and material to the Borrower and its Subsidiaries, taken as a whole (except to the extent such violation would not reasonably be expected to have a Material Adverse Effect).

(c) This Agreement constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, subject however to (i) the exercise of judicial discretion in accordance with general principles of equity and (ii) bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted.

(d) The proceeds of the Loans made to the Borrower shall not be used for a purpose which violates Regulation U.

(e) As of the date hereof, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending against the Borrower or, to the knowledge of the Borrower, threatened by or against, the Borrower or any Subsidiary or against any of their respective properties or revenues (i) with respect to this Agreement or any of the transactions contemplated hereby or (ii) that could reasonably be expected to have a Material Adverse Effect.

(f) (i) The consolidated balance sheet of the Borrower and its statements of income, stockholders equity and cash flows as of and for the fiscal year ended December 31, 2017, reported on by KPMG LLP, independent public accountants, as filed with the Securities and Exchange Commission, present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP; and (ii) since December 31, 2017, to the date hereof, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect with respect to the Borrower and its Subsidiaries, taken as a whole.

(g) The Borrower maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. The Borrower and its Subsidiaries and, to the knowledge of the Borrower, their respective directors, officers, employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects, and no action, suit or proceeding by or before any Governmental Authority involving the Borrower or any of its Subsidiaries with respect to Anti-Corruption Laws or Sanctions is pending or, to the best knowledge of the Borrower, threatened. None of the Borrower or any Subsidiary nor, to the knowledge of the Borrower or such Subsidiary, any of their respective directors, officers or employees or any of their respective agents that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No part of the proceeds of the Loans or the Transactions will be used by the Borrower in violation of Anti-Corruption Laws or applicable Sanctions.

(h) The Borrower maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with the Anti-Money Laundering Laws. The operations of the Borrower and its Subsidiaries are in compliance in all material respects with the Bank Secrecy Act and implementing regulations and the applicable anti-money laundering statutes of jurisdictions where the Borrower and its Subsidiaries conduct business, and the rules and regulations thereunder (collectively, the “ Anti-Money Laundering Laws ”), and no action, suit or proceeding by or before any Governmental Authority involving the Borrower or any of its Subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of the Borrower, threatened.

(i) Except, in each case, as would not reasonably be expected to have a Material Adverse Effect, (i) the Plan is in compliance with the applicable provisions of ERISA, the Code and other applicable federal or state laws, (ii) there are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to the Plan, and (iii) no ERISA Event has occurred.

(j) Except as which would not otherwise have a Material Adverse Effect, to the knowledge of the Borrower, the Borrower is in compliance with all Environmental Laws, which compliance includes obtaining, maintaining and complying with all permits, licenses and other authorizations required by such Environmental Laws. This paragraph (j) shall constitute the sole and exclusive representation and warranty regarding environmental matters, including those under or related to Environmental Laws.

(k) The Borrower is not required to be registered as an “investment company” as defined in the Investment Company Act of 1940, as amended.

(l) The Borrower is not an EEA Financial Institution.

ARTICLE IV

CONDITIONS

SECTION 4.01. Closing Date . The obligations of the Lenders to make Loans hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02) (such date, the “ Closing Date ”):

(a) The Administrative Agent (or its counsel) shall have received from each Lender, either (i) a counterpart of this Agreement signed on behalf of such party or parties or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party or parties have signed a counterpart of this Agreement.

(b) The Administrative Agent shall have received the favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Closing Date) of (i) in-house counsel for the Borrower and (ii) Weil, Gotshal & Manges LLP, counsel to the Borrower. The Borrower hereby requests such counsel to deliver such opinions.

(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and, if applicable, good standing of the Borrower, the authorization of the Transactions and any other legal matters relating to the Borrower, this Agreement or the Transactions, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

(d) The Administrative Agent shall have received satisfactory evidence that the Bilateral Credit Facilities have been terminated.

(e) The Borrower shall have executed and delivered a satisfactory authorization letter dated as of the date hereof.

The Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02).

SECTION 4.02. Each Credit Event . The obligation of each Lender to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions:

(a) the representations of the Borrower set forth in this Agreement (except for the representations set forth in clauses (e) and (f) of Article III) shall be true and correct in all material respects on and as of the date of such Borrowing; and

(b) at the time of and immediately after giving effect to such Borrowing no Default or Event of Default shall have occurred and be continuing.

Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.

ARTICLE V

AFFIRMATIVE COVENANTS

The Borrower hereby agrees that, so long as the Commitments remain in effect or any Loan or other amount is owing to any Lender or the Administrative Agent hereunder, the Borrower shall:

SECTION 5.01. Financial Statements and Notices . Furnish to the Administrative Agent and each Lender:

(a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the audited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such year and the related audited consolidated statements of income and of cash flows for such year, reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, by KPMG LLP or other independent certified public accountants of nationally recognized standing;

(b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such quarter and the portion of the fiscal year through the end of such quarter;

All such financial statements shall be complete and correct in all material respects and shall be prepared in accordance with GAAP. Timely filing of such statements with the Securities and Exchange Commission shall constitute compliance with this Article V; provided that the Borrower agrees to provide hard copies of such statements to any Lender upon the reasonable request of such Lender made to 901 Main Avenue, Norwalk, CT 006851, Attention of General Counsel (Telecopy No. 203-357-3490).

ARTICLE VI

NEGATIVE COVENANTS

The Borrower hereby agrees that, so long as the Commitments remain in effect or any Loan or other amount is owing to any Lender or the Administrative Agent hereunder:

SECTION 6.01. Fundamental Changes . The Borrower shall not consolidate with or merge into any other person or convey, transfer or lease its properties and assets substantially as an entirety to any person or persons, unless:

(a) the person formed by such consolidation or into which the Borrower is merged or the person which acquires by conveyance or transfer, or which leases, the properties and assets of the Borrower substantially as an entirety shall be a corporation, partnership, trust or other entity, and shall expressly assume, by an amendment or joinder supplemental hereto, executed and delivered to the Administrative Agent, in form satisfactory to the Administrative Agent, the due and punctual payment of the principal of and any interest or other expenses on all the Loans and the performance or observance of every covenant of this Agreement or the Fee Letter on the part of the Borrower to be performed or observed;

(b) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and

(c) the Borrower (or such person so assuming the obligations of the Borrower) have delivered to the Administrative Agent and the Lenders such customary certificates, opinions or supplemental agreements, including as to authority and enforceability of any joinder, supplement or amendment documentation reasonably requested by the Administrative Agent, each in form and substance reasonably satisfactory to the Administrative Agent.

ARTICLE VII

EVENTS OF DEFAULT

If any of the following events (“ Events of Default ”) shall occur:

(a) the Borrower shall fail to pay when due any principal of any Loan made to it;

(b) the Borrower shall fail to pay (i) any interest on any Loan or (ii) any fee payable under Section 2.09, and such failure shall not be cured within fifteen days after receipt by the Borrower of notice of such failure from the Administrative Agent;

(c) if (x) a default shall occur in respect of any other Indebtedness of the Borrower in an aggregate principal amount of $100,000,000 or more and such default causes acceleration thereof or (y) any event or condition occurs that results in the Syndicated Credit Facility becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the lenders thereunder or any agent on their behalf to cause the Syndicated Credit Facility to become due prior to its scheduled maturity;

(d) bankruptcy, reorganization, insolvency, receivership, or similar proceedings are instituted by or against the Borrower, and, if instituted against the Borrower, are not vacated within 60 days;

(e) the Borrower makes a general assignment for the benefit of creditors;

(f) the Borrower is unable to pay its debts generally as they become due and admits expressly such inability in writing;

(g) any representation or warranty made in writing or deemed made by or on behalf of the Borrower in or in connection with this Agreement, or in any report, certificate, financial statement or other document furnished in connection with this Agreement, shall prove to have been incorrect in any material respect when made or deemed made; or

(h) the Borrower shall fail to observe or perform Section 6.01;

(i) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clauses (a), (b) and (h) of this Article), and such failure shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent or the Required Lenders to the Borrower,

then, and in every such event (other than an event with respect to the Borrower described in clause (d) or (e) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (d) or (e) of this Article, the Commitments shall automatically terminate and the principal of the Loans of the Borrower then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

ARTICLE VIII

THE ADMINISTRATIVE AGENT

Each of the Lenders hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto. The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.

