New York
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14-0689340
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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41 Farnsworth Street, Boston, MA
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02210
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(617) 443-3000
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(Address of principal executive offices)
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(Zip Code)
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(Telephone No.)
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Securities Registered Pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each exchange on which registered
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Common stock, par value $0.06 per share
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New York Stock Exchange
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Securities Registered Pursuant to Section 12(g) of the Act:
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(Title of class)
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Emerging growth company
¨
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Page
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Forward-Looking Statements
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About General Electric
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Capital Resources and Liquidity
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Non-GAAP Financial Measures
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Risk Factors
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Management and Auditor's Reports
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Audited
Financial Statements and Notes
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Directors, Executive Officers and Corporate Governance
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Exhibits
and Financial Statement Schedules
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Form 10-K Cross Reference Index
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FORWARD-LOOKING STATEMENTS
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•
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our success in executing and completing, including obtaining regulatory approvals and satisfying other closing conditions for, announced GE Industrial and GE Capital business or asset dispositions or other transactions, including the planned sale of our BioPharma business within our Healthcare segment and plans to exit our equity ownership positions in BHGE and Wabtec, the timing of closing for those transactions and the expected proceeds and benefits to GE;
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•
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our strategy and plans for the remaining portion of our Healthcare business, including the structure, form, timing and nature of potential actions with respect to that business in the future and the characteristics of the business going forward;
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•
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our capital allocation plans, as such plans may change including with respect to de-leveraging actions, the timing and amount of GE dividends, organic investments, and other priorities;
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further downgrades of our current short- and long-term credit ratings or ratings outlooks, or changes in rating application or methodology, and the related impact on our liquidity, funding profile, costs and competitive position;
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•
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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;
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•
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GE Capital's capital and liquidity needs, including in connection with GE Capital’s run-off insurance operations, the amount and timing of required capital contributions, strategic actions that we may pursue, WMC-related claims, liabilities and payments, 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;
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•
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customer actions or market developments such as secular and cyclical pressures in our Power business, pricing pressures in the renewable energy market, 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;
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•
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operational execution by our businesses, including our ability to improve the operations and execution of our Power business, and the continued strength of our Aviation business;
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•
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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;
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•
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our decisions about investments in new products, services and platforms, and our ability to launch new products in a cost-effective manner;
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•
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our ability to increase margins through implementation of operational changes, restructuring and other cost reduction measures;
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•
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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;
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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;
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•
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the impact of potential product failures and related reputational effects;
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•
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the impact of potential information technology, cybersecurity or data security breaches;
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the other factors that are described in "Forward-Looking Statements" in BHGE’s most recent earnings release or SEC filings; and
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•
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the other factors that are described in the Risk Factors section of this Form 10-K report.
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ABOUT GENERAL ELECTRIC
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Power
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Oil & Gas
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Lighting
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Renewable Energy
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Healthcare
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Aviation
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Transportation
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Capital
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•
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product development cycles for many of our products are long and product quality and efficiency are critical to success,
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•
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research and development expenditures are important to our business,
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•
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many of our products are subject to a number of regulatory standards and
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•
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changing end markets, including shifts in energy sources and demand and the impact of technology changes. In particular, Power markets have been particularly challenging as
significant overcapacity in the industry has resulted in decreased utilization of our power equipment, lower market penetration, increased price concessions, uncertain timing of deal closures due to financing and the complexities of working in emerging markets as well as increasing energy efficiency and renewable energy penetration. See the Power segment section within MD&A for further information.
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ABOUT GENERAL ELECTRIC
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•
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General Electric or the Company
– the parent company, General Electric Company.
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•
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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).
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•
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General Electric Capital Corporation or GECC
– predecessor to GE Capital Global Holdings, LLC.
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•
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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.
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•
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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.
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•
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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.
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•
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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).
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•
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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.
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•
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Baker Hughes, a GE company or BHGE
– following the combination of our Oil & Gas business with Baker Hughes Incorporated, our Oil & Gas segment comprises our ownership interest of approximately 50.4% 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 49.6% 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.
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•
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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.
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MD&A
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•
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Continuing earnings
– we refer to the caption “earnings from continuing operations attributable to GE common shareowners” as continuing earnings.
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•
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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.”
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•
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GE Cash Flows from Operating Activities (GE CFOA)
- unless otherwise indicated, GE CFOA is from continuing operations.
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•
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GE Industrial profit margin
(GAAP)
– GE total revenues plus other income minus GE total costs and expenses divided by GE total revenues.
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•
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Net earnings (loss)
– we refer to the caption “net earnings attributable to GE common shareowners” as net earnings.
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•
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Net earnings (loss) per share (EPS)
– when we refer to net earnings per share, it is the diluted per-share amount of “net earnings attributable to GE common shareowners.”
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•
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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. See the Non-GAAP Financial measures section within this MD&A for reconciliations.
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•
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Segment profit
– refers to the profit of the industrial segments, which includes other income, and the net earnings of the financial services segment. See the Segment Operations section within the MD&A for a description of the basis for segment profits.
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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.
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•
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Equipment leased to others (ELTO)
– rental equipment we own that is available to rent and is stated at cost less accumulated depreciation.
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•
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Global Growth Organization (GGO
) –
The GGO provides leadership in global markets, particularly within emerging and developing markets. GGO provides regional commercial finance capabilities and customer financing solutions, in collaboration with certain of our GE Capital businesses, and works to build the GE brand and protect GE’s reputation.
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•
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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.
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•
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Orders, backlog and remaining performance obligation (RPO)
– orders are contractual commitments with customers to provide specified goods or services for an agreed upon price. 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.
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•
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Product services agreements
– contractual commitments, with multiple-year terms, to provide specified services for products in our Power, Renewable Energy Aviation, Oil & Gas 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. See Revenues from Services section within Note 1 to the consolidated financial statements for further information.
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•
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Services
– for purposes of the financial statement display of sales and costs of sales in our consolidated 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.
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•
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Shared Services
– sharing of business processes in order to standardize and consolidate services to provide value to the businesses in the form of simplified processes, reduced overall costs and increased service performance.
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MD&A
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KEY PERFORMANCE INDICATORS
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REVENUES PERFORMANCE
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2018 versus 2017
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2017 versus 2016
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Industrial Segment (GAAP)
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2
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%
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1
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%
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Industrial Segment Organic (Non-GAAP)
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—
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%
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(2
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)%
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GE INDUSTRIAL ORDERS AND BACKLOG
(In billions)
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2018
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2017
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2016
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Orders
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||||||
Equipment
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$
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61.9
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$
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57.7
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$
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54.9
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Services(a)
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62.1
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59.1
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54.8
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Total
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$
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124.0
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$
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116.8
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$
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109.7
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||||||
Backlog
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||||||
Equipment
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$
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88.8
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$
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85.1
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$
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83.9
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Services(a)
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302.2
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286.6
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264.0
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|||
Total
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$
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391.0
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$
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371.7
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$
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347.9
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GE INDUSTRIAL COSTS
(In billions)
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2018
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2017
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2016
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|||
GE total costs and expenses (GAAP)
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$
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135.7
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$
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111.7
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$
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105.8
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GE Industrial structural costs (Non-GAAP)
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$
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23.7
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$
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25.2
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$
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25.0
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GE INDUSTRIAL PROFIT MARGIN
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2018
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2017
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2016
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GE Industrial profit margin (GAAP)
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(17.4
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)%
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1.3
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%
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8.2
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%
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Adjusted GE Industrial profit margin (Non-GAAP)
|
9.0
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%
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10.1
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%
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12.5
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%
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EARNINGS
(In billions; per-share in dollars and diluted)
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2018
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2017
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2016
|
|
|||
Continuing earnings (loss) (GAAP)
|
$
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(21.1
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)
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$
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(8.6
|
)
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$
|
7.8
|
|
Net earnings (loss) (GAAP)
|
(22.8
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)
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(8.9
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)
|
6.8
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|||
Adjusted earnings (loss) (Non-GAAP)
|
5.7
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|
8.7
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|
9.4
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|
|||
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||||||
Continuing earnings (loss) per share (GAAP)
|
$
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(2.43
|
)
|
$
|
(0.99
|
)
|
$
|
0.85
|
|
Net earnings (loss) per share (GAAP)
|
(2.62
|
)
|
(1.03
|
)
|
0.75
|
|
|||
Adjusted earnings (loss) per share (Non-GAAP)
|
0.65
|
|
1.00
|
|
1.03
|
|
GE CFOA AND GE INDUSTRIAL FREE CASH FLOWS
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
GE CFOA (GAAP)
|
$
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2.3
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$
|
11.0
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|
$
|
30.0
|
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GE Industrial free cash flows (Non-GAAP)
|
4.8
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|
4.3
|
|
7.1
|
|
|||
Adjusted GE Industrial free cash flows (Non-GAAP)
|
4.5
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|
5.6
|
|
7.1
|
|
FIVE-YEAR PERFORMANCE GRAPH
|
|
MD&A
|
KEY PERFORMANCE INDICATORS
|
|
•
|
On May 21, 2018, we announced an agreement to spin- or split-off and merge our Transportation segment with Wabtec Corporation, a U.S. rail equipment manufacturer. The agreement was subsequently amended on January 25, 2019. On February 25, 2019, we completed the spin-off and subsequent merger. In the transaction, participating GE shareholders received shares of Wabtec common stock representing an approximately 24.3% ownership interest in Wabtec common stock. GE received approximately $2.9 billion in cash as well as shares of Wabtec common stock and Wabtec non-voting convertible preferred stock that, together, represent an approximately 24.9% ownership interest in Wabtec. In addition, GE is entitled to additional cash consideration up to $0.5 billion for tax benefits that Wabtec realizes from the transaction.
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•
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In June 2018, we announced a plan to separate GE Healthcare into a standalone company. On February 25, 2019, we announced an agreement to sell our BioPharma business within our Healthcare segment to Danaher Corporation for total consideration of approximately $21.4 billion, subject to certain adjustments. The transaction is expected to close in the fourth quarter of 2019, subject to regulatory approvals and customary closing conditions. We intend to retain the remaining portion of our Healthcare business which provides us full flexibility for growth and optionality with respect to the business.
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MD&A
|
CONSOLIDATED RESULTS
|
•
|
Pursuant to our announced plan of an orderly separation from BHGE over time, BHGE completed an underwritten public offering in which we sold 101.2 million shares of BHGE Class A common stock. BHGE also repurchased 65 million BHGE LLC units from us. The total consideration received by us from these transactions was $3.7 billion. The transaction closed in November 2018 and, as a result, our economic interest in BHGE reduced from 62.5% to 50.4%
and we recognized a pre-tax loss in equity of $2.2 billion
. See Note 15 to the consolidated financial statements for further information.
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•
|
The sale of our Industrial Solutions business within our Power segment for approximately $2.3 billion to ASEA Brown Boveri (ABB), a Swiss-based engineering company. We recognized a resulting pre-tax gain of $0.3 billion in the second quarter of 2018.
|
•
|
The sale of 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.
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•
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The sale of Energy Financial Services' (EFS) debt origination business within our Capital segment for proceeds of approximately $2.0 billion to Starwood Property Trust, Inc. and recognized a pre-tax gain of approximately $0.3 billion. In addition, we completed the sale of various EFS investments for proceeds of approximately $4.7 billion and recognized an insignificant pre-tax loss.
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•
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The sale of Healthcare Equipment Finance (HEF) financing receivables within our Capital segment for proceeds of approximately $1.6 billion to various buyers, including $1.4 billion to TIAA Bank, a U.S. lender and recognized an insignificant pre-tax loss.
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MD&A
|
CONSOLIDATED RESULTS
|
REVENUES
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
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||||||
Consolidated revenues
|
$
|
121.6
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$
|
118.2
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$
|
119.5
|
|
|
|
|
|
||||||
Industrial segment revenues
|
$
|
115.7
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$
|
113.2
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|
$
|
112.3
|
|
Corporate revenues and Industrial eliminations
|
(2.0
|
)
|
(1.9
|
)
|
(1.7
|
)
|
|||
GE Industrial revenues
|
$
|
113.6
|
|
$
|
111.3
|
|
$
|
110.6
|
|
|
|
|
|
||||||
Financial services revenues
|
$
|
9.6
|
|
$
|
9.1
|
|
$
|
10.9
|
|
REVENUES COMMENTARY: 2018 – 2017
|
•
|
GE Industrial revenues increased
$2.4
billion, or
2%
.
|
•
|
Financial Services revenues increased $
0.5
billion, or
5%
,
primarily due to lower impairments and volume growth, partially offset by lower gains.
|
REVENUES COMMENTARY: 2017 – 2016
|
•
|
GE Industrial revenues increased $
0.6
billion, or
1%
.
|
•
|
Financial Services revenues decreased $
1.8
billion, or
17%
,
primarily due to higher impairments and volume declines.
|
MD&A
|
CONSOLIDATED RESULTS
|
EARNINGS (LOSS) AND EARNINGS (LOSS) PER SHARE
(In billions; per-share in dollars and diluted)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Continuing earnings (loss)
|
$
|
(21.1
|
)
|
$
|
(8.6
|
)
|
$
|
7.8
|
|
|
|
|
|
||||||
Continuing earnings (loss) per share
|
$
|
(2.43
|
)
|
$
|
(0.99
|
)
|
$
|
0.85
|
|
EARNINGS COMMENTARY: 2018 – 2017
|
•
|
GE Industrial continuing earnings decreased $
0.2
billion, or
2%
.
|
•
|
Financial Services continuing losses decreased $
6.3
billion, or 93%,
primarily due to the nonrecurrence of the 2017 charges associated with the GE Capital insurance premium deficiency review and EFS strategic actions, partially offset by the nonrecurrence of 2017 tax benefits.
|
EARNINGS COMMENTARY: 2017 – 2016
|
•
|
GE Industrial continuing earnings decreased $
5.6
billion, or
41%
.
|
•
|
Financial Services continuing losses increased $
5.5
billion,
primarily due to a $6.2 billion after-tax charge related to the completion of GE Capital's insurance premium deficiency review, as well as EFS strategic actions resulting in $1.8 billion of after-tax charges in addition to higher impairments, partially offset by lower headquarters and treasury operation expenses associated with the GE Capital Exit Plan, higher tax benefits including the effects of U.S. tax reform and lower preferred dividend expenses associated with the January 2016 preferred equity exchange.
|
MD&A
|
CONSOLIDATED RESULTS
|
•
|
Interest and other financial charges, income taxes, non-operating benefit costs and GE goodwill impairments 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.
|
RECONCILIATION OF INDUSTRIAL BACKLOG TO REMAINING PERFORMANCE OBLIGATION
|
|||||||||
|
December 31, 2018
|
||||||||
(In billions)
|
Equipment
|
|
Services
|
|
Total
|
|
|||
|
|
|
|
||||||
Backlog
|
$
|
88.8
|
|
$
|
302.2
|
|
$
|
391.0
|
|
Adjustments
|
(37.0
|
)
|
(100.9
|
)
|
(137.9
|
)
|
|||
Remaining Performance Obligation
|
$
|
51.9
|
|
$
|
201.3
|
|
$
|
253.2
|
|
MD&A
|
SEGMENT OPERATIONS
|
|
|
General Electric Company and consolidated affiliates
|
||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Revenues
|
|
|
|
||||||
Power
|
$
|
27,300
|
|
$
|
34,878
|
|
$
|
35,835
|
|
Renewable Energy
|
9,533
|
|
9,205
|
|
9,752
|
|
|||
Aviation
|
30,566
|
|
27,013
|
|
26,240
|
|
|||
Oil & Gas
|
22,859
|
|
17,180
|
|
12,938
|
|
|||
Healthcare
|
19,784
|
|
19,017
|
|
18,212
|
|
|||
Transportation
|
3,898
|
|
3,935
|
|
4,585
|
|
|||
Lighting(a)
|
1,723
|
|
1,941
|
|
4,762
|
|
|||
Total industrial segment revenues
|
115,664
|
|
113,168
|
|
112,324
|
|
|||
Capital
|
9,551
|
|
9,070
|
|
10,905
|
|
|||
Total segment revenues
|
125,215
|
|
122,239
|
|
123,229
|
|
|||
Corporate items and eliminations
|
(3,600
|
)
|
(3,995
|
)
|
(3,760
|
)
|
|||
Consolidated revenues
|
$
|
121,615
|
|
$
|
118,243
|
|
$
|
119,469
|
|
|
|
|
|
||||||
Segment profit
|
|
|
|
||||||
Power
|
$
|
(808
|
)
|
$
|
1,947
|
|
$
|
4,187
|
|
Renewable Energy
|
287
|
|
583
|
|
631
|
|
|||
Aviation
|
6,466
|
|
5,370
|
|
5,324
|
|
|||
Oil & Gas(b)
|
429
|
|
158
|
|
1,302
|
|
|||
Healthcare
|
3,698
|
|
3,488
|
|
3,210
|
|
|||
Transportation
|
633
|
|
641
|
|
966
|
|
|||
Lighting(a)
|
70
|
|
27
|
|
165
|
|
|||
Total industrial segment profit
|
10,774
|
|
12,213
|
|
15,785
|
|
|||
Capital
|
(489
|
)
|
(6,765
|
)
|
(1,251
|
)
|
|||
Total segment profit
|
10,285
|
|
5,448
|
|
14,534
|
|
|||
Corporate items and eliminations
|
(2,796
|
)
|
(4,060
|
)
|
(2,064
|
)
|
|||
GE goodwill impairments
|
(22,136
|
)
|
(1,165
|
)
|
—
|
|
|||
GE interest and other financial charges
|
(2,708
|
)
|
(2,753
|
)
|
(2,026
|
)
|
|||
GE non-operating benefit costs
|
(2,764
|
)
|
(2,385
|
)
|
(2,349
|
)
|
|||
GE benefit (provision) for income taxes
|
(957
|
)
|
(3,691
|
)
|
(298
|
)
|
|||
Earnings (loss) from continuing operations
|
|
|
|
||||||
attributable to GE common shareowners
|
(21,076
|
)
|
(8,605
|
)
|
7,797
|
|
|||
Earnings (loss) from discontinued operations, net of taxes
|
(1,726
|
)
|
(309
|
)
|
(954
|
)
|
|||
Less net earnings (loss) attributable to noncontrolling interests, discontinued operations
|
—
|
|
6
|
|
(1
|
)
|
|||
Earnings (loss) from discontinued operations,
|
|
|
|
||||||
net of taxes and noncontrolling interests
|
(1,726
|
)
|
(315
|
)
|
(952
|
)
|
|||
Consolidated net earnings (loss)
|
|
|
|
||||||
attributable to GE common shareowners
|
$
|
(22,802
|
)
|
$
|
(8,920
|
)
|
$
|
6,845
|
|
(a)
|
Lighting segment included Appliances through its disposition in the second quarter of 2016.
|
(b)
|
Subsequent to the Baker Hughes transaction, restructuring and other charges are included in the determination of segment profit for our Oil & Gas segment. Oil & Gas segment profit excluding restructuring and other charges* was $1,045 million and $837 million for the years ended December 31, 2018 and 2017, respectively.
|
MD&A
|
SEGMENT OPERATIONS | POWER
|
Products & Services
|
|
Power serves power generation, industrial, government and other customers worldwide with products and services related to energy production and water reuse. Our products and technologies harness resources such as oil, gas, coal, diesel, nuclear and water to produce electric power and include gas and steam turbines, full balance of plant, upgrade and service solutions, as well as data-leveraging software. We employ approximately 59,700 people, serve customers in 150+ countries, and our headquarters is located in Schenectady, NY.
|
•
|
Gas Power Systems
–
offers a wide spectrum of heavy-duty and aeroderivative gas turbines for utilities, independent power producers and numerous industrial applications, ranging from small, mobile power to utility scale power plants.
|
•
|
Steam Power Systems
–
offers steam power technology for coal and nuclear applications including boilers, generators, steam turbines and Air Quality Control Systems (AQCS) to help efficiently produce power and provide performance over the life of a power plant.
|
•
|
Power Services
–
delivers maintenance, service and upgrade solutions across total plant assets and over their operational lifecycle, leveraging the Industrial Internet to improve the performance of such solutions. Long-term service agreements for both Gas Power Systems and Steam Power Systems are collectively managed in Power Services.
|
•
|
Grid Solutions
- offers products and services, such as high voltage equipment, power electronics, automation and protection equipment and software solutions, and serves industries such as generation, transmission, distribution, oil and gas, telecommunication, mining and water. We announced our intention to reorganize Grid Solutions into our Renewable Energy segment.
|
•
|
Power Conversion
- applies the science and systems of power conversion to provide motors, generators, automation and control equipment and drives for energy intensive industries such as marine, oil and gas, renewable energy, mining, rail, metals, test systems and water.
|
•
|
Automation & Controls
- serves as the Controls Center of Excellence for GE and partners with GE Digital, the Global Research Center, and GE businesses around the world to provide control solutions to help customers become more productive and efficient. We announced our intention to reorganize Automation & Controls into our Grid Solutions, Steam Power Systems and Gas Power Systems businesses.
|
•
|
GE Hitachi Nuclear
–
offers advanced reactor technologies solutions, including reactors, fuels and support services for boiling water reactors, through joint ventures with Hitachi and Toshiba, for safety, reliability and performance for nuclear fleets.
|
Competition & Regulation
|
Significant Trends & Developments
|
•
|
In September 2017, we announced an agreement to sell our Industrial Solutions business for approximately $2.2 billion
(net of cash transferred)
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. This gain was recorded within Corporate.
|
•
|
In June 2018, we announced an agreement to sell our Distributed Power business to Advent International, a global private equity investor, for approximately
$2.8 billion (net of cash transferred)
. On November 6, 2018, we completed the sale and recognized a pre-tax gain of $0.7 billion. This gain was recorded within Corporate.
|
•
|
During the second half of 2018, we recognized non-cash pre-tax goodwill impairment charges of $22.0 billion related to our Power Generation and Grid Solutions
reporting units
. These charges were all recorded within Corporate.
See Note 8 to the consolidated financial statements for further information.
|
•
|
The Power market as well as its operating environment continues to be challenging, and our outlook for Power has continued to deteriorate driven by the significant overcapacity in the industry
resulting in decreased utilization of our power equipment, lower market penetration, increased price concessions on certain long-term contracts as well as the uncertain timing of deal closures due to financing and the complexities of working in emerging markets
. In addition, our near-term earnings outlook has been negatively impacted by project execution and our own underlying operational challenges.
|
•
|
Market factors such as increasing energy efficiency and renewable energy penetration continue to impact our view of long-term demand. We believe the overall market for annual heavy-duty gas orders will be between 25 and 30 gigawatts for 2019 and the foreseeable future.
|
MD&A
|
SEGMENT OPERATIONS | POWER
|
•
|
Advanced Gas Path (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.
|
•
|
During the third quarter of 2018, Gas Power Systems recorded a $0.2 billion pre-tax charge related to an oxidation issue within the HA and 9FB Stage 1 turbine blades, resulting in increased warranty and maintenance reserves. In addition, Power recognized pre-tax charges of approximately $0.4 billion associated with an increase in issues on our existing projects driven by execution as well as partner and customer challenges.
|
•
|
During the fourth quarter of 2018, we recorded pre-tax charges of $0.8 billion, of which $0.4 billion was related to various assumption updates for unfavorable pricing, lower utilization, and cost updates on our long-term service agreements and $0.4 billion related to execution issues resulting in liquidated damages and partner execution issues on our long-term equipment projects at Gas Power Systems.
|
•
|
In 2018, we reduced structural costs* by $0.9 billion, excluding the effects of acquisition and disposition activity, for the year, and we expect restructuring efforts to continue into 2019.
|
•
|
We have made significant changes and are heavily focused on improving our operational and project execution across every business in Power. We expect operations to stabilize in 2019, with improving execution, a refocused services strategy and strong execution on cost reduction.
|
•
|
Digital offerings have been developed to further complement our equipment and services business and drive value and better outcomes for our customers.
|
•
|
The business has continued to invest in new product development, such as our HA-Turbines, advanced upgrades, substation automation, connected controls, micro-grids, energy storage and digital solutions, to expand our equipment and services offerings. Subsequent to the large investment needed to develop our HA-Turbines, we expect overall research and development costs to decrease going forward to better align with the economic realities of the end demand markets.
|
GEOGRAPHIC REVENUES
(Dollars in billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
U.S.
|
$
|
8.2
|
|
$
|
10.9
|
|
Non-U.S.
|
|
|
||||
Europe
|
5.8
|
|
6.3
|
|
||
Asia
|
5.5
|
|
6.4
|
|
||
Americas
|
3.3
|
|
3.5
|
|
||
Middle East and Africa
|
4.6
|
|
7.8
|
|
||
Total Non-U.S.
|
$
|
19.1
|
|
$
|
24.0
|
|
Total Segment Revenues
|
$
|
27.3
|
|
$
|
34.9
|
|
|
|
|
||||
Non-U.S. Revenues as a % of Segment Revenues
|
70
|
%
|
69
|
%
|
SUB-SEGMENT REVENUES(a)
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Gas Power Systems(b)
|
$
|
5.2
|
|
$
|
8.0
|
|
Steam Power Systems
|
1.9
|
|
2.2
|
|
||
Power Services
|
11.8
|
|
12.9
|
|
||
Other(c)
|
8.4
|
|
11.8
|
|
||
Total Segment Revenues
|
$
|
27.3
|
|
$
|
34.9
|
|
(a) Upon completion of our announced reorganization, Gas Power Systems and Power Services will comprise GE Gas Power, while Steam Power
Systems (including services currently reported in Power Services), Power Conversion and GE Hitachi Nuclear will comprise Power Portfolio. (b) Includes Distributed Power until its disposition in the fourth quarter of 2018. (c) Includes Grid Solutions, Power Conversion, Automation & Controls, GE Hitachi Nuclear, Water & Process Technologies until its disposition in the third quarter of 2017 and Industrial Solutions until its disposition in the second quarter of 2018. |
ORDERS AND BACKLOG
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Orders
|
|
|
||||
Equipment
|
$
|
13.1
|
|
$
|
17.6
|
|
Services
|
14.4
|
|
18.0
|
|
||
Total
|
$
|
27.5
|
|
$
|
35.7
|
|
|
|
|
||||
Backlog
|
|
|
||||
Equipment
|
$
|
24.3
|
|
$
|
26.3
|
|
Services
|
67.6
|
|
71.8
|
|
||
Total
|
$
|
91.9
|
|
$
|
98.1
|
|
MD&A
|
SEGMENT OPERATIONS | POWER
|
GAS TURBINES
|
2018
|
|
2017
|
|
V
|
|
Unit Orders
|
43
|
|
75
|
|
(32
|
)
|
Unit Sales
|
42
|
|
102
|
|
(60
|
)
|
SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Revenues
|
|
|
|
||||||
Equipment
|
$
|
12.3
|
|
$
|
17.5
|
|
$
|
17.4
|
|
Services
|
15.0
|
|
17.4
|
|
18.5
|
|
|||
Total(a)
|
$
|
27.3
|
|
$
|
34.9
|
|
$
|
35.8
|
|
|
|
|
|
||||||
SEGMENT PROFIT AND PROFIT MARGIN
(Dollars in billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Segment profit(b)
|
$
|
(0.8
|
)
|
$
|
1.9
|
|
$
|
4.2
|
|
Segment profit margin
|
(3.0
|
)%
|
5.6
|
%
|
11.7
|
%
|
(a)
|
Power segment revenues represent 24% and 22% of total industrial segment revenues and total segment revenues, respectively, for the year ended December 31, 2018.
|
(b)
|
Power segment profit represents (7)% of total industrial segment profit for the year ended December 31, 2018.
|
2018 – 2017 COMMENTARY:
|
•
|
The Power market as well as its operating environment continues to be challenging driven by the significant overcapacity in the industry, decreased utilization of our power equipment, increased price concessions, uncertain timing of deal closures due to financing and the complexities of working in emerging markets, as well as increasing energy efficiency and renewable energy penetration.
|
•
|
During the third quarter of 2018, Gas Power Systems recorded a $0.2 billion pre-tax charge related to an oxidation issue within the HA and 9FB Stage 1 turbine blades, resulting in increased warranty and maintenance reserves. In addition, we recognized pre-tax charges of approximately $0.4 billion associated with an increase in issues on our existing projects driven by execution as well as partner and customer challenges.
During the fourth quarter of 2018, we recorded pre-tax charges of $0.8 billion, of which $0.4 billion was related to various assumption updates for unfavorable pricing, lower utilization, and cost updates on our long-term service agreements and $0.4 billion related to execution issues resulting in liquidated damages and partner execution issues on our long-term equipment projects at Gas Power Systems.
|
•
|
Equipment revenues decreased primarily at Gas Power Systems by $2.7 billion due to lower unit sales, including 60 fewer gas turbines, 26 fewer Heat Recovery Steam Generators and 23 fewer aeroderivative units. Services revenues also decreased $1.1 billion at Power Services primarily due to 27 fewer AGP upgrades. In addition, revenues decreased due to the absence of Industrial Solutions which contributed $1.4 billion in the second half of 2017 that did not recur in 2018 following the sale in June 2018 as well as the absence of Water which contributed $1.5 billion in 2017 prior to the sale in September 2017. Revenues further decreased due to price pressure, partially offset by the effects of a weaker U.S. dollar versus certain currencies.
|
•
|
The decrease in profit was due to negative variable cost productivity driven by warranty and project cost updates as well as liquidated damages recognized by Gas Power Systems, lower volume including the absence of Industrial Solutions $0.1 billion and Water $0.1 billion, lower prices 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.
|
2017 – 2016 COMMENTARY:
|
•
|
The power market continues to be
challenged by the increasing penetration of renewable energy, fleet penetration for AGPs, lower capacity payments, utilization, and service outages which
decreased 8% from the prior year. In addition, e
xcess capacity in developed markets, continued pressure in oil and gas applications and macroeconomic and geopolitical environments have created uncertainty in the industry.
|
•
|
Services revenues decreased primarily at Power Services by $0.8 billion due to 65 fewer AGP upgrades. Equipment revenues increased primarily at Gas Power Systems by $0.4 billion due to higher balance of plant as well as 46 more Heat Recovery Steam Generator shipments, partially offset by two fewer gas turbine and 55 fewer aeroderivative units. Revenues further decreased due to the
absence of Water which contributed $0.6 billion in the fourth quarter of 2016 that did not recur following the sale in September 2017
and price pressure, partially offset by the effects of a weaker U.S. dollar versus certain currencies.
|
•
|
The decrease in profit was partially driven by $0.9 billion of charges in the fourth quarter primarily related to slow moving and obsolete inventory in Power Services, Gas Power Systems, and Power Conversion, a litigation settlement and a bankruptcy of a distributor. Profit further declined due to negative variable cost productivity, unfavorable business mix due to higher revenues from lower margin balance of plant volume and fewer higher margin aeroderivative units, and price pressure. These decreases were partially offset by positive base cost productivity.
|
MD&A
|
SEGMENT OPERATIONS | RENEWABLE ENERGY
|
Products & Services
|
|
GE Renewable Energy makes renewable power sources affordable, accessible and reliable for the benefit of people everywhere. With one of the broadest technology portfolios in the industry, Renewable Energy creates value for customers with solutions from onshore and offshore wind, hydro and its wind turbine blade manufacturing business. With operations in over 80 countries around the world, Renewable Energy can deliver solutions to where its customers need them most. We employ approximately 22,900 people, serve customers in 80+ countries, and our headquarters is located in Paris, France.
|
•
|
Onshore Wind
–
delivers technology and services for the onshore wind power industry by providing wind turbine platforms and hardware and software to optimize wind resources. Wind services help customers improve availability and value of their assets over the lifetime of the fleet. The Digital Wind Farm is a site level solution, creating a dynamic, connected and adaptable ecosystem that improves our customers’ fleet operations.
|
•
|
Offshore Wind
–
offers its high-yield offshore wind turbine, Haliade X-12MW, the most powerful offshore wind turbine commercially available, driving down offshore wind’s levelized cost of energy with an industry leading capacity factor and digital capabilities to help customers succeed in an increasingly competitive environment
|
•
|
Hydro
– provides a full range of solutions, products and services to serve the hydropower industry from initial design to final commissioning, from Low Head / Medium / High Head hydropower plants to pumped storage hydropower plants and small hydropower plants.
|
•
|
LM Wind Power
- designs and manufactures blades for onshore and offshore wind turbines. LM became part of GE after a $1.7 billion acquisition in April 2017 and serves both GE and external customers worldwide, through advanced rotor solutions, improved blade efficiency, increased rotor swept-area, proven reliability and a global manufacturing footprint on or close to all major markets for wind.
|
Competition & Regulation
|
Significant Trends & Developments
|
•
|
During the fourth quarter of 2018, we recognized non-cash pre-tax goodwill impairment charges of $0.1 billion related to our Hydro
reporting unit
. This charge was recorded within Corporate.
See Note 8 to the consolidated financial statements for further information.
|
•
|
Renewable energy is in a rapid transition period and is on track to become a fully commercialized, unsubsidized source of energy, successfully competing in the marketplace against conventional energy sources. Wind energy is now the second-largest contributor to renewable capacity growth, while hydropower is projected to remain the largest renewable electricity source through 2023.
|
•
|
Influential businesses like Apple, Google, Microsoft and Amazon are increasingly committing to renewable energy, typically contracting for output from various renewable sources directly using Power Purchase Agreements (PPAs). GE’s EFS business has enabled several deals of this nature that use wind turbines from GE Renewable Energy’s Onshore Wind unit.
|
•
|
Consequently, the renewable energy market is highly competitive, particularly in onshore wind, resulting in significant pricing pressure. Pricing for our Onshore Wind business was down in 2018 due to the impact of auctions in many international markets and the competitive environment across all renewable sources.
|
•
|
We believe that North America will continue to be a solid market in the near term with two main dynamics at play. First, we expect a ramp-up in 2019-2020 leading up to the expiration of the PTC at 100% value in 2020. PTC credits will be phased out after 2020 which we anticipate may have an adverse impact on the U.S. market. Second, we expect additional opportunities to “repower” existing wind turbines. Repowering allows customers to increase the annual energy output of their installed base, provides more competitively priced energy and extends the life of their assets. The repower market remains robust, and we expect continued strong demand through 2019 and beyond. To date, we have commissioned over 1,000 repowered turbines, and we are seeing excellent operating performance of those turbines throughout our broad customer base.
|
MD&A
|
SEGMENT OPERATIONS | RENEWABLE ENERGY
|
•
|
Given price pressure, the need for grid flexibility to accommodate more renewable energy, and the diversification of energy players, the hydropower industry continues to maximize value with new small-scale and pumped storage projects to support both wind and solar expansion.
|
•
|
The onshore wind market continues to see megawatt (MW) growth in turbines as customer preference has shifted from 1.X-2.X models to larger, more efficient units. In 2018, more than 40% of global turbine sales consisted of machines with 3.0MW or higher ratings.
|
•
|
New Product Introductions (NPIs) continue to be a key lever as our customers show a willingness to invest in new technology that decreases the levelized cost of energy. In September 2018, we launched our new onshore wind turbine platform Cypress, and the next model from that platform, GE’s 5.3-158 wind turbine. Designed to scale over time to meet customer needs through the 5MW range, Cypress enables significant Annual Energy Production (AEP) improvements, increased efficiency in serviceability and improved logistics and siting potential. We also introduced our next generation Haliade-X offshore wind turbine with a 12 MW generator rating and a 220-meter rotor (107-meter blade designed by LM Wind Power) to meet the needs of customers facing “zero-subsidy” auctions. Looking ahead, we are continuing to focus on taking cost out of our NPI machines, in-sourcing blade production and developing larger, more efficient turbines like the Haliade-X and Cypress.
|
•
|
During the first quarter of 2019, we announced our intention to reorganize our Grid Solutions, Solar and storage assets in our Energy Connections business within our Power segment into our Renewable Energy segment, creating an end-to-end offering for Renewable Energy customers as the demand for renewable power generation and grid integration continues to grow globally.
|
GEOGRAPHIC REVENUES
(Dollars in billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
U.S.
|
$
|
4.3
|
|
$
|
4.8
|
|
Non-U.S.
|
|
|
||||
Europe
|
1.9
|
|
1.6
|
|
||
Asia
|
1.6
|
|
0.8
|
|
||
Americas
|
1.5
|
|
1.5
|
|
||
Middle East and Africa
|
0.2
|
|
0.5
|
|
||
Total Non-U.S.
|
$
|
5.2
|
|
$
|
4.4
|
|
Total Segment Revenues
|
$
|
9.5
|
|
$
|
9.2
|
|
|
|
|
||||
Non-U.S. Revenues as a % of Segment Revenues
|
54
|
%
|
48
|
%
|
SUB-SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Onshore Wind
|
$
|
8.3
|
|
$
|
8.1
|
|
Offshore Wind
|
0.4
|
|
0.3
|
|
||
Hydro
|
0.8
|
|
0.9
|
|
||
Total Segment Revenues
|
$
|
9.5
|
|
$
|
9.2
|
|
ORDERS AND BACKLOG
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Orders
|
|
|
||||
Equipment
|
$
|
7.9
|
|
$
|
8.2
|
|
Services
|
3.0
|
|
2.2
|
|
||
Total
|
$
|
10.9
|
|
$
|
10.4
|
|
|
|
|
||||
Backlog
|
|
|
||||
Equipment
|
$
|
8.5
|
|
$
|
7.9
|
|
Services
|
8.7
|
|
6.9
|
|
||
Total
|
$
|
17.3
|
|
$
|
14.8
|
|
WIND TURBINES
|
2018
|
|
2017
|
|
V
|
|
Unit Orders
|
3,198
|
|
3,017
|
|
181
|
|
Unit Sales
|
2,491
|
|
2,604
|
|
(113
|
)
|
MD&A
|
SEGMENT OPERATIONS | RENEWABLE ENERGY
|
SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Revenues
|
|
|
|
||||||
Equipment
|
$
|
7.0
|
|
$
|
7.0
|
|
$
|
8.9
|
|
Services
|
2.5
|
|
2.2
|
|
0.9
|
|
|||
Total(a)
|
$
|
9.5
|
|
$
|
9.2
|
|
$
|
9.8
|
|
|
|
|
|
||||||
SEGMENT PROFIT AND PROFIT MARGIN
(Dollars in billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Segment profit(b)
|
$
|
0.3
|
|
$
|
0.6
|
|
$
|
0.6
|
|
Segment profit margin
|
3.0
|
%
|
6.3
|
%
|
6.5
|
%
|
(a)
|
Renewable Energy segment revenues represent 8% of both total industrial segment revenues and total segment revenues for the year ended December 31, 2018.
|
(b)
|
Renewable Energy segment profit represents 3% of total industrial segment profit for the year ended December 31, 2018.
|
2018 – 2017 COMMENTARY:
|
•
|
The renewable energy market remains competitive, particularly in onshore wind. The onshore wind market continues to experience megawatt growth as customer preference has shifted from 1.X-2.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 during 2018. In addition, uncertainty at the end of 2017 related to the impact of U.S. tax reform caused a temporary delay in project work, resulting in lower volume during the first half of the year. From the third quarter of 2018 onward, we expect project build and shipments to increase in anticipation of the expiration of Production Tax Credits (PTCs) in the U.S. at 100% value in 2020.
|
•
|
Services volume increased due to larger installed base resulting in increased contractual revenues as well as 50 more repower units at Onshore Wind than in the prior year. Equipment volume remained flat with 113 fewer wind turbine shipments on a unit basis, offset by 9% more megawatts shipped, than in the prior year. 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, partially offset by pricing pressure and the effects of a stronger U.S. dollar versus certain currencies.
|
•
|
The decrease in profit was due to pricing pressure, unfavorable business mix as well as liquidated damages related to partner execution and project delays, and higher losses in Hydro and Offshore as we began fully consolidating these entities in the fourth quarter, partially offset by materials deflation and positive base cost productivity.
|
2017 – 2016 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, there is significant competitive pricing pressure driven by onshore turbines.
|
•
|
Equipment volume decreased due to 785 fewer wind turbine shipments on a unit basis, including the nonrecurrence of certain orders in Europe and ASEAN, or 17% fewer megawatts shipped than in the prior year. Services volume increased due to 975 more repower units at Onshore Wind. Revenues also increased due to the acquisition of LM Wind in April 2017 which contributed $0.3 billion of inorganic revenue growth in 2017 and the effects of a weaker U.S. dollar versus certain currencies, partially offset by pricing pressure.
|
•
|
The decrease in profit was due to negative base cost productivity and price pressure, partially offset by positive variable cost productivity, material deflation and increased other income including a reduction in foreign exchange transactional losses.
|
MD&A
|
SEGMENT OPERATIONS | AVIATION
|
Products & Services
|
|
Aviation designs and produces commercial and military aircraft engines, integrated digital components, electric power and mechanical aircraft systems. We also provide aftermarket services to support our products. We employ approximately 48,000 people, serve customers in 120+ countries, and our headquarters is located in Cincinnati, OH.
|
•
|
Commercial Engines
–
manufactures jet engines and turboprops for commercial airframes. Our commercial engines power aircraft in all categories; regional, narrowbody and widebody. We also manufacture engines and components for business and general aviation segments, and we produce and market engines through CFM International, a company jointly owned by GE and Safran Aircraft Engines, a subsidiary of the Safran Group of France, and Engine Alliance, LLC, a company jointly owned by GE and the Pratt & Whitney division of United Technologies Corporation. New engines are also being designed and marketed in a joint venture with Honda Aero, Inc., a division of Honda Motor Co., Ltd.
|
•
|
Commercial Services
–
provides maintenance, component repair and overhaul services (MRO), including sales of replacement parts.
|
•
|
Military
–
manufactures jet engines for military airframes. Our military engines power a wide variety of military aircraft including fighters, bombers, tankers, helicopters and surveillance aircraft, as well as marine applications. We provide maintenance, component repair and overhaul services, including sales of replacement parts.
|
•
|
Systems
–
provides components, systems and services for commercial and military segments. This includes avionics systems, aviation electric power systems, flight efficiency and intelligent operation services, aircraft structures and Avio Aero.
|
•
|
Additive
–
provides a wide variety of products and services including additive machines from Concept Laser and Arcam EBM, additive materials (including metal powders from AP&C), and additive engineering services through our consultancy brand AddWorks
TM
. In November 2017, GE Additive also acquired software simulation company GeonX.
|
Competition & Regulation
|
Significant Trends & Developments
|
•
|
On January 2, 2018, GE purchased additional shares of Arcam, AB to bring GE’s total ownership to 96%. On January 11, 2018, Arcam applied to the Nasdaq Stockholm exchange to commence delisting of the remaining shares. The last day of trading was January 26, 2018, and GE announced the delisting on January 30, 2018.
|
•
|
In September 2018, we announced an agreement to sell our Middle River Aircraft Systems business within our Aviation segment to Singapore Technologies Engineering, a global technology, defense and engineering group, for $0.6 billion. The deal is expected to close early 2019, subject to customary closing conditions and regulatory approvals.
|
•
|
Global passenger air travel continued to grow during the year. In 2018, revenue passenger kilometers (RPKs) growth outpaced the ten-year average, increasing 6.6%* with strong growth both domestically and internationally. In addition, passenger load factors globally remained above 80%*.
|
•
|
In 2018, air freight volume continued to grow, and freight ton kilometers (FTKs) grew 3.9%*.
|
•
|
The installed base continues to grow with new product launches. In 2018, we shipped the first Passport engines, powering the Bombardier Global 7000 business jet. We are also continuing development on the Advanced Turbo Prop program and the GE9X engine, incorporating the latest technologies for application in the widebody aircraft space.
|
•
|
During 2018, we delivered 1,118 LEAP engines, meeting our ramp commitments for the year with cost reductions in line with production cost curve expectations. LEAP reliability and performance specification remain on track. While we are behind on production as a result of delays in materials, we are actively working with our customers and airframers to mitigate impacts to their aircraft build schedule, and we continue to see improvement in our supplier yields and our overall output on a week to week basis. We plan to produce more than 2,000 engines by 2020.
|
MD&A
|
SEGMENT OPERATIONS | AVIATION
|
•
|
Military shipments grew to 674 engines from 617 engines in 2017. 2018 was a critical year for the contract decision on the next generation combat engine, and the United States Air Force selected Boeing as the contractor to produce 351 new advanced T-X trainer aircraft powered by our F404 engine.
|
•
|
Our digital initiatives, including analytics on flight operations, technical operations, and advanced manufacturing, are enabling our customers, internal operations and suppliers to reduce costs, cycle time and improve quality.
|
GEOGRAPHIC REVENUES
(Dollars in billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
U.S.
|
$
|
12.5
|
|
$
|
10.8
|
|
Non-U.S.
|
|
|
||||
Europe
|
7.0
|
|
6.3
|
|
||
Asia
|
5.8
|
|
5.2
|
|
||
Americas
|
1.5
|
|
1.1
|
|
||
Middle East and Africa
|
3.8
|
|
3.6
|
|
||
Total Non-U.S.
|
$
|
18.0
|
|
$
|
16.3
|
|
Total Segment Revenues
|
$
|
30.6
|
|
$
|
27.0
|
|
|
|
|
||||
Non-U.S. Revenues as a % of Segment Revenues
|
59
|
%
|
60
|
%
|
SUB-SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Commercial Engines & Services
|
$
|
22.7
|
|
$
|
19.7
|
|
Military
|
4.1
|
|
4.0
|
|
||
Systems & Other
|
3.7
|
|
3.3
|
|
||
Total Segment Revenues
|
$
|
30.6
|
|
$
|
27.0
|
|
ORDERS AND BACKLOG
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Orders
|
|
|
||||
Equipment
|
$
|
15.3
|
|
$
|
10.6
|
|
Services
|
20.2
|
|
18.5
|
|
||
Total
|
$
|
35.5
|
|
$
|
29.1
|
|
|
|
|
||||
Backlog
|
|
|
||||
Equipment
|
$
|
37.8
|
|
$
|
34.1
|
|
Services
|
185.7
|
|
166.1
|
|
||
Total
|
$
|
223.5
|
|
$
|
200.2
|
|
UNIT ORDERS
|
2018
|
|
2017
|
|
V
|
|
Commercial Engines
|
4,772
|
|
2,565
|
|
2,207
|
|
LEAP Engines(a)
|
3,637
|
|
1,418
|
|
2,219
|
|
Military Engines
|
751
|
|
522
|
|
229
|
|
(a) LEAP engines are a subset of commercial engines
|
MD&A
|
SEGMENT OPERATIONS | AVIATION
|
SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Revenues
|
|
|
|
||||||
Equipment
|
$
|
11.5
|
|
$
|
10.2
|
|
$
|
11.4
|
|
Services
|
19.1
|
|
16.8
|
|
14.9
|
|
|||
Total(a)
|
$
|
30.6
|
|
$
|
27.0
|
|
$
|
26.2
|
|
|
|
|
|
||||||
SEGMENT PROFIT AND PROFIT MARGIN
(Dollars in billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Segment profit(b)
|
$
|
6.5
|
|
$
|
5.4
|
|
$
|
5.3
|
|
Segment profit margin
|
21.2
|
%
|
19.9
|
%
|
20.3
|
%
|
(a)
|
Aviation segment revenues represent 26% and 24% of total industrial segment revenues and total segment revenues, respectively, for the year ended December 31, 2018.
|
(b)
|
Aviation segment profit represents 60% of total industrial segment profit for the year ended December 31, 2018.
|
2018 – 2017 COMMENTARY:
|
•
|
Global passenger air travel continued to grow with revenue passenger kilometers (RPK) growth outpacing the ten-year average. Industry-load factors remained above 80%*. Air freight volume also increased, particularly in international markets. Freight capacity additions slightly exceeded freight volume growth during the year.
|
•
|
We shipped 1,118 LEAP engines during the year, meeting our commitment to ship 1,100-1,200 engines in 2018.
|
•
|
Services revenues increased primarily due to a higher commercial spares shipment rate, as well as increased price. Equipment revenues increased primarily due to 57 more military engine shipments and 195 more commercial units, including 659 more LEAP units, versus the prior year, partially offset by lower legacy commercial output in the CFM and GE90 product lines.
|
•
|
The increase in profit was mainly due to increased price, increased volume, higher spare engine shipments and product and base cost productivity. 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.
|
2017 – 2016 COMMENTARY:
|
•
|
Global passenger air travel continued to grow with RPK growth outpacing the five-year average. Air freight volume rebounded, particularly in international markets, with FTK demand also exceeding capacity for the year.
|
•
|
Services revenues increased primarily due to a higher commercial and military spares shipment rate, as well as higher prices. Equipment revenues decreased due to lower legacy and GEnx Commercial engine shipments, partially offset by more LEAP and Military engine shipments. Revenues also increased due to the acquisitions of Arcam AB and Concept Laser GmbH in the fourth quarter of 2016 which contributed $0.2 billion of inorganic revenue growth in 2017.
|
•
|
The increase in profit was mainly due to higher cost productivity driven by structural cost reductions, as well as material deflation, higher services volume and higher prices. These increases were partially offset by an unfavorable business mix driven by negative LEAP margin impact.
|
MD&A
|
SEGMENT OPERATIONS | OIL & GAS
|
Products & Services
|
|
Oil & Gas, which represents our 50.4% consolidated interest in BHGE, is a fullstream oilfield technology provider that has a unique mix of integrated oilfield products, services and digital solutions. We operate through our four business segments: Oilfield Services, Oilfield Equipment, Turbomachinery & Processing Solutions and Digital Solutions. We employ approximately 65,800 people, serve customers in 120+ countries, and our headquarters are located in London, UK and Houston, TX.
|
•
|
Oilfield Services
–
provides equipment and services ranging from well evaluation to decommissioning. Products and services include diamond and tri-cone drill bits, drilling services (including directional drilling technology, measurement while drilling and logging while drilling), downhole completion tools and systems, wellbore intervention tools and services, wireline services, drilling and completions fluids, oilfield and industrial chemicals, pressure pumping and artificial lift technologies (including electrical submersible pumps).
|
•
|
Oilfield Equipment
–
provides a broad portfolio of products and services required to facilitate the safe and reliable flow of hydrocarbons from the subsea wellhead to the surface. Products and services include pressure control equipment and services, subsea production systems and services, drilling equipment and flexible pipeline systems. Oilfield Equipment operation designs and manufactures onshore and offshore drilling and production systems and equipment for floating production platforms and provides a full range of services related to onshore and offshore drilling activities.
|
•
|
Turbomachinery & Process Solutions
–
provides equipment and related services for mechanical-drive, compression and power-generation applications across the oil and gas industry as well as products and services to serve the downstream segments of the industry including refining, petrochemical, distributed gas, flow and process control and other industrial applications. The Turbomachinery & Process Solutions portfolio includes drivers (aero-derivative gas turbines, heavy-duty gas turbines and synchronous and induction electric motors), compressors (centrifugal and axial, direct drive high speed, integrated, subsea compressors, turbo expanders and reciprocating), turn-key solutions (industrial modules and waste heat recovery), pumps, valves and compressed natural gas (CNG) and small-scale liquefied natural gas (LNG) solutions used primarily for shale oil and gas field development.
|
•
|
Digital Solutions
–
provides equipment and services for a wide range of industries, including oil & gas, power generation, aerospace, metals and transportation. The offerings include sensor-based measurement, non-destructive testing and inspection, turbine, generator and plant controls and condition monitoring, as well as pipeline integrity solutions.
|
Competition & Regulation
|
Significant Trends & Developments
|
•
|
In June 2018, we announced our plan to pursue an orderly separation from BHGE over time. The
business has not met the accounting criteria for held for sale classification. That classification will depend on the nature and timing of the transaction.
|
•
|
Pursuant this announcement, BHGE completed an underwritten public offering in which we sold 101.2 million shares of BHGE Class A common stock. BHGE also repurchased 65.0 million BHGE LLC units from us. The total consideration received by us from these transactions was $3.7 billion. The transaction closed in November 2018 and, as a result, our economic interest in BHGE reduced from 62.5% to 50.4% and we recognized a pre-tax loss in equity of $2.2 billion.
See Note 15 to the consolidated financial statements for further information.
|
•
|
On November 13, 2018, we entered into a Master Agreement and a series of related ancillary agreements and binding term sheets with BHGE (collectively, the “Master Agreement Framework”) designed to further solidify the commercial and technological collaborations between BHGE and GE. In particular, the Master Agreement Framework contemplates long-term agreements between us and BHGE on technology, fulfillment and other key areas.
|
•
|
Market weakness in recent years including lower oil prices has led to reductions in customers’ forecasted capital expenditures and lower convertible orders, creating industry challenges, the effects of which are uncertain. In addition, decreased U.S. rig count and lower drilling activity versus prior peaks in the early 2000s has reduced the need for new wells, rigs, and replacement equipment.
|
•
|
We are also impacted by volatility in foreign currency exchange rates mainly due to a high concentration of non-U.S. dollar denominated business as well as long-term contracts denominated in multiple currencies.
|
•
|
2018 demonstrated the volatility of the oil and gas market. Through the first three quarters of 2018, we experienced stability in the North American and international markets. However, in the fourth quarter of 2018, commodity prices dropped nearly 40%, resulting in increased customer uncertainty. From an offshore standpoint, through most of 2018, we saw multiple large offshore projects reach positive final investment decision, and expect customers to continue to evaluate final investment decisions timing, in light of increased commodity price volatility.
|
MD&A
|
SEGMENT OPERATIONS | OIL & GAS
|
•
|
The liquified natural gas (LNG) market and outlook improved throughout 2018, driven by increased demand globally. In 2018, the first large North American LNG positive final investment decision was reached. Looking to 2019, we expect a significant number of LNG million tons per annum (MTPA) to reach positive final investment decisions.
|
•
|
In 2018, total rig count increased 9% to an average of 2,211 from an average of 2,030 in 2017. This increase was driven by an increase in North American rig count from 1,082 in 2017 to 1,223 in 2018, primarily driven by U.S. rig count, partially offset with a decline in Canadian rig count.
|
•
|
Oil prices generally increased throughout 2018, but sharply declined in the fourth quarter driven by global economic growth forecast revisions, higher than expected production in the U.S., and lower than anticipated production cuts from OPEC.
|
•
|
In North America, customer spending is highly driven by WTI oil prices which on average increased throughout the year. Average WTI oil prices increased to $65.23/Bbl in 2018 from $50.80/Bbl in 2017 and ranged from a low of $44.48/Bbl in December 2018 to a high of $77.41/Bbl in June 2018.
|
•
|
Outside of North America, customer spending is influenced by Brent oil prices, which also increased on average throughout the year. Average Brent oil prices increased to $71.34/Bbl in 2018 from $54.12/Bbl in 2017 and ranged from a low of $50.57/Bbl in December 2018 to a high of $86.07/Bbl in October 2018.
|
•
|
Given the commodity price decline in the fourth quarter of 2018, we continue to expect activity to remain volatile and final investment decisions to remain fluid due to continued oil price volatility.
|
GEOGRAPHIC REVENUES
(Dollars in billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
U.S.
|
$
|
6.6
|
|
$
|
4.4
|
|
Non-U.S.
|
|
|
||||
Europe
|
4.0
|
|
3.0
|
|
||
Asia
|
3.2
|
|
2.5
|
|
||
Americas
|
3.3
|
|
2.5
|
|
||
Middle East and Africa
|
5.8
|
|
4.8
|
|
||
Total Non-U.S.
|
$
|
16.3
|
|
$
|
12.8
|
|
Total Segment Revenues
|
$
|
22.9
|
|
$
|
17.2
|
|
|
|
|
||||
Non-U.S. Revenues as a % of Segment Revenues
|
71
|
%
|
74
|
%
|
SUB-SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Turbomachinery & Process Solutions (TPS)
|
$
|
6.0
|
|
$
|
6.3
|
|
Oilfield Services (OFS)(a)
|
11.6
|
|
5.9
|
|
||
Oilfield Equipment (OFE)(b)
|
2.6
|
|
2.7
|
|
||
Digital Solutions
|
2.6
|
|
2.3
|
|
||
Total Segment Revenues
|
$
|
22.9
|
|
$
|
17.2
|
|
(a)
Previously referred to as Surface
(b)
Previously referred to as Subsea Systems & Drilling
|
ORDERS AND BACKLOG
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Orders
|
|
|
||||
Equipment
|
$
|
9.9
|
|
$
|
6.9
|
|
Services
|
13.9
|
|
10.3
|
|
||
Total
|
$
|
23.9
|
|
$
|
17.1
|
|
|
|
|
||||
Backlog
|
|
|
||||
Equipment
|
$
|
5.7
|
|
$
|
5.5
|
|
Services
|
15.8
|
|
16.4
|
|
||
Total
|
$
|
21.5
|
|
$
|
21.9
|
|
MD&A
|
SEGMENT OPERATIONS | OIL & GAS
|
SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Revenues
|
|
|
|
||||||
Equipment
|
$
|
9.3
|
|
$
|
7.2
|
|
$
|
6.1
|
|
Services
|
13.6
|
|
10.0
|
|
6.9
|
|
|||
Total(a)
|
$
|
22.9
|
|
$
|
17.2
|
|
$
|
12.9
|
|
|
|
|
|
||||||
SEGMENT PROFIT AND PROFIT MARGIN
(Dollars in billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Segment profit(b)
|
$
|
0.4
|
|
$
|
0.2
|
|
$
|
1.3
|
|
Segment profit margin
|
1.9
|
%
|
0.9
|
%
|
10.1
|
%
|
(a)
|
Oil & Gas segment revenues represent 20% and 18% of total industrial segment revenues and total segment revenues, respectively, for the year ended December 31, 2018.
|
(b)
|
Oil & Gas segment profit represents 4% of total industrial segment profit for the year ended December 31, 2018.
|
2018 – 2017 COMMENTARY:
|
•
|
The oil and gas market experienced stability through the first three quarters of 2018 leading to continuous improvements. However, in the fourth quarter, commodity prices dropped nearly 40%, demonstrating the volatility of the market and resulting in increased customer uncertainty. From an offshore and liquefied natural gas (LNG) perspective, in 2018, major equipment projects were awarded in the Oilfield Equipment and TPS businesses.
|
•
|
The Baker Hughes acquisition in July 2017 contributed $5.4 billion of inorganic revenue growth in the first half of 2018 compared to the first half of 2017. In addition, Oil & Gas revenues increased due to increased services revenues, primarily resulting from higher OFS activity of $0.3 billion in North America and international markets. Equipment revenues decreased primarily at TPS by $0.3 billion as a result of lower opening backlog, partially offset by the effects of a weaker U.S. dollar versus
certain currencies
.
|
•
|
The increase in profit was primarily driven by synergies delivered from combining our Oil & Gas business with Baker Hughes Incorporated and lower restructuring and other charges, partially offset by unfavorable business mix and decreased other income including increased equity income losses in affiliates.
|
2017 – 2016 COMMENTARY:
|
•
|
The oil and gas market remained challenging in 2017. Despite some improvements in activity, there were no significant increases in customer capital commitments, and oil prices remained volatile for the majority of the year. While oil prices stabilized towards the end of 2017 and North American rig count increased, major equipment project awards continued to be pushed out in the Oilfield Equipment and TPS businesses.
|
•
|
The Baker Hughes acquisition in July 2017 contributed $5.2 billion of inorganic revenue growth in 2017. Legacy equipment revenues decreased due to lower volume primarily at OFE of $0.8 billion as a result of the market conditions and lower opening backlog. Revenues further decreased due to lower oil prices, partially offset by the effects of a weaker U.S. dollar versus certain currencies.
|
•
|
The decrease in profit was primarily driven by negative variable cost productivity, restructuring and other charges, lower prices and lower organic volume, partially offset by increased volume from Baker Hughes, deflation and increased other income including a reduction in foreign exchange transactional losses.
|
MD&A
|
SEGMENT OPERATIONS | HEALTHCARE
|
Products & Services
|
|
Healthcare provides essential healthcare technologies to developed and emerging markets and has expertise in medical imaging, digital solutions, patient monitoring and diagnostics, drug discovery, biopharmaceutical manufacturing technologies and performance improvement solutions that are the building blocks of precision health. Products and services are sold worldwide primarily to hospitals, medical facilities, pharmaceutical and biotechnology companies, and to the life science research market. We employ approximately 53,800 people, serve customers in 140+ countries, and our headquarters is located in Chicago, IL.
|
•
|
Healthcare Systems
–
develops, manufactures, markets and services a broad suite of products and solutions used in the diagnosis, treatment and monitoring of patients that is encompassed in imaging, ultrasound, life care solutions and enterprise software and solutions. Imaging includes magnetic resonance, computed tomography, molecular imaging, x-ray systems and complementary software and services, for use in general diagnostics, Women’s Health and image-guided therapies. Ultrasound includes high-frequency soundwave systems, and complementary software and services, for use in diagnostics tailored to a wide range of clinical settings. Life Care Solutions (“LCS”) includes clinical monitoring and acute care systems, and complementary software and services, for use in intensive care, anesthesia delivery, diagnostic cardiology and perinatal care. Enterprise Software & Solutions (“ESS”) includes enterprise digital, consulting and healthcare technology management offerings designed to improve efficiency in healthcare delivery and expand global access to advanced health care.
|
•
|
Life Sciences
–
delivers products, services and manufacturing solutions for drug discovery, the biopharmaceutical industry, and cellular and gene therapy technologies, so that scientists and specialists can discover new ways to predict, diagnose and treat disease. It also researches, manufactures and markets innovative imaging agents used during medical scanning procedures to highlight organs, tissue and functions inside the human body, to aid physicians in the early detection, diagnosis and management of disease through advanced in-vivo diagnostics.
|
Competition & Regulation
|
Significant Trends & Developments
|
•
|
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 $1.0 billion (net of cash transferred). This transaction closed on July 10, 2018 and resulted in the recognition of a pre-tax gain of approximately $0.7 billion in the third quarter of 2018. This gain was recorded within Corporate.
|
•
|
In June 2018, we announced a plan to separate GE Healthcare into a standalone company. On February 25, 2019, we announced an agreement to sell our BioPharma business within our Healthcare segment to Danaher Corporation for total consideration of approximately $21.4 billion, subject to certain adjustments. The transaction is expected to close in the fourth quarter of 2019, subject to regulatory approvals and customary closing conditions. We intend to retain the remaining portion of our Healthcare business which provides us full flexibility for growth and optionality with respect to the business.
|
•
|
In 2018, we sold our remaining shares in Neogenomics and received proceeds of approximately $200 million.
|
•
|
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 imaging agents market growing at low single digit rates.
|
•
|
We continue to lead in technology innovation with greater focus on productivity-based technology, services and IT/cloud-based solutions as healthcare providers seek greater productivity and better outcomes.
|
•
|
In 2018, we launched a variety of new products including our ultra-premium radiology ultrasound system, LOGIQ E10, and our AIR technology coil suite. We also enhanced our MR portfolio with SIGNA™ Premier and upgraded our portfolio of premium high power mobile Surgery C-arms featuring CMOS detectors.
|
•
|
Emerging markets are expected to grow over the long-term with short-term volatility, driven by the long-term trend of expanding access to healthcare in these markets.
|
MD&A
|
SEGMENT OPERATIONS | HEALTHCARE
|
•
|
As expected, the China market was a source of growth in 2018 with strong fundamentals in the public market and an expanding private market. While we expect this growth to continue in 2019, new U.S. tariffs on certain types of medical equipment and components that we import from China have resulted in increased costs. We are taking actions to mitigate this cost impact including moving our sourcing and manufacturing for these parts outside of China.
|
•
|
In the U.S., the underlying market remains stable, with a trend toward customers looking for more complete solutions that offer greater capacity and productivity. However, the market continues to face uncertainties driven by the increasing cost of providing healthcare that has led to a trend of increasing hospital and provider consolidation.
|
•
|
Underlying demand for biopharmaceuticals is expected to continue to expand with new product introductions complemented by growing access to these treatments in emerging markets. These trends continue to support the underlying growth of our Life Sciences franchise which has significant exposure to these end markets.
|
GEOGRAPHIC REVENUES
(Dollars in billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
U.S.
|
$
|
8.6
|
|
$
|
8.4
|
|
Non-U.S.
|
|
|
||||
Europe
|
4.1
|
|
3.9
|
|
||
Asia
|
5.2
|
|
4.9
|
|
||
Americas
|
1.0
|
|
1.0
|
|
||
Middle East and Africa
|
0.9
|
|
0.9
|
|
||
Total Non-U.S.
|
$
|
11.2
|
|
$
|
10.6
|
|
Total Segment Revenues
|
$
|
19.8
|
|
$
|
19.0
|
|
|
|
|
||||
Non-U.S. Revenues as a % of Segment Revenues
|
57
|
%
|
56
|
%
|
SUB-SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Healthcare Systems(a)
|
$
|
14.9
|
|
$
|
14.5
|
|
Life Sciences
|
4.9
|
|
4.6
|
|
||
Total Segment Revenues
|
$
|
19.8
|
|
$
|
19.0
|
|
ORDERS AND BACKLOG
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Orders
|
|
|
||||
Equipment
|
$
|
12.6
|
|
$
|
12.2
|
|
Services
|
8.3
|
|
8.2
|
|
||
Total
|
$
|
20.9
|
|
$
|
20.4
|
|
|
|
|
||||
Backlog
|
|
|
||||
Equipment
|
$
|
6.3
|
|
$
|
6.4
|
|
Services
|
11.2
|
|
11.7
|
|
||
Total
|
$
|
17.4
|
|
$
|
18.1
|
|
MD&A
|
SEGMENT OPERATIONS | HEALTHCARE
|
SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Revenues
|
|
|
|
||||||
Equipment
|
$
|
11.4
|
|
$
|
10.8
|
|
$
|
10.2
|
|
Services
|
8.4
|
|
8.2
|
|
8.0
|
|
|||
Total(a)
|
$
|
19.8
|
|
$
|
19.0
|
|
$
|
18.2
|
|
|
|
|
|
||||||
SEGMENT PROFIT AND PROFIT MARGIN
(Dollars in billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Segment profit(b)
|
$
|
3.7
|
|
$
|
3.5
|
|
$
|
3.2
|
|
Segment profit margin
|
18.7
|
%
|
18.3
|
%
|
17.6
|
%
|
(a)
|
Healthcare segment revenues represent 17% and 16% of total industrial segment revenues and total segment revenues, respectively, for the year ended December 31, 2018.
|
(b)
|
Healthcare segment profit represents 34% of total industrial segment profit for the year ended December 31, 2018.
|
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.
|
•
|
Services and equipment revenues increased due to higher volume in Healthcare Systems of $0.4 billion 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 by $0.3 billion, driven by Bioprocess and Pharmaceutical Diagnostics. In addition, revenues increased due to the effects of a weaker U.S. dollar versus
certain currencies
, partially offset by price pressure at Healthcare Systems and
the absence of
the Value-Based Care Division following the sale in July 2018.
|
•
|
The increase in profit was primarily driven by 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, investments in programs including digital product innovations and Healthcare Systems new product introductions, the nonrecurrence of a small gain on the disposition of a non-strategic operation in Life Sciences and
the absence of
the Value-Based Care Division following the sale in July 2018.
|
2017 – 2016 COMMENTARY:
|
•
|
The Healthcare Systems global market continued to expand, predominately in emerging markets, including China, driven by Ultrasound as well as Imaging across most modalities. In addition, Healthcare Systems launched 26 new products in 2017, and Life Sciences continued to expand its business through product launches, organic investments and acquisitions.
|
•
|
Services and equipment revenues increased due to higher volume in Healthcare Systems of $0.5 billion attributable to growth in Imaging and Ultrasound supported by new product launches and growth in developing regions such as China and emerging markets. Volume also increased in Life Sciences by $0.3 billion, driven by Bioprocess and Pharmaceutical Diagnostics. This growth was 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. In addition, profit further increased due to the recognition of small gains on the disposition of nonstrategic operations. These increases were partially offset by price pressure at Healthcare Systems and investments in programs including digital product innovations and new product offerings.
|
MD&A
|
SEGMENT OPERATIONS | TRANSPORTATION
|
Products & Services
|
|
Transportation is a global technology leader and supplier to the railroad, mining, marine, stationary power and drilling industries. Products and services offered by Transportation are detailed below. We employ approximately 9,400 people, serve customers in approximately 60 countries, and our headquarters is located in Chicago, IL.
|
•
|
Locomotives
–
provides freight and passenger locomotives as well as rail services to help solve rail challenges. We manufacture high-horsepower, diesel-electric locomotives including the Evolution Series
TM
, which meets or exceeds the U.S. Environmental Protection Agency’s (EPA) Tier 4 requirements for freight and passenger applications.
|
•
|
Services
–
develops partnerships that support advisory services, parts, integrated software solutions and data analytics. Our comprehensive offerings include tailored service programs, high-quality parts for GE and other locomotive platforms, overhaul, repair and upgrade services and wreck repair. Our portfolio provides the people, partnerships and leading software to optimize operations and asset utilization.
|
•
|
Digital Solutions
–
offers a suite of software-enabled solutions to help our customers lower operational costs, increase productivity and improve service quality and reliability.
|
•
|
Mining
–
provides mining equipment and services. The portfolio includes drive systems for off-highway vehicles, mining equipment, mining power and productivity.
|
•
|
Marine, Stationary & Drilling
–
offers marine diesel engines and stationary power diesel engines and motors for land and offshore drilling rigs.
|
Competition & Regulation
|
Significant Trends & Developments
|
•
|
On May 21, 2018, we announced an agreement to spin- or split-off and merge our Transportation segment with Wabtec Corporation, a U.S. rail equipment manufacturer. The agreement was subsequently amended on January 25, 2019. On February 25, 2019, we completed the spin-off and subsequent merger. In the transaction, participating GE shareholders received shares of Wabtec common stock representing an approximately 24.3% ownership interest in Wabtec common stock. GE received approximately $2.9 billion in cash as well as shares of Wabtec common stock and Wabtec non-voting convertible preferred stock that, together, represent an approximately 24.9% ownership interest in Wabtec. In addition, GE is entitled to additional cash consideration up to $0.5 billion for tax benefits that Wabtec realizes from the transaction.
|
•
|
North American rail carloads increased 3.4% in 2018, driven primarily by an increase in intermodal
(a)
traffic.
|
•
|
Despite improving carload volume, parked locomotives began to increase in the second half of 2018. This increase of 4.7% from the prior year is attributable to some fleet overcapacity and constrained spending by the railroads limiting fleet expansion.
|
•
|
Global locomotive deliveries were down from 433 units in 2017 to 272 units in 2018 driven primarily by the optimization of existing fleets in North America.
|
•
|
In addition, price increases associated with additional U.S. tariffs imposed on China could negatively affect demand and reduce rail volumes, particularly those linked to farm exports, auto exports, and intermodal flows.
|
MD&A
|
SEGMENT OPERATIONS | TRANSPORTATION
|
GEOGRAPHIC REVENUES
(Dollars in billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
U.S.
|
$
|
2.2
|
|
$
|
2.2
|
|
Non-U.S.
|
|
|
||||
Europe
|
0.3
|
|
0.2
|
|
||
Asia
|
0.4
|
|
0.3
|
|
||
Americas
|
0.7
|
|
0.6
|
|
||
Middle East and Africa
|
0.2
|
|
0.7
|
|
||
Total Non-U.S.
|
$
|
1.7
|
|
$
|
1.7
|
|
Total Segment Revenues
|
$
|
3.9
|
|
$
|
3.9
|
|
|
|
|
||||
Non-U.S. Revenues as a % of Segment Revenues
|
43
|
%
|
44
|
%
|
SUB-SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Locomotives
|
$
|
0.9
|
|
$
|
1.3
|
|
Services
|
2.1
|
|
1.9
|
|
||
Mining
|
0.6
|
|
0.4
|
|
||
Other(a)
|
0.4
|
|
0.4
|
|
||
Total Segment Revenues
|
$
|
3.9
|
|
$
|
3.9
|
|
ORDERS AND BACKLOG
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Orders
|
|
|
||||
Equipment
|
$
|
2.8
|
|
$
|
2.1
|
|
Services
|
2.9
|
|
2.8
|
|
||
Total
|
$
|
5.7
|
|
$
|
4.9
|
|
|
|
|
||||
Backlog
|
|
|
||||
Equipment
|
$
|
6.0
|
|
$
|
4.8
|
|
Services
|
12.9
|
|
13.3
|
|
||
Total
|
$
|
18.9
|
|
$
|
18.1
|
|
LOCOMOTIVES
|
2018
|
|
2017
|
|
V
|
|
Unit Orders
|
1,072
|
|
438
|
|
634
|
|
Unit Sales
|
272
|
|
433
|
|
(161
|
)
|
MD&A
|
SEGMENT OPERATIONS | TRANSPORTATION
|
SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Revenues
|
|
|
|
||||||
Equipment
|
$
|
1.4
|
|
$
|
1.7
|
|
$
|
2.3
|
|
Services
|
2.5
|
|
2.2
|
|
2.3
|
|
|||
Total(a)
|
$
|
3.9
|
|
$
|
3.9
|
|
$
|
4.6
|
|
|
|
|
|
||||||
SEGMENT PROFIT AND PROFIT MARGIN
(Dollars in billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Segment profit(b)
|
$
|
0.6
|
|
$
|
0.6
|
|
$
|
1.0
|
|
Segment profit margin
|
16.2
|
%
|
16.3
|
%
|
21.1
|
%
|
(a)
|
Transportation segment revenues represent 3% of both total industrial segment revenues and total segment revenues for the year ended December 31, 2018.
|
(b)
|
Transportation segment profit represents 6% of total industrial segment profit for the year ended December 31, 2018.
|
2018 – 2017 COMMENTARY:
|
•
|
North American carload volume increased 3.4% during 2018, driven primarily by an increase in intermodal traffic. Despite improving carload volume, the number of parked locomotives began to increase in the second half of 2018. The increase in parked locomotives of 4.7% from the prior year is attributable to some fleet overcapacity and constrained spending by the railroads limiting fleet expansion.
|
•
|
Equipment volume decreased primarily driven by 161 fewer locomotive shipments. This decrease was primarily offset by growth in mining of $0.2 billion and an increase in services revenues of $0.2 billion as railroads are running their locomotives longer. In addition, unparkings did occur in the first half of the year, and these 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 locomotive shipments and cost pressure from material inflation and the impact of tariffs, offset by favorable business mix from a higher proportion of services volume.
|
2017 – 2016 COMMENTARY:
|
•
|
The North American market continues to see overcapacity and spending budget cuts by the railroads limiting fleet expansion. However, carload volume increased 4.8% during the year driven by an increase in coal. With improving carload volume, the number of parked locomotives has decreased 18% from the prior year.
|
•
|
Equipment volume decreased primarily driven by 266 fewer locomotive shipments in North America due to continuing challenging market conditions. Services revenues also decreased driven by lower transactional services volume.
|
•
|
The decrease in profit was driven by lower equipment volume, partially offset by favorable business mix from a higher proportion of services volume including an increase in earnings in our long-term service contracts. Additionally, cost reduction actions including restructuring, supply chain initiatives and work transfers to more cost-competitive locations continued during the year.
|
MD&A
|
SEGMENT OPERATIONS | LIGHTING
|
Products & Services
|
|
Lighting includes the GE Lighting business, which is primarily focused on consumer lighting applications in the U.S. and Canada, and Current, powered by GE (Current), which is focused on providing energy efficiency and productivity solutions for commercial, industrial and municipal customers. We employ approximately 3,000 people, serve customers in 97 countries, and our headquarters are located in East Cleveland, OH for GE Lighting and Boston, MA for Current.
|
•
|
GE Lighting
–
focused on driving innovation and growth in light emitting diode (LED) and connected home technology. The business offers LEDs in a variety of shapes, sizes, wattages and color temperatures. It is also investing in the growing smart home category, offering a suite of connected lighting products with simple connection points that offer new opportunities to do more at home.
|
•
|
Current
–
combines advanced LED technology with networked sensors and software to make commercial buildings, retail stores, industrial facilities and cities more energy efficient and productive.
|
Competition & Regulation
|
Significant Trends & Developments
|
•
|
We classified the substantial majority of our Lighting segment as held for sale in the fourth quarter of 2017.