The Administrative Agent shall not have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing by the Required Lenders, and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders or all the Lenders, as the case may be, or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and reasonably believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right, with the written consent of the Borrower (so long as no Event of Default exists), to appoint a successor. If no successor shall have been so appointed by the Required Lenders with any requisite consent of the Borrower and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York that has a combined capital and surplus of at least $500,000,000, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent. Notwithstanding anything to the contrary herein, no Disqualified Institution (nor any Affiliate thereof) may be appointed as a successor Administrative Agent

Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder.

Anything herein to the contrary notwithstanding, the Lead Arrangers, the Co-Administrative Agents and the Syndication Agents shall not, in such capacities, have any powers, duties or responsibilities under this Agreement.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01. Notices . Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing (including by electronic transmission) and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy or email with PDF attachment (unless any party has previously notified the other parties hereto that it does not wish to receive notices by email), as follows:

(a) if to the Borrower, to it at 901 Main Avenue, Norwalk, CT 006851, Attention of Vice President and Treasurer (Telecopy No. 203-585-1191);

(b) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., JPMorgan Loan Services, 500 Stanton Christiana Road, NCC 5, 1st Floor, Newark, DE 19713, Attention of Jane Dreisbach (Telecopy No. 302-634-8459), email: jane.dreisbach@jpmorgan.com, with a copy to: JPMorgan Chase Bank, N.A., 383 Madison Avenue, New York, NY 10179, Attention of Gene R. Riego de Dios (Telecopy No. 212-270-5100), email: gene.r.riegodedios@jpmorgan.com; and

(c) if to any other Lender, to it at its address (or telecopy number or email) set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

SECTION 9.02. Waivers; Amendments . Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that (A) no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) amend, modify or waive Sections 2.01 or 2.08 (or any definitions used therein) without the consent of each Original Lender; provided , at the time of such amendment, modification or waiver, such Original Lender is a Lender, (v) change any of the provisions of this Section, Section 2.14(b), the definition of “Required Lenders”, or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender, or (vi) change the definition of “Required Delayed Draw Lenders” or “Required Revolving Lenders”, without the written consent of each Lender holding a Delayed Draw Term Loan and/or Delayed Draw Term Commitment (in the case of the definition of “Required Delayed Draw Lenders”) or each Lender holding a Revolving Loan and/or Revolving Commitments (in the case of the definition of “Required Revolving Lender”), (B) solely with the consent of the Required Revolving Lenders (but without the necessity of obtaining the consent of the Required Lenders or any other Lender), waive, amend or modify any condition precedent to a Revolving Loan and (C) solely with the consent of the Required Delayed Draw Lenders (but without the necessity of obtaining the consent of the Required Lenders or any other Lender), waive, amend or modify any condition precedent to a Delayed Draw Term Loan; provided , further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent hereunder without the prior written consent of the Administrative Agent. If the Administrative Agent and the Borrower acting together identify any ambiguity, omission, mistake, typographical error or other defect in any provision of this Agreement, then the Administrative Agent and the Borrower shall be permitted to amend, modify or supplement such provision to cure such ambiguity, omission, mistake, typographical error or other defect, and such amendment shall become effective without any further action or consent of any other party to this Agreement if the same is not objected to in writing by the Required Lenders within five Business Days of receipt of notice thereof.

SECTION 9.03. Expenses; Indemnity . (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Lead Arrangers, the Administrative Agent and their respective Affiliates, including the reasonable fees, charges and disbursements of a single counsel for the Lead Arrangers and the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement and any amendments, modifications or waivers of the provisions hereof and (ii) all reasonable out-of-pocket expenses incurred by the Administrative Agent or any Lender, including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent or the Lenders, in connection with the enforcement or protection of its rights in connection with this Agreement.

(a) The Borrower shall indemnify the Lead Arrangers, the Co-Administrative Agents, the Syndication Agents, the Administrative Agent and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or the performance by the parties hereto of their respective obligations hereunder, (ii) any Loan or the use of the proceeds therefrom or (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses have resulted from the gross negligence or willful misconduct of such Indemnitee, in each case, as determined by a final, non-appealable judgment of a court of competent jurisdiction. It is understood and agreed that, to the extent not precluded by a conflict of interest, each Indemnitee shall endeavor to work cooperatively with the Borrower with a view toward minimizing the legal and other expenses associated with any defense and any potential settlement or judgment. To the extent reasonably practicable and not disadvantageous to any Indemnitee, it is anticipated that a single counsel selected by the Borrower may be used. Settlement of any claim or litigation involving any material indemnified amount will require the approvals of the Borrower (not to be unreasonably withheld or delayed) and the relevant Indemnitee (not to be unreasonably withheld or delayed). This Section 9.03(b) shall not apply with respect to Taxes other than Taxes that represent loses or damages arising from any non-Tax claim.