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.
|
•
|
In November 2018, we announced an agreement to sell our Current, powered by GE business within our Lighting segment to American Industrial Partners (AIP), a New York-based private equity firm. The deal is expected to close in early 2019, subject to customary closing conditions and regulatory approval.
|
GEOGRAPHIC REVENUES
(Dollars in billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
U.S.
|
$
|
1.4
|
|
$
|
1.5
|
|
Non-U.S.
|
|
|
||||
Europe
|
0.1
|
|
0.2
|
|
||
Asia
|
—
|
|
—
|
|
||
Americas
|
0.2
|
|
0.2
|
|
||
Middle East and Africa
|
—
|
|
0.1
|
|
||
Total Non-U.S.
|
$
|
0.3
|
|
$
|
0.5
|
|
Total Segment Revenues
|
$
|
1.7
|
|
$
|
1.9
|
|
|
|
|
||||
Non-U.S. Revenues as a % of Segment Revenues
|
17
|
%
|
25
|
%
|
SUB-SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Current
|
$
|
1.0
|
|
$
|
1.0
|
|
GE Lighting
|
0.7
|
|
0.9
|
|
||
Total Segment Revenues
|
$
|
1.7
|
|
$
|
1.9
|
|
ORDERS AND BACKLOG
(In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Orders
|
|
|
||||
Equipment
|
$
|
0.9
|
|
$
|
1.1
|
|
Services
|
—
|
|
0.1
|
|
||
Total
|
$
|
1.0
|
|
$
|
1.2
|
|
|
|
|
||||
Backlog
|
|
|
||||
Equipment
|
$
|
0.2
|
|
$
|
0.2
|
|
Services
|
—
|
|
—
|
|
||
Total
|
$
|
0.2
|
|
$
|
0.2
|
|
MD&A
|
SEGMENT OPERATIONS | LIGHTING
|
SEGMENT REVENUES
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Revenues
|
|
|
|
||||||
Equipment
|
$
|
1.6
|
|
$
|
1.9
|
|
$
|
4.6
|
|
Services
|
0.1
|
|
0.1
|
|
0.2
|
|
|||
Total(a)(b)
|
$
|
1.7
|
|
$
|
1.9
|
|
$
|
4.8
|
|
|
|
|
|
||||||
SEGMENT PROFIT AND PROFIT MARGIN(a)
(Dollars in billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Segment profit(c)
|
$
|
0.1
|
|
$
|
—
|
|
$
|
0.2
|
|
Segment profit margin
|
4.1
|
%
|
1.4
|
%
|
3.5
|
%
|
(a)
|
Lighting segment included Appliances through its disposition in the second quarter of 2016.
|
(b)
|
Lighting segment revenues represent 1% of both total industrial segment revenues and total segment revenues for the year ended December 31, 2018.
|
(c)
|
Lighting segment profit represents 1% of total industrial segment profit for the year ended December 31, 2018.
|
2018 – 2017 COMMENTARY:
|
•
|
The traditional lighting market continued to decline in 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.
|
•
|
Revenues decreased due to the disposition of our GE Lighting business in Europe, the Middle East, Africa and Turkey and our Global Automotive Lighting business in the second quarter of 2018. Excluding the impact of these dispositions, equipment revenues increased due to higher LED volume and Digital sales, partially offset by lower traditional lighting and solar sales and lower LED prices.
|
•
|
The increase in profit was driven by savings from restructuring and decreased investment and controllable spending, partially offset by regional exits and lower prices.
|
2017 – 2016 COMMENTARY:
|
•
|
The traditional lighting market continued to be challenging due to continued U.S. energy efficiency regulations and market shifts away from traditional lighting products in favor of more energy-efficient, cost-saving options.
|
•
|
The main driver of the decrease in revenues was the Appliances disposition
which contributed $2.6 billion in the first half of 2016 that did not recur in 2017 following the sale in June 2016.
For the remaining Lighting business, equipment revenues decreased due to lower traditional lighting product sales and LED price pressure, partially offset by LED and solar growth in Current. In addition, revenues further decreased due to Lighting regional exits outside of North America.
|
•
|
The decrease in profit was due to lower volume driven by the Appliances disposition in June 2016. Excluding this disposition, profit increased for the remaining Lighting business driven by savings from restructuring, regional exits and decreased investment and controllable spending. These increases were partially offset by pressure in North America from declining traditional lighting product sales being only partially offset by increasing LED sales.
|
MD&A
|
SEGMENT OPERATIONS | CAPITAL
|
Products & Services
|
•
|
GE Capital Aviation Services (GECAS)
- is an aviation lessor and financier with over 50 years of experience. GECAS provides a wide range of assets including narrow- or widebody aircraft, regional jets, turboprops, freighters, engines, helicopters, financing and materials. GECAS offers a broad array of financing products and services on these assets including operating leases, sale-leasebacks, secured debt financing, asset trading and servicing, and airframe parts management. GECAS owns, services or has on order more than 1,850 aircraft, plus provides loans collateralized by approximately 320 aircraft. GECAS serves approximately 250 customers in over 75 countries from a network of 24 offices around the world. GECAS acquired Milestone Aviation Group (Milestone) in January 2015, adding helicopter leasing and financing. Milestone provides financing options to operators in the offshore oil & gas industries, search & rescue, EMS, police surveillance, mining and other utility missions. Its current fleet and forward order book of medium and heavy helicopter models include models from AgustaWestland, Airbus and Sikorsky available for lease. Its adjacency businesses - GECAS Engine Leasing and Asset Management Services (Parts) - offer customers solutions and services for spare engine leasing, spare parts financing/management, and aviation consulting services.
|
•
|
Energy Financial Services (EFS)
- a global energy investor that provides financial solutions and underwriting capabilities for Power, Renewable Energy, and Oil & Gas to meet rising demand and sustainability imperatives.
|
•
|
Industrial Finance (IF)
- its Working Capital Solutions business provides working capital services to GE and through December 31, 2018, it also provided healthcare equipment financing.
|
•
|
Insurance
-
Refer to the Other Items - Insurance section within this MD&A for a detailed business description.
|
Competition & Regulation
|
Significant Trends & Developments
|
•
|
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 EFS and IF businesses (GE Capital strategic shift). We continue to evaluate strategic options to accelerate the further reduction in the size of GE Capital. Certain of these options could have a material financial charge depending on the timing, negotiated terms and conditions of any ultimate arrangements.
|
•
|
In 2018, we completed the sale of EFS' debt origination business, various EFS investments and HEF financing receivables within our Capital segment for proceeds of approximately $8.3 billion and recognized a net pre-tax gain of approximately $0.2 billion. These sales, along with net collections of financing receivables and maturities of liquidity investments primarily provided the cash necessary to reduce the GE Capital balance sheet through net repayment of borrowings of $21.1 billion.
|
•
|
GE Capital paid no common dividends in 2018 and does not expect to make a common dividend distribution to GE for the foreseeable future. GE Capital paid common dividends of $4.0 billion to GE during the year ended December 31, 2017.
|
•
|
Refer to the Other Items - Insurance section within this MD&A for further discussion of the accounting estimates and assumptions in our insurance reserves and their sensitivity to change. Also, see Notes 1 and 12 to the consolidated financial statements for further information.
|
MD&A
|
SEGMENT OPERATIONS | CAPITAL
|
SUB-SEGMENT ASSETS
(In billions)
|
2018
|
|
2017
|
|
||
GECAS
|
$
|
41.7
|
|
$
|
40.0
|
|
EFS
|
3.0
|
|
9.9
|
|
||
Industrial Finance and WCS(a)
|
15.8
|
|
25.8
|
|
||
Insurance
|
40.3
|
|
39.9
|
|
||
Other continuing operations
|
18.6
|
|
35.3
|
|
||
Total segment assets
|
$
|
119.3
|
|
$
|
150.8
|
|
(a)
|
In the second quarter of 2018, management of our Working Capital Solutions (WCS) business was transferred to our Treasury operations.
|
GEOGRAPHIC REVENUES
(Dollars in billions)
|
2018
|
|
2017
|
|
||
U.S.
|
$
|
5.3
|
|
$
|
4.4
|
|
Non-U.S.
|
|
|
||||
Europe
|
1.4
|
|
1.5
|
|
||
Asia
|
1.4
|
|
1.4
|
|
||
Americas
|
0.6
|
|
0.8
|
|
||
Middle East and Africa
|
0.9
|
|
1.0
|
|
||
Total Non-U.S.
|
4.3
|
|
4.7
|
|
||
Total
|
$
|
9.6
|
|
$
|
9.1
|
|
|
|
|
||||
Non-U.S. Revenues as a % of Segment Revenues
|
45
|
%
|
52
|
%
|
RATIO
|
2018
|
2017
|
GE Capital debt to equity
|
5.74:1
|
7.06:1
|
SUB-SEGMENT REVENUES(a)
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
GECAS
|
$
|
4.9
|
|
$
|
5.1
|
|
$
|
5.4
|
|
EFS
|
0.1
|
|
(0.5
|
)
|
0.7
|
|
|||
Industrial Finance and WCS
|
1.5
|
|
1.5
|
|
1.2
|
|
|||
Insurance
|
2.9
|
|
2.9
|
|
2.9
|
|
|||
Other continuing operations
|
0.1
|
|
—
|
|
0.7
|
|
|||
Total segment revenues
|
$
|
9.6
|
|
$
|
9.1
|
|
$
|
10.9
|
|
(a)
|
Capital
segment revenues represent 8% of total segment revenues for the year ended December 31, 2018.
|
SUB-SEGMENT PROFIT(a)
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
GECAS
|
$
|
1.2
|
|
$
|
2.1
|
|
$
|
1.4
|
|
EFS
|
0.1
|
|
(1.5
|
)
|
0.4
|
|
|||
Industrial Finance and WCS
|
0.3
|
|
0.5
|
|
0.4
|
|
|||
Insurance
|
(0.2
|
)
|
(7.2
|
)
|
(0.1
|
)
|
|||
Other continuing operations(b)
|
(1.9
|
)
|
(0.7
|
)
|
(3.3
|
)
|
|||
Total segment profit
|
$
|
(0.5
|
)
|
$
|
(6.8
|
)
|
$
|
(1.3
|
)
|
(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.
|
(b)
|
Other continuing operations in 2018 is primarily driven by excess interest costs from debt previously allocated to assets that have been sold as part of the GE Capital Exit Plan, preferred stock dividend costs and interest costs not allocated to GE Capital segments, which are driven by GE Capital’s interest allocation process. Interest costs are allocated to GE Capital segments based on the tenor of their assets using the market rate at the time of origination. Debt on the GE Capital balance sheet was issued based on the profile of our balance sheet prior to the decision in 2015 to strategically shrink GE Capital. It included long dated maturities that are no longer consistent with a much smaller business. As a result, actual interest expense is higher than interest expense allocated to the remaining GE Capital segments. Preferred stock dividend costs will become a GE obligation in 2021 as the intercompany securities convert into common equity and excess interest costs from debt previously allocated to assets that have been sold are expected to run off by 2020. In addition, we anticipate unallocated interest costs to decline gradually as debt matures and/or is refinanced.
|
2018 – 2017 COMMENTARY:
|
2017 – 2016 COMMENTARY:
|
MD&A
|
CORPORATE ITEMS AND ELIMINATIONS
|
REVENUES AND OPERATING PROFIT (COST)
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
||||
Revenues
|
|
|
|
|||||||
|
Eliminations and other
|
$
|
(3,600
|
)
|
$
|
(3,995
|
)
|
$
|
(3,760
|
)
|
Total Corporate Items and Eliminations
|
$
|
(3,600
|
)
|
$
|
(3,995
|
)
|
$
|
(3,760
|
)
|
|
|
|
|
|
|
||||||
Operating profit (cost)
|
|
|
|
|||||||
|
Gains (losses) on disposals(a)
|
$
|
1,350
|
|
$
|
926
|
|
$
|
3,480
|
|
|
Restructuring and other charges(b)
|
(2,958
|
)
|
(3,351
|
)
|
(3,544
|
)
|
|||
|
Goodwill impairments
|
(22,136
|
)
|
(1,165
|
)
|
—
|
|
|||
|
Eliminations and other
|
(1,187
|
)
|
(1,636
|
)
|
(2,000
|
)
|
|||
Total Corporate Items and Eliminations
|
$
|
(24,931
|
)
|
$
|
(5,225
|
)
|
$
|
(2,064
|
)
|
(a)
|
Includes gains (losses) on disposed or held for sale businesses. The total amount realized in the second half of 2018 amounted to $161 million related to the sale of our Pivotal software equity investment. Any fair value adjustments recorded through the date of sale were considered unrealized.
|
(b)
|
Subsequent to the Baker Hughes transaction, restructuring and other charges are included in the determination of segment profit for our Oil & Gas segment.
|
CORPORATE COSTS (OPERATING)
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
||||||
Total Corporate Items and Eliminations (GAAP)
|
$
|
(24,931
|
)
|
$
|
(5,225
|
)
|
$
|
(2,064
|
)
|
|
Less: restructuring and other charges
|
(2,958
|
)
|
(3,351
|
)
|
(3,544
|
)
|
||||
Less: gains (losses) on disposals
|
1,350
|
|
926
|
|
3,480
|
|
||||
Less: goodwill impairments
|
(22,136
|
)
|
(1,165
|
)
|
—
|
|
||||
Adjusted total corporate costs (operating) (Non-GAAP)
|
$
|
(1,187
|
)
|
$
|
(1,636
|
)
|
$
|
(2,000
|
)
|
•
|
Decrease in inter-segment eliminations
|
•
|
$21.0 billion of higher goodwill impairment charges due to $22.0 billion of goodwill impairments in our Power business and a $0.1 billion goodwill impairment in our Renewable business in 2018 compared to a $1.2 billion charge for the impairment of Power Conversion goodwill in 2017.
|
•
|
$0.4 billion of lower restructuring and other charges primarily driven by $0.7 billion of lower restructuring costs across all GE industrial segments during 2018 and $0.2 billion of lower charges in 2018 for the impairment of a power plant asset. These decreases were partly offset by $0.6 billion of impairments within our Power business in 2018.
|
•
|
$0.4 billion of higher net gains from disposed or held for sale businesses, which is primarily related to the $0.7 billion gain from the sale of our Distributed Power business to Advent International in 2018, $0.7 billion gain from the sale of our Value Based Care business to Veritas Capital in 2018, $0.3 billion gain from the sale of our Industrial Solutions business to ABB in 2018, $0.2 billion gain from the sale of our Pivotal Software investment in 2018 and $0.4 billion of lower held for sale losses in 2018 primarily related to our Lighting and Aviation segments. These increases were partly offset by a $1.9 billion gain from the sale of our Water business to Suez in 2017.
|
•
|
$0.4 billion of lower Corporate costs from restructuring and cost reduction actions.
|
MD&A
|
CORPORATE ITEMS AND ELIMINATIONS
|
•
|
Increase in inter-segment eliminations.
|
•
|
$2.6 billion of lower net gains from disposed or held for sale businesses, which is primarily related to the $3.1 billion gain from the sale of our Appliances business to Haier in 2016, $0.4 billion gain from the sale of GE Asset Management to State Street Corporation in 2016 and $1.0 billion of held for sale losses in 2017 related to our Lighting and Aviation businesses. These decreases were partially offset by a $1.9 billion gain from the sale of our Water business to Suez in 2017.
|
•
|
$1.2 billion of higher goodwill charges related to the impairment of Power Conversion goodwill in 2017.
|
•
|
$0.2 billion of lower restructuring and other charges primarily driven by a decrease of $0.5 billion of Oil & Gas related charges recorded at Corporate, partially offset by a charge of $0.3 billion for the impairment of a power plant asset.
|
•
|
$0.4 billion of lower Corporate costs from restructuring and cost reduction actions in 2017.
|
RESTRUCTURING & OTHER CHARGES
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Workforce reductions
|
$
|
0.9
|
|
$
|
1.2
|
|
$
|
1.3
|
|
Plant closures & associated costs and other asset write-downs
|
1.8
|
|
1.9
|
|
1.3
|
|
|||
Acquisition/disposition net charges
|
0.8
|
|
0.8
|
|
0.6
|
|
|||
Other
|
0.1
|
|
0.2
|
|
0.3
|
|
|||
Total(a)
|
$
|
3.6
|
|
$
|
4.1
|
|
$
|
3.5
|
|
(a)
|
Subsequent to the Baker Hughes transaction, restructuring and other charges are included in the determination of segment profit for our Oil & Gas segment.
|
MD&A
|
CORPORATE ITEMS AND ELIMINATIONS
|
COSTS AND GAINS NOT INCLUDED IN
|
Costs
|
|
Gains (Losses)
|
|
||||||||||||||||||||
SEGMENT RESULTS
(In billions)
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Power
|
$
|
23.5
|
|
(a)
|
$
|
2.0
|
|
(a)
|
$
|
1.5
|
|
(a)
|
$
|
1.0
|
|
|
$
|
1.9
|
|
(b)
|
$
|
—
|
|
|
Renewable Energy
|
0.2
|
|
(c)
|
0.3
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
Aviation
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
(0.1
|
)
|
(d)
|
(0.3
|
)
|
(d)
|
(0.1
|
)
|
|
||||||
Oil & Gas(e)
|
—
|
|
|
0.2
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
Healthcare
|
0.2
|
|
|
0.3
|
|
|
0.5
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
||||||
Transportation
|
0.1
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
Lighting(f)
|
0.1
|
|
|
0.2
|
|
|
0.3
|
|
|
(0.5
|
)
|
(d)
|
(0.7
|
)
|
(d)
|
3.1
|
|
(g)
|
||||||
Total
|
$
|
24.1
|
|
|
$
|
3.3
|
|
|
$
|
3.7
|
|
|
$
|
1.2
|
|
|
$
|
0.9
|
|
|
$
|
3.0
|
|
|
(a)
|
Included a charge of $22.0 billion for the impairment of Power goodwill in 2018, $1.2 billion for the impairment of Power Conversion goodwill in 2017 and $0.9 billion of Alstom-related restructuring and other charges in 2016.
|
(b)
|
Related to the sale of our Water business in the third quarter of 2017.
|
(c)
|
Included a charge of $0.1 billion for the impairment of our Hydro business within Renewable Energy in 2018.
|
(d)
|
Related to held for sale charges in our Lighting and Aviation businesses in 2017 and 2018.
|
(e)
|
Subsequent to the Baker Hughes transaction restructuring and other charges are included in the determination of segment profit for our Oil & Gas segment.
|
(f)
|
The Lighting segment included the Appliances business through its disposition in the second quarter of 2016.
|
(g)
|
Related to the sale of our Appliances business in the second quarter of 2016.
|
BENEFIT PLANS COST
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Principal pension plans
|
$
|
4.3
|
|
$
|
3.7
|
|
$
|
3.6
|
|
Other pension plans
|
(0.1
|
)
|
0.3
|
|
0.4
|
|
|||
Principal retiree benefit plans
|
(0.1
|
)
|
—
|
|
0.1
|
|
|||
Total
|
$
|
4.1
|
|
$
|
4.0
|
|
$
|
4.1
|
|
MD&A
|
OTHER CONSOLIDATED INFORMATION
|
PRINCIPAL PENSION PLANS(a)
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|||
Discount rates
|
3.64
|
%
|
4.11
|
%
|
4.38
|
%
|
Expected rate of return
|
6.75
|
%
|
7.50
|
%
|
7.50
|
%
|
•
|
Postretirement benefit plan cost increased $0.1 billion as lower service cost resulting from fewer active plan participants was offset by effects of lower discount rates and higher loss amortization related to our principal pension plans.
|
•
|
Postretirement benefit plans cost decreased
$0.1 billion
as lower service cost resulting from fewer active principal pension plan participants and earnings from pension plan assets, and the effects of lower discount rates were essentially offset by higher loss amortization related to our principal pension plans.
|
•
|
Discount rate at
4.34%
for our principal pension plans, reflecting current long-term interest rates.
|
•
|
Assumed long-term return on our principal pension plan assets of
6.75%
, unchanged from 2018.
|
•
|
The GE Pension Plan deficit decreased in
2018
primarily due to higher discount rates and employer contributions, partially offset by investment performance and the growth in pension liabilities.
|
•
|
The decrease in the deficit of our other pension plans was primarily attributable to higher discount rates and employer contributions, partially offset by investment performance.
|
•
|
The decrease in the principal retiree benefit plans deficit was primarily attributable to employer contributions, higher discount rates and favorable cost trends, partially offset by the growth in retiree benefit liabilities.
|
MD&A
|
OTHER CONSOLIDATED INFORMATION
|
(a)
|
Includes taxes paid related to discontinued operations.
|
•
|
The consolidated income tax rate for
2018
was (2.9)%.The negative effective tax rate for 2018 reflects a tax expense on a consolidated pre-tax loss.
|
•
|
The 2018 effective tax rate included an insignificant charge associated with the adjustment of the provisional estimate of the impact of the 2017 enactment of U.S. tax reform. As discussed in Note 14 to the consolidated financial statements, the 2017 impact of U.S. tax reform on the revaluation of deferred taxes and the transition tax on historic earnings was 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. Additional guidance may be issued after 2018 and any resulting effect will be recorded in the quarter of issuance.
|
•
|
The increase in the consolidated provision for income taxes was primarily attributable to the decrease in pre-tax loss (excluding non-deductible goodwill impairments) with a tax benefit above the average tax rate and the decrease in benefit from global operations including an increase in valuation allowances on the non-U.S. deferred tax assets of the Power business and the decision to execute internal restructuring for separation actions related to the Healthcare business.
|
•
|
Partially offsetting this increase was the decrease in the consolidated provision for income taxes attributable to the insignificant 2018 charge to adjust the impact of enactment of tax reform compared to the $4.5 billion charge in 2017 for the estimated impact of enactment.
|
•
|
The consolidated income tax rate for 2017 was 23.4%. This effective tax rate reflects a tax benefit on a consolidated pre-tax loss.
|
•
|
The effective tax rate included a provisional charge of $4.5 billion associated with the enactment of U.S. tax reform.
|
•
|
The consolidated tax rate excluding the effect of U.S. tax reform was 63.9%. This effective tax rate was also a tax benefit on a consolidated pre-tax loss. The tax benefit excluding the impact of tax reform was larger than 35% because of the benefit from lower-taxed international income compared to losses taxed at higher than the average rate and the benefit of the lower-taxed disposition of the Water business.
|
•
|
The decrease in the consolidated provision for income taxes was primarily attributable to the increase in the pre-tax loss with a tax benefit above the average tax rate including the one-time charge to revalue insurance reserves partially offset by the tax charge associated with the enactment of U.S. tax reform.
|
MD&A
|
OTHER CONSOLIDATED INFORMATION
|
BENEFITS FROM LOWER-TAXED GLOBAL OPERATIONS
(In billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Benefit/(detriment) of lower foreign tax rate on non-U.S. earnings
|
$
|
(0.6
|
)
|
$
|
0.7
|
|
$
|
0.8
|
|
Benefit of audit resolutions
|
0.2
|
|
—
|
|
0.2
|
|
|||
Other
|
(0.9
|
)
|
2.8
|
|
1.1
|
|
|||
Total benefit/(detriment)
|
$
|
(1.3
|
)
|
$
|
3.5
|
|
$
|
2.1
|
|
GE EFFECTIVE TAX RATE (EXCLUDING GE CAPITAL EARNINGS)
(Dollars in billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
GE ETR, excluding GE Capital earnings*
|
(4.8
|
)%
|
248.9
|
%
|
3.3
|
%
|
|||
GE provision for income taxes
|
$
|
1.0
|
|
$
|
3.7
|
|
$
|
0.3
|
|
MD&A
|
OTHER CONSOLIDATED INFORMATION
|
•
|
The GE provision for income taxes decreased in 2018 because of the nonrecurrence of the $4.9 billion charge for the provisional charge associated with the enactment of U.S. tax reform.
|
•
|
Excluding the charge associated with U.S. tax reform, the GE tax provision increased by $2.3 billion. The increase was primarily due to the decrease in benefit from global operations including an increase in valuation allowances on the non-U.S. deferred tax assets of the Power business and the decision to execute internal restructuring for separation actions related to the Healthcare business.
|
•
|
The GE provision for income taxes increased in 2017 because of the $4.9 billion charge for the provisional estimate of the transition tax on historic foreign earnings ($2.9 billion) and effect of revaluing our deferred taxes ($2.0 billion).
|
•
|
Excluding the charge associated with U.S. tax reform, the GE tax provision decreased by $1.5 billion. The decrease was due primarily to a decrease in pre-tax income, excluding non-deductible held-for-sale and impairment losses, which is taxed at above the average tax rate.
|
GE CAPITAL EFFECTIVE TAX RATE
(Dollars in billions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
GE Capital ETR
|
99.7
|
%
|
49.9
|
%
|
70.3
|
%
|
|||
GE Capital provision (benefit) for income taxes
|
$
|
(0.4
|
)
|
$
|
(6.3
|
)
|
$
|
(1.4
|
)
|
•
|
The decrease in the tax benefit at GE Capital from a benefit of $6.3 billion in 2017 to a benefit of $0.4 billion in 2018 is primarily due to the decrease in the pre-tax loss with a tax benefit above the average tax rate including the nonrecurrence in the one-time charge to revalue insurance reserves.
|
•
|
The increase in the tax benefit at GE Capital from a benefit of $1.4 billion in 2016 to a benefit of $6.3 billion is primarily due to the increase in the pre-tax loss with a tax benefit above the average tax rate including the one-time charge to revalue insurance reserves.
|
•
|
The GE Capital tax provision included a benefit of $0.4 billion for the provisional estimate of the transition tax on historic foreign earnings ($1.8 billion benefit) partially offset by the effect of revaluing our deferred taxes ($1.4 billion charge).
|
MD&A
|
OTHER CONSOLIDATED INFORMATION
|
GEOGRAPHIC REVENUES
|
|
|
|
V%
|
||||||||||
(Dollars in billions)
|
2018
|
|
2017
|
|
2016
|
|
2018-2017
|
|
2017-2016
|
|||||
|
|
|
|
|
|
|
||||||||
U.S.
|
$
|
46.8
|
|
$
|
44.3
|
|
$
|
49.3
|
|
6
|
%
|
|
-10
|
%
|
Non-U.S.
|
|
|
|
|
|
|
||||||||
Europe
|
23.9
|
|
23.2
|
|
21.3
|
|
|
|
|
|||||
Asia
|
22.9
|
|
20.8
|
|
20.4
|
|
|
|
|
|||||
Americas
|
11.8
|
|
11.0
|
|
10.7
|
|
|
|
|
|||||
Middle East and Africa
|
16.3
|
|
18.9
|
|
17.7
|
|
|
|
|
|||||
Total Non-U.S.
|
74.9
|
|
74.0
|
|
70.1
|
|
1
|
%
|
|
5
|
%
|
|||
Total
|
$
|
121.6
|
|
$
|
118.2
|
|
$
|
119.5
|
|
3
|
%
|
|
(1
|
)%
|
|
|
|
|
|
|
|
||||||||
Non-U.S. Revenues as a % of Consolidated Revenues
|
62
|
%
|
63
|
%
|
59
|
%
|
|
|
|
•
|
Increased revenues by $0.6 billion in 2018, primarily driven by the euro ($0.9 billion), the pound sterling ($0.1 billion) and the Chinese renminbi ($0.1 billion), partially offset by decreases in revenue driven by the Brazilian real ($0.4 billion) and the Indian rupee ($0.1 billion).
|
•
|
Increased revenues by $0.6 billion in 2017, primarily driven by the euro ($0.4 billion), the Brazilian real ($0.3 billion) and the Indian rupee ($0.1 billion), partially offset by decreases in revenue driven by the pound sterling ($0.2 billion).
|
MD&A
|
OTHER CONSOLIDATED INFORMATION
|
TOTAL ASSETS (CONTINUING OPERATIONS)
December 31 (In billions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
U.S.
|
$
|
159.8
|
|
$
|
181.6
|
|
Non-U.S.
|
|
|
||||
Europe
|
82.4
|
|
117.8
|
|
||
Asia
|
22.9
|
|
23.6
|
|
||
Americas
|
18.0
|
|
21.3
|
|
||
Other Global
|
21.4
|
|
18.9
|
|
||
Total Non-U.S.
|
$
|
144.7
|
|
$
|
181.7
|
|
Total
|
$
|
304.5
|
|
$
|
363.3
|
|
MD&A
|
CAPITAL RESOURCES AND LIQUIDITY
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(In billions)
|
December 31, 2018
|
|
|
|
December 31, 2018
|
|
||
|
|
|
|
|
||||
GE(a)
|
$
|
20.5
|
|
|
U.S.
|
$
|
18.0
|
|
GE Capital(b)
|
14.5
|
|
|
Non-U.S.
|
17.0
|
|
(a)
|
At
December 31, 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 $1.2 billion of BHGE cash and equivalents, which is subject to similar restrictions.
|
(b)
|
Excluded $0.5 billion classified within discontinued operations. Included $0.7 billion held in insurance and banking entities which are subject to regulatory restrictions.
|
MD&A
|
CAPITAL RESOURCES AND LIQUIDITY
|
GE COMMITTED AND AVAILABLE CREDIT FACILITIES
(In billions)
|
December 31, 2018
|
||
|
|
||
Unused back-up revolving credit facility(a)
|
$
|
20.0
|
|
Revolving credit facilities (exceeding one year)(b)
|
23.9
|
|
|
Bilateral revolving credit facilities (364-day)(c)
|
3.6
|
|
|
Total committed credit facilities
|
$
|
47.5
|
|
Less offset provisions(d)
|
(6.7
|
)
|
|
Total net available credit facilities
|
$
|
40.8
|
|
(a)
|
Consisted of a $20 billion syndicated credit facility extended by 36 banks, expiring in 2021.
|
(b)
|
Included a $19.8 billion syndicated credit facility extended by six banks, expiring in 2020.
|
(c)
|
Consisted of credit facilities extended by seven banks, with expiration dates ranging from February 2019 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.
|
(In billions)
|
Commercial Paper(a)
|
Revolving Credit Facilities(b)
|
Total(a)(c)
|
||||||
|
|
|
|
||||||
2018
|
|
|
|
||||||
Average borrowings during the fourth quarter
|
$
|
7.9
|
|
$
|
2.5
|
|
$
|
10.4
|
|
Maximum borrowings outstanding during the fourth quarter
|
$
|
10.7
|
|
$
|
5.1
|
|
$
|
14.8
|
|
Ending balance at December 31
|
$
|
3.0
|
|
$
|
—
|
|
$
|
3.0
|
|
|
|
|
|
||||||
2017
|
|
|
|
||||||
Average borrowings during the fourth quarter
|
$
|
17.3
|
|
$
|
0.1
|
|
$
|
17.4
|
|
Maximum borrowings outstanding during the fourth quarter
|
$
|
19.7
|
|
$
|
0.3
|
|
$
|
19.7
|
|
Ending balance at December 31
|
$
|
3.0
|
|
$
|
—
|
|
$
|
3.0
|
|
(a)
|
Excluded GE Capital commercial paper, which in the fourth quarter of 2018 had average, maximum and ending balances of $0.6 billion, $3.0 billion, and an insignificant amount, respectively. GE Capital does not expect to issue any new commercial paper in the foreseeable future.
|
(b)
|
Consisted of activity in the revolving credit facilities exceeding one year and the bilateral revolving credit facilities (364-day). There was no activity in the $20 billion back-up revolving credit facility, which remains unused.
|
(c)
|
Total average and maximum borrowings are calculated based on the daily outstanding balance of the sum of commercial paper and revolving credit facilities.
|
MD&A
|
CAPITAL RESOURCES AND LIQUIDITY
|
December 31, 2018 (in billions)
|
GE
|
|
GE Capital
|
|
Consolidated(a)
|
|
|||
|
|
|
|
||||||
Total short- and long-term borrowings
|
$
|
68.6
|
|
$
|
43.0
|
|
$
|
110.0
|
|
|
|
|
|
||||||
Debt assumed by GE from GE Capital
|
(36.3
|
)
|
36.3
|
|
—
|
|
|||
Intercompany loans with right of offset
|
13.7
|
|
(13.7
|
)
|
—
|
|
|||
Total intercompany payable (receivable) between GE and GE Capital
|
(22.5
|
)
|
22.5
|
|
—
|
|
|||
|
|
|
|
||||||
Total borrowings adjusted for assumed debt and intercompany loans
|
$
|
46.1
|
|
$
|
65.5
|
|
$
|
110.0
|
|
(a)
|
Included
$1.6 billion
elimination of other
GE borrowings from GE Capital, primarily related to timing of cash cutoff associated with the GE receivables monetization program. This amount was $2.3 billion in 2017.
|
|
GE
|
|
|
GE Capital
|
||||||||||
December 31 (Dollars in billions)
|
2018
|
|
2017
|
|
|
December 31 (Dollars in billions)
|
2018
|
|
2017
|
|
||||
Commercial paper
|
$
|
3.0
|
|
$
|
3.0
|
|
|
Commercial paper
|
$
|
—
|
|
$
|
5.0
|
|
GE Senior notes
|
20.5
|
|
21.0
|
|
|
Senior and subordinated notes
|
39.1
|
|
46.4
|
|
||||
Intercompany loans from GE Capital(a)
|
13.7
|
|
7.3
|
|
|
Senior and subordinated notes assumed by GE
|
36.3
|
|
47.1
|
|
||||
Other GE borrowings
|
2.5
|
|
3.2
|
|
|
Intercompany loans to GE(a)
|
(13.7
|
)
|
(7.3
|
)
|
||||
Total GE adjusted borrowings excluding BHGE
|
$
|
39.7
|
|
$
|
34.5
|
|
|
Other GE Capital borrowings(b)
|
3.9
|
|
3.9
|
|
||
Total BHGE borrowings
|
6.3
|
|
7.2
|
|
|
|
|
|
||||||
Total GE adjusted borrowings
|
$
|
46.1
|
|
$
|
41.7
|
|
|
Total GE Capital adjusted borrowings
|
$
|
65.5
|
|
$
|
95.2
|
|
(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.
|
(b)
|
Included $1.
9 billion
and $2.0 billion at December 31, 2018 and 2017, respectively,
of non-recourse borrowings of consolidated securitization entities.
|
MD&A
|
CAPITAL RESOURCES AND LIQUIDITY
|
MD&A
|
CAPITAL RESOURCES AND LIQUIDITY
|
•
|
It is our policy to minimize exposure to interest rate changes and their impact to interest and other financial charges. We fund our financial investments using debt or a combination of debt and hedging instruments so that the interest rates of our borrowings match the expected interest rate profile on our assets. To test the effectiveness of our hedging actions, we assumed that, on January 1, 2019, interest rates decreased by 100 basis points across the yield curve (a “parallel shift” in that curve) and further assumed that the decrease remained in place for the next 12 months. Based on the year-end 2018 portfolio and holding all other assumptions constant, we estimated that our consolidated net earnings for the next 12 months, starting in January 1, 2019, would decline by less than $0.1 billion as a result of this parallel shift in the yield curve. Additionally, refer to the Critical Accounting Estimates section within this MD&A for further interest rate sensitivities related to pension and insurance reserve assumptions.
|
•
|
It is our policy to minimize currency exposures and to conduct operations either within functional currencies or using the protection of hedge strategies. We analyzed year-end 2018 consolidated currency exposures, including derivatives designated and effective as hedges, to identify assets and liabilities denominated in other than their relevant functional currencies. For such assets and liabilities, we then evaluated the effects of a 10% shift in exchange rates between those currencies and the U.S. dollar, holding all other assumptions constant. This analysis indicated that our 2018 consolidated net earnings would decline by less than $0.1 billion as a result of such a shift in exchange rates. This analysis excludes any translation impact from changes in exchange rates on our financial results and any offsetting effect from the forecasted future transactions that are economically hedged.
|
MD&A
|
CAPITAL RESOURCES AND LIQUIDITY
|
•
|
No common dividends were paid by GE Capital to GE in 2018 compared with $4.0 billion in 2017.
|
•
|
Cash generated from GE CFOA (excluding common dividends received from GE Capital in 2017) amounted to
$2.3
billion in 2018 (including $1.8 billion from Oil & Gas CFOA) and
$7.0
billion in 2017 (including $0.5 billion used for Oil & Gas CFOA), primarily due to the following:
|
•
|
Net earnings for cash flows plus depreciation and amortization of property, plant and equipment, amortization of intangible assets, goodwill impairments, gains on sales of business interests and provisions for income taxes of $7.1 billion in 2018 compared with $6.7 billion in 2017. Net earnings for cash flows included pre-tax restructuring and other charges of $2.9 billion in 2018 compared with $3.9 billion in 2017.
|
•
|
Principal pension plan contributions of $6.3 billion (including $6.0 billion related to the GE Pension Plan) in 2018 compared with $2.0 billion (including $1.7 billion related to the GE Pension Plan) in 2017.
|
•
|
Lower taxes paid of $1.8 billion in 2018 compared with $2.7 billion in 2017.
|
•
|
Lower growth in contract and other deferred assets of
$0.1
billion in 2018 compared with
$1.9
billion in 2017, primarily due to the timing of revenue recognized relative to the timing of billings and collections on our long-term equipment agreements, primarily in our Power and Oil & Gas segments, partially offset by our Aviation and Healthcare segments and lower cash used for deferred inventory, primarily in our Power segment.
|
•
|
Cash generated from working capital of an insignificant amount in 2018 compared with $2.8 billion in 2017. This was primarily due: to an increase in cash used for inventories of $2.1 billion, mainly in our Oil & Gas, Aviation, Transportation and Healthcare segments, partially offset by our Power segment; an increase in cash used from progress collections of $2.1 billion, mainly in our Power and Aviation segments, partially offset by our Renewable Energy segment; and an
increase in cash used for current receivables of $1.5 billion across all segments excluding Oil & Gas. These increases in cash used for working capital were partially offset by an increase in cash generated from accounts payable of $3.0 billion, mainly in our Aviation, Oil & Gas and Renewable Energy segments.
|
•
|
The effects of the BHGE Class B shareholder dividends of $0.5 billion and $0.3 billion received in 2018 and 2017, respectively, are eliminated from GE CFOA.
|
MD&A
|
CAPITAL RESOURCES AND LIQUIDITY
|
•
|
Business acquisitions of $0.1 billion in 2018, compared with $6.1 billion in 2017, mainly driven by the Baker Hughes transaction for $3.4 billion ($7.5 billion cash consideration, less $4.1 billion of cash assumed), LM Wind Power for $1.7 billion (net of cash acquired) and ServiceMax for $0.9 billion (net of cash acquired).
|
•
|
Proceeds from business dispositions (net of cash transferred) of $6.5 billion in 2018, primarily from the sale of our Distributed Power business for $2.8 billion, our Industrial Solutions business for $2.2 billion and our Value-Based Care business for $1.0 billion, compared with $3.1 billion in 2017, mainly driven by the sale of our Water business for $2.9 billion.
|
•
|
Lower additions to property, plant and equipment and internal-use software of $3.6 billion in 2018 (including $1.0 billion at Oil & Gas), compared with $4.7 billion in 2017 (including $0.5 billion at Oil & Gas).
|
•
|
A net increase in borrowings of $3.6 billion in 2018, mainly driven by intercompany loans from GE Capital to GE of $6.5 billion (including $6.0 billion to fund contributions to the GE Pension Plan), partially offset by net repayments of debt of $2.9 billion (including $0.8 billion at BHGE), compared with a net increase in borrowings of $16.0 billion in 2017, mainly driven by the issuance of long-term debt of $12.5 billion (including $4.0 billion at BHGE), primarily to fund acquisitions, and long-term loans from GE Capital to GE of $7.3 billion, partially offset by maturity of long-term debt of $4.0 billion and the settlement of the remaining portion of a 2016 short-term loan from GE Capital to GE of $1.3 billion.
|
•
|
The acquisition of Alstom's interest in grid technology, renewable energy, and global nuclear and French steam power joint ventures for $3.1 billion in 2018.
|
•
|
BHGE net stock repurchases and dividends to noncontrolling interests
of $0.7 billion in 2018, compared with $0.3 billion in 2017.
|
•
|
These increases in cash used were partially offset by the following decreases:
|
•
|
Common dividends paid to shareowners of $4.2 billion in 2018, compared with $8.4 billion in 2017.
|
•
|
An insignificant amount of net repurchases of GE treasury shares in 2018, compared with net repurchases of $2.6 billion in 2017.
|
•
|
Proceeds from BHGE's public share offering of $2.3 billion in 2018.
|
•
|
GE Capital paid common dividends to GE totaling $4.0 billion in 2017 compared with $20.1 billion in 2016.
|
•
|
Cash generated from
GE CFOA (excluding common dividends received from GE Capital)
amounted to
$7.0
billion in 2017
(including $0.5 billion used for Oil & Gas CFOA)
and
$
9.9
billion
in 2016, primarily due to the following:
|
•
|
Net earnings for cash flows plus depreciation and amortization of property, plant and equipment, amortization of intangible assets, goodwill impairments, gains on sales of business interests and provisions for income taxes of $6.7 billion in 2017 compared with $9.9 billion in 2016. Net earnings for cash flows included pre-tax restructuring and other charges of $3.9 billion in 2017 compared with $3.4 billion in 2016.
|
•
|
Principal pension plan contributions of $2.0 billion (including $1.7 billion related to the GE Pension Plan) in 2017 compared with $0.6 billion (including $0.3 billion related to the GE Pension Plan) in 2016.
|
•
|
Lower growth in contract and other deferred assets of $1.9 billion in 2017 compared with $2.6 billion in 2016, primarily due to the timing of revenue recognized relative to the timing of billings and collections on our long-term service agreements, mainly in our Aviation segment.
|
•
|
Cash generated from working capital of $2.8 billion in 2017 compared with $3.7 billion in 2016. This was primarily due to: an increase in cash used for accounts payable of $2.2 billion, mainly in our Power, Aviation and Renewable Energy segments; a decrease in cash generated from current receivables of $0.6 billion, mainly in our Oil & Gas segment (primarily due to the cessation of sales of current receivables to GE Capital in the fourth quarter of 2017), partially offset by our Renewable Energy segment; and a decrease in progress collections of an insignificant amount, driven by our Power segment, offset by the benefit from the timing of progress collections received in the fourth quarter of 2017 of approximately $0.7 billion (primarily in our Aviation segment). These decreases in working capital were partially offset by an increase in cash generated from inventories of $2.0 billion, mainly in our Power, Aviation, Healthcare and Oil & Gas segments and in our Appliances business, due to inventory build in the first half of 2016 which did not reoccur in 2017 as a result of the sale of the business in the second quarter of 2016.
|
•
|
The effect of BHGE Class B shareholder dividends of $0.3 billion received in 2017 is eliminated from GE CFOA.
|
MD&A
|
CAPITAL RESOURCES AND LIQUIDITY
|
•
|
Business acquisition activities of $6.1 billion in 2017, primarily driven by the Baker Hughes transaction for $3.4 billion ($7.5 billion cash consideration, less $4.1 billion of cash assumed), LM Wind Power for $1.7 billion (net of cash acquired) and ServiceMax for $0.9 billion (net of cash acquired), compared with business acquisitions of $2.3 billion in 2016, which included two European 3-D printing companies in our Aviation segment for $1.1 billion (net of cash acquired).
|
•
|
Business disposition proceeds of $3.1 billion in 2017, primarily driven by the sale of our Water business for $2.9 billion (net of cash transferred) in 2017, compared with proceeds of $5.4 billion in 2016, primarily driven by the sale of our Appliances business for $4.8 billion and the sale of GEAM for $0.4 billion.
|
•
|
Net cash paid for settlements of derivative hedges of $1.1 billion in 2017.
|
•
|
Net repurchases of GE treasury shares of $2.6 billion and $21.4 billion in 2017 and 2016, respectively.
|
•
|
A net increase in borrowings of $16.0 billion in 2017, mainly driven by the issuance of long-term debt of $12.5 billion, (including $4.0 billion at BHGE) and long-term loans from GE Capital to GE of $7.3 billion, partially offset by maturity of long-term debt of $4.0 billion and the settlement of the remaining portion of a 2016 short-term loan from GE Capital to GE of $1.3 billion, compared with a net increase in borrowings of $2.8 billion in 2016, including a short-term loan from GE Capital to GE of $1.3 billion.
|
•
|
Net increase in cash collateral and settlements paid to counterparties on derivative contracts of $1.5 billion partially offset by a general increase in cash generated from earnings (loss) from continuing operations.
|
•
|
Higher collections of financing receivables of $7.1 billion.
|
•
|
Proceeds from the sales of EFS' debt origination business and EFS equity investments of $6.1 billion in 2018.
|
•
|
These increases in cash were partially offset by the following decreases:
|
•
|
A decrease in net investment securities of
$4.6 billion
: $2.5 billion in 2018 compared with $7.1 billion in 2017.
|
•
|
An increase in net additions to property, plant and equipment of $1.6 billion.
|
•
|
Net proceeds from sales of discontinued operations of an insignificant amount in 2018 compared with $1.5 billion in 2017.
|
•
|
An increase in net intercompany loans from GE Capital to GE of $6.5 billion in 2018 compared with $5.9 billion in 2017.
|
•
|
A general reduction in funding related to discontinued operations.
|
•
|
Higher net repayments of borrowings of $21.1 billion in 2018 compared with $19.0 billion in 2017.
|
•
|
A net increase in derivative cash settlements paid of $2.0 billion.
|
•
|
These increases in cash used were partially offset by the following decrease:
|
•
|
GE Capital paid no common dividends to GE in 2018 compared with $4.0 billion in 2017.
|
•
|
Lower cash paid for income taxes and interest of $2.3 billion.
|
•
|
Net increase in cash collateral and settlements received from counterparties on derivative contracts of $1.2 billion and a general
decrease in cash generated from earnings (loss) from continuing operations.
|
MD&A
|
CAPITAL RESOURCES AND LIQUIDITY
|
•
|
Net proceeds from the sales of our discontinued operations of $1.5 billion in 2017 compared to $59.9 billion in 2016.
|
•
|
Maturities of $10.4 billion related to interest bearing time deposits in 2016.
|
•
|
Long-term loans from GE Capital to GE of $7.3 billion, partially offset by the settlement of the remaining portion of 2016 short-term
loan from GE Capital to GE of $1.3 billion in 2017, compared to the issuance of a short-term loan from GE Capital to GE of
$1.3 billion in 2016.
|
•
|
Net cash paid for derivative settlements of an insignificant amount in 2017 compared to net cash received from derivative
settlements of $0.4 billion in 2016.
|
•
|
These decreases were partially offset by the following increases:
|
•
|
Net investment securities of $18.4 billion related to net maturities of $7.1 billion in 2017 compared to net purchases of investment securities of $11.2 billion in 2016.
|
•
|
Higher collections of financing receivables of $4.2 billion in 2017.
|
•
|
A general reduction in funding related to discontinued operations.
|
•
|
Lower net repayments of borrowings of $19.0 billion in 2017 compared to $58.8 billion in 2016.
|
•
|
GE Capital paid common dividends to GE totaling $4.0 billion in 2017 compared to $20.1 billion in 2016.
|
•
|
GE Capital dividends to GE,
|
•
|
GE Capital working capital services to GE, including trade receivables and supply chain finance programs,
|
•
|
GE Capital enabled GE industrial orders, including related GE guarantees to GE Capital,
|
•
|
GE Capital financing of GE long-term receivables, and
|
•
|
A
ircraft engines, power equipment, renewable energy equipment and healthcare equipment manufactured by GE that are installed on GE Capital investments, including leased equipment.
|
•
|
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.
|
MD&A
|
CAPITAL RESOURCES AND LIQUIDITY
|
MD&A
|
CAPITAL RESOURCES AND LIQUIDITY
|
MD&A
|
CAPITAL RESOURCES AND LIQUIDITY
|
|
Payments due by period
|
||||||||||||||
|
|
|
|
|
2024 and
|
|
|||||||||
(In billions)
|
Total
|
|
2019
|
|
2020-2021
|
|
2022-2023
|
|
thereafter
|
|
|||||
|
|
|
|
|
|
||||||||||
Borrowings (Note 11)
|
$
|
110.0
|
|
$
|
13.1
|
|
$
|
27.2
|
|
$
|
17.1
|
|
$
|
52.6
|
|
Interest on borrowings
|
31.8
|
|
3.3
|
|
4.9
|
|
3.9
|
|
19.7
|
|
|||||
Purchase obligations(a)(b)
|
62.3
|
|
26.7
|
|
19.5
|
|
12.5
|
|
3.6
|
|
|||||
Insurance liabilities (Note 12)(c)
|
35.4
|
|
2.6
|
|
4.1
|
|
4.2
|
|
24.5
|
|
|||||
Operating lease obligations (Note 26)
|
5.6
|
|
1.1
|
|
1.7
|
|
1.2
|
|
1.6
|
|
|||||
Other liabilities(d)
|
67.0
|
|
7.9
|
|
8.6
|
|
9.6
|
|
40.9
|
|
|||||
Contractual obligations of discontinued operations(e)
|
2.9
|
|
2.2
|
|
0.4
|
|
0.1
|
|
0.2
|
|
(a)
|
Included all take-or-pay arrangements, capital expenditures, contractual commitments to purchase equipment that will be leased to others, software acquisition/license commitments, contractual minimum programming commitments and any contractually required cash payments for acquisitions.
|
(b)
|
Excluded funding commitments entered into in the ordinary course of business. See Notes 20 and 22 to the consolidated financial statements for further information on these commitments and other guarantees.
|
(c)
|
Included all contracts associated with our run-off insurance operations and represents the present value of future policy benefit and claim reserves.
|
(d)
|
Included an estimate of future expected funding requirements related to our postretirement benefit plans and included liabilities for unrecognized tax benefits. Because their future cash outflows are uncertain, the following non-current liabilities are excluded from the table above: derivatives, deferred income and other sundry items. See Notes 13, 14 and 20 to the consolidated financial statements for further information on certain of these items.
|
(e)
|
Included payments for other liabilities.
|
MD&A
|
CRITICAL ACCOUNTING ESTIMATES
|
MD&A
|
CRITICAL ACCOUNTING ESTIMATES
|
MD&A
|
CRITICAL ACCOUNTING ESTIMATES
|
•
|
Discount rate – A 25 basis point increase in discount rate would decrease pension cost in the following year by
$0.2 billion
and would decrease the pension benefit obligation at year-end by about
$2.0 billion
.
|
•
|
Expected return on assets – A 50 basis point decrease in the expected return on assets would increase pension cost in the following year by
$0.3 billion
.
|
MD&A
|
CRITICAL ACCOUNTING ESTIMATES
|
MD&A
|
CRITICAL ACCOUNTING ESTIMATES
|
December 31, 2018 (In millions)
|
Long-term care insurance contracts
|
Structured settlement annuities & life insurance contracts
|
Other
contracts
|
Other adjustments
|
Total
|
||||||||||
|
|
|
|
|
|
||||||||||
Future policy benefit reserves
|
$
|
16.0
|
|
$
|
9.5
|
|
$
|
0.2
|
|
$
|
2.2
|
|
$
|
27.9
|
|
Claim reserves(a)
|
3.9
|
|
0.2
|
|
1.2
|
|
—
|
|
5.3
|
|
|||||
Investment contracts(b)
|
—
|
|
1.2
|
|
1.1
|
|
—
|
|
2.4
|
|
|||||
Unearned premiums and other
|
—
|
|
0.2
|
|
0.1
|
|
—
|
|
0.3
|
|
|||||
|
20.0
|
|
11.2
|
|
2.6
|
|
2.2
|
|
36.0
|
|
|||||
Eliminations
|
—
|
|
—
|
|
(0.4
|
)
|
—
|
|
(0.4
|
)
|
|||||
Total
|
$
|
20.0
|
|
$
|
11.2
|
|
$
|
2.2
|
|
$
|
2.2
|
|
$
|
35.6
|
|
Percent of total
|
56
|
%
|
31
|
%
|
6
|
%
|
6
|
%
|
100
|
%
|
MD&A
|
OTHER ITEMS
|
|
December 31, 2017 (In millions)
|
Long-term care insurance contracts
|
Structured settlement annuities & life insurance contracts
|
Other
contracts
|
Other adjustments
|
Total
|
||||||||||
|
|
|
|
|
|
||||||||||
Future policy benefit reserves
|
$
|
16.5
|
|
$
|
9.3
|
|
$
|
0.2
|
|
$
|
4.6
|
|
$
|
30.6
|
|
Claim reserves(a)
|
3.6
|
|
0.3
|
|
1.2
|
|
—
|
|
5.1
|
|
|||||
Investment contracts(b)
|
—
|
|
1.3
|
|
1.2
|
|
—
|
|
2.6
|
|
|||||
Unearned premiums and other
|
—
|
|
0.2
|
|
0.1
|
|
—
|
|
0.4
|
|
|||||
|
20.2
|
|
11.1
|
|
2.8
|
|
4.6
|
|
38.6
|
|
|||||
Eliminations
|
—
|
|
—
|
|
(0.5
|
)
|
—
|
|
(0.5
|
)
|
|||||
Total
|
$
|
20.2
|
|
$
|
11.1
|
|
$
|
2.3
|
|
$
|
4.6
|
|
$
|
38.1
|
|
Percent of total
|
53
|
%
|
29
|
%
|
6
|
%
|
12
|
%
|
100
|
%
|
(a)
|
Other contracts included claim reserves of $0.3 billion and $0.4 billion related to short-duration contracts at EIC, net of eliminations, at December 31, 2018 and December 31, 2017, respectively.
|
(b)
|
Investment contracts are contracts without significant mortality or morbidity risks.
|
MD&A
|
OTHER ITEMS
|
|
December 31, 2018 (Dollars in billions, except where noted)
|
ERAC
|
UFLIC
|
Total
|
||||||
Gross GAAP future policy benefit reserves and claim reserves
|
$
|
14.1
|
|
$
|
5.9
|
|
$
|
19.9
|
|
Gross statutory future policy benefit reserves and claim reserves(a)
|
23.2
|
|
7.2
|
|
30.4
|
|
|||
Number of policies in force
|
202,000
|
|
72,000
|
|
274,000
|
|
|||
Number of covered lives in force
|
270,000
|
|
72,000
|
|
342,000
|
|
|||
Average policyholder attained age
|
75
|
|
82
|
|
77
|
|
|||
Gross GAAP future policy benefit reserve per policy (in actual dollars)
|
$
|
60,000
|
|
$
|
56,000
|
|
$
|
59,000
|
|
Gross GAAP future policy benefit reserve per covered life (in actual dollars)
|
45,000
|
|
56,000
|
|
47,000
|
|
|||
Gross statutory future policy benefit reserve per policy (in actual dollars)(a)
|
105,000
|
|
72,000
|
|
96,000
|
|
|||
Gross statutory future policy benefit reserve per covered life (in actual dollars)(a)
|
79,000
|
|
72,000
|
|
77,000
|
|
|||
Percentage of policies with:
|
|
|
|
||||||
Lifetime benefit period
|
70
|
%
|
35
|
%
|
60
|
%
|
|||
Inflation protection option
|
81
|
%
|
91
|
%
|
84
|
%
|
|||
Joint lives
|
34
|
%
|
—
|
%
|
25
|
%
|
|||
Percentage of policies that are premium paying
|
74
|
%
|
83
|
%
|
76
|
%
|
|||
Policies on claim
|
10,000
|
|
9,200
|
|
19,200
|
|
(a)
|
Statutory balances reflect recognition of the estimated remaining statutory increase in reserves of approximately $9 billion through 2023 under the permitted accounting practice discussed further below and in Note 12 to our consolidated financial statements
.
|
MD&A
|
OTHER ITEMS
|
|
MD&A
|
OTHER ITEMS
|
|
MD&A
|
OTHER ITEMS
|
|
•
|
Increased discount rate assumptions in 2018 compared to our original estimate. Our revised reinvestment plan incorporates the remaining projected capital contribution of approximately $11 billion through 2024, of which approximately $1.9 billion was received in the first quarter of 2019, and introduction of strategic initiatives for the investment into new higher-yielding asset classes while maintaining an overall A-rated fixed income portfolio. These initiatives are the result of an extensive review in 2018 of our investment management opportunities including the engagement of external investment advisors. Our discount rate assumption for purposes of performing the premium deficiency assessments resulted in a weighted-average rate of approximately 6.04%, compared to approximately 5.67% in 2017. The increased discount rate favorably impacted our reserve margin by $1.9 billion;
|
•
|
Lower long-term care insurance morbidity improvement assumptions indicating less long-term improvement (1.25% per year) over shorter durations (between 12 and 20 years based on the average attained age of the underlying books of business) which adversely impacted our reserve margin by $1.2 billion;
|
•
|
Higher interest rates leading to higher inflation which increased projected utilization on long-term care insurance policies which adversely impacted our reserve margin by $0.3 billion;
|
•
|
Lower policy terminations on long-term care insurance policies and revisions to assumptions of future mortality primarily for older attained ages, based on experience analysis of internal and industry data, on life insurance products which adversely impacted our reserve margin by $0.2 billion and $0.3 billion, respectively; and
|
•
|
Higher levels of projected long-term care premium rate increases due to larger rate filings by some ceding companies than previously planned which favorably impacted our reserve margin by $0.2 billion. Our 2018 premium deficiency test includes approximately $1.7 billion of anticipated premium increases or benefit reductions associated with future in-force rate actions, including actions that are: (a) approved and not implemented, (b) filed but not yet approved and (c) estimated on future filings through 2028.
|
|
2017 assumption
|
2018 assumption
|
Hypothetical change in 2018 assumption
|
Estimated increase to future policy benefit reserves
(In billions, pre-tax)
|
Long-term care insurance morbidity improvement(a)
|
1.6% per year over 16 to 20 years
|
1.25% per year over 12 to 20 years
|
25 basis point reduction
No morbidity improvement
|
$0.7
$3.7
|
Long-term care insurance morbidity
|
Based on company experience
|
Based on company experience
|
5% increase in dollar amount of paid claims
|
$1.0
|
Long-term care insurance mortality improvement
|
0.5% per year for 10 years with annual improvement graded to 0% over next 10 years
|
0.5% per year for 10 years with annual improvement graded to 0% over next 10 years
|
1.0% per year for 10 years with annual improvement graded to 0% over next 10 years
|
$0.4
|
Total terminations:
|
|
|
Reduce total terminations by 10%
|
$1.0
|
Long-term care insurance mortality
|
Based on company experience
|
Based on company experience
|
|
|
Long-term care insurance lapse rate
|
Varies by block, attained age and benefit period; average 0.7 - 1.0%
|
Varies by block, attained age and benefit period; average 0.5 - 1.15%
|
|
|
Long-term care insurance benefit exhaustion
|
Based on company experience
|
Based on company experience
|
|
|
Long-term care insurance future premium rate increases
|
Varies by block based on filing experience
|
Varies by block based on filing experience
|
25% adverse change in premium rate increase success rate
|
$0.4
|
Discount rate
|
Approximately 5.67%
|
Approximately 6.04%
|
25 basis point reduction
|
$1.0
|
Structured settlement annuity mortality
|
Based on company experience
|
Based on company experience
|
5% decrease in mortality
|
$0.1
|
Life insurance mortality
|
Based on company experience
|
Based on company experience
|
5% increase in mortality
|
$0.3
|
(a)
|
In both 2017 and 2018, these morbidity improvement assumptions are applied to the future claim cost curves that were reconstructed in 2017 and do not include any issue-age adjustments.
|
MD&A
|
OTHER ITEMS
|
|
MD&A
|
OTHER ITEMS
|
|
MD&A
|
OTHER ITEMS
|
|
•
|
A non-U.S. affiliate of GE’s Oil & Gas business received 5 purchase orders and attributed €31.4 million ($36.0 million) in gross revenues and €8.6 million ($9.9 million) in net profits related to the sale of valves and parts for industrial machinery and equipment used in gas plants, petrochemical plants and gas production projects in Iran.
|
•
|
A second non-U.S. affiliate of GE’s Oil & Gas business received 12 purchase orders and attributed €0.1 million ($0.1 million) in gross revenues and less than €0.1 million ($0.1 million) in net profits to the sale of valves and other spare parts for use in the petrochemical industry in Iran.
|
•
|
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 ($0.1 million) in net profits to transactions involving the sale of films used in the inspection of pipelines in Iran.
|
•
|
A non-U.S. affiliate of GE’s Power business received one purchase order and attributed €0.1 million ($0.1 million) in gross revenues and €0.1 million ($0.1 million) in net profits related to the sale of compressor parts to a petrochemical company in Iran.
|
•
|
A second non-U.S. affiliate of GE’s Power business attributed €0.4 million ($0.5 million) in gross revenues and €0.2 million ($0.2 million) in net profits to a services contract with an Iranian petrochemical plant.
|
•
|
A third non-U.S. affiliate of GE's Power business received three purchase orders and attributed €0.6 million ($0.6 million) in gross revenues and €0.2 million ($0.2 million) in net profits for the sale of protection relays to oil refineries in Iran.
|
•
|
A fourth non-U.S. affiliate of GE’s Power business received two purchase orders for the sale of spare parts to petrochemical companies in Iran but attributed no gross revenues to this activity. The non-U.S. affiliate recognized less than €0.1 million ($0.1 million) in losses due to costs incurred.