SECTION 9.04. Successors and Assigns .

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, the Lead Arrangers, the Co-Administrative Agents, the Syndication Agents and, to the extent expressly contemplated hereby, the Related Parties of each of the Lead Arrangers, the Co-Administrative Agents, the Syndication Agents, the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Any Lender other than any Conduit Lender may assign to one or more assignees (other than a Disqualified Institution, natural person or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural person) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) each of the Administrative Agent and, except in the case of an assignment to a Lender or an Affiliate of a Lender, the Borrower must give its prior written consent to such assignment (such consents not to be unreasonably withheld); provided , however, that Goldman Sachs Bank USA or Goldman Sachs Lending Partners LLC, each as a Lender hereunder, may assign its rights and obligations hereunder to Goldman Sachs Lending Partners LLC or Goldman Sachs Bank USA, respectively, without the consent of the Administrative Agent, (ii) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of an entire remaining amount of the assigning Lender’s Commitment, the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consents, (iii) each partial assignment of a Lender’s rights and obligations under a Facility shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under such Facility, (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 payable by the assignor or the assignee, (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and (vi) the assignee, if applicable, shall, prior to the first date on which interest or fees are payable hereunder for its account, deliver to the Borrower and the Administrative Agent the documentation described in Section 2.13(e); provided , further that any consent of the Borrower otherwise required under this paragraph shall not be required if an Event of Default has occurred and is continuing. Upon acceptance and recording pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.12, 2.13, 2.16, and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section. Notwithstanding the foregoing, any Conduit Lender may assign at any time to its designating Lender hereunder without the consent of the Borrower or the Administrative Agent any or all of the Loans it may have funded hereunder and pursuant to its designation agreement and without regard to the limitations set forth in the first sentence of this Section 9.04(b).

(c) (c) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by any Lender at any reasonable time and from time to time upon reasonable prior notice.

(d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(e) Any Lender other than any Conduit Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (other than a Disqualified Institution, natural person or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural person) (each, a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02 that affects such Participant. Subject to paragraph (f) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.12, 2.13 and 2.16 to the same extent and subject to the same conditions as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section at the time of the participation. Each Lender that sells a participation, acting solely for tax purposes as a non-fiduciary agent of the Borrower, shall maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant in the Loans or other obligations under this Agreement (the “ Participant Register ”); provided that, except as set forth in the penultimate sentence of this Section 9.04(e), no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Loans or its other obligations hereunder) to any Person except to the extent that such disclosure is necessary to establish that such Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender, each Loan Party and the Administrative Agent shall treat such person whose name is recorded in the Participant Register pursuant to the terms hereof as the owner of such participation for all purposes of this Agreement, notwithstanding notice to the contrary. In consideration of this Section 9.04(e), the Participant Register shall be available for inspection by the Borrower upon reasonable request and prior notice, provided that the Borrower in good faith determines it is necessary or appropriate to access the Participant Register in order to establish that the Loans and other obligations are in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.

The Borrower shall keep any information obtained from the Participant Register confidential, except to the extent that a taxing authority requires disclosure for the sole purpose of establishing that the Loans and other obligations are in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.

(f) A Participant shall not be entitled to receive any greater payment under Section 2.12 or 2.13 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant shall not be entitled to the benefits of Section 2.13 unless the Borrower is notified of the Participation sold to such Participant and such Participant complies with Section 2.13 as though it were a Lender.

(g) Any Lender other than any Conduit Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any such pledge or assignment to a Federal Reserve Bank or any other central bank having jurisdiction over such Lender, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall (i) release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto and (ii) be made to a Disqualified Institution, natural person or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural person.

(h) The Borrower, each Lender and the Administrative Agent hereby confirms that it will not institute against a Conduit Lender or join any other Person in instituting against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any state bankruptcy or similar law, for one year and one day after the payment in full of the latest maturing commercial paper note issued by such Conduit Lender; provided , however, that each Lender designating any Conduit Lender hereby agrees to indemnify, save and hold harmless each other party hereto for any loss, cost, damage or expense arising out of its inability to institute such a proceeding against such Conduit Lender during such period of forbearance.