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|||
Total sales to U.S. Government agencies
|
4
|
%
|
4
|
%
|
3
|
%
|
Aviation segment defense-related sales
|
3
|
%
|
3
|
%
|
3
|
%
|
MD&A
|
NON-GAAP FINANCIAL MEASURES
|
|
•
|
GE Industrial segment organic revenues
– revenues excluding the effects of acquisitions, dispositions and translational foreign currency exchange.
|
•
|
GE Industrial structural costs
–
Industrial structural costs 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 first six months of 2017.
|
•
|
Power structural costs
- Power structural costs include segment structural costs excluding the impact of restructuring and other charges, business acquisitions and dispositions and foreign exchange.
|
•
|
Adjusted earnings (loss)
–
continuing earnings excluding the impact of non-operating benefit costs, gains (losses) and
impairments for disposed or held for sale businesses, restructuring and other, goodwill impairments and GE Capital EFS impairments and insurance charge in 2017 after-tax, excluding the effects of U.S. tax reform enactment adjustment.
|
•
|
Adjusted earnings (loss) per share (EPS)
– when we refer to adjusted earnings per share, it is the diluted per-share amount of “adjusted earnings.”
|
•
|
Adjusted GE Industrial profit and profit margin (excluding certain items)
– GE Industrial profit margin excluding interest and other financial charges, non-operating benefit costs, gains (losses), restructuring and other charges and goodwill impairment plus noncontrolling interests.
|
•
|
GE Industrial organic profit
– profit excluding the effects of acquisitions, business dispositions and translational foreign currency exchange.
|
•
|
Adjusted Oil & Gas segment profit
– Reported Oil & Gas segment profit less GE's share of restructuring & other charges.
|
•
|
GE effective tax rates, excluding GE Capital earnings
–
GE provision for income taxes divided by GE pre-tax earnings from continuing operations, excluding GE Capital earnings (loss) from continuing operations.
|
•
|
GE Industrial Free Cash Flows (FCF) and Adjusted GE Industrial FCF
– GE Industrial free cash flows is 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) is 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 net debt
–
GE Industrial net debt reflects the total of gross debt excluding BHGE, after-tax net pension and retiree benefit plan liabilities, adjustments for operating lease obligations excluding BHGE, and adjustments for 50% of preferred stock, less 75% of GE’s cash balance excluding BHGE.
|
MD&A
|
NON-GAAP FINANCIAL MEASURES
|
|
GE INDUSTRIAL SEGMENT ORGANIC REVENUES (NON-GAAP)
(In millions)
|
2018
|
|
2017
|
|
V%
|
|
||
|
|
|
|
|||||
GE Industrial segment revenues (GAAP)
|
$
|
115,664
|
|
$
|
113,168
|
|
2
|
%
|
Adjustments:
|
|
|
|
|||||
Less: acquisitions
|
5,589
|
|
92
|
|
|
|||
Less: business dispositions (other than dispositions acquired for investment)
|
138
|
|
3,857
|
|
|
|||
Less: currency exchange rate(a)
|
597
|
|
—
|
|
|
|||
GE Industrial segment organic revenues (Non-GAAP)
|
$
|
109,340
|
|
$
|
109,220
|
|
—
|
%
|
|
|
|
|
|||||
|
2017
|
|
2016
|
|
V%
|
|
||
|
|
|
|
|||||
GE Industrial segment revenues (GAAP)
|
$
|
113,168
|
|
$
|
112,324
|
|
1
|
%
|
Adjustments:
|
|
|
|
|||||
Less: acquisitions
|
6,061
|
|
37
|
|
|
|||
Less: business dispositions (other than dispositions acquired for investment)
|
9
|
|
3,478
|
|
|
|||
Less: currency exchange rate(a)
|
557
|
|
—
|
|
|
|||
GE Industrial segment organic revenues (Non-GAAP)
|
$
|
106,540
|
|
$
|
108,808
|
|
(2
|
)%
|
|
|
|
|
|||||
(a) Translational foreign exchange
|
|
|
|
|||||
Organic revenues* measure revenues 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 revenues* 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 revenues" 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.
|
||||||||
When comparing revenue growth between periods excluding the effects of acquisitions, business dispositions and currency exchange rates, those effects are different when comparing results for different periods. Revenues from acquisitions are considered inorganic from the date we complete an acquisition through the end of the fourth quarter following the acquisition and are therefore reflected as an adjustment to reported revenue to derive organic revenue for the period following the acquisition. In subsequent periods, the revenues from the acquisition become organic as these revenues are included for all periods presented.
|
||||||||
Additionally, when comparing the calculation of Industrial segment organic revenues* with 2018 in the first table, there is no adjustment to the 2017 GAAP revenues for currency exchange rates while in the calculation of 2017 organic revenues* compared to 2016 in the second table there is an adjustment to 2017 reported revenues of $557 million for currency exchange rates. This is the case because in the comparison of 2017 to 2016 we are adjusting the 2017 reported revenues to exclude the effect of currency exchange rates to provide a more direct comparison to the 2016 results. That is, we are adjusting 2017 reported revenues to eliminate the effects of changes in foreign currency had on 2017 revenues. Additionally, when comparing 2017 to 2016, we adjust the 2017 revenue amount for the effects of currency exchange to enable a more direct comparison to 2016.
|
MD&A
|
NON-GAAP FINANCIAL MEASURES
|
|
GE INDUSTRIAL STRUCTURAL COSTS (NON-GAAP)
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
GE total costs and expenses (GAAP)
|
$
|
135,656
|
|
$
|
111,710
|
|
$
|
105,774
|
|
Less: GE interest and other financial charges (GAAP)
|
2,708
|
|
2,753
|
|
2,026
|
|
|||
Less: goodwill impairments (GAAP)
|
22,136
|
|
1,165
|
|
—
|
|
|||
Less: non-operating benefit costs (GAAP)
|
2,764
|
|
2,385
|
|
2,349
|
|
|||
GE Industrial costs excluding interest and other financial charges, goodwill impairments and non-operating benefit costs (Non-GAAP)
|
108,048
|
|
105,407
|
|
101,399
|
|
|||
Less: Segment variable costs
|
81,661
|
|
77,986
|
|
73,647
|
|
|||
Less: Segment restructuring & other
|
834
|
|
792
|
|
—
|
|
|||
Less: Segment acquisitions/dispositions structural costs and impact from foreign exchange
|
518
|
|
(102
|
)
|
548
|
|
|||
Less: Corporate restructuring & other charges
|
2,958
|
|
3,350
|
|
3,544
|
|
|||
Add: Corporate revenue (ex. GE-GE Capital eliminations), other income and noncontrolling interests
|
280
|
|
852
|
|
(2,155
|
)
|
|||
Less: Corporate (gains) losses(a)
|
(1,350
|
)
|
(926
|
)
|
(3,480
|
)
|
|||
Less: Corporate unrealized (gains) losses
|
—
|
|
—
|
|
|
|
|||
GE Industrial structural costs (Non-GAAP)
|
$
|
23,707
|
|
$
|
25,159
|
|
$
|
24,984
|
|
|
|
|
|
||||||
(a) Includes (gains) losses on disposed or held for sale businesses.
|
|
|
|
||||||
|
|
|
|
||||||
Industrial structural costs* 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 first six months of 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 captions "Cost of goods" and "Cost of services sold" in our consolidated Statement of Earnings (Loss).
|
|||||||||
We believe that Industrial structural costs* is a meaningful measure 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.
|
MD&A
|
NON-GAAP FINANCIAL MEASURES
|
|
ADJUSTED EARNINGS (LOSS) (NON-GAAP)
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Consolidated earnings (loss) from continuing operations attributable to GE common shareowners (GAAP)
|
$
|
(21,076
|
)
|
$
|
(8,605
|
)
|
$
|
7,797
|
|
Less: GE Capital earnings (loss) from continuing operations attributable to GE common shareowners (GAAP)
|
(489
|
)
|
(6,765
|
)
|
(1,251
|
)
|
|||
GE Industrial earnings (loss) (Non-GAAP)
|
(20,587
|
)
|
(1,841
|
)
|
9,048
|
|
|||
|
|
|
|
||||||
Non-operating benefits costs (pre-tax) (GAAP)
|
(2,764
|
)
|
(2,385
|
)
|
(2,349
|
)
|
|||
Tax effect on non-operating benefit costs(a)
|
581
|
|
835
|
|
822
|
|
|||
Less: non-operating benefit costs (net of tax)
|
(2,184
|
)
|
(1,550
|
)
|
(1,527
|
)
|
|||
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax)
|
1,350
|
|
926
|
|
3,480
|
|
|||
Tax effect on gains (losses) and impairments for disposed or held for sale businesses(b)
|
(375
|
)
|
(62
|
)
|
(1,106
|
)
|
|||
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax)
|
974
|
|
864
|
|
2,374
|
|
|||
Restructuring & other (pre-tax)
|
(3,440
|
)
|
(4,030
|
)
|
(3,544
|
)
|
|||
Tax effect on restructuring & other(b)
|
492
|
|
1,252
|
|
1,061
|
|
|||
Less: restructuring & other (net of tax)
|
(2,948
|
)
|
(2,778
|
)
|
(2,483
|
)
|
|||
Goodwill impairments (pre-tax)
|
(22,136
|
)
|
(1,165
|
)
|
—
|
|
|||
Tax effect on goodwill impairments(b)
|
(235
|
)
|
9
|
|
—
|
|
|||
Less: goodwill impairments (net of tax)
|
(22,371
|
)
|
(1,156
|
)
|
—
|
|
|||
Less: GE Industrial U.S. tax reform enactment adjustment
|
(38
|
)
|
(4,905
|
)
|
—
|
|
|||
Adjusted GE Industrial earnings (loss) (Non-GAAP)
|
$
|
5,980
|
|
$
|
7,685
|
|
$
|
10,684
|
|
|
|
|
|
||||||
GE Capital earnings (loss) from continuing operations attributable to GE common shareowners (GAAP)
|
(489
|
)
|
(6,765
|
)
|
(1,251
|
)
|
|||
EFS impairments and insurance charge (pre-tax)
|
—
|
|
(11,444
|
)
|
—
|
|
|||
Tax effect on EFS impairments and insurance charge(b)
|
—
|
|
3,501
|
|
—
|
|
|||
Less: EFS impairments and insurance charge (net of tax)
|
—
|
|
(7,943
|
)
|
—
|
|
|||
Less: GE Capital U.S. tax reform enactment adjustment
|
(173
|
)
|
206
|
|
—
|
|
|||
Adjusted GE Capital earnings (loss) (Non-GAAP)
|
$
|
(316
|
)
|
$
|
972
|
|
$
|
(1,251
|
)
|
|
|
|
|
||||||
Adjusted GE Industrial earnings (loss) (Non-GAAP)
|
$
|
5,980
|
|
$
|
7,685
|
|
$
|
10,684
|
|
Add: Adjusted GE Capital earnings (loss) (Non-GAAP)
|
(316
|
)
|
972
|
|
(1,251
|
)
|
|||
Adjusted earnings (loss) (Non-GAAP)
|
$
|
5,664
|
|
$
|
8,657
|
|
$
|
9,433
|
|
|
|
|
|
||||||
(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 (loss)* excludes non-operating benefit costs, gains (losses) and impairments for disposed or held for sale businesses, restructuring and other, goodwill impairments and GE Capital EFS impairments and insurance charge in 2017, 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. Prior to the third quarter of 2018, goodwill impairment was included as a component of restructuring and other charges; beginning in the third quarter of 2018, on a comparable basis, we reported it separately in our consolidated Statement of Earnings (Loss) because of the significance of the charge that quarter, and Adjusted earnings (loss)* continues to exclude amounts related to goodwill impairment separate from the ongoing operations of our businesses. We believe that the retained costs in Adjusted earnings (loss)* 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 (loss)* separately from 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.
|
MD&A
|
NON-GAAP FINANCIAL MEASURES
|
|
ADJUSTED EARNINGS (LOSS) PER SHARE (NON-GAAP)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Consolidated EPS from continuing operations attributable to GE common shareowners (GAAP)
|
$
|
(2.43
|
)
|
$
|
(0.99
|
)
|
$
|
0.85
|
|
Less: GE Capital EPS from continuing operations attributable to GE common shareowners (GAAP)
|
(0.06
|
)
|
(0.78
|
)
|
(0.14
|
)
|
|||
GE Industrial EPS (Non-GAAP)
|
(2.37
|
)
|
(0.21
|
)
|
0.99
|
|
|||
|
|
|
|
||||||
Non-operating benefits costs (pre-tax) (GAAP)
|
(0.32
|
)
|
(0.27
|
)
|
(0.26
|
)
|
|||
Tax effect on non-operating benefit costs(a)
|
0.07
|
|
0.10
|
|
0.09
|
|
|||
Less: non-operating benefit costs (net of tax)
|
(0.25
|
)
|
(0.18
|
)
|
(0.17
|
)
|
|||
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax)
|
0.16
|
|
0.11
|
|
0.38
|
|
|||
Tax effect on gains (losses) and impairments for disposed or held for sale businesses(b)
|
(0.04
|
)
|
(0.01
|
)
|
(0.12
|
)
|
|||
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax)
|
0.11
|
|
0.10
|
|
0.26
|
|
|||
Restructuring & other (pre-tax)
|
(0.40
|
)
|
(0.46
|
)
|
(0.39
|
)
|
|||
Tax effect on restructuring & other(b)
|
0.06
|
|
0.14
|
|
0.12
|
|
|||
Less: restructuring & other (net of tax)
|
(0.34
|
)
|
(0.32
|
)
|
(0.27
|
)
|
|||
Goodwill impairments (pre-tax)
|
(2.55
|
)
|
(0.13
|
)
|
—
|
|
|||
Tax effect on goodwill impairments(b)
|
(0.03
|
)
|
—
|
|
—
|
|
|||
Less: goodwill impairments (net of tax)
|
(2.57
|
)
|
(0.13
|
)
|
—
|
|
|||
Less: GE Industrial U.S. tax reform enactment adjustment
|
—
|
|
(0.56
|
)
|
—
|
|
|||
Adjusted GE Industrial EPS (Non-GAAP)
|
$
|
0.69
|
|
$
|
0.88
|
|
$
|
1.17
|
|
|
|
|
|
||||||
GE Capital EPS from continuing operations attributable to GE common shareowners (GAAP)
|
(0.06
|
)
|
(0.78
|
)
|
(0.14
|
)
|
|||
EFS impairments and insurance charge (pre-tax)
|
—
|
|
(1.32
|
)
|
—
|
|
|||
Tax effect on EFS impairments and insurance charge(b)
|
—
|
|
0.40
|
|
—
|
|
|||
Less: EFS impairments and insurance charge (net of tax)
|
—
|
|
(0.91
|
)
|
—
|
|
|||
Less: GE Capital U.S. tax reform enactment adjustment
|
(0.02
|
)
|
0.02
|
|
—
|
|
|||
Adjusted GE Capital EPS (Non-GAAP)
|
$
|
(0.04
|
)
|
$
|
0.11
|
|
$
|
(0.14
|
)
|
|
|
|
|
||||||
Adjusted GE Industrial EPS (Non-GAAP)
|
$
|
0.69
|
|
$
|
0.88
|
|
$
|
1.17
|
|
Add: Adjusted GE Capital EPS (Non-GAAP)
|
(0.04
|
)
|
0.11
|
|
(0.14
|
)
|
|||
Adjusted EPS (Non-GAAP)(c)
|
$
|
0.65
|
|
$
|
1.00
|
|
$
|
1.03
|
|
|
|
|
|
||||||
(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 (losses) and impairments for disposed or held for sale businesses, restructuring and other, goodwill impairments and GE Capital EFS impairments and insurance charge in 2017, 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. Prior to the third quarter of 2018, goodwill impairment was included as a component of restructuring and other charges; beginning in the third quarter of 2018, on a comparable basis, we reported it separately in our consolidated Statement of Earnings (loss) because of the significance of the charge that quarter, and Adjusted EPS* continues to exclude amounts related to goodwill impairment separate from the ongoing operations of our businesses. 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 EPS* separately from 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.
|
MD&A
|
NON-GAAP FINANCIAL MEASURES
|
|
ADJUSTED GE INDUSTRIAL PROFIT AND PROFIT MARGIN (EXCLUDING CERTAIN ITEMS) (NON-GAAP)
(Dollars in millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
GE total revenues (GAAP)
|
$
|
113,642
|
|
$
|
111,255
|
|
$
|
110,615
|
|
|
|
|
|
||||||
Costs
|
|
|
|
||||||
GE total costs and expenses (GAAP)
|
135,656
|
|
111,710
|
|
105,774
|
|
|||
Less: GE interest and other financial charges
|
2,708
|
|
2,753
|
|
2,026
|
|
|||
Less: non-operating benefit costs
|
2,764
|
|
2,385
|
|
2,349
|
|
|||
Less: restructuring & other
|
3,487
|
|
3,923
|
|
3,544
|
|
|||
Less: goodwill impairments
|
22,136
|
|
1,165
|
|
—
|
|
|||
Add: noncontrolling interests
|
(129
|
)
|
(368
|
)
|
(278
|
)
|
|||
Adjusted GE Industrial costs (Non-GAAP)
|
104,432
|
|
101,116
|
|
97,577
|
|
|||
|
|
|
|
||||||
Other Income
|
|
|
|
||||||
GE other income (GAAP)
|
2,255
|
|
1,937
|
|
4,227
|
|
|||
Less: restructuring & other
|
(87
|
)
|
(107
|
)
|
—
|
|
|||
Less: gains (losses) and impairments for disposed or held for sale businesses
|
1,350
|
|
926
|
|
3,480
|
|
|||
Adjusted GE other income (Non-GAAP)
|
992
|
|
1,118
|
|
748
|
|
|||
|
|
|
|
||||||
GE Industrial profit (GAAP)
|
$
|
(19,759
|
)
|
$
|
1,482
|
|
$
|
9,068
|
|
GE Industrial profit margin (GAAP)
|
(17.4
|
)%
|
1.3
|
%
|
8.2
|
%
|
|||
|
|
|
|
||||||
Adjusted GE Industrial profit (Non-GAAP)
|
$
|
10,203
|
|
$
|
11,257
|
|
$
|
13,786
|
|
Adjusted GE Industrial profit margin (Non-GAAP)
|
9.0
|
%
|
10.1
|
%
|
12.5
|
%
|
|||
|
|
|
|
||||||
We have presented our Adjusted GE Industrial profit* and profit margin* excluding interest and other financial charges, non-operating benefit costs, restructuring & other, goodwill impairments, non-controlling interests and gains (losses) and impairments for disposed or held for sale businesses. We believe that GE Industrial profit and profit margins adjusted for these items are meaningful measures because they increase the comparability of period-to-period results.
|
MD&A
|
NON-GAAP FINANCIAL MEASURES
|
|
GE EFFECTIVE TAX RATES, EXCLUDING GE CAPITAL EARNINGS (NON-GAAP)
(Dollars in millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
GE earnings (loss) from continuing operations before income taxes (GAAP)
|
$
|
(20,248
|
)
|
$
|
(5,282
|
)
|
$
|
7,817
|
|
Less: GE Capital earnings (loss) from continuing operations
|
(489
|
)
|
(6,765
|
)
|
(1,251
|
)
|
|||
Total
|
$
|
(19,759
|
)
|
$
|
1,483
|
|
$
|
9,068
|
|
|
|
|
|
||||||
GE provision for income taxes (GAAP)
|
$
|
957
|
|
$
|
3,691
|
|
$
|
298
|
|
GE effective tax rate, excluding GE Capital earnings (Non-GAAP)
|
(4.8)
|
%
|
248.9
|
%
|
3.3
|
%
|
MD&A
|
NON-GAAP FINANCIAL MEASURES
|
|
GE INDUSTRIAL NET DEBT (NON-GAAP)
(Dollars in millions)
|
December 31, 2018
|
|
|
Total GE short- and long-term borrowings (GAAP)
|
$
|
68,570
|
|
Less: GE Capital short- and long-term debt assumed by GE
|
36,262
|
|
|
Less: BHGE total borrowings
|
6,330
|
|
|
Add: intercompany loans from GE Capital
|
13,749
|
|
|
Total adjusted GE borrowings
|
39,727
|
|
|
Total pension and retiree benefit plan liabilities (pre-tax)(a)
|
27,159
|
|
|
Less: taxes at 21%
|
5,703
|
|
|
Total pension and retiree benefit plan liabilities (net of tax)
|
21,456
|
|
|
GE rental expense for the year ended December 31, 2018
|
1,850
|
|
|
Multiply by 3
|
3
|
|
|
Total operating lease obligations
|
5,550
|
|
|
Less: BHGE rental expense for the year ended December 31, 2018 multiplied by 3
|
1,682
|
|
|
Total operating lease obligations excluding BHGE
|
3,868
|
|
|
GE preferred stock
|
5,573
|
|
|
Less: 50% of GE preferred stock
|
2,787
|
|
|
50% of preferred stock
|
2,787
|
|
|
Deduction for total GE cash, cash equivalents and restricted cash
|
(20,528
|
)
|
|
Less: BHGE cash, cash equivalents and restricted cash
|
(3,723
|
)
|
|
Deduction for total GE cash, cash equivalents and restricted cash, excluding BHGE
|
(16,805
|
)
|
|
Less: 25% of GE cash, cash equivalents and restricted cash, excluding BHGE
|
(4,201
|
)
|
|
Deduction for 75% of GE cash, cash equivalents and restricted cash, excluding BHGE
|
(12,604
|
)
|
|
Total GE Industrial net debt (Non-GAAP)
|
$
|
55,233
|
|
|
|
||
(a) Represents the total underfunded status of Principal pension plans ($18,491 million), Other pension plans ($3,877 million), and Retiree health and life benefit plans ($4,791 million).
|
|||
|
|||
In this document we use GE industrial net debt*, which is calculated based on rating agency methodologies. There is significant uncertainty around the timing and 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. We are including the calculation of GE industrial net debt* to provide investors more clarity regarding how the credit rating agencies measure GE industrial leverage.
|
OTHER FINANCIAL DATA
|
|
|
(In millions, except total employees; per-share amounts in dollars)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|||||
General Electric Company and Consolidated Affiliates
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
121,615
|
|
$
|
118,243
|
|
$
|
119,469
|
|
$
|
115,159
|
|
$
|
116,407
|
|
Earnings (loss) from continuing operations attributable to the Company
|
(20,629
|
)
|
(8,169
|
)
|
8,453
|
|
1,488
|
|
9,447
|
|
|||||
Earnings (loss) from discontinued operations, net of taxes, attributable to the Company
|
(1,726
|
)
|
(315
|
)
|
(952
|
)
|
(7,807
|
)
|
5,698
|
|
|||||
Net earnings (loss) attributable to the Company
|
(22,355
|
)
|
(8,484
|
)
|
7,500
|
|
(6,320
|
)
|
15,145
|
|
|||||
Dividends declared(a)
|
3,669
|
|
7,741
|
|
9,054
|
|
9,161
|
|
8,949
|
|
|||||
Per common share
|
|
|
|
|
|
||||||||||
Earnings (loss) from continuing operations – diluted
|
$
|
(2.43
|
)
|
$
|
(0.99
|
)
|
$
|
0.85
|
|
$
|
0.15
|
|
$
|
0.93
|
|
Earnings (loss) from discontinued operations – diluted
|
(0.20
|
)
|
(0.04
|
)
|
(0.10
|
)
|
(0.78
|
)
|
0.56
|
|
|||||
Net earnings (loss) – diluted
|
(2.62
|
)
|
(1.03
|
)
|
0.75
|
|
(0.63
|
)
|
1.49
|
|
|||||
Earnings (loss) from continuing operations – basic
|
(2.43
|
)
|
(0.99
|
)
|
0.86
|
|
0.15
|
|
0.94
|
|
|||||
Earnings (loss) from discontinued operations – basic
|
(0.20
|
)
|
(0.04
|
)
|
(0.11
|
)
|
(0.78
|
)
|
0.57
|
|
|||||
Net earnings (loss) – basic
|
(2.62
|
)
|
(1.03
|
)
|
0.76
|
|
(0.64
|
)
|
1.51
|
|
|||||
Dividends declared
|
0.37
|
|
0.84
|
|
0.93
|
|
0.92
|
|
0.89
|
|
|||||
Total assets
|
309,129
|
|
369,245
|
|
359,122
|
|
489,115
|
|
654,018
|
|
|||||
Short-term borrowings
|
12,849
|
|
24,036
|
|
30,714
|
|
49,860
|
|
70,402
|
|
|||||
Non-recourse borrowings of consolidated securitization entities
|
1,875
|
|
1,980
|
|
417
|
|
3,083
|
|
4,403
|
|
|||||
Long-term borrowings
|
95,234
|
|
108,575
|
|
105,080
|
|
144,659
|
|
185,832
|
|
|||||
Redeemable noncontrolling interests
|
$
|
382
|
|
$
|
3,391
|
|
$
|
3,017
|
|
$
|
2,962
|
|
$
|
98
|
|
Total employees
|
283,000
|
|
313,000
|
|
295,000
|
|
333,000
|
|
305,000
|
|
(a)
|
Included $447 million, $436 million, $656 million and $18 million of preferred stock dividends in 2018 , 2017, 2016 and 2015, respectively.
|
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)
|
|
|
(Shares in thousands)
|
|
|
|
||||
|
|
|
|
||||
2018
|
|
|
|
||||
October
|
1,428
|
|
$
|
11.74
|
|
1,428
|
|
November
|
3,870
|
|
8.32
|
|
3,870
|
|
|
December
|
2,302
|
|
7.26
|
|
2,302
|
|
|
Total
|
7,600
|
|
$
|
8.64
|
|
7,600
|
|
(a)
|
Shares were repurchased through the GE Share Repurchase Program that we announced on April 10, 2015 (the Program). Under the program, we were authorized to repurchase up to
$50.0 billion
of our common stock through December 31, 2018. As of December 31, 2018, we had repurchased a total of approximately
$29.3 billion
under the Program. The Program was flexible and shares were acquired with a combination of borrowings and free cash flows from the public markets and other sources, including GE Stock Direct, a stock purchase plan that is available to the public.
|
RISK FACTORS
|
|
|
RISK FACTORS
|
|
|
RISK FACTORS
|
|
|
RISK FACTORS
|
|
|
RISK FACTORS
|
|
|
RISK FACTORS
|
|
|
RISK FACTORS
|
|
|
RISK FACTORS
|
|
|
LEGAL PROCEEDINGS
|
|
|
LEGAL PROCEEDINGS
|
|
|
REPORTS
|
|
|
REPORTS
|
|
|
/s/ H. Lawrence Culp, Jr.
|
|
/s/ Jamie S. Miller
|
H. Lawrence Culp, Jr.
|
|
Jamie S. Miller
|
Chairman of the Board and
Chief Executive Officer
|
|
Senior Vice President and
Chief Financial Officer
|
February 26, 2019
|
|
|
REPORTS
|
|
|
/s/ KPMG LLP
|
KPMG LLP
We have served as the Company's auditor since 1909.
Boston, Massachusetts
|
February 26, 2019
|
FINANCIAL STATEMENTS
|
|
|
Statement of Earnings (Loss)
|
|||
Consolidated Statement of Comprehensive Income (Loss)
|
|||
Statement of Financial Position
|
|||
Statement of Cash Flows
|
|||
Notes to Consolidated Financial Statements
|
|
||
1
|
|
Basis of Presentation and Summary of Significant Accounting Policies
|
|
2
|
|
Businesses Held for Sale and Discontinued Operations
|
|
3
|
|
Investment Securities
|
|
4
|
|
Current Receivables
|
|
5
|
|
Inventories
|
|
6
|
|
GE Capital Financing Receivables and Allowance for Losses on Financing Receivables
|
|
7
|
|
Property, Plant and Equipment
|
|
8
|
|
Acquisitions, Goodwill and Other Intangible Assets
|
|
9
|
|
Revenues
|
|
10
|
|
Contract & Other Deferred Assets and Progress Collections & Deferred Income
|
|
11
|
|
Borrowings
|
|
12
|
|
Investment Contracts, Insurance Liabilities and Insurance Annuity Benefits
|
|
13
|
|
Postretirement Benefit Plans
|
|
14
|
|
Income Taxes
|
|
15
|
|
Shareowners’ Equity
|
|
16
|
|
Other Stock-related Information
|
|
17
|
|
Earnings Per Share Information
|
|
18
|
|
Other Income
|
|
19
|
|
Fair Value Measurements
|
|
20
|
|
Financial Instruments
|
|
21
|
|
Variable Interest Entities
|
|
22
|
|
Commitments, Guarantees, Product Warranties and Other Loss Contingencies
|
|
23
|
|
Cash Flows Information
|
|
24
|
|
Intercompany Transactions
|
|
25
|
|
Operating Segments
|
|
26
|
|
Cost Information
|
|
27
|
|
Guarantor Financial Information
|
|
28
|
|
Quarterly Information (unaudited)
|
FINANCIAL STATEMENTS
|
|
|
STATEMENT OF EARNINGS (LOSS)
|
General Electric Company
and consolidated affiliates
|
||||||||
For the years ended December 31 (In millions; per-share amounts in dollars)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Revenues
|
|
|
|
||||||
Sales of goods
|
$
|
74,855
|
|
$
|
74,990
|
|
$
|
76,721
|
|
Sales of services
|
38,689
|
|
35,977
|
|
33,450
|
|
|||
GE Capital revenues from services
|
8,072
|
|
7,276
|
|
9,297
|
|
|||
Total revenues (Note 9)
|
121,615
|
|
118,243
|
|
119,469
|
|
|||
|
|
|
|
||||||
Costs and expenses
|
|
|
|
||||||
Cost of goods sold
|
63,116
|
|
63,075
|
|
62,605
|
|
|||
Cost of services sold
|
29,555
|
|
27,808
|
|
25,047
|
|
|||
Selling, general and administrative expenses
|
18,111
|
|
17,569
|
|
17,756
|
|
|||
Interest and other financial charges
|
5,059
|
|
4,869
|
|
5,025
|
|
|||
Investment contracts, insurance losses and
insurance annuity benefits
|
2,790
|
|
12,168
|
|
2,797
|
|
|||
Goodwill impairments (Note 8)
|
22,136
|
|
2,550
|
|
—
|
|
|||
Non-operating benefit costs
|
2,777
|
|
2,399
|
|
2,365
|
|
|||
Other costs and expenses
|
464
|
|
1,082
|
|
982
|
|
|||
Total costs and expenses
|
144,008
|
|
131,520
|
|
116,577
|
|
|||
|
|
|
|
||||||
Other income (Note 18)
|
2,259
|
|
2,126
|
|
4,140
|
|
|||
GE Capital earnings (loss) from continuing operations
|
—
|
|
—
|
|
—
|
|
|||
|
|
|
|
||||||
Earnings (loss) from continuing operations
before income taxes
|
(20,134
|
)
|
(11,151
|
)
|
7,031
|
|
|||
Benefit (provision) for income taxes (Note 14)
|
(583
|
)
|
2,611
|
|
1,133
|
|
|||
Earnings (loss) from continuing operations
|
(20,717
|
)
|
(8,540
|
)
|
8,165
|
|
|||
Earnings (loss) from discontinued operations,
net of taxes (Note 2)
|
(1,726
|
)
|
(309
|
)
|
(954
|
)
|
|||
Net earnings (loss)
|
(22,443
|
)
|
(8,849
|
)
|
7,211
|
|
|||
Less net earnings (loss) attributable to noncontrolling interests
|
(89
|
)
|
(365
|
)
|
(289
|
)
|
|||
Net earnings (loss) attributable to the Company
|
(22,355
|
)
|
(8,484
|
)
|
7,500
|
|
|||
Preferred stock dividends
|
(447
|
)
|
(436
|
)
|
(656
|
)
|
|||
Net earnings (loss) attributable to GE common shareowners
|
$
|
(22,802
|
)
|
$
|
(8,920
|
)
|
$
|
6,845
|
|
|
|
|
|
||||||
Amounts attributable to GE common shareowners
|
|
|
|
||||||
Earnings (loss) from continuing operations
|
$
|
(20,717
|
)
|
$
|
(8,540
|
)
|
$
|
8,165
|
|
Less net earnings (loss) attributable to
noncontrolling interests, continuing operations
|
(89
|
)
|
(371
|
)
|
(288
|
)
|
|||
Earnings (loss) from continuing operations attributable
to the Company
|
(20,629
|
)
|
(8,169
|
)
|
8,453
|
|
|||
Preferred stock dividends
|
(447
|
)
|
(436
|
)
|
(656
|
)
|
|||
Earnings (loss) from continuing operations attributable
to GE common shareowners
|
(21,076
|
)
|
(8,605
|
)
|
7,797
|
|
|||
Earnings (loss) from discontinued operations, net of taxes
|
(1,726
|
)
|
(309
|
)
|
(954
|
)
|
|||
Less net earnings (loss) attributable to
noncontrolling interests, discontinued operations
|
—
|
|
6
|
|
(1
|
)
|
|||
Net earnings (loss) attributable to GE common shareowners
|
$
|
(22,802
|
)
|
$
|
(8,920
|
)
|
$
|
6,845
|
|
|
|
|
|
||||||
Per-share amounts (Note 17)
|
|
|
|
||||||
Earnings (loss) from continuing operations
|
|
|
|
||||||
Diluted earnings (loss) per share
|
$
|
(2.43
|
)
|
$
|
(0.99
|
)
|
$
|
0.85
|
|
Basic earnings (loss) per share
|
$
|
(2.43
|
)
|
$
|
(0.99
|
)
|
$
|
0.86
|
|
|
|
|
|
||||||
Net earnings (loss)
|
|
|
|
||||||
Diluted earnings (loss) per share
|
$
|
(2.62
|
)
|
$
|
(1.03
|
)
|
$
|
0.75
|
|
Basic earnings (loss) per share
|
$
|
(2.62
|
)
|
$
|
(1.03
|
)
|
$
|
0.76
|
|
|
|
|
|
||||||
Dividends declared per common share
|
$
|
0.37
|
|
$
|
0.84
|
|
$
|
0.93
|
|
FINANCIAL STATEMENTS
|
|
|
STATEMENT OF EARNINGS (LOSS) (CONTINUED)
For the years ended December 31
|
GE(a)
|
|
Financial Services (GE Capital)
|
||||||||||||||||
(In millions; per-share amounts in dollars)
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||||||
Sales of goods
|
$
|
74,854
|
|
$
|
75,068
|
|
$
|
76,887
|
|
|
$
|
121
|
|
$
|
130
|
|
$
|
115
|
|
Sales of services
|
38,788
|
|
36,187
|
|
33,729
|
|
|
—
|
|
—
|
|
—
|
|
||||||
GE Capital revenues from services
|
—
|
|
—
|
|
—
|
|
|
9,430
|
|
8,940
|
|
10,790
|
|
||||||
Total revenues (Note 9)
|
113,642
|
|
111,255
|
|
110,615
|
|
|
9,551
|
|
9,070
|
|
10,905
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Costs and expenses
|
|
|
|
|
|
|
|
||||||||||||
Cost of goods sold
|
63,137
|
|
63,180
|
|
62,793
|
|
|
95
|
|
102
|
|
93
|
|
||||||
Cost of services sold
|
27,591
|
|
25,822
|
|
23,088
|
|
|
2,089
|
|
2,196
|
|
2,238
|
|
||||||
Selling, general and administrative expenses
|
17,319
|
|
16,406
|
|
15,518
|
|
|
1,341
|
|
1,662
|
|
2,931
|
|
||||||
Interest and other financial charges
|
2,708
|
|
2,753
|
|
2,026
|
|
|
2,982
|
|
3,145
|
|
3,790
|
|
||||||
Investment contracts, insurance losses and
insurance annuity benefits
|
—
|
|
—
|
|
—
|
|
|
2,849
|
|
12,213
|
|
2,861
|
|
||||||
Goodwill impairments (Note 8)
|
22,136
|
|
1,165
|
|
—
|
|
|
—
|
|
1,386
|
|
—
|
|
||||||
Non-operating benefit costs
|
2,764
|
|
2,385
|
|
2,349
|
|
|
12
|
|
14
|
|
16
|
|
||||||
Other costs and expenses
|
—
|
|
—
|
|
—
|
|
|
558
|
|
986
|
|
1,013
|
|
||||||
Total costs and expenses
|
135,656
|
|
111,710
|
|
105,774
|
|
|
9,926
|
|
21,703
|
|
12,942
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Other income (Note 18)
|
2,255
|
|
1,937
|
|
4,227
|
|
|
—
|
|
—
|
|
—
|
|
||||||
GE Capital earnings (loss) from continuing operations
|
(489
|
)
|
(6,765
|
)
|
(1,251
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Earnings (loss) from continuing operations
before income taxes
|
(20,248
|
)
|
(5,282
|
)
|
7,817
|
|
|
(375
|
)
|
(12,633
|
)
|
(2,037
|
)
|
||||||
Benefit (provision) for income taxes (Note 14)
|
(957
|
)
|
(3,691
|
)
|
(298
|
)
|
|
374
|
|
6,302
|
|
1,431
|
|
||||||
Earnings (loss) from continuing operations
|
(21,205
|
)
|
(8,973
|
)
|
7,519
|
|
|
(1
|
)
|
(6,331
|
)
|
(606
|
)
|
||||||
Earnings (loss) from discontinued operations,
net of taxes (Note 2)
|
(1,726
|
)
|
(315
|
)
|
(952
|
)
|
|
(1,670
|
)
|
(312
|
)
|
(954
|
)
|
||||||
Net earnings (loss)
|
(22,931
|
)
|
(9,288
|
)
|
6,567
|
|
|
(1,672
|
)
|
(6,643
|
)
|
(1,560
|
)
|
||||||
Less net earnings (loss) attributable to noncontrolling interests
|
(129
|
)
|
(368
|
)
|
(278
|
)
|
|
40
|
|
4
|
|
(12
|
)
|
||||||
Net earnings (loss) attributable to the Company
|
(22,802
|
)
|
(8,920
|
)
|
6,845
|
|
|
(1,712
|
)
|
(6,647
|
)
|
(1,548
|
)
|
||||||
Preferred stock dividends
|
—
|
|
—
|
|
—
|
|
|
(447
|
)
|
(436
|
)
|
(656
|
)
|
||||||
Net earnings (loss) attributable to GE common shareowners
|
$
|
(22,802
|
)
|
$
|
(8,920
|
)
|
$
|
6,845
|
|
|
$
|
(2,159
|
)
|
$
|
(7,083
|
)
|
$
|
(2,204
|
)
|
|
|
|
|
|
|
|
|
||||||||||||
Amounts attributable to GE common shareowners:
|
|
|
|
|
|
|
|
||||||||||||
Earnings (loss) from continuing operations
|
$
|
(21,205
|
)
|
$
|
(8,973
|
)
|
$
|
7,519
|
|
|
$
|
(1
|
)
|
$
|
(6,331
|
)
|
$
|
(606
|
)
|
Less net earnings (loss) attributable to
noncontrolling interests, continuing operations
|
(129
|
)
|
(368
|
)
|
(278
|
)
|
|
40
|
|
(3
|
)
|
(10
|
)
|
||||||
Earnings (loss) from continuing operations attributable
to the Company
|
(21,076
|
)
|
(8,605
|
)
|
7,797
|
|
|
(42
|
)
|
(6,328
|
)
|
(595
|
)
|
||||||
Preferred stock dividends
|
—
|
|
—
|
|
—
|
|
|
(447
|
)
|
(436
|
)
|
(656
|
)
|
||||||
Earnings (loss) from continuing operations attributable
to GE common shareowners
|
(21,076
|
)
|
(8,605
|
)
|
7,797
|
|
|
(489
|
)
|
(6,765
|
)
|
(1,251
|
)
|
||||||
Earnings (loss) from discontinued operations, net of taxes
|
(1,726
|
)
|
(315
|
)
|
(952
|
)
|
|
(1,670
|
)
|
(312
|
)
|
(954
|
)
|
||||||
Less net earnings (loss) attributable to
noncontrolling interests, discontinued operations
|
—
|
|
—
|
|
—
|
|
|
—
|
|
6
|
|
(1
|
)
|
||||||
Net earnings (loss) attributable to GE common shareowners
|
$
|
(22,802
|
)
|
$
|
(8,920
|
)
|
$
|
6,845
|
|
|
$
|
(2,159
|
)
|
$
|
(7,083
|
)
|
$
|
(2,204
|
)
|
(a)
|
Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. See Note 1.