(i) The Loans (including the notes evidencing such Loans) are registered obligations, and the right, title, and interest of the Lenders and their assignees in and to such Loans shall be transferable only upon notation of such transfer in the Register. A note shall only evidence the Lender’s or an assignee’s right, title and interest in and to the related Loan, and in no event is any such note to be considered a bearer instrument or obligation not in “registered form” within the meaning of Section 163(f) of the Code. This Section 9.04 shall be construed so that the Loans are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related regulations (or any successor provisions of the Code or such regulations). For purposes of Treasury Regulation Section 5f.103-1(c) only, the Administrative Agent shall act as the Borrower’s agent for purposes of maintaining such notations of transfer in the Register and each applicable Lender shall act as the Borrower’s agent for purposes of maintaining notations in the Participant Register. Nothing in this Section 9.04 is intended to alter the U.S. federal income tax withholding and reporting obligations that would exist between any Administrative Agent and any Lender or between any Lender and any Participant in the absence of this Section 9.04 pursuant to Section 2.13(i) or as otherwise required by Law.

SECTION 9.05. Counterparts; Integration; Effectiveness . This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and any separate letter agreements with respect to fees payable to the Lead Arrangers and the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or email with PDF attachment shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 9.06. Governing Law; Jurisdiction .

(a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

SECTION 9.07. Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 9.08. Confidentiality . Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority or any credit insurance provider, (c) to the extent required by Applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations hereunder, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower. For the purposes of this Section, “Information” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Notwithstanding anything to the contrary herein, each of the Administrative Agent and the Lenders agree that it will not disclose any Information to a Disqualified Institution.

SECTION 9.09. WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

SECTION 9.10. Judgment Currency .

(a) If for the purpose of obtaining judgment in any court it is necessary to convert a sum due hereunder in one currency into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency in the city in which it normally conducts its foreign exchange operation for the first currency on the Business Day preceding the day on which final judgment is given

(b) The obligation of the Borrower in respect of any sum due from it to any Lender hereunder shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “ Agreement Currency ”), be discharged only to the extent that on the Business Day following receipt by such Lender of any sum adjudged to be so due in the Judgment Currency such Lender may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency; if the amount of Agreement Currency so purchased is less than the sum originally due to such Lender in the Agreement Currency, the Borrower agrees notwithstanding any such judgment to indemnify such Lender against such loss, and if the amount of the Agreement Currency so purchased exceeds the sum originally due to any Lender, such Lender agrees to remit to the Borrower such excess.

SECTION 9.11. USA PATRIOT Act . Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Act ”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Act. The Borrower shall promptly provide such information upon request by any Lender.

SECTION 9.12. No Fiduciary Duty . The Administrative Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “ Lenders ”), may have economic interests that conflict with those of the Borrower, their stockholders and/or their affiliates. The Borrower agrees that nothing in this Agreement and any related documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and the Borrower, its stockholders or its affiliates, on the other. The Borrower acknowledges and agrees that (i) the transactions contemplated by this Agreement and any related documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Borrower, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of the Borrower, its stockholders or its affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise the Borrower, its stockholders or its Affiliates on other matters) or any other obligation to the Borrower except the obligations expressly set forth in this Agreement and any related documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of the Borrower, its management, stockholders, creditors or any other Person. The Borrower acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. The Borrower agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower, in connection with such transaction or the process leading thereto.

SECTION 9.13. Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contrary in this Agreement or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under this Agreement may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b) the effects of any Bail-In Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement; or