|
FINANCIAL STATEMENTS
|
|
|
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
|
|
|
|
||||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
For the years ended December 31 (In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Net earnings (loss)
|
$
|
(22,443
|
)
|
$
|
(8,849
|
)
|
$
|
7,211
|
|
Less net earnings (loss) attributable to noncontrolling interests
|
(89
|
)
|
(365
|
)
|
(289
|
)
|
|||
Net earnings (loss) attributable to the Company
|
$
|
(22,355
|
)
|
$
|
(8,484
|
)
|
$
|
7,500
|
|
|
|
|
|
||||||
Other comprehensive income (loss)
|
|
|
|
||||||
Investment securities
|
$
|
64
|
|
$
|
(776
|
)
|
$
|
203
|
|
Currency translation adjustments
|
(1,664
|
)
|
2,178
|
|
(1,298
|
)
|
|||
Cash flow hedges
|
(51
|
)
|
51
|
|
93
|
|
|||
Benefit plans
|
1,416
|
|
2,782
|
|
(1,068
|
)
|
|||
Other comprehensive income (loss)
|
(235
|
)
|
4,236
|
|
(2,070
|
)
|
|||
Less other comprehensive income (loss) attributable to noncontrolling interests
|
(225
|
)
|
51
|
|
(14
|
)
|
|||
Other comprehensive income (loss) attributable to the Company
|
$
|
(10
|
)
|
$
|
4,184
|
|
$
|
(2,056
|
)
|
|
|
|
|
||||||
Comprehensive income (loss)
|
$
|
(22,678
|
)
|
$
|
(4,613
|
)
|
$
|
5,141
|
|
Less comprehensive income (loss) attributable to noncontrolling interests
|
(314
|
)
|
(314
|
)
|
(303
|
)
|
|||
Comprehensive income (loss) attributable to the Company
|
$
|
(22,364
|
)
|
$
|
(4,300
|
)
|
$
|
5,444
|
|
FINANCIAL STATEMENTS
|
|
|
FINANCIAL STATEMENTS
|
|
|
STATEMENT OF FINANCIAL POSITION
|
General Electric Company
and consolidated affiliates |
|||||
December 31 (In millions, except share amounts)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Assets
|
|
|
||||
Cash, cash equivalents and restricted cash(a)
|
$
|
35,020
|
|
$
|
43,967
|
|
Investment securities (Note 3)
|
33,835
|
|
38,696
|
|
||
Current receivables (Note 4)
|
19,874
|
|
24,209
|
|
||
Inventories (Note 5)
|
19,271
|
|
19,419
|
|
||
Financing receivables – net (Note 6)
|
7,699
|
|
10,336
|
|
||
Other GE Capital receivables
|
6,218
|
|
6,301
|
|
||
Property, plant and equipment – net (Note 7)
|
50,749
|
|
53,874
|
|
||
Receivable from GE Capital
|
—
|
|
—
|
|
||
Investment in GE Capital
|
—
|
|
—
|
|
||
Goodwill (Note 8)
|
59,614
|
|
83,968
|
|
||
Other intangible assets – net (Note 8)
|
18,159
|
|
20,273
|
|
||
Contract and other deferred assets (Note 10)
|
20,000
|
|
20,356
|
|
||
All other assets
|
20,018
|
|
28,949
|
|
||
Deferred income taxes (Note 14)
|
12,432
|
|
8,819
|
|
||
Assets of businesses held for sale (Note 2)
|
1,630
|
|
4,164
|
|
||
Assets of discontinued operations (Note 2)
|
4,610
|
|
5,912
|
|
||
Total assets(b)
|
$
|
309,129
|
|
$
|
369,245
|
|
|
|
|
||||
Liabilities and equity
|
|
|
||||
Short-term borrowings (Note 11)
|
$
|
12,849
|
|
$
|
24,036
|
|
Short-term borrowings assumed by GE (Note 11)
|
—
|
|
—
|
|
||
Accounts payable, principally trade accounts
|
17,153
|
|
15,172
|
|
||
Progress collections and deferred income (Note 10)
|
20,895
|
|
22,117
|
|
||
Dividends payable
|
95
|
|
1,052
|
|
||
Other GE current liabilities
|
16,345
|
|
16,919
|
|
||
Non-recourse borrowings of consolidated securitization entities (Note 11)
|
1,875
|
|
1,980
|
|
||
Long-term borrowings (Note 11)
|
95,234
|
|
108,575
|
|
||
Long-term borrowings assumed by GE (Note 11)
|
—
|
|
—
|
|
||
Investment contracts, insurance liabilities and insurance annuity benefits (Note 12)
|
35,562
|
|
38,136
|
|
||
Non-current compensation and benefits
|
33,783
|
|
41,630
|
|
||
All other liabilities
|
20,892
|
|
20,784
|
|
||
Liabilities of businesses held for sale (Note 2)
|
708
|
|
1,248
|
|
||
Liabilities of discontinued operations (Note 2)
|
1,875
|
|
706
|
|
||
Total liabilities(b)
|
257,266
|
|
292,355
|
|
||
|
|
|
||||
Redeemable noncontrolling interests (Note 15)
|
382
|
|
3,391
|
|
||
|
|
|
||||
Preferred stock (5,939,875 shares outstanding at both December 31, 2018 and
December 31, 2017)
|
6
|
|
6
|
|
||
Common stock (8,702,227,000 and 8,680,571,000 shares outstanding
at December 31, 2018 and December 31, 2017, respectively)
|
702
|
|
702
|
|
||
Accumulated other comprehensive income (loss) – net attributable to GE(c)
|
|
|
||||
Investment securities
|
(39
|
)
|
(102
|
)
|
||
Currency translation adjustments
|
(6,134
|
)
|
(4,661
|
)
|
||
Cash flow hedges
|
13
|
|
62
|
|
||
Benefit plans
|
(8,254
|
)
|
(9,702
|
)
|
||
Other capital
|
35,504
|
|
37,384
|
|
||
Retained earnings
|
93,109
|
|
117,245
|
|
||
Less common stock held in treasury
|
(83,925
|
)
|
(84,902
|
)
|
||
Total GE shareowners’ equity
|
30,981
|
|
56,030
|
|
||
Noncontrolling interests(d) (Note 15)
|
20,500
|
|
17,468
|
|
||
Total equity (Note 15)
|
51,481
|
|
73,498
|
|
||
Total liabilities, redeemable noncontrolling interests and equity
|
$
|
309,129
|
|
$
|
369,245
|
|
(a)
|
Included restricted cash of
$492 million
and
$668 million
at December 31, 2018 and December 31, 2017, respectively.
|
(b)
|
Our consolidated assets at
December 31, 2018
included total assets of
$5,475 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
$3,158 million
and investment securities of
$35 million
within continuing operations and assets of discontinued operations of
$133 million
. Our consolidated liabilities at
December 31, 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
$1,875 million
within continuing operations. See Note 21.
|
(c)
|
The sum of accumulated other comprehensive income (loss) (AOCI) attributable to the Company was
$(14,414) million
and
$(14,404) million
at
December 31, 2018
and
December 31, 2017
, respectively.
|
(d)
|
Included AOCI attributable to noncontrolling interests of
$(451) million
and
$(226) million
at
December 31, 2018
and
December 31, 2017
, respectively.
|
FINANCIAL STATEMENTS
|
|
|
STATEMENT OF FINANCIAL POSITION (CONTINUED)
|
GE(a)
|
|
Financial Services (GE Capital)
|
||||||||||
December 31 (In millions, except share amounts)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
||||||||
Cash, cash equivalents and restricted cash(b)
|
$
|
20,528
|
|
$
|
18,822
|
|
|
$
|
14,492
|
|
$
|
25,145
|
|
Investment securities (Note 3)
|
514
|
|
569
|
|
|
33,393
|
|
38,231
|
|
||||
Current receivables (Note 4)
|
15,418
|
|
14,638
|
|
|
—
|
|
—
|
|
||||
Inventories (Note 5)
|
19,222
|
|
19,344
|
|
|
50
|
|
75
|
|
||||
Financing receivables – net (Note 6)
|
—
|
|
—
|
|
|
13,628
|
|
21,967
|
|
||||
Other GE Capital receivables
|
—
|
|
—
|
|
|
15,361
|
|
16,945
|
|
||||
Property, plant and equipment – net (Note 7)
|
21,967
|
|
23,963
|
|
|
29,510
|
|
30,595
|
|
||||
Receivable from GE Capital(c)(d)
|
22,513
|
|
39,844
|
|
|
—
|
|
—
|
|
||||
Investment in GE Capital
|
11,412
|
|
13,493
|
|
|
—
|
|
—
|
|
||||
Goodwill (Note 8)
|
58,710
|
|
82,985
|
|
|
904
|
|
984
|
|
||||
Other intangible assets – net (Note 8)
|
17,923
|
|
20,014
|
|
|
236
|
|
259
|
|
||||
Contract and other deferred assets (Note 10)
|
20,000
|
|
20,356
|
|
|
—
|
|
—
|
|
||||
All other assets
|
10,288
|
|
13,627
|
|
|
9,819
|
|
15,606
|
|
||||
Deferred income taxes (Note 14)
|
10,491
|
|
7,815
|
|
|
1,936
|
|
999
|
|
||||
Assets of businesses held for sale (Note 2)
|
1,525
|
|
3,799
|
|
|
—
|
|
—
|
|
||||
Assets of discontinued operations (Note 2)
|
—
|
|
—
|
|
|
4,610
|
|
5,912
|
|
||||
Total assets
|
$
|
230,510
|
|
$
|
279,267
|
|
|
$
|
123,939
|
|
$
|
156,716
|
|
|
|
|
|
|
|
||||||||
Liabilities and equity
|
|
|
|
|
|
||||||||
Short-term borrowings(d) (Note 11)
|
$
|
5,220
|
|
$
|
6,237
|
|
|
$
|
4,999
|
|
$
|
11,291
|
|
Short-term borrowings assumed by GE(c) (Note 11)
|
4,207
|
|
8,310
|
|
|
2,684
|
|
8,310
|
|
||||
Accounts payable, principally trade accounts
|
22,972
|
|
21,851
|
|
|
1,612
|
|
1,853
|
|
||||
Progress collections and deferred income (Note 10)
|
21,151
|
|
22,221
|
|
|
—
|
|
—
|
|
||||
Dividends payable
|
95
|
|
1,052
|
|
|
—
|
|
—
|
|
||||
Other GE current liabilities
|
16,345
|
|
16,919
|
|
|
—
|
|
—
|
|
||||
Non-recourse borrowings of consolidated securitization entities (Note 11)
|
—
|
|
—
|
|
|
1,875
|
|
1,980
|
|
||||
Long-term borrowings(d) (Note 11)
|
27,089
|
|
28,236
|
|
|
36,154
|
|
42,081
|
|
||||
Long-term borrowings assumed by GE(c)(d) (Note 11)
|
32,054
|
|
38,804
|
|
|
19,828
|
|
31,533
|
|
||||
Investment contracts, insurance liabilities and insurance annuity benefits (Note 12)
|
—
|
|
—
|
|
|
35,994
|
|
38,587
|
|
||||
Non-current compensation and benefits
|
32,918
|
|
40,820
|
|
|
856
|
|
801
|
|
||||
All other liabilities
|
15,772
|
|
16,873
|
|
|
6,724
|
|
5,886
|
|
||||
Liabilities of businesses held for sale (Note 2)
|
748
|
|
1,248
|
|
|
—
|
|
—
|
|
||||
Liabilities of discontinued operations (Note 2)
|
76
|
|
23
|
|
|
1,800
|
|
683
|
|
||||
Total liabilities
|
178,648
|
|
202,595
|
|
|
112,527
|
|
143,007
|
|
||||
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interests (Note 15)
|
382
|
|
3,391
|
|
|
—
|
|
—
|
|
||||
|
|
|
|
|
|
||||||||
Preferred stock (5,939,875 shares outstanding at both December 31, 2018 and
December 31, 2017)
|
6
|
|
6
|
|
|
6
|
|
6
|
|
||||
Common stock (8,702,227,000 and 8,680,571,000 shares outstanding
at December 31, 2018 and December 31, 2017, respectively)
|
702
|
|
702
|
|
|
—
|
|
—
|
|
||||
Accumulated other comprehensive income (loss) – net attributable to GE
|
|
|
|
|
|
||||||||
Investment securities
|
(39
|
)
|
(102
|
)
|
|
(32
|
)
|
(99
|
)
|
||||
Currency translation adjustments
|
(6,134
|
)
|
(4,661
|
)
|
|
(162
|
)
|
(225
|
)
|
||||
Cash flow hedges
|
13
|
|
62
|
|
|
53
|
|
54
|
|
||||
Benefit plans
|
(8,254
|
)
|
(9,702
|
)
|
|
(642
|
)
|
(524
|
)
|
||||
Other capital
|
35,504
|
|
37,384
|
|
|
12,883
|
|
12,806
|
|
||||
Retained earnings
|
93,109
|
|
117,245
|
|
|
(694
|
)
|
1,476
|
|
||||
Less common stock held in treasury
|
(83,925
|
)
|
(84,902
|
)
|
|
—
|
|
—
|
|
||||
Total GE shareowners’ equity
|
30,981
|
|
56,030
|
|
|
11,412
|
|
13,493
|
|
||||
Noncontrolling interests (Note 15)
|
20,499
|
|
17,252
|
|
|
1
|
|
217
|
|
||||
Total equity (Note 15)
|
51,480
|
|
73,282
|
|
|
11,412
|
|
13,709
|
|
||||
Total liabilities, redeemable noncontrolling interests and equity
|
$
|
230,510
|
|
$
|
279,267
|
|
|
$
|
123,939
|
|
$
|
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
$459 million
and
$611 million
at December 31, 2018 and December 31, 2017, respectively, and GE Capital restricted cash was
$33 million
and
$57 million
at December 31, 2018 and December 31, 2017, respectively.
|
(c)
|
At December 31, 2018, the remaining GE Capital borrowings that had been assumed by GE as part of the GE Capital Exit Plan was
$36,262 million
(
$4,207 million
short term and
$32,054
million long term), for which GE has an offsetting Receivable from GE Capital of
$22,513 million
. The difference of
$13,749 million
represents the amount of borrowings GE Capital had funded with available cash to GE via an intercompany loan in lieu of GE issuing borrowings externally. See Note 11 and the Borrowings section of Capital Resources and Liquidity within MD&A for further information.
|
(d)
|
At December 31, 2018, total GE borrowings is comprised of GE-issued borrowings of
$32,309 million
(
$5,220 million
short term and
$27,089 million
long term) and the
$13,749 million
of borrowings from GE Capital as described in note (c) above for a total of
$46,058 million
(including
$6,330 million
BHGE borrowings). See Note 11 and the Borrowings section of Capital Resources and Liquidity within MD&A for further information.
|
FINANCIAL STATEMENTS
|
|
|
STATEMENT OF CASH FLOWS
|
General Electric Company
and consolidated affiliates
|
||||||||
For the years ended December 31 (In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Cash flows – operating activities
|
|
|
|
||||||
Net earnings (loss)
|
$
|
(22,443
|
)
|
$
|
(8,849
|
)
|
$
|
7,211
|
|
(Earnings) loss from discontinued operations
|
1,726
|
|
309
|
|
954
|
|
|||
Adjustments to reconcile net earnings (loss) to cash provided from operating
activities:
|
|
|
|
||||||
Depreciation and amortization of property, plant and equipment (Note 7)
|
5,562
|
|
5,139
|
|
4,997
|
|
|||
Amortization of intangible assets (Note 8)
|
2,662
|
|
2,290
|
|
2,073
|
|
|||
Goodwill impairments (Note 8)
|
22,136
|
|
2,550
|
|
—
|
|
|||
(Earnings) loss from continuing operations retained by GE Capital
|
—
|
|
—
|
|
—
|
|
|||
(Gains) losses on purchases and sales of business interests (Note 18)
|
(1,582
|
)
|
(1,021
|
)
|
(3,731
|
)
|
|||
Principal pension plans cost (Note 13)
|
4,260
|
|
3,687
|
|
3,623
|
|
|||
Principal pension plans employer contributions (Note 13)
|
(6,283
|
)
|
(1,978
|
)
|
(552
|
)
|
|||
Other postretirement benefit plans (net) (Note 13)
|
(1,101
|
)
|
(888
|
)
|
(716
|
)
|
|||
Provision (benefit) for income taxes (Note 14)
|
583
|
|
(2,611
|
)
|
(1,133
|
)
|
|||
Cash recovered (paid) during the year for income taxes
|
(1,864
|
)
|
(2,436
|
)
|
(7,280
|
)
|
|||
Decrease (increase) in contract and other deferred assets
|
(92
|
)
|
(1,898
|
)
|
(2,617
|
)
|
|||
Decrease (increase) in GE current receivables
|
(430
|
)
|
(2,846
|
)
|
1,460
|
|
|||
Decrease (increase) in inventories
|
(902
|
)
|
1,183
|
|
(815
|
)
|
|||
Increase (decrease) in accounts payable
|
2,199
|
|
(394
|
)
|
1,228
|
|
|||
Increase (decrease) in GE progress collections
|
(502
|
)
|
1,737
|
|
1,725
|
|
|||
All other operating activities
|
735
|
|
13,027
|
|
1,078
|
|
|||
Cash from (used for) operating activities – continuing operations
|
4,662
|
|
7,000
|
|
7,503
|
|
|||
Cash from (used for) operating activities – discontinued operations(a)
|
(416
|
)
|
(968
|
)
|
(6,343
|
)
|
|||
Cash from (used for) operating activities
|
4,246
|
|
6,032
|
|
1,160
|
|
|||
|
|
|
|
||||||
Cash flows – investing activities
|
|
|
|
||||||
Additions to property, plant and equipment
|
(7,695
|
)
|
(7,371
|
)
|
(7,199
|
)
|
|||
Dispositions of property, plant and equipment
|
4,519
|
|
5,746
|
|
4,424
|
|
|||
Additions to internal-use software
|
(361
|
)
|
(549
|
)
|
(749
|
)
|
|||
Net decrease (increase) in GE Capital financing receivables
|
1,796
|
|
805
|
|
200
|
|
|||
Proceeds from sale of discontinued operations
|
29
|
|
1,464
|
|
59,890
|
|
|||
Proceeds from principal business dispositions
|
8,884
|
|
3,228
|
|
5,357
|
|
|||
Net cash from (payments for) principal businesses purchased
|
(90
|
)
|
(6,087
|
)
|
(2,271
|
)
|
|||
All other investing activities
|
10,969
|
|
11,112
|
|
2,913
|
|
|||
Cash from (used for) investing activities – continuing operations
|
18,052
|
|
8,348
|
|
62,566
|
|
|||
Cash from (used for) investing activities – discontinued operations
|
187
|
|
(1,784
|
)
|
(13,431
|
)
|
|||
Cash from (used for) investing activities
|
18,239
|
|
6,564
|
|
49,135
|
|
|||
|
|
|
|
||||||
Cash flows – financing activities
|
|
|
|
||||||
Net increase (decrease) in borrowings (maturities of 90 days or less)
|
(4,436
|
)
|
1,794
|
|
(1,135
|
)
|
|||
Newly issued debt (maturities longer than 90 days)
|
3,201
|
|
14,876
|
|
1,492
|
|
|||
Repayments and other reductions (maturities longer than 90 days)
|
(21,166
|
)
|
(25,622
|
)
|
(58,768
|
)
|
|||
Net dispositions (purchases) of GE shares for treasury
|
(17
|
)
|
(2,550
|
)
|
(21,429
|
)
|
|||
Dividends paid to shareowners
|
(4,474
|
)
|
(8,650
|
)
|
(8,806
|
)
|
|||
All other financing activities
|
(4,141
|
)
|
(903
|
)
|
(2,607
|
)
|
|||
Cash from (used for) financing activities – continuing operations
|
(31,033
|
)
|
(21,055
|
)
|
(91,253
|
)
|
|||
Cash from (used for) financing activities – discontinued operations
|
—
|
|
1,909
|
|
789
|
|
|||
Cash from (used for) financing activities
|
(31,033
|
)
|
(19,146
|
)
|
(90,464
|
)
|
|||
Effect of currency exchange rate changes on cash, cash equivalents and
restricted cash
|
(628
|
)
|
891
|
|
(1,146
|
)
|
|||
Increase (decrease) in cash, cash equivalents and restricted cash
|
(9,176
|
)
|
(5,660
|
)
|
(41,315
|
)
|
|||
Cash, cash equivalents and restricted cash at beginning of year
|
44,724
|
|
50,384
|
|
91,698
|
|
|||
Cash, cash equivalents and restricted cash at end of year
|
35,548
|
|
44,724
|
|
50,384
|
|
|||
Less cash, cash equivalents and restricted cash of discontinued operations
at end of year
|
528
|
|
757
|
|
1,601
|
|
|||
Cash, cash equivalents and restricted cash of continuing operations at end of year
|
$
|
35,020
|
|
$
|
43,967
|
|
$
|
48,783
|
|
Supplemental disclosure of cash flows information
|
|
|
|
||||||
Cash paid during the year for interest
|
$
|
(4,409
|
)
|
$
|
(4,211
|
)
|
$
|
(5,779
|
)
|
(a)
|
Included cash recovered (paid) during the year for income taxes of
$(4) million
, an insignificant amount and
$(188) million
for the years ended December 31, 2018, 2017 and 2016, respectively.
|
FINANCIAL STATEMENTS
|
|
|
STATEMENT OF CASH FLOWS (CONTINUED)
|
GE(a)
|
|
Financial Services (GE Capital)
|
||||||||||||||||
For the years ended December 31 (In millions)
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
||||||
Cash flows – operating activities
|
|
|
|
|
|
|
|
||||||||||||
Net earnings (loss)
|
$
|
(22,931
|
)
|
$
|
(9,288
|
)
|
$
|
6,567
|
|
|
$
|
(1,672
|
)
|
$
|
(6,643
|
)
|
$
|
(1,560
|
)
|
(Earnings) loss from discontinued operations
|
1,726
|
|
315
|
|
952
|
|
|
1,670
|
|
312
|
|
954
|
|
||||||
Adjustments to reconcile net earnings (loss) to cash provided from operating activities:
|
|
|
|
|
|
|
|
||||||||||||
Depreciation and amortization of property, plant and equipment (Note 7)
|
3,433
|
|
2,857
|
|
2,597
|
|
|
2,110
|
|
2,277
|
|
2,384
|
|
||||||
Amortization of intangible assets
|
2,608
|
|
2,225
|
|
1,942
|
|
|
53
|
|
65
|
|
131
|
|
||||||
Goodwill impairments (Note 8)
|
22,136
|
|
1,165
|
|
—
|
|
|
—
|
|
1,386
|
|
—
|
|
||||||
(Earnings) loss from continuing operations retained by GE Capital(b)
|
489
|
|
10,781
|
|
21,345
|
|
|
—
|
|
—
|
|
—
|
|
||||||
(Gains) losses on purchases and sales of business interests (Note 18)
|
(1,294
|
)
|
(1,021
|
)
|
(3,731
|
)
|
|
(288
|
)
|
—
|
|
—
|
|
||||||
Principal pension plans cost (Note 13)
|
4,260
|
|
3,687
|
|
3,623
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Principal pension plans employer contributions (Note 13)
|
(6,283
|
)
|
(1,978
|
)
|
(552
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||
Other postretirement benefit plans (net) (Note 13)
|
(1,084
|
)
|
(865
|
)
|
(715
|
)
|
|
(18
|
)
|
(23
|
)
|
(1
|
)
|
||||||
Provision (benefit) for income taxes (Note 14)
|
957
|
|
3,691
|
|
298
|
|
|
(374
|
)
|
(6,302
|
)
|
(1,431
|
)
|
||||||
Cash recovered (paid) during the year for income taxes
|
(1,803
|
)
|
(2,700
|
)
|
(2,547
|
)
|
|
(61
|
)
|
264
|
|
(4,734
|
)
|
||||||
Decrease (increase) in contract and other deferred assets
|
(92
|
)
|
(1,898
|
)
|
(2,617
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||
Decrease (increase) in GE current receivables
|
(1,233
|
)
|
310
|
|
875
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Decrease (increase) in inventories
|
(941
|
)
|
1,200
|
|
(762
|
)
|
|
31
|
|
(2
|
)
|
(10
|
)
|
||||||
Increase (decrease) in accounts payable
|
2,548
|
|
(429
|
)
|
1,746
|
|
|
2
|
|
(75
|
)
|
17
|
|
||||||
Increase (decrease) in GE progress collections
|
(364
|
)
|
1,763
|
|
1,803
|
|
|
—
|
|
—
|
|
—
|
|
||||||
All other operating activities (Note 23)
|
125
|
|
1,221
|
|
(851
|
)
|
|
127
|
|
11,115
|
|
4,032
|
|
||||||
Cash from (used for) operating activities – continuing operations
|
2,258
|
|
11,033
|
|
29,972
|
|
|
1,582
|
|
2,374
|
|
(219
|
)
|
||||||
Cash from (used for) operating activities – discontinued operations
|
—
|
|
(1
|
)
|
(90
|
)
|
|
(415
|
)
|
(968
|
)
|
(6,253
|
)
|
||||||
Cash from (used for) operating activities
|
2,257
|
|
11,033
|
|
29,882
|
|
|
1,166
|
|
1,407
|
|
(6,472
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Cash flows – investing activities
|
|
|
|
|
|
|
|
||||||||||||
Additions to property, plant and equipment
|
(3,302
|
)
|
(4,132
|
)
|
(3,758
|
)
|
|
(4,569
|
)
|
(3,680
|
)
|
(3,769
|
)
|
||||||
Dispositions of property, plant and equipment
|
698
|
|
1,401
|
|
1,080
|
|
|
3,853
|
|
4,579
|
|
3,637
|
|
||||||
Additions to internal-use software
|
(347
|
)
|
(518
|
)
|
(740
|
)
|
|
(14
|
)
|
(31
|
)
|
(8
|
)
|
||||||
Net decrease (increase) in GE Capital financing receivables (Note 23)
|
—
|
|
—
|
|
—
|
|
|
9,986
|
|
2,897
|
|
(1,279
|
)
|
||||||
Proceeds from sale of discontinued operations
|
—
|
|
—
|
|
—
|
|
|
29
|
|
1,464
|
|
59,890
|
|
||||||
Proceeds from principal business dispositions
|
6,507
|
|
3,106
|
|
5,357
|
|
|
2,011
|
|
—
|
|
—
|
|
||||||
Net cash from (payments for) principal businesses purchased
|
(90
|
)
|
(6,087
|
)
|
(2,271
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||
All other investing activities (Note 23)
|
(1,190
|
)
|
(2,061
|
)
|
(1,349
|
)
|
|
482
|
|
3,013
|
|
1,297
|
|
||||||
Cash from (used for) investing activities – continuing operations
|
2,276
|
|
(8,291
|
)
|
(1,681
|
)
|
|
11,777
|
|
8,242
|
|
59,769
|
|
||||||
Cash from (used for) investing activities – discontinued operations
|
—
|
|
1
|
|
90
|
|
|
186
|
|
(1,784
|
)
|
(13,521
|
)
|
||||||
Cash from (used for) investing activities
|
2,277
|
|
(8,291
|
)
|
(1,592
|
)
|
|
11,964
|
|
6,458
|
|
46,248
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Cash flows – financing activities
|
|
|
|
|
|
|
|
||||||||||||
Net increase (decrease) in borrowings (maturities of 90 days or less)
|
(1,197
|
)
|
1,704
|
|
1,655
|
|
|
(4,308
|
)
|
69
|
|
(1,655
|
)
|
||||||
Newly issued debt (maturities longer than 90 days)
|
6,651
|
|
20,264
|
|
5,307
|
|
|
3,045
|
|
1,909
|
|
1,174
|
|
||||||
Repayments and other reductions (maturities longer than 90 days)
|
(1,870
|
)
|
(5,981
|
)
|
(4,155
|
)
|
|
(19,836
|
)
|
(21,007
|
)
|
(58,285
|
)
|
||||||
Net dispositions (purchases) of GE shares for treasury (Note 23)
|
(17
|
)
|
(2,550
|
)
|
(21,429
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||
Dividends paid to shareowners
|
(4,179
|
)
|
(8,355
|
)
|
(8,474
|
)
|
|
(371
|
)
|
(4,311
|
)
|
(20,427
|
)
|
||||||
All other financing activities (Note 23)
|
(1,723
|
)
|
(528
|
)
|
(273
|
)
|
|
(2,408
|
)
|
(280
|
)
|
(2,460
|
)
|
||||||
Cash from (used for) financing activities – continuing operations
|
(2,334
|
)
|
4,554
|
|
(27,371
|
)
|
|
(23,878
|
)
|
(23,619
|
)
|
(81,653
|
)
|
||||||
Cash from (used for) financing activities – discontinued operations
|
—
|
|
—
|
|
—
|
|
|
—
|
|
1,909
|
|
789
|
|
||||||
Cash from (used for) financing activities
|
(2,334
|
)
|
4,554
|
|
(27,371
|
)
|
|
(23,878
|
)
|
(21,710
|
)
|
(80,864
|
)
|
||||||
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash
|
(494
|
)
|
444
|
|
(392
|
)
|
|
(134
|
)
|
447
|
|
(754
|
)
|
||||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
1,706
|
|
7,739
|
|
527
|
|
|
(10,882
|
)
|
(13,399
|
)
|
(41,842
|
)
|
||||||
Cash, cash equivalents and restricted cash at beginning of year
|
18,822
|
|
11,083
|
|
10,556
|
|
|
25,902
|
|
39,301
|
|
81,143
|
|
||||||
Cash, cash equivalents and restricted cash at end of year
|
20,528
|
|
18,822
|
|
11,083
|
|
|
15,020
|
|
25,902
|
|
39,301
|
|
||||||
Less cash, cash equivalents and restricted cash of discontinued operations at end of year
|
—
|
|
—
|
|
—
|
|
|
528
|
|
757
|
|
1,601
|
|
||||||
Cash, cash equivalents and restricted cash of continuing operations at end of year
|
$
|
20,528
|
|
$
|
18,822
|
|
$
|
11,083
|
|
|
$
|
14,492
|
|
$
|
25,145
|
|
$
|
37,700
|
|
Supplemental disclosure of cash flows information
|
|
|
|
|
|
|
|
||||||||||||
Cash paid during the year for interest
|
$
|
(2,201
|
)
|
$
|
(2,347
|
)
|
$
|
(1,753
|
)
|
|
$
|
(2,883
|
)
|
$
|
(2,793
|
)
|
$
|
(4,982
|
)
|
(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 dividends paid to GE.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Level 1 –
|
Quoted prices for identical instruments in active markets.
|
Level 2 –
|
Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
|
Level 3 –
|
Significant inputs to the valuation model are unobservable.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
•
|
Modifications
. Under the new revenue standard, contract modifications are generally 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.
|
•
|
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 are generally accounted for as separate performance obligations under the new revenue standard.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE
December 31 (In millions) |
2018
|
|
2017
|
|
||
Assets
|
|
|
|
|||
Current receivables(a)
|
$
|
184
|
|
$
|
612
|
|
Inventories
|
529
|
|
931
|
|
||
Property, plant, and equipment – net
|
423
|
|
931
|
|
||
Goodwill
|
514
|
|
1,619
|
|
||
Other intangible assets – net
|
370
|
|
403
|
|
||
Contract and other deferred assets
|
562
|
|
619
|
|
||
Valuation allowance on disposal group classified as held for sale(b)
|
(1,013
|
)
|
(1,000
|
)
|
||
Other
|
60
|
|
49
|
|
||
Assets of businesses held for sale
|
$
|
1,630
|
|
$
|
4,164
|
|
|
|
|
||||
Liabilities
|
|
|
||||
Accounts payable(a)
|
$
|
344
|
|
$
|
602
|
|
Progress collections and price adjustments accrued
|
84
|
|
179
|
|
||
Non-current compensation and benefits
|
152
|
|
162
|
|
||
Other liabilities
|
128
|
|
305
|
|
||
Liabilities of businesses held for sale
|
$
|
708
|
|
$
|
1,248
|
|
(a)
|
Included transactions in our industrial businesses that were made on arm's length terms with GE Capital, including GE current receivables sold to GE Capital of $
105
million and
$366 million
at December 31, 2018 and December 31, 2017, respectively, and amounts due to GE Capital associated with the supply chain finance program of
$40 million
at December 31, 2018. 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.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Operations
|
|
|
|
||||||
Total revenues and other income (loss)
|
$
|
(1,347
|
)
|
$
|
182
|
|
$
|
2,968
|
|
|
|
|
|
||||||
Earnings (loss) from discontinued operations before income taxes
|
$
|
(1,811
|
)
|
$
|
(731
|
)
|
$
|
(162
|
)
|
Benefit (provision) for income taxes(a)
|
82
|
|
295
|
|
460
|
|
|||
Earnings (loss) from discontinued operations, net of taxes
|
$
|
(1,729
|
)
|
$
|
(437
|
)
|
$
|
298
|
|
|
|
|
|
||||||
Disposals
|
|
|
|
||||||
Gain (loss) on disposals before income taxes
|
$
|
4
|
|
$
|
306
|
|
$
|
(750
|
)
|
Benefit (provision) for income taxes(a)
|
(1
|
)
|
(178
|
)
|
(502
|
)
|
|||
Gain (loss) on disposals, net of taxes
|
$
|
3
|
|
$
|
128
|
|
$
|
(1,252
|
)
|
|
|
|
|
||||||
Earnings (loss) from discontinued operations, net of taxes
|
$
|
(1,726
|
)
|
$
|
(309
|
)
|
$
|
(954
|
)
|
(a)
|
GE Capital’s total tax benefit (provision) for discontinued operations and disposals included current tax benefit (provision) of
$201 million
,
$(299) million
and
$945 million
for the years ended
December 31, 2018
,
2017
and
2016
, respectively, including current U.S. Federal tax benefit (provision) of
$91 million
,
$(402) million
and
$1,224 million
and deferred tax benefit (provision) of
$(120) million
,
$416 million
and
$(988) million
for the years ended
December 31, 2018
,
2017
and
2016
, respectively.
|
December 31 (In millions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Assets
|
|
|
||||
Cash, cash equivalents and restricted cash
|
$
|
528
|
|
$
|
757
|
|
Investment securities
|
195
|
|
647
|
|
||
Deferred income taxes
|
872
|
|
951
|
|
||
Financing receivables held for sale
|
2,745
|
|
3,215
|
|
||
Other assets
|
270
|
|
342
|
|
||
Assets of discontinued operations
|
$
|
4,610
|
|
$
|
5,912
|
|
|
|
|
||||
Liabilities
|
|
|
||||
Accounts payable
|
$
|
43
|
|
$
|
51
|
|
All other liabilities
|
1,833
|
|
655
|
|
||
Liabilities of discontinued operations
|
$
|
1,875
|
|
$
|
706
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
2018
|
|
2017
|
||||||||||||||||||||||
December 31 (In millions)
|
Amortized
cost |
|
Gross
unrealized gains |
|
Gross
unrealized losses |
|
Estimated
fair value |
|
|
Amortized
cost |
|
Gross
unrealized gains |
|
Gross
unrealized losses |
|
Estimated
fair value |
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Debt
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. corporate
|
$
|
21,306
|
|
$
|
2,257
|
|
$
|
(357
|
)
|
$
|
23,206
|
|
|
$
|
20,104
|
|
$
|
3,775
|
|
$
|
(35
|
)
|
$
|
23,843
|
|
Non-U.S. corporate
|
1,906
|
|
53
|
|
(76
|
)
|
1,883
|
|
|
5,455
|
|
86
|
|
(13
|
)
|
5,528
|
|
||||||||
State and municipal
|
3,320
|
|
367
|
|
(54
|
)
|
3,633
|
|
|
3,775
|
|
534
|
|
(40
|
)
|
4,269
|
|
||||||||
Mortgage and asset-backed
|
3,325
|
|
51
|
|
(54
|
)
|
3,322
|
|
|
2,820
|
|
81
|
|
(23
|
)
|
2,878
|
|
||||||||
Government and agencies
|
1,603
|
|
63
|
|
(20
|
)
|
1,645
|
|
|
1,927
|
|
75
|
|
(2
|
)
|
2,000
|
|
||||||||
Equity(a)
|
146
|
|
—
|
|
—
|
|
146
|
|
|
166
|
|
12
|
|
—
|
|
178
|
|
||||||||
Total
|
$
|
31,605
|
|
$
|
2,792
|
|
$
|
(561
|
)
|
$
|
33,835
|
|
|
$
|
34,246
|
|
$
|
4,564
|
|
$
|
(114
|
)
|
$
|
38,696
|
|
(a)
|
These securities have readily determinable fair values and subsequently 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 were
$(3) million
,
$29 million
and
$(2) million
for the years ended
December 31, 2018
, 2017 and 2016, respectively.
|
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
|
$
|
534
|
|
$
|
536
|
|
After one year through five years
|
2,870
|
|
2,963
|
|
||
After five years through ten years
|
6,116
|
|
6,527
|
|
||
After ten years
|
18,676
|
|
20,412
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Consolidated(a)
|
|
GE(b)
|
||||||||||
December 31 (In millions)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||
Power
|
$
|
6,982
|
|
$
|
9,735
|
|
|
$
|
4,325
|
|
$
|
4,664
|
|
Renewable Energy
|
1,333
|
|
1,687
|
|
|
1,181
|
|
962
|
|
||||
Aviation
|
2,973
|
|
3,722
|
|
|
2,562
|
|
1,859
|
|
||||
Oil & Gas
|
5,643
|
|
5,953
|
|
|
5,645
|
|
5,832
|
|
||||
Healthcare
|
2,888
|
|
3,487
|
|
|
1,721
|
|
1,814
|
|
||||
Transportation
|
375
|
|
289
|
|
|
307
|
|
184
|
|
||||
Lighting
|
85
|
|
105
|
|
|
50
|
|
36
|
|
||||
Corporate and eliminations
|
598
|
|
304
|
|
|
623
|
|
342
|
|
||||
|
20,878
|
|
25,282
|
|
|
16,415
|
|
15,693
|
|
||||
Less Allowance for losses
|
(1,004
|
)
|
(1,073
|
)
|
|
(997
|
)
|
(1,055
|
)
|
||||
Total
|
$
|
19,874
|
|
$
|
24,209
|
|
|
$
|
15,418
|
|
$
|
14,638
|
|
(a)
|
The consolidated total included a DPP receivable of
$468 million
and
$388 million
at
December 31, 2018
and
2017
, respectively, related to the Receivables facility (described below)
. During the years ended December 31, 2018 and 2017, GE Capital received additional non-cash DPP related to the sale of new current receivables of
$5,272 million
and
$4,292
million, respectively and received cash payments on the DPP of
$5,192 million
and
$4,411 million
, respectively.
|
(b)
|
GE current receivables balances at
December 31, 2018
and
2017
, before allowance for losses, included
$11,491 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.
|
(In millions)
|
2018
|
|
2017
|
|
||
Retained by GE Capital(a)
|
$
|
4,455
|
|
$
|
9,982
|
|
Sold to Receivables facilities and others(b)
|
7,900
|
|
5,763
|
|
||
Total
|
$
|
12,355
|
|
$
|
15,745
|
|
(a)
|
Of these amounts, approximately
31%
and
40%
at December 31, 2018 and 2017, respectively, GE provided GE Capital with full or limited recourse (i.e., GE retains all or some risk of default).
|
(b)
|
Other than the DPP held by GE Capital described below, the Company has no substantive risk of loss with respect to these sold receivables.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
December 31 (In millions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Raw materials and work in process
|
$
|
10,665
|
|
$
|
10,131
|
|
Finished goods
|
8,387
|
|
8,847
|
|
||
Unbilled shipments
|
219
|
|
441
|
|
||
Total inventories
|
$
|
19,271
|
|
$
|
19,419
|
|
FINANCING RECEIVABLES – NET
December 31 (In millions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Loans, net of deferred income
|
$
|
10,834
|
|
$
|
17,404
|
|
Investment in financing leases, net of deferred income
|
2,822
|
|
4,614
|
|
||
|
13,656
|
|
22,018
|
|
||
Allowance for losses
|
(28
|
)
|
(51
|
)
|
||
Financing receivables – net
|
$
|
13,628
|
|
$
|
21,967
|
|
NET INVESTMENT IN FINANCING LEASES
|
Total financing leases
|
|
Direct financing leases
|
|
Leveraged leases
|
|||||||||||||||
December 31 (In millions)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Total minimum lease payments receivable
|
$
|
2,719
|
|
$
|
4,637
|
|
|
$
|
1,421
|
|
$
|
2,952
|
|
|
$
|
1,298
|
|
$
|
1,685
|
|
Less principal and interest on third-party non-recourse debt
|
(474
|
)
|
(638
|
)
|
|
—
|
|
—
|
|
|
(474
|
)
|
(638
|
)
|
||||||
Net rentals receivable
|
2,245
|
|
3,999
|
|
|
1,421
|
|
2,952
|
|
|
824
|
|
1,047
|
|
||||||
Estimated unguaranteed residual value of leased assets
|
1,295
|
|
1,590
|
|
|
571
|
|
743
|
|
|
724
|
|
847
|
|
||||||
Less deferred income
|
(718
|
)
|
(975
|
)
|
|
(437
|
)
|
(614
|
)
|
|
(282
|
)
|
(361
|
)
|
||||||
Investment in financing leases, net of deferred income(a)
|
$
|
2,822
|
|
$
|
4,614
|
|
|
$
|
1,556
|
|
$
|
3,081
|
|
|
$
|
1,266
|
|
$
|
1,533
|
|
(a)
|
See Note 14 for deferred tax amounts related to financing leases.
|
CONTRACTUAL MATURITIES
(In millions)
|
Total
loans |
|
Net rentals
receivable |
|
||
Due in
|
|
|
||||
2019
|
$
|
5,932
|
|
$
|
446
|
|
2020
|
1,371
|
|
391
|
|
||
2021
|
1,208
|
|
334
|
|
||
2022
|
753
|
|
247
|
|
||
2023
|
796
|
|
329
|
|
||
2024 and later
|
773
|
|
497
|
|
||
Total
|
$
|
10,834
|
|
$
|
2,245
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Depreciable lives-new
|
|
Original Cost
|
|
Net Carrying Value
|
||||||||||
December 31 (Dollars in millions)
|
(in years)
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
|
|
||||||||
GE
|
|
|
|
|
|
|
|
||||||||
Land and improvements
|
8
|
(a)
|
$
|
1,148
|
|
$
|
1,175
|
|
|
$
|
1,113
|
|
$
|
1,154
|
|
Buildings, structures and related equipment
|
8-40
|
|
11,557
|
|
11,486
|
|
|
6,479
|
|
6,913
|
|
||||
Machinery and equipment
|
4-20
|
|
27,088
|
|
26,702
|
|
|
11,828
|
|
12,734
|
|
||||
Leasehold costs and manufacturing plant under construction
|
1-10
|
|
3,289
|
|
3,862
|
|
|
2,546
|
|
3,162
|
|
||||
|
|
|
$
|
43,082
|
|
$
|
43,225
|
|
|
$
|
21,967
|
|
$
|
23,963
|
|
|
|
|
|
|
|
|
|
||||||||
GE Capital(b)
|
|
|
|
|
|
|
|
||||||||
Land and improvements, buildings, structures and related equipment
|
1-40
|
(a)
|
$
|
153
|
|
$
|
171
|
|
|
$
|
32
|
|
$
|
45
|
|
Equipment leased to others
|
|
|
|
|
|
|
|
||||||||
Aircraft
|
15-20
|
|
44,944
|
|
46,296
|
|
|
29,352
|
|
30,067
|
|
||||
All other
|
4-34
|
|
205
|
|
718
|
|
|
126
|
|
483
|
|
||||
|
|
|
$
|
45,302
|
|
$
|
47,185
|
|
|
$
|
29,510
|
|
$
|
30,595
|
|
Eliminations
|
|
|
(909
|
)
|
(802
|
)
|
|
(728
|
)
|
(684
|
)
|
||||
Total
|
|
|
$
|
87,475
|
|
$
|
89,608
|
|
|
$
|
50,749
|
|
$
|
53,874
|
|
(a)
|
Depreciable lives exclude land.
|
(b)
|
Included
$1,397 million
and
$1,414 million
of original cost of assets leased to GE with accumulated amortization of
$241 million
and
$193 million
at
December 31, 2018
and
2017
, respectively.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
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(b)
|
10,690
|
|
|
Fair value of existing noncontrolling interest
|
(35
|
)
|
|
Goodwill(c)
|
14,143
|
|
|
Total allocated purchase price
|
$
|
24,798
|
|
(a)
|
Includes an increase of approximately
$806 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.
|
(b)
|
Through the end of the purchase accounting window in 2018, measurement period adjustments increased goodwill by $
787 million
primarily due to reductions in the fair value of property, plant and equipment of
$362 million
, equity method investments of
$228 million
, intangible assets of
$123 million
, and an increase to other liabilities of
$315 million
, partially offset by deferred tax adjustments of
$251 million
. Certain of these adjustments resulted in 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.
|
(c)
|
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.
|
(Dollars in millions)
|
Estimated fair value
|
|
Estimated useful life (in years)
|
|
Trademarks - Baker Hughes
|
$
|
2,100
|
|
Indefinite life
|
Customer-related
|
1,240
|
|
24
|
|
Patents and technology
|
465
|
|
4-8
|
|
Trademarks - Other
|
45
|
|
10
|
|
Capitalized software
|
64
|
|
3-7
|
|
In-process research and development
|
70
|
|
Indefinite life
|
|
Favorable lease contracts
|
21
|
|
10
|
|
Total
|
$
|
4,005
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
CHANGES IN GOODWILL BALANCES
|
|||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||||||||||
(In millions)
|
Balance at
January 1 |
|
Acquisitions
|
|
Impairments
|
|
Dispositions,
currency exchange and other |
|
Balance at
December 31 |
|
|
Balance at
January 1 |
|
Acquisitions
|
|
Impairments
|
|
Dispositions,
currency exchange and other |
|
Balance at
December 31 |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Power
|
$
|
25,269
|
|
$
|
—
|
|
$
|
(21,209
|
)
|
$
|
(2,289
|
)
|
$
|
1,772
|
|
|
$
|
26,403
|
|
$
|
37
|
|
$
|
(1,165
|
)
|
$
|
(6
|
)
|
$
|
25,269
|
|
Renewable Energy
|
4,093
|
|
—
|
|
(94
|
)
|
(28
|
)
|
3,971
|
|
|
2,507
|
|
1,503
|
|
—
|
|
83
|
|
4,093
|
|
||||||||||
Aviation
|
10,008
|
|
—
|
|
—
|
|
(170
|
)
|
9,839
|
|
|
9,455
|
|
25
|
|
—
|
|
529
|
|
10,008
|
|
||||||||||
Oil & Gas
|
23,943
|
|
68
|
|
—
|
|
444
|
|
24,455
|
|
|
10,363
|
|
13,364
|
|
—
|
|
216
|
|
23,943
|
|
||||||||||
Healthcare
|
17,306
|
|
—
|
|
—
|
|
(80
|
)
|
17,226
|
|
|
17,424
|
|
60
|
|
—
|
|
(178
|
)
|
17,306
|
|
||||||||||
Transportation
|
902
|
|
—
|
|
—
|
|
(18
|
)
|
884
|
|
|
899
|
|
—
|
|
—
|
|
3
|
|
902
|
|
||||||||||
Lighting
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
281
|
|
—
|
|
—
|
|
(281
|
)
|
—
|
|
||||||||||
Capital
|
984
|
|
—
|
|
—
|
|
(80
|
)
|
904
|
|
|
2,368
|
|
—
|
|
(1,386
|
)
|
2
|
|
984
|
|
||||||||||
Corporate
|
1,463
|
|
—
|
|
(833
|
)
|
(66
|
)
|
563
|
|
|
739
|
|
727
|
|
—
|
|
(3
|
)
|
1,463
|
|
||||||||||
Total
|
$
|
83,968
|
|
$
|
68
|
|
$
|
(22,136
|
)
|
$
|
(2,286
|
)
|
$
|
59,614
|
|
|
$
|
70,438
|
|
$
|
15,716
|
|
$
|
(2,550
|
)
|
$
|
365
|
|
$
|
83,968
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
OTHER INTANGIBLE ASSETS – NET
December 31 (In millions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Intangible assets subject to amortization
|
$
|
15,937
|
|
$
|
18,056
|
|
Indefinite-lived intangible assets(a)
|
2,222
|
|
2,217
|
|
||
Total
|
$
|
18,159
|
|
$
|
20,273
|
|
(a)
|
Indefinite-lived intangible assets principally comprise trademarks and in-process research and development.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
2018
|
|
2017
|
||||||||||||||||
INTANGIBLE ASSETS SUBJECT TO AMORTIZATION
December 31 (In millions)
|
Gross carrying
amount |
|
Accumulated
amortization |
|
Net
|
|
|
Gross carrying
amount |
|
Accumulated
amortization |
|
Net
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Customer-related(a)
|
$
|
10,214
|
|
$
|
(3,722
|
)
|
$
|
6,494
|
|
|
$
|
10,614
|
|
$
|
(3,095
|
)
|
$
|
7,521
|
|
Patents and technology
|
10,332
|
|
(4,528
|
)
|
5,804
|
|
|
10,271
|
|
(3,899
|
)
|
6,372
|
|
||||||
Capitalized software
|
7,437
|
|
(4,617
|
)
|
2,820
|
|
|
8,064
|
|
(4,974
|
)
|
3,089
|
|
||||||
Trademarks
|
1,137
|
|
(524
|
)
|
613
|
|
|
1,280
|
|
(421
|
)
|
859
|
|
||||||
Lease valuations
|
150
|
|
(84
|
)
|
66
|
|
|
170
|
|
(80
|
)
|
89
|
|
||||||
All other
|
242
|
|
(103
|
)
|
139
|
|
|
218
|
|
(92
|
)
|
125
|
|
||||||
Total
|
$
|
29,513
|
|
$
|
(13,578
|
)
|
$
|
15,937
|
|
|
$
|
30,617
|
|
$
|
(12,561
|
)
|
$
|
18,056
|
|
(a)
|
Balance includes payments made to our customers, primarily within our Aviation business.
|
ESTIMATED 5 YEAR CONSOLIDATED AMORTIZATION
(In millions)
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
|||||
|
|
|
|
|
|
||||||||||
Estimated annual pre-tax amortization
|
$
|
2,108
|
|
$
|
1,973
|
|
$
|
1,810
|
|
$
|
1,641
|
|
$
|
1,506
|
|
COMPONENTS OF FINITE-LIVED INTANGIBLE ASSETS ACQUIRED DURING 2018
(Dollars in millions) |
Gross
carrying value |
|
Weighted-average
amortizable period (in years) |
|
|
|
|
||
Customer-related
|
$
|
23
|
|
20
|
Patents and technology
|
662
|
|
19.5
|
|
Capitalized software
|
686
|
|
4.7
|
|
Trademarks
|
1
|
|
10
|
|
All other
|
23
|
|
11
|
|
Total gross carrying value
|
$
|
1,395
|
|
|
DISAGGREGATED EQUIPMENT
|
Years ended December 31
|
||||||||||||||||||||||||||||
AND SERVICES REVENUES(a)
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
(In millions)
|
Equipment Revenues
|
Services Revenues
|
Total Revenues
|
|
Equipment Revenues
|
Services Revenues
|
Total Revenues
|
|
Equipment Revenues
|
Services Revenues
|
Total Revenues
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Power
|
$
|
12,296
|
|
$
|
15,004
|
|
$
|
27,300
|
|
|
$
|
17,477
|
|
$
|
17,401
|
|
$
|
34,878
|
|
|
$
|
17,359
|
|
$
|
18,476
|
|
$
|
35,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Renewable Energy
|
7,036
|
|
2,497
|
|
9,533
|
|
|
7,036
|
|
2,169
|
|
9,205
|
|
|
8,861
|
|
891
|
|
9,752
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Aviation
|
11,499
|
|
19,067
|
|
30,566
|
|
|
10,215
|
|
16,797
|
|
27,013
|
|
|
11,357
|
|
14,883
|
|
26,240
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Oil & Gas
|
9,251
|
|
13,608
|
|
22,859
|
|
|
7,188
|
|
9,992
|
|
17,180
|
|
|
6,083
|
|
6,855
|
|
12,938
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Healthcare
|
11,422
|
|
8,363
|
|
19,784
|
|
|
10,771
|
|
8,246
|
|
19,017
|
|
|
10,206
|
|
8,006
|
|
18,212
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Transportation
|
1,363
|
|
2,535
|
|
3,898
|
|
|
1,686
|
|
2,248
|
|
3,935
|
|
|
2,279
|
|
2,306
|
|
4,585
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Lighting
|
1,630
|
|
93
|
|
1,723
|
|
|
1,887
|
|
55
|
|
1,941
|
|
|
4,583
|
|
179
|
|
4,762
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Total Industrial Segment Revenues
|
$
|
54,497
|
|
$
|
61,167
|
|
$
|
115,664
|
|
|
$
|
56,260
|
|
$
|
56,909
|
|
$
|
113,168
|
|
|
$
|
60,728
|
|
$
|
51,596
|
|
$
|
112,324
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
SUB-SEGMENT REVENUES
|
Years ended December 31
|
||||||||||
(In millions)
|
2018
|
|
|
2017
|
|
|
2016
|
|
|||
|
|
|
|
|
|
||||||
Power(a)
|
|
|
|
|
|
||||||
Gas Power Systems
|
$
|
5,186
|
|
|
$
|
7,990
|
|
|
$
|
7,594
|
|
Steam Power Systems
|
1,912
|
|
|
2,176
|
|
|
1,793
|
|
|||
Power Services
|
11,793
|
|
|
12,930
|
|
|
13,748
|
|
|||
Other
|
8,409
|
|
|
11,782
|
|
|
12,700
|
|
|||
Power revenues
|
$
|
27,300
|
|
|
$
|
34,878
|
|
|
$
|
35,835
|
|
|
|
|
|
|
|
||||||
Renewable Energy
|
|
|
|
|
|
||||||
Onshore Wind
|
$
|
8,258
|
|
|
$
|
8,056
|
|
|
$
|
8,576
|
|
Offshore Wind
|
447
|
|
|
296
|
|
|
249
|
|
|||
Hydro
|
827
|
|
|
853
|
|
|
927
|
|
|||
Renewable Energy revenues
|
$
|
9,533
|
|
|
$
|
9,205
|
|
|
$
|
9,752
|
|
|
|
|
|
|
|
||||||
Aviation
|
|
|
|
|
|
||||||
Commercial Engines & Services
|
$
|
22,724
|
|
|
$
|
19,709
|
|
|
$
|
19,521
|
|
Military
|
4,103
|
|
|
3,991
|
|
|
3,585
|
|
|||
Systems & Other
|
3,740
|
|
|
3,314
|
|
|
3,135
|
|
|||
Aviation revenues
|
$
|
30,566
|
|
|
$
|
27,013
|
|
|
$
|
26,240
|
|
|
|
|
|
|
|
||||||
Oil & Gas
|
|
|
|
|
|
||||||
Turbomachinery & Process Solutions (TPS)
|
$
|
5,999
|
|
|
$
|
6,298
|
|
|
$
|
6,525
|
|
Oilfield Services (OFS)
|
11,617
|
|
|
5,881
|
|
|
788
|
|
|||
Oilfield Equipment (OFE)
|
2,641
|
|
|
2,661
|
|
|
3,541
|
|
|||
Digital Solutions
|
2,603
|
|
|
2,340
|
|
|
2,084
|
|
|||
Oil & Gas revenues
|
$
|
22,859
|
|
|
$
|
17,180
|
|
|
$
|
12,938
|
|
|
|
|
|
|
|
||||||
Healthcare
|
|
|
|
|
|
||||||
Healthcare Systems
|
$
|
14,886
|
|
|
$
|
14,460
|
|
|
$
|
13,975
|
|
Life Sciences
|
4,898
|
|
|
4,557
|
|
|
4,237
|
|
|||
Healthcare revenues
|
$
|
19,784
|
|
|
$
|
19,017
|
|
|
$
|
18,212
|
|
|
|
|
|
|
|
||||||
Transportation
|
|
|
|
|
|
||||||
Locomotives
|
$
|
867
|
|
|
$
|
1,309
|
|
|
$
|
2,071
|
|
Services
|
2,087
|
|
|
1,888
|
|
|
1,853
|
|
|||
Mining
|
571
|
|
|
387
|
|
|
334
|
|
|||
Other
|
373
|
|
|
351
|
|
|
328
|
|
|||
Transportation revenues
|
$
|
3,898
|
|
|
$
|
3,935
|
|
|
$
|
4,585
|
|
|
|
|
|
|
|
||||||
Lighting
|
|
|
|
|
|
||||||
Current
|
$
|
980
|
|
|
$
|
1,042
|
|
|
$
|
1,044
|
|
GE Lighting
|
743
|
|
|
899
|
|
|
1,136
|
|
|||
Appliances
|
—
|
|
|
—
|
|
|
2,582
|
|
|||
Lighting revenues
|
$
|
1,723
|
|
|
$
|
1,941
|
|
|
$
|
4,762
|
|
|
|
|
|
|
|
||||||
Total industrial segment revenues
|
$
|
115,664
|
|
|
$
|
113,168
|
|
|
$
|
112,324
|
|
Capital revenues(b)
|
9,551
|
|
|
9,070
|
|
|
10,905
|
|
|||
Corporate items and eliminations
|
(3,600
|
)
|
|
(3,995
|
)
|
|
(3,760
|
)
|
|||
Consolidated revenues(b)
|
$
|
121,615
|
|
|
$
|
118,243
|
|
|
$
|
119,469
|
|
(a)
|
Upon completion of our announced reorganization, GE Gas Power will comprise Gas Power Systems and Power Services, while Power Portfolio will comprise Steam Power Systems (including services currently reported in Power Services) as well as Power Conversion and GE Hitachi Nuclear, which are reported within Other.
|
(b)
|
Included
$9,314 million
,
$8,886 million
and
$10,356 million
for the years ended December 31, 2018, 2017 and 2016, respectively, of revenues at GE Capital outside of the scope of ASC 606.
|
•
|
Equipment - total remaining performance obligation of $
51,873
million of which
51%
,
72%
and
95%
is expected to be satisfied within
1
,
2
and
5 years
, respectively, and the remaining thereafter.
|
•
|
Service - total remaining performance obligation of $
201,292
million of which
18%
,
53%
,
76%
and
87%
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.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
December 31, 2018 (In millions)
|
Power
|
Aviation
|
Oil & Gas
|
Renewable Energy
|
Transportation
|
Other(a)
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||
GE
|
|
|
|
|
|
|
|
||||||||||||||
Revenues in excess of billings
|
$
|
5,368
|
|
$
|
5,412
|
|
$
|
703
|
|
$
|
—
|
|
$
|
590
|
|
$
|
—
|
|
$
|
12,072
|
|
Billings in excess of revenues
|
(1,693
|
)
|
(3,297
|
)
|
(187
|
)
|
—
|
|
(56
|
)
|
—
|
|
(5,232
|
)
|
|||||||
Long-term service agreements(b)
|
$
|
3,675
|
|
$
|
2,115
|
|
$
|
516
|
|
$
|
—
|
|
$
|
534
|
|
$
|
—
|
|
$
|
6,840
|
|
Equipment contract revenues(c)
|
3,899
|
|
352
|
|
1,085
|
|
287
|
|
101
|
|
551
|
|
6,275
|
|
|||||||
Total contract assets
|
7,574
|
|
2,468
|
|
1,600
|
|
287
|
|
635
|
|
551
|
|
13,115
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||
Deferred inventory costs(d)
|
1,012
|
|
673
|
|
179
|
|
1,258
|
|
34
|
|
365
|
|
3,522
|
|
|||||||
Nonrecurring engineering costs(e)
|
124
|
|
1,916
|
|
22
|
|
22
|
|
100
|
|
34
|
|
2,217
|
|
|||||||
Customer advances and other
|
—
|
|
1,146
|
|
—
|
|
—
|
|
1
|
|
—
|
|
1,147
|
|
|||||||
Contract and other deferred assets
|
$
|
8,709
|
|
$
|
6,204
|
|
$
|
1,800
|
|
$
|
1,567
|
|
$
|
769
|
|
$
|
951
|
|
$
|
20,000
|
|
December 31, 2017 (In millions)
|
Power
|
Aviation
|
Oil & Gas
|
Renewable Energy
|
Transportation
|
Other(a)
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||
GE
|
|
|
|
|
|
|
|
||||||||||||||
Revenues in excess of billings
|
$
|
6,294
|
|
$
|
4,556
|
|
$
|
721
|
|
$
|
1
|
|
$
|
827
|
|
$
|
—
|
|
$
|
12,400
|
|
Billings in excess of revenues
|
(2,937
|
)
|
(1,942
|
)
|
(204
|
)
|
—
|
|
(414
|
)
|
—
|
|
(5,498
|
)
|
|||||||
Long-term 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)
|
On our consolidated Statement of Financial Position, long-term service agreement balances are presented net of related billings in excess of revenues of
$5,232 million
and
$5,498 million
at December 31, 2018 and 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 service agreements. Amounts due from these arrangements totaled
$883 million
and
$748 million
as of December 31, 2018 and 2017, respectively.
|
(d)
|
Represents cost deferral for shipped goods (such as components for wind turbine assemblies 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 (such as requisition engineering) for equipment production contracts, primarily within our Aviation segment, which are allocated ratably to each unit produced.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
December 31, 2018 (In millions)
|
Power
|
Aviation
|
Oil & Gas
|
Renewable Energy
|
Transportation
|
Other(a)
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||
GE
|
|
|
|
|
|
|
|
||||||||||||||
Progress collections on equipment contracts
|
$
|
6,690
|
|
$
|
114
|
|
$
|
878
|
|
$
|
423
|
|
$
|
239
|
|
$
|
—
|
|
$
|
8,344
|
|
Other progress collections
|
692
|
|
4,034
|
|
552
|
|
3,467
|
|
68
|
|
338
|
|
9,151
|
|
|||||||
Total progress collections
|
$
|
7,382
|
|
$
|
4,148
|
|
$
|
1,430
|
|
$
|
3,890
|
|
$
|
307
|
|
$
|
338
|
|
$
|
17,495
|
|
Deferred income
|
163
|
|
1,338
|
|
164
|
|
241
|
|
11
|
|
1,739
|
|
3,656
|
|
|||||||
Progress collections and deferred income
|
$
|
7,545
|
|
$
|
5,486
|
|
$
|
1,594
|
|
$
|
4,131
|
|
$
|
318
|
|
$
|
2,077
|
|
$
|
21,151
|
|
December 31, 2017 (In millions)
|
Power
|
Aviation
|
Oil & Gas
|
Renewable Energy
|
Transportation
|
Other(a)
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||
GE
|
|
|
|
|
|
|
|
||||||||||||||
Progress collections on equipment contracts
|
$
|
8,493
|
|
$
|
134
|
|
$
|
1,149
|
|
$
|
591
|
|
$
|
316
|
|
$
|
—
|
|
$
|
10,683
|
|
Other progress collections
|
775
|
|
4,373
|
|
141
|
|
2,180
|
|
71
|
|
88
|
|
7,627
|
|
|||||||
Total progress collections
|
$
|
9,268
|
|
$
|
4,507
|
|
$
|
1,290
|
|
$
|
2,771
|
|
$
|
387
|
|
$
|
88
|
|
$
|
18,310
|
|
Deferred income
|
286
|
|
1,289
|
|
317
|
|
245
|
|
18
|
|
1,756
|
|
3,911
|
|
|||||||
Progress collections and deferred income
|
$
|
9,554
|
|
$
|
5,795
|
|
$
|
1,608
|
|
$
|
3,016
|
|
$
|
405
|
|
$
|
1,843
|
|
$
|
22,221
|
|
(a)
|
Primarily includes our Healthcare segment.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
December 31 (Dollars in millions)
|
|
2018
|
|
|
2017
|
|
|
||||
|
|
|
|
|
|
||||||
Short-term borrowings
|
|
Amount
|
|
Average Rate(a)
|
|
Amount
|
|
Average Rate(a)
|
|
||
GE
|
|
|
|
|
|
||||||
Commercial paper
|
|
$
|
3,005
|
|
1.64
|
%
|
$
|
3,000
|
|
1.35
|
%
|
Current portion of long-term borrowings
|
|
103
|
|
6.60
|
|
1,142
|
|
4.29
|
|
||
Current portion of long-term borrowings assumed by GE(e)
|
|
4,207
|
|
3.76
|
|
8,310
|
|
2.82
|
|
||
Other
|
|
2,112
|
|
|
2,095
|
|
|
||||
Total GE short-term borrowings
|
|
$
|
9,427
|
|
|
$
|
14,548
|
|
|
||
|
|
|
|
|
|
||||||
GE Capital
|
|
|
|
|
|
||||||
Commercial paper
|
|
$
|
5
|
|
|
$
|
5,013
|
|
1.45
|
|
|
Current portion of long-term borrowings(b)
|
|
3,984
|
|
2.00
|
|
5,781
|
|
1.26
|
|
||
Intercompany payable to GE(d)
|
|
2,684
|
|
|
8,310
|
|
|
||||
Other
|
|
1,010
|
|
|
497
|
|
|
||||
Total GE Capital short-term borrowings
|
|
$
|
7,684
|
|
|
$
|
19,602
|
|
|
||
|
|
|
|
|
|
||||||
Eliminations(d)
|
|
(4,262
|
)
|
|
(10,114
|
)
|
|
||||
Total short-term borrowings
|
|
$
|
12,849
|
|
|
$
|
24,036
|
|
|
||
|
|
|
|
|
|
||||||
Long-term borrowings
|
Maturities
|
Amount
|
|
Average Rate(a)
|
|
Amount
|
|
Average Rate(a)
|
|
||
GE
|
|
|
|
|
|
||||||
Senior notes(c)
|
2020-2047
|
$
|
26,628
|
|
2.58
|
%
|
$
|
27,233
|
|
2.55
|
%
|
Senior notes assumed by GE(e)
|
2020-2055
|
29,218
|
|
4.30
|
|
35,491
|
|
3.59
|
|
||
Subordinated notes assumed by GE(e)
|
2021-2037
|
2,836
|
|
3.64
|
|
2,913
|
|
3.28
|
|
||
Other
|
|
460
|
|
|
1,003
|
|
|
||||
Other borrowings assumed by GE(e)
|
|
—
|
|
|
400
|
|
|
||||
Total GE long-term borrowings
|
|
$
|
59,143
|
|
|
$
|
67,040
|
|
|
||
|
|
|
|
|
|
||||||
GE Capital
|
|
|
|
|
|
||||||
Senior notes
|
2020-2039
|
$
|
35,105
|
|
3.49
|
|
$
|
40,754
|
|
3.11
|
|
Subordinated notes
|
|
165
|
|
|
208
|
|
|
||||
Intercompany payable to GE(d)
|
|
19,828
|
|
|
31,533
|
|
|
||||
Other(b)
|
|
885
|
|
|
1,118
|
|
|
||||
Total GE Capital long-term borrowings
|
|
$
|
55,982
|
|
|
$
|
73,614
|
|
|
||
|
|
|
|
|
|
||||||
Eliminations(d)
|
|
(19,892
|
)
|
|
(32,079
|
)
|
|
||||
Total long-term borrowings
|
|
$
|
95,234
|
|
|
$
|
108,575
|
|
|
||
Non-recourse borrowings of
consolidated securitization entities(f)
|
2019-2022
|
1,875
|
|
3.97
|
%
|
1,980
|
|
2.77
|
%
|
||
Total borrowings
|
|
$
|
109,958
|
|
|
$
|
134,591
|
|
|
(a)
|
Based on year-end balances and year-end local currency effective interest rates, including the effects from hedging.
|
(b)
|
Included
$161 million
and
$885 million
of short- and long-term borrowings, respectively, at December 31, 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,
$216 million
and
$458 million
is non-recourse to GE Capital at December 31, 2018 and 2017, respectively.
|
(c)
|
Included
$6,177 million
and
$6,206 million
of BHGE senior notes at December 31, 2018 and 2017, respectively. Total BHGE borrowings were
$6,330 million
and
$7,225 million
at December 31, 2018 and 2017, respectively.
|
(d)
|
Included a reduction of
$1,523 million
and
zero
for the current portion of intercompany loans from GE Capital to GE at December 31, 2018 and 2017, respectively, and a reduction of
$12,226 million
and
$7,271 million
for the long-term portion of intercompany loans from GE Capital to GE at December 31, 2018 and 2017, respectively. These loans bear the right of offset against amounts owed under the assumed debt agreement and can be prepaid by GE at any time in whole or in part, without premium or penalty.
|
(e)
|
At December 31, 2018, the remaining GE Capital borrowings that had been assumed by GE as part of the GE Capital Exit Plan was
$36,262 million
(
$4,207 million
short term and
$32,054
long term), for which GE has an offsetting Receivable from GE Capital of
$22,513 million
. The difference of
$13,749 million
represents the amount of borrowings GE Capital had funded with available cash to GE via an intercompany loan in lieu of GE issuing borrowings externally.
|
(f)
|
Included
$225 million
and
$621 million
of current portion of long-term borrowings at December 31, 2018 and 2017, respectively. See Note 21 for further information.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
(In millions)
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
|||||
|
|
|
|
|
|
||||||||||
GE excluding assumed debt(a)
|
$
|
103
|
|
$
|
870
|
|
$
|
578
|
|
$
|
6,271
|
|
$
|
1,451
|
|
GE Capital debt assumed by GE(b)
|
4,207
|
|
6,172
|
|
4,663
|
|
1,959
|
|
2,835
|
|
|||||
GE Capital other debt
|
3,984
|
(c)
|
11,309
|
|
2,001
|
|
2,207
|
|
2,358
|
|
(a)
|
Includes maturities of BHGE borrowings of
$43 million
,
$12 million
,
$537 million
,
$1,274 million
and
$8 million
in 2019, 2020, 2021, 2022 and 2023, respectively.
|
(b)
|
Of these maturities,
$1,523 million
,
$3,369 million
,
$442 million
,
zero
and
zero
for 2019, 2020, 2021, 2022 and 2023, respectively, were effectively transferred to GE through intercompany loans with right of offset.
|
(c)
|
Fixed and floating rate notes of
$433 million
contain put options with exercise dates in 2019, and which have final maturity beyond 2023.
|
December 31, 2018 (In millions)
|
Long-term care insurance contracts
|
Structured settlement annuities & life insurance contracts
|
Other
contracts |
Other adjustments(a)
|
Total
|
||||||||||
|
|
|
|
|
|
||||||||||
Future policy benefit reserves
|
$
|
16,029
|
|
$
|
9,495
|
|
$
|
169
|
|
$
|
2,247
|
|
$
|
27,940
|
|
Claim reserves(b)
|
3,917
|
|
230
|
|
1,178
|
|
—
|
|
5,324
|
|
|||||
Investment contracts(c)
|
—
|
|
1,239
|
|
1,149
|
|
—
|
|
2,388
|
|
|||||
Unearned premiums and other
|
34
|
|
205
|
|
103
|
|
—
|
|
342
|
|
|||||
|
19,980
|
|
11,169
|
|
2,599
|
|
2,247
|
|
35,994
|
|
|||||
Eliminations
|
—
|
|
—
|
|
(432
|
)
|
—
|
|
(432
|
)
|
|||||
Total
|
$
|
19,980
|
|
$
|
11,169
|
|
$
|
2,167
|
|
$
|
2,247
|
|
$
|
35,562
|
|
December 31, 2017 (In millions)
|
Long-term care insurance contracts
|
Structured settlement annuities & life insurance contracts
|
Other
contracts |
Other adjustments(a)
|
Total
|
||||||||||
|
|
|
|
|
|
||||||||||
Future policy benefit reserves
|
$
|
16,522
|
|
$
|
9,257
|
|
$
|
191
|
|
$
|
4,582
|
|
$
|
30,552
|
|
Claim reserves(b)
|
3,590
|
|
274
|
|
1,230
|
|
—
|
|
5,094
|
|
|||||
Investment contracts(c)
|
—
|
|
1,348
|
|
1,221
|
|
—
|
|
2,569
|
|
|||||
Unearned premiums and other
|
45
|
|
211
|
|
117
|
|
—
|
|
372
|
|
|||||
|
20,157
|
|
11,090
|
|
2,759
|
|
4,582
|
|
38,587
|
|
|||||
Eliminations
|
—
|
|
—
|
|
(451
|
)
|
—
|
|
(451
|
)
|
|||||
Total
|
$
|
20,157
|
|
$
|
11,090
|
|
$
|
2,308
|
|
$
|
4,582
|
|
$
|
38,136
|
|
(a)
|
To the extent that unrealized gains on specific investment 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 after-tax reduction of net unrealized gains recognized through "Other comprehensive income" in our consolidated Statement of Earnings (Loss).
|
(b)
|
Other contracts included claim reserves of
$346 million
and
$364 million
related to short-duration contracts at EIC, net of eliminations, at
December 31, 2018
and December 31, 2017, respectively.
|
(c)
|
Investment contracts are contracts without significant mortality or morbidity risks.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
•
|
Increased discount rate assumptions in 2018 compared to our original estimate. Our revised reinvestment plan incorporates the remaining projected capital contribution of approximately
$11,000 million
through 2024, of which approximately
$1,900 million
was received in the first quarter of 2019, and introduction of strategic initiatives for the investment into new higher-yielding asset classes while maintaining an overall A-rated fixed income portfolio. These initiatives are the result of an extensive review in 2018 of our investment management opportunities including the engagement of external investment advisors. Our discount rate assumption for purposes of performing the premium deficiency assessments resulted in a weighted-average rate of approximately
6.04%
, compared to approximately
5.67%
in 2017. The increased discount rate favorably impacted our reserve margin by
$1,900 million
;
|
•
|
Lower long-term care insurance morbidity improvement assumptions indicating less long-term improvement (
1.25%
per year)
over shorter durations (between
12
and
20 years
based on the average attained age of the underlying books of business) which adversely impacted our reserve margin by $
1,200
million;
|
•
|
Higher interest rates leading to higher inflation which increased projected utilization on long-term care insurance policies which adversely impacted our reserve margin by $
325
million;
|
•
|
Lower policy terminations on long-term care insurance policies and revisions to assumptions of future mortality primarily for older attained ages, based on experience analysis of internal and industry data, on life insurance products which adversely impacted our reserve margin by $
200
million and $
300
million, respectively; and
|
•
|
Higher levels of projected long-term care premium rate increases due to larger rate filings by some ceding companies than previously planned which favorably impacted our reserve margin by $
200
million.