(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

BORROWER
GENERAL ELECTRIC COMPANY

By: Jennifer VanBelle
Title: Vice President and Treasurer

JPMORGAN CHASE BANK, N.A., as Administrative Agent and as a Lender

_________________________________
By: Gene R. Riego de Dios
Title: Executive Director

Citibank N.A, as a Lender

_________________________________
By: Brian Reed
Title: Vice President

BANK OF AMERICA N.A, as a Lender

_________________________________
By: Mukesh Singh
Title: Director

BNP Paribas , as a Lender

_________________________________
By: Raquel Latuff
Title: Managing Director

_________________________________
By: Andrew W. Strait
Title: Managing Director

GOLDMAN SACHS BANK USA , as a Lender

_________________________________
By: Charles D. Johnston
Title: Authorized Signatory

GOLDMAN SACHS LENDING PARTNERS LLC, as a Lender

_________________________________
By: Charles D. Johnston
Title: Authorized Signatory

MORGAN STANLEY SENIOR FUNDING, INC., as a Lender

_________________________________
By: Michael King
Title: Vice President

Schedule 2.01

Commitments



Lender	Delayed Draw Commitment	Revolving Commitment	Total Commitments
JPMorgan Chase Bank, N.A.	$875,000,000	$2,625,000,000	$3,500,000,000
Citibank, N.A.	$875,000,000	$2,625,000,000	$3,500,000,000
Bank of America, N.A.	$875,000,000	$2,625,000,000	$3,500,000,000
Goldman Sachs Bank USA	-	$2,350,000,000	$2,350,000,000
Goldman Sachs Lending Partners LLC	$875,000,000	$275,000,000	$1,150,000,000
Morgan Stanley Senior Funding, Inc.	$875,000,000	$2,625,000,000	$3,500,000,000
BNP Paribas	$575,000,000	$1,725,000,000	$2,300,000,000


Total	$4,950,000,000	$14,850,000,000	$19,800,000,000

EXHIBIT A

FORM OF ASSIGNMENT AND ACCEPTANCE

Reference is made to the Credit Agreement dated as of June 22, 2018 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “ Credit Agreement ”), among General Electric Company and the Lenders named therein. Terms defined in the Credit Agreement are used herein with the same meanings. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Acceptance as if set forth herein in full.

The Assignor named below hereby sells and assigns, without recourse, to the Assignee named below, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, effective as of the Assignment Date set forth below, the interests set forth below (the “ Assigned Interest ”) in the Assignor’s rights and obligations under the Credit Agreement, including, without limitation, the interests set forth below in the Commitment of the Assignor on the Assignment Date and Loans owing to the Assignor which are outstanding on the Assignment Date, but excluding accrued interest and fees to and excluding the Assignment Date. The Assignee hereby acknowledges receipt of a copy of the Credit Agreement. From and after the Assignment Date (i) the Assignee shall be a party to and be bound by the provisions of the Credit Agreement and, to the extent of the Assigned Interest, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of the Assigned Interest, relinquish its rights and be released from its obligations under the Credit Agreement.

This Assignment and Acceptance is being delivered to the Administrative Agent together with (i) if applicable, any documentation required to be delivered by the Assignee pursuant to Section 2.13(e) or (f) of the Credit Agreement, duly completed and executed by the Assignee, and (ii) if the Assignee is not already a Lender under the Credit Agreement, an Administrative Questionnaire in the form supplied by the Administrative Agent, duly completed by the Assignee. The [Assignee/Assignor] shall pay the fee payable to the Administrative Agent pursuant to Section 9.04(b) of the Credit Agreement.

THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Date of Assignment:

Legal Name of Assignor:

Legal Name of Assignee:

Assignee’s Address for Notices:

Effective date of Assignment
(“ Assignment Date ”):



Facility Assigned	Principal Amount Assigned:	Loan assigned (indicate the applicable Eurodollar Loan Spread and the applicable Prime Loan Spread)	Percentage Assigned (set forth, to at least 8 decimals, as a percentage of the aggregate Commitments/Loans of all Lenders thereunder)
[Delayed Draw Term Commitment] / [Revolving Commitment] Assigned	$
[Delayed Draw Term Loan] / [Revolving Loan] Assigned

The terms set forth above are hereby agreed to:

[Name of Assignor], as Assignor


By:	Name: Title:

[Name of Assignor], as Assignee


By:	Name: Title:

The undersigned hereby consent to the within assignment:

[GENERAL ELECTRIC COMPANY


By:	Name: Title:]

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent


By:	Name: Title:

ANNEX 1

STANDARD TERMS AND CONDITIONS
FOR ASSIGNMENT AND ACCEPTANCE

1. Representations and Warranties .

1.1 Assignor . The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement.

1.2. Assignee . The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Assignment Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Article V thereof, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, (v) if it is a non-U.S. Lender, attached to the Assignment and Acceptance is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee and (vi) it is not a Disqualified Institution and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

2. Payments . From and after the Assignment Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Assignment Date and to the Assignee for amounts which have accrued from and after the Assignment Date.

3. General Provisions . This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Acceptance may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by email or telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. This Assignment and Acceptance shall be governed by, and construed in accordance with, the law of the State of New York.

EXHIBIT B-1

FORM OF INCREASED FACILITY ACTIVATION NOTICE


To:	JPMorgan Chase Bank, N.A., as Administrative Agent under the Credit Agreement referred to below

Reference is hereby made to the Credit Agreement dated as of June 22, 2018 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “ Credit Agreement ”; terms defined therein being used herein as therein defined unless otherwise defined), among General Electric Company and the Lenders named therein.

This notice is an Increased Facility Activation Notice referred to in Section 2.01(b)(i) of the Credit Agreement, and the Borrower and each of the Lenders party hereto hereby notify you that:

1. Each Lender party hereto agrees to make, obtain or increase the amount of its Commitment as set forth opposite such Lender’s name on the signature pages hereof under the caption “ Increased Facility Amount ”.

2. The Increased Facility Closing Date is .

GENERAL ELECTRIC COMPANY


By:	Name: Title:

[INSERT NAME OF LENDER]


By:	Name: Title:

Increased Facility Amount

CONSENTED TO:

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent


By:	Name: Title:

EXHIBIT B-2

FORM OF NEW LENDER SUPPLEMENT

SUPPLEMENT, dated as of [ ], to the Credit Agreement dated as of June 22, 2018 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “ Credit Agreement ”; terms defined therein being used herein as therein defined unless otherwise defined), among General Electric Company and the Lenders named therein.

W I T N E S S E T H :

WHEREAS, the Credit Agreement provides in Section 2.01(b)(ii) thereof that any bank, financial institution or other entity may become a party to the Credit Agreement as a Lender with the consent of the Borrower and the Administrative Agent by executing and delivering to the Borrower and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and

WHEREAS, the undersigned now desires to become a party to the Credit Agreement as a Lender;

NOW, THEREFORE, the undersigned hereby agrees as follows:

1. The undersigned agrees to be bound by the provisions of the Credit Agreement, and agrees that it shall, on the date this Supplement is accepted by the Borrower and the Administrative Agent, become a Lender for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with a Commitment of $ .

2. The undersigned (a) represents and warrants that it is legally authorized to enter into this Supplement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in clause (f) of Article III thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (c) agrees that it has made and will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including its obligations pursuant to Section 2.13(e) and (f) of the Credit Agreement.

IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.

[INSERT NAME OF LENDER]


By:	Name: Title:

Accepted this ______day of
__________. ______

GENERAL ELECTRIC COMPANY


By:	Name: Title:

Accepted this ______day of
__________. ______

JPMORGAN CHASE BANK, N.A., as Administrative Agent


By:	Name: Title:

EXHIBIT C-1

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE
(For Non-U.S. Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement dated as of June 22, 2018 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among General Electric Company and each lender from time to time party thereto.

Pursuant to the provisions of Section 2.13(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Administrative Agent, and (2) the undersigned shall have at all times furnished the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]


By:	Name: Title:

Date: _________, 20[ ]

EXHIBIT C-2

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 2.13(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code,

(iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF PARTICIPANT]


By:	Name: Title:

Date: _________, 20[ ]

EXHIBIT C-3

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 2.13(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF PARTICIPANT]


By:	Name: Title:

Date: _________, 20[ ]

EXHIBIT C-4

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE
(For Non-U.S. Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 2.13(e) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Administrative Agent, and (2) the undersigned shall have at all times furnished the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]


By:	Name: Title:

Date: _________, 20[ ]

WEIL:\96583134\14\47890.0321



Exhibit 12(a)

General Electric Company
Computation of Ratio of Earnings to Fixed Charges
Six months ended June 30, 2018
(Unaudited)

(Dollars in millions)

General Electric Company and consolidated affiliates
Earnings(a)	$	1,960
Plus:
Interest and other financial charges included in expense(b)	2,615
One-third of rental expense(c)	243
Adjusted "earnings"	$	4,818

Fixed charges:
Interest and other financial charges included in expense(b)	$	2,615
Interest capitalized	27
One-third of rental expense(c)	243
Total fixed charges	$	2,885

Ratio of earnings to fixed charges	1.67


(a)	Earnings before income taxes, noncontrolling interests, discontinued operations and undistributed earnings of equity investees.


(b)	Included interest on tax deficiencies and interest on discontinued operations.


(c)	Considered to be representative of interest factor in rental expense.



Exhibit 12(b)

General Electric Company
Computation of Ratio of Earnings to Fixed Charges and
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
Six months ended June 30, 2018
(Unaudited)

(Dollars in millions)

General Electric Company and consolidated affiliates
Earnings(a)	$	1,960
Plus:
Interest and other financial charges included in expense(b)	2,615
One-third of rental expense(c)	243
Adjusted "earnings"	$	4,818

Fixed charges:
Interest and other financial charges included in expense(b)	$	2,615
Interest capitalized	27
One-third of rental expense(c)	243
Total fixed charges	$	2,885

Ratio of earnings to fixed charges	1.67

Preferred stock dividend requirements	$	222

Ratio of earnings before provision for
income taxes to earnings from
continuing operations	1.48

Preferred stock dividend factor on pre-tax basis	$	328
Fixed charges	2,885

Total fixed charges and preferred stock
dividend requirements	$	3,213

Ratio of earnings to combined fixed
charges and preferred stock dividends	1.50


(a)	Earnings before income taxes, noncontrolling interests, discontinued operations and undistributed earnings of equity investees.


(b)	Included interest on tax deficiencies and interest on discontinued operations.


(c)	Considered to be representative of interest factor in rental expense.

Exhibit 31(a)

Certification Pursuant to
Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended

I, John L. Flannery, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of General Electric Company;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 27, 2018

/s/ John L. Flannery

John L. Flannery

Chief Executive Officer

Exhibit 31(b)

Certification Pursuant to
Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended

I, Jamie S. Miller, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of General Electric Company;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 27, 2018

/s/ Jamie S. Miller

Jamie S. Miller

Chief Financial Officer

Exhibit 32

Certification Pursuant to
18 U.S.C. Section 1350

In connection with the Quarterly Report of General Electric Company (the “registrant”) on Form 10-Q for the period ended June 30, 2018 , as filed with the Securities and Exchange Commission on the date hereof (the “report”), we, John L. Flannery and Jamie S. Miller, Chief Executive Officer and Chief Financial Officer, respectively, of the registrant, certify, pursuant to 18 U.S.C. § 1350, that to our knowledge:


(1)	The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(2)	The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

July 27, 2018

/s/ John L. Flannery

John L. Flannery

Chief Executive Officer

/s/ Jamie S. Miller

Jamie S. Miller

Chief Financial Officer

Exhibit 95

Mine Safety Disclosure

The following disclosures are provided pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K, which require certain disclosures by companies required to file periodic reports under the Securities Exchange Act of 1934, as amended, that operate mines regulated under the Federal Mine Safety and Health Act of 1977.

The table that follows reflects citations, orders, violations and proposed assessments issued by the Mine Safety and Health Administration (the “MSHA”) for each mine of which Baker Hughes, a GE company and/or its subsidiaries is an operator. The disclosure is with respect to the three months ended June 30, 2018. Due to timing and other factors, the data may not agree with the mine data retrieval system maintained by the MSHA at www.MSHA.gov.

Three Months Ended June 30, 2018



Mine or Operating Name/MSHA Identification Number	Section 104 S&S Citations	Section 104(b) Orders	Section 104(d) Citations and Orders	Section 110(b)(2) Violations	Section 107(a) Orders	Proposed MSHA Assessments (1)		Mining Related Fatalities	Received Notice of Pattern of Violations Under Section 104(e) (yes/no)	Received Notice of Potential to Have Pattern Under Section 104(e) (yes/no)	Legal Actions Pending as of Last Day of Period	Legal Actions Initiated During Period	Legal Actions Resolved During Period
Morgan City Grinding Plant/1601357	0	0	0	0	0	$	—	0	N	N	0	0	0
Argenta Mine and Mill/2601152	1	0	0	0	0	$	—	0	N	N	0	0	0
Corpus Christi Grinding Plant/4103112	0	0	0	0	0	$	—	0	N	N	0	0	0

⁽¹⁾

Amounts included are the total dollar value of proposed assessments received from MSHA during the three months ended June 30, 2018, regardless of whether the assessment has been challenged or appealed. Citations and orders can be contested and appealed, and as part of that process, are sometimes reduced in severity and amount, and sometimes dismissed. The number of citations, orders, and proposed assessments vary by inspector and also vary depending on the size and type of the operation.