Our 2018 premium deficiency test includes approximately
$1,700 million
of anticipated premium increases or benefit reductions associated with future in-force rate actions, including actions that are: (a) approved and not implemented, (b) filed but not yet approved and (c) estimated on future filings through 2028.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
December 31 (In millions)
|
2018
|
2017
|
||||
|
|
|
||||
Reinsurance recoverables, gross
|
|
|
||||
Future policy benefit reserves
|
$
|
2,605
|
|
$
|
3,928
|
|
Claim reserves
|
756
|
|
715
|
|
||
|
3,361
|
|
4,643
|
|
||
Allowance for losses
|
(1,090
|
)
|
(2,185
|
)
|
||
Reinsurance recoverables, net
|
$
|
2,271
|
|
$
|
2,458
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
•
|
Service cost – the cost of benefits earned by active employees who participate in the plan.
|
•
|
Prior service cost (credit) amortization – the cost of changes to our benefits plans (plan amendments) related to prior service performed.
|
•
|
Expected return on plan assets – the return we expect to earn on plan investments used to pay future benefits.
|
•
|
Interest cost – the accrual of interest on the pension obligations due to the passage of time.
|
•
|
Net actuarial loss (gain) amortization – differences between our estimates (for example, discount rate, expected return on plan assets) and our actual experience which are initially recorded in equity and amortized into earnings.
|
•
|
Curtailment loss (gain) – earnings effects of amounts previously deferred which have been accelerated because of an event that shortens future service or eliminates benefits (for example, a sale of a business).
|
COST OF PENSION PLANS
|
Total
|
|
Principal pension plans
|
|
Other pension plans
|
||||||||||||||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Service cost for benefits earned
|
$
|
1,227
|
|
$
|
1,629
|
|
$
|
1,699
|
|
|
$
|
888
|
|
$
|
1,055
|
|
$
|
1,237
|
|
|
$
|
339
|
|
$
|
574
|
|
$
|
462
|
|
Prior service cost (credit) amortization
|
134
|
|
285
|
|
304
|
|
|
143
|
|
290
|
|
303
|
|
|
(9
|
)
|
(5
|
)
|
1
|
|
|||||||||
Expected return on plan assets
|
(4,646
|
)
|
(4,639
|
)
|
(4,370
|
)
|
|
(3,248
|
)
|
(3,390
|
)
|
(3,336
|
)
|
|
(1,398
|
)
|
(1,249
|
)
|
(1,034
|
)
|
|||||||||
Interest cost on benefit obligations
|
3,270
|
|
3,462
|
|
3,609
|
|
|
2,658
|
|
2,856
|
|
2,939
|
|
|
612
|
|
606
|
|
670
|
|
|||||||||
Net actuarial loss amortization
|
4,107
|
|
3,241
|
|
2,705
|
|
|
3,785
|
|
2,812
|
|
2,449
|
|
|
322
|
|
429
|
|
256
|
|
|||||||||
Curtailment loss (gain)
|
37
|
|
43
|
|
50
|
|
|
34
|
|
64
|
|
31
|
|
|
3
|
|
(21
|
)
|
19
|
|
|||||||||
Pension cost
|
$
|
4,129
|
|
$
|
4,021
|
|
$
|
3,997
|
|
|
$
|
4,260
|
|
$
|
3,687
|
|
$
|
3,623
|
|
|
$
|
(131
|
)
|
$
|
334
|
|
$
|
374
|
|
ASSUMPTIONS USED TO MEASURE PENSION
|
Principal pension plans
|
|
Other pension plans (weighted average)
|
||||||||||
BENEFIT OBLIGATIONS
December 31
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
4.34
|
%
|
3.64
|
%
|
4.11
|
%
|
|
2.81
|
%
|
2.45
|
%
|
2.58
|
%
|
Compensation increases
|
3.60
|
|
3.55
|
|
3.80
|
|
|
3.16
|
|
3.12
|
|
3.48
|
|
ASSUMPTIONS USED TO MEASURE PENSION COST
|
Principal pension plans
|
|
Other pension plans (weighted average)
|
||||||||||
December 31
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
3.64
|
%
|
4.11
|
%
|
4.38
|
%
|
|
2.45
|
%
|
2.58
|
%
|
3.33
|
%
|
Expected return on assets
|
6.75
|
|
7.50
|
|
7.50
|
|
|
6.67
|
|
6.75
|
|
6.36
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FUNDED STATUS
|
Principal pension plans
|
|
Other pension plans
|
|
|||||||||||
December 31 (In millions)
|
2018
|
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligations
|
$
|
68,500
|
|
|
$
|
74,985
|
|
|
$
|
23,256
|
|
$
|
25,303
|
|
|
Fair value of plan assets
|
50,009
|
|
|
50,361
|
|
|
19,379
|
|
21,224
|
|
|
||||
Underfunded
|
$
|
18,491
|
|
|
$
|
24,624
|
|
|
$
|
3,877
|
|
$
|
4,079
|
|
|
PROJECTED BENEFIT OBLIGATIONS (PBO)
|
Principal pension plans
|
|
Other pension plans
|
|
|||||||||||
(In millions)
|
2018
|
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Balance at January 1
|
$
|
74,985
|
|
|
$
|
71,501
|
|
|
$
|
25,303
|
|
$
|
22,543
|
|
|
Service cost for benefits earned
|
888
|
|
|
1,055
|
|
|
339
|
|
574
|
|
|
||||
Interest cost on benefit obligations
|
2,658
|
|
|
2,856
|
|
|
612
|
|
606
|
|
|
||||
Participant contributions
|
90
|
|
|
91
|
|
|
37
|
|
42
|
|
|
||||
Plan amendments
|
—
|
|
|
—
|
|
|
89
|
|
—
|
|
|
||||
Actuarial loss (gain)
|
(6,263
|
)
|
(a)
|
3,300
|
|
(a)
|
(961
|
)
|
(181
|
)
|
|
||||
Benefits paid
|
(3,729
|
)
|
|
(3,818
|
)
|
|
(1,113
|
)
|
(977
|
)
|
|
||||
Acquisitions (dispositions) / other - net
|
(129
|
)
|
|
—
|
|
|
(4
|
)
|
1,321
|
|
|
||||
Exchange rate adjustments
|
—
|
|
|
—
|
|
|
(1,046
|
)
|
1,375
|
|
|
||||
Balance at December 31
|
$
|
68,500
|
|
(b)
|
$
|
74,985
|
|
(b)
|
$
|
23,256
|
|
$
|
25,303
|
|
|
(a)
|
Principally associated with discount rate changes.
|
(b)
|
The PBO for the GE Supplementary Pension Plan, which is an unfunded plan, was
$6,110 million
and
$6,682 million
at year-end
2018
and
2017
, respectively.
|
|
Principal pension plans
|
|
Other pension plans
|
||||||||||
December 31 (In millions)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||||||
Global equity
|
$
|
6,015
|
|
$
|
9,192
|
|
|
$
|
4,323
|
|
$
|
6,323
|
|
Debt securities
|
|
|
|
|
|
||||||||
Fixed income and cash investment funds
|
2,069
|
|
1,200
|
|
|
6,504
|
|
6,242
|
|
||||
U.S. corporate(a)
|
8,734
|
|
6,597
|
|
|
397
|
|
393
|
|
||||
Other debt securities(b)
|
5,264
|
|
5,225
|
|
|
520
|
|
599
|
|
||||
Real estate
|
2,218
|
|
2,125
|
|
|
175
|
|
222
|
|
||||
Private equities & other investments
|
557
|
|
581
|
|
|
424
|
|
481
|
|
||||
Total
|
24,857
|
|
24,920
|
|
|
12,343
|
|
14,260
|
|
||||
|
|
|
|
|
|
||||||||
Investments measured at net asset value (NAV)
|
|
|
|
|
|
||||||||
Global equity
|
12,558
|
|
13,790
|
|
|
1,668
|
|
1,871
|
|
||||
Debt securities
|
6,400
|
|
4,107
|
|
|
1,431
|
|
1,247
|
|
||||
Real estate
|
1,261
|
|
1,258
|
|
|
1,754
|
|
1,598
|
|
||||
Private equities & other investments
|
4,933
|
|
6,286
|
|
|
2,183
|
|
2,248
|
|
||||
Total plan assets at fair value
|
$
|
50,009
|
|
$
|
50,361
|
|
|
$
|
19,379
|
|
$
|
21,224
|
|
(a)
|
Primarily represented investment-grade bonds of U.S. issuers from diverse industries.
|
(b)
|
Primarily represented investments in residential and commercial mortgage-backed securities, non-U.S. corporate and government bonds and U.S. government, federal agency, state and municipal debt.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FAIR VALUE OF PLAN ASSETS
|
Principal pension plans
|
|
Other pension plans
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||||||
Balance at January 1
|
$
|
50,361
|
|
$
|
45,893
|
|
|
$
|
21,224
|
|
$
|
17,091
|
|
Actual gain (loss) on plan assets
|
(2,996
|
)
|
6,217
|
|
|
(299
|
)
|
1,977
|
|
||||
Employer contributions
|
6,283
|
|
1,978
|
|
|
522
|
|
870
|
|
||||
Participant contributions
|
90
|
|
91
|
|
|
37
|
|
42
|
|
||||
Benefits paid
|
(3,729
|
)
|
(3,818
|
)
|
|
(1,113
|
)
|
(977
|
)
|
||||
Acquisitions (dispositions) / other - net
|
—
|
|
—
|
|
|
(92
|
)
|
1,221
|
|
||||
Exchange rate adjustments
|
—
|
|
—
|
|
|
(900
|
)
|
1,000
|
|
||||
Balance at December 31
|
$
|
50,009
|
|
$
|
50,361
|
|
|
$
|
19,379
|
|
$
|
21,224
|
|
ASSET ALLOCATION
|
Principal pension plans
|
|
Other pension plans
(weighted average)
|
|||||
|
2018
|
2018
|
|
|
2018
|
|
2018
|
|
December 31
|
Target
allocation
|
Actual
allocation
|
|
|
Target
allocation
|
|
Actual
allocation
|
|
|
|
|
|
|
|
|||
Global equity
|
33.5 - 53.5%
|
37
|
%
|
|
33
|
%
|
32
|
%
|
Debt securities (including cash equivalents)
|
15.0 - 58.5
|
45
|
|
|
35
|
|
46
|
|
Real estate
|
5.0 - 15.0
|
7
|
|
|
11
|
|
10
|
|
Private equities & other investments
|
6.5 - 16.5
|
11
|
|
|
21
|
|
12
|
|
|
Principal pension plans
|
|
Other pension plans
|
||||||||||
December 31 (In millions, pre-tax)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||||||
Prior service cost (credit)
|
$
|
596
|
|
$
|
784
|
|
|
$
|
14
|
|
$
|
(100
|
)
|
Net actuarial loss
|
10,430
|
|
14,326
|
|
|
3,918
|
|
3,712
|
|
||||
Total
|
$
|
11,026
|
|
$
|
15,110
|
|
|
$
|
3,932
|
|
$
|
3,612
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
ESTIMATED FUTURE BENEFIT PAYMENTS
(In millions)
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024 - 2028
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Principal pension plans
|
$
|
3,735
|
|
$
|
3,795
|
|
$
|
3,875
|
|
$
|
3,930
|
|
$
|
3,985
|
|
$
|
20,760
|
|
Other pension plans
|
1,050
|
|
1,045
|
|
1,050
|
|
1,070
|
|
1,080
|
|
5,715
|
|
ASSUMPTIONS USED TO MEASURE BENEFIT OBLIGATIONS
December 31
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|||
Discount rate
|
4.12
|
%
|
3.43
|
%
|
3.75
|
%
|
Compensation increases
|
3.60
|
|
3.55
|
|
3.80
|
|
Initial healthcare trend rate(a)
|
6.00
|
|
6.00
|
|
6.00
|
|
(a)
|
For
2018
, ultimately declining to
5%
for 2030 and thereafter.
|
ASSUMPTIONS USED TO MEASURE BENEFIT COST
December 31
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|||
Discount rate(a)
|
3.43
|
%
|
3.75
|
%
|
3.93
|
%
|
Expected return on assets
|
7.00
|
|
7.00
|
|
7.00
|
|
(a)
|
Weighted average discount rate of
3.86%
was used for determination of cost in
2016
.
|
FUNDED STATUS
December 31 (In millions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Accumulated postretirement benefit obligation
|
$
|
5,153
|
|
$
|
6,006
|
|
Fair value of plan assets
|
362
|
|
518
|
|
||
Underfunded
|
$
|
4,791
|
|
$
|
5,488
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION
(In millions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Balance at January 1
|
$
|
6,006
|
|
$
|
6,289
|
|
Service cost for benefits earned
|
63
|
|
94
|
|
||
Interest cost on benefit obligations
|
196
|
|
224
|
|
||
Participant contributions
|
60
|
|
54
|
|
||
Plan amendments
|
—
|
|
(8
|
)
|
||
Actuarial gain(a)
|
(593
|
)
|
(94
|
)
|
||
Benefits paid
|
(569
|
)
|
(580
|
)
|
||
Acquisitions (dispositions) / other - net
|
(10
|
)
|
27
|
|
||
Balance at December 31(b)
|
$
|
5,153
|
|
$
|
6,006
|
|
(a)
|
In 2018, gain principally due to increase in discount rate and favorable cost trends.
|
(b)
|
The benefit obligation for retiree health plans was
$3,425 million
and
$4,084 million
at
December 31, 2018
and
2017
, respectively.
|
ASSET ALLOCATION
|
2018
|
2018
|
|
December 31
|
Target
allocation
|
Actual
allocation
|
|
|
|
|
|
Global equity
|
54 - 74%
|
63
|
%
|
Debt securities (including cash equivalents)
|
16 - 55
|
28
|
|
Private equities & other investments
|
0 - 12
|
9
|
|
December 31 (In millions, pre-tax)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Prior service credit
|
$
|
(2,584
|
)
|
$
|
(2,814
|
)
|
Net actuarial gain
|
(1,196
|
)
|
(732
|
)
|
||
Total
|
$
|
(3,780
|
)
|
$
|
(3,546
|
)
|
ESTIMATED FUTURE BENEFIT PAYMENTS
(In millions)
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024 - 2028
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
|
$
|
520
|
|
$
|
500
|
|
$
|
480
|
|
$
|
465
|
|
$
|
450
|
|
$
|
1,950
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
2018 COST OF POSTRETIREMENT BENEFIT PLANS AND CHANGES IN OTHER COMPREHENSIVE INCOME
(In millions, pre-tax)
|
Total
postretirement
benefit plans
|
|
Principal pension
plans
|
|
Other pension
plans
|
|
Principal retiree
benefit plans
|
|
||||
|
|
|
|
|
||||||||
Cost of postretirement benefit plans
|
$
|
4,050
|
|
$
|
4,260
|
|
$
|
(131
|
)
|
$
|
(79
|
)
|
Changes in other comprehensive income
|
|
|
|
|
||||||||
Prior service cost (credit) – current year
|
89
|
|
—
|
|
89
|
|
—
|
|
||||
Net actuarial loss (gain) – current year
|
(103
|
)
|
(111
|
)
|
551
|
|
(543
|
)
|
||||
Reclassification out of AOCI:
|
|
|
|
|
||||||||
Net curtailment gain (loss)
|
(52
|
)
|
(45
|
)
|
(7
|
)
|
—
|
|
||||
Prior service credit (cost) amortization
|
96
|
|
(143
|
)
|
9
|
|
230
|
|
||||
Net actuarial gain (loss) amortization
|
(4,028
|
)
|
(3,785
|
)
|
(322
|
)
|
79
|
|
||||
Total changes in other comprehensive income
|
(3,998
|
)
|
(4,084
|
)
|
320
|
|
(234
|
)
|
||||
Cost of postretirement benefit plans and
changes in other comprehensive income
|
$
|
52
|
|
$
|
176
|
|
$
|
189
|
|
$
|
(313
|
)
|
2017 COST OF POSTRETIREMENT BENEFIT PLANS AND CHANGES IN OTHER COMPREHENSIVE INCOME
(In millions, pre-tax) |
Total
postretirement benefit plans |
|
Principal pension
plans |
|
Other pension
plans |
|
Principal retiree
benefit plans |
|
||||
|
|
|
|
|
||||||||
Cost of postretirement benefit plans
|
$
|
4,056
|
|
$
|
3,687
|
|
$
|
334
|
|
$
|
35
|
|
Changes in other comprehensive income
|
|
|
|
|
||||||||
Prior service cost (credit) – current year
|
(8
|
)
|
—
|
|
—
|
|
(8
|
)
|
||||
Net actuarial loss (gain) – current year
|
(310
|
)
|
474
|
|
(656
|
)
|
(128
|
)
|
||||
Reclassification out of AOCI:
|
|
|
|
|
||||||||
Net curtailment gain (loss)
|
(88
|
)
|
(64
|
)
|
(20
|
)
|
(4
|
)
|
||||
Prior service credit (cost) amortization
|
(114
|
)
|
(290
|
)
|
5
|
|
171
|
|
||||
Net actuarial gain (loss) amortization
|
(3,161
|
)
|
(2,812
|
)
|
(429
|
)
|
80
|
|
||||
Total changes in other comprehensive income
|
(3,681
|
)
|
(2,692
|
)
|
(1,100
|
)
|
111
|
|
||||
Cost of postretirement benefit plans and
changes in other comprehensive income
|
$
|
375
|
|
$
|
995
|
|
$
|
(766
|
)
|
$
|
146
|
|
2016 COST OF POSTRETIREMENT BENEFIT PLANS AND CHANGES IN OTHER COMPREHENSIVE INCOME
(In millions, pre-tax) |
Total
postretirement benefit plans |
|
Principal pension
plans |
|
Other pension
plans |
|
Principal retiree
benefit plans |
|
||||
|
|
|
|
|
||||||||
Cost of postretirement benefit plans
|
$
|
4,112
|
|
$
|
3,623
|
|
$
|
374
|
|
$
|
115
|
|
Changes in other comprehensive income
|
|
|
|
|
||||||||
Prior service cost (credit) – current year
|
(61
|
)
|
—
|
|
(54
|
)
|
(7
|
)
|
||||
Net actuarial loss (gain) – current year
|
4,038
|
|
2,317
|
|
1,989
|
|
(268
|
)
|
||||
Reclassification out of AOCI:
|
|
|
|
|
||||||||
Net curtailment gain (loss)
|
(50
|
)
|
(31
|
)
|
(19
|
)
|
—
|
|
||||
Prior service credit (cost) amortization
|
(140
|
)
|
(303
|
)
|
(1
|
)
|
164
|
|
||||
Net actuarial gain (loss) amortization
|
(2,655
|
)
|
(2,449
|
)
|
(256
|
)
|
50
|
|
||||
Total changes in other comprehensive income
|
1,132
|
|
(466
|
)
|
1,659
|
|
(61
|
)
|
||||
Cost of postretirement benefit plans and
changes in other comprehensive income
|
$
|
5,244
|
|
$
|
3,157
|
|
$
|
2,033
|
|
$
|
54
|
|
(BENEFIT) PROVISION FOR INCOME TAXES
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
GE
|
|
|
|
||||||
Current tax expense (benefit)
|
$
|
2,451
|
|
$
|
2,810
|
|
$
|
(140
|
)
|
Deferred tax expense (benefit) from temporary differences
|
(1,494
|
)
|
881
|
|
438
|
|
|||
|
957
|
|
3,691
|
|
298
|
|
|||
GE Capital
|
|
|
|
||||||
Current tax expense (benefit)
|
596
|
|
(1,008
|
)
|
(1,138
|
)
|
|||
Deferred tax expense (benefit) from temporary differences
|
(970
|
)
|
(5,294
|
)
|
(293
|
)
|
|||
|
(374
|
)
|
(6,302
|
)
|
(1,431
|
)
|
|||
Consolidated
|
|
|
|
||||||
Current tax expense (benefit)
|
3,047
|
|
1,802
|
|
(1,278
|
)
|
|||
Deferred tax expense (benefit) from temporary differences
|
(2,464
|
)
|
(4,413
|
)
|
145
|
|
|||
Total
|
$
|
583
|
|
$
|
(2,611
|
)
|
$
|
(1,133
|
)
|
CONSOLIDATED EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
U.S. earnings
|
$
|
(10,197
|
)
|
$
|
(18,935
|
)
|
$
|
535
|
|
Non-U.S. earnings
|
(9,937
|
)
|
7,784
|
|
6,496
|
|
|||
Total
|
$
|
(20,134
|
)
|
$
|
(11,151
|
)
|
$
|
7,031
|
|
CONSOLIDATED (BENEFIT) PROVISION FOR INCOME TAXES
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
U.S. Federal
|
|
|
|
||||||
Current
|
$
|
954
|
|
$
|
(823
|
)
|
$
|
(2,646
|
)
|
Deferred
|
(3,393
|
)
|
(3,740
|
)
|
(1,217
|
)
|
|||
Non - U.S.
|
|
|
|
||||||
Current
|
1,859
|
|
2,286
|
|
1,730
|
|
|||
Deferred
|
1,240
|
|
(522
|
)
|
1,054
|
|
|||
Other
|
(78
|
)
|
188
|
|
(54
|
)
|
|||
Total
|
$
|
583
|
|
$
|
(2,611
|
)
|
$
|
(1,133
|
)
|
INCOME TAXES PAID (RECOVERED)
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
GE
|
$
|
1,803
|
|
$
|
2,700
|
|
$
|
2,612
|
|
GE Capital
|
65
|
|
(264
|
)
|
4,857
|
|
|||
Total(a)
|
$
|
1,868
|
|
$
|
2,436
|
|
$
|
7,469
|
|
RECONCILIATION OF U.S. FEDERAL STATUTORY INCOME TAX RATE TO ACTUAL INCOME TAX RATE
|
Consolidated
|
|
GE
|
|
GE Capital
|
|||||||||||||||
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. federal statutory income tax rate
|
21.0
|
%
|
35.0
|
%
|
35.0
|
%
|
|
21.0
|
%
|
35.0
|
%
|
35.0
|
%
|
|
21.0
|
%
|
35.0
|
%
|
35.0
|
%
|
Increase (reduction) in rate resulting from
inclusion of after-tax earnings of GE Capital in
before-tax earnings of GE
|
—
|
|
—
|
|
—
|
|
|
(0.5
|
)
|
(44.8
|
)
|
5.6
|
|
|
—
|
|
—
|
|
—
|
|
Tax on global activities including exports
|
(6.6
|
)
|
31.2
|
|
(29.8
|
)
|
|
(6.6
|
)
|
36.6
|
|
(25.6
|
)
|
|
3.2
|
|
12.2
|
|
4.9
|
|
U.S. business credits(a)
|
2.7
|
|
4.5
|
|
(5.8
|
)
|
|
0.5
|
|
1.7
|
|
(1.2
|
)
|
|
120.0
|
|
3.2
|
|
15.7
|
|
Goodwill impairments
|
(22.4
|
)
|
(7.9
|
)
|
—
|
|
|
(22.3
|
)
|
(7.6
|
)
|
—
|
|
|
—
|
|
(3.8
|
)
|
—
|
|
Tax Cuts and Jobs Act enactment
|
(0.2
|
)
|
(40.5
|
)
|
—
|
|
|
0.5
|
|
(92.9
|
)
|
—
|
|
|
(36.5
|
)
|
3.1
|
|
—
|
|
All other – net(b)(c)
|
2.6
|
|
1.1
|
|
(15.5
|
)
|
|
2.7
|
|
2.1
|
|
(10.0
|
)
|
|
(8.0
|
)
|
0.2
|
|
14.7
|
|
|
(23.9
|
)
|
(11.6
|
)
|
(51.1
|
)
|
|
(25.7
|
)
|
(104.9
|
)
|
(31.2
|
)
|
|
78.7
|
|
14.9
|
|
35.3
|
|
Actual income tax rate
|
(2.9
|
)%
|
23.4
|
%
|
(16.1
|
)%
|
|
(4.7
|
)%
|
(69.9
|
)%
|
3.8
|
%
|
|
99.7
|
%
|
49.9
|
%
|
70.3
|
%
|
(a)
|
U.S. general business credits, primarily the credit for energy produced from renewable sources and the credit for research performed in the U.S.
|
(b)
|
Includes, for each period, the expense or benefit for “Other” taxes reported above in the consolidated (benefit) provision for income taxes, net of
21.0%
federal effect for the year ended December 31, 2018 and
35.0%
federal effect for the years ended December 31, 2017 and 2016.
|
(c)
|
For the year ended December 31, 2018, included
2.9%
and
2.9%
in consolidated and GE, respectively, and in 2016,
(9.9)%
and
(8.9)%
in consolidated and GE, respectively, related to deductible stock losses. Included in 2017 is
5.7%
and
12.1%
in consolidated and GE, respectively, related to the disposition of the Water business. Also included in 2017 is
(3.1)%
and
(6.6)%
in consolidated and GE, respectively, related to losses on planned dispositions.
|
UNRECOGNIZED TAX BENEFITS
December 31 (Dollars in millions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Unrecognized tax benefits
|
$
|
5,563
|
|
$
|
5,449
|
|
Portion that, if recognized, would reduce tax expense and effective tax rate(a)
|
4,265
|
|
3,626
|
|
||
Accrued interest on unrecognized tax benefits
|
934
|
|
810
|
|
||
Accrued penalties on unrecognized tax benefits
|
182
|
|
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.
|
UNRECOGNIZED TAX BENEFITS RECONCILIATION
(In millions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Balance at January 1
|
$
|
5,449
|
|
$
|
4,692
|
|
Additions for tax positions of the current year
|
300
|
|
260
|
|
||
Additions for tax positions of prior years(a)
|
945
|
|
791
|
|
||
Reductions for tax positions of prior years
|
(905
|
)
|
(113
|
)
|
||
Settlements with tax authorities
|
(64
|
)
|
(57
|
)
|
||
Expiration of the statute of limitations
|
(162
|
)
|
(124
|
)
|
||
Balance at December 31
|
$
|
5,563
|
|
$
|
5,449
|
|
(a)
|
For 2017, the amount shown as “additions for tax positions of prior years” included
$326 million
related to uncertain tax liabilities acquired in the Baker Hughes transaction.
|
DEFERRED INCOME TAXES
December 31 (In millions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Assets
|
|
|
||||
GE
|
$
|
14,777
|
|
$
|
16,013
|
|
GE Capital
|
6,214
|
|
6,176
|
|
||
|
20,991
|
|
22,189
|
|
||
Liabilities
|
|
|
||||
GE
|
(4,286
|
)
|
(8,197
|
)
|
||
GE Capital
|
(4,278
|
)
|
(5,177
|
)
|
||
Eliminations
|
5
|
|
4
|
|
||
|
(8,559
|
)
|
(13,370
|
)
|
||
Net deferred income tax asset (liability)
|
$
|
12,432
|
|
$
|
8,819
|
|
COMPONENTS OF THE NET DEFERRED INCOME TAX ASSET (LIABILITY)
December 31 (In millions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
GE
|
|
|
||||
Principal pension plans
|
$
|
3,883
|
|
$
|
3,911
|
|
Other non-current compensation and benefits
|
2,553
|
|
2,780
|
|
||
Provision for expenses
|
2,480
|
|
2,485
|
|
||
Retiree insurance plans
|
1,006
|
|
1,152
|
|
||
Non-U.S. loss carryforwards(a)
|
1,568
|
|
2,078
|
|
||
U.S. credit carryforwards(b)
|
74
|
|
1,932
|
|
||
Contract assets
|
(1,874
|
)
|
(2,925
|
)
|
||
Intangible assets
|
1,303
|
|
(2,033
|
)
|
||
Depreciation
|
(720
|
)
|
(1,022
|
)
|
||
Other – net
|
218
|
|
(543
|
)
|
||
|
10,491
|
|
7,815
|
|
||
GE Capital
|
|
|
||||
Operating leases
|
(2,690
|
)
|
(2,689
|
)
|
||
Financing leases
|
(599
|
)
|
(877
|
)
|
||
Energy investments
|
(144
|
)
|
(754
|
)
|
||
Intangible assets
|
(16
|
)
|
(25
|
)
|
||
U.S. credit carryforwards(b)
|
2,491
|
|
1,632
|
|
||
Insurance company loss reserves
|
1,386
|
|
1,373
|
|
||
Non-U.S. loss carryforwards(a)
|
1,231
|
|
1,271
|
|
||
Other – net
|
277
|
|
1,068
|
|
||
|
1,936
|
|
999
|
|
||
Eliminations
|
5
|
|
4
|
|
||
Net deferred income tax asset (liability)
|
$
|
12,432
|
|
$
|
8,819
|
|
(a)
|
Net of valuation allowances of
$5,103 million
and
$4,251 million
for GE and
$767 million
and
$448 million
for GE Capital, for
2018
and
2017
, respectively. Of the net deferred tax asset as of
December 31, 2018
of
$2,799 million
,
$37 million
relates to net operating loss carryforwards that expire in various years ending from December 31, 2019 through December 31, 2021;
$314 million
relates to net operating losses that expire in various years ending from December 31, 2022 through December 31, 2038 and
$2,448 million
relates to net operating loss carryforwards that may be carried forward indefinitely.
|
(b)
|
Of the net deferred tax asset as of December 31, 2018 of
$2,565 million
for U.S. credit carryforwards,
$1,144 million
expires in the year ending December 31, 2027 through 2028,
$74 million
expires in the years ending December 31, 2030 through 2032 and
$1,347 million
expires in various years ending from December 31, 2033 through December 31, 2038.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Preferred stock issued
|
$
|
6
|
|
$
|
6
|
|
$
|
6
|
|
Common stock issued
|
$
|
702
|
|
$
|
702
|
|
$
|
702
|
|
Accumulated other comprehensive income (loss)
|
|
|
|
||||||
Balance at January 1
|
$
|
(14,404
|
)
|
$
|
(18,588
|
)
|
$
|
(16,532
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
|
|
||||||
Investment securities - net of deferred taxes of $41, $(335), $84(a)
|
87
|
(627)
|
170
|
||||||
Currency translation adjustments (CTA) - net of deferred taxes of $29, $(537), $719
|
(2,076)
|
846
|
(1,593)
|
||||||
Cash flow hedges - net of deferred taxes of $(26), $31, $(41)
|
(149)
|
171
|
(234)
|
||||||
Benefit plans - net of deferred taxes of $115, $32, $(1,016)
|
71
|
550
|
(2,946)
|
||||||
Total
|
$
|
(2,066
|
)
|
$
|
940
|
|
$
|
(4,603
|
)
|
Reclassifications from other comprehensive income
|
|
|
|
||||||
Investment securities - net of deferred taxes of $(6), $(81), $30(b)
|
(23
|
)
|
(149
|
)
|
34
|
|
|||
Currency translation gains (losses) on dispositions - net of deferred taxes of $89, $(543), $241(b)
|
412
|
|
1,333
|
|
294
|
|
|||
Cash flow hedges - net of deferred taxes of $4, $(28), $37(c)
|
98
|
|
(120
|
)
|
327
|
|
|||
Benefit plans - net of deferred taxes of $2,610, $1,111, $966(d)
|
1,345
|
|
2,232
|
|
1,878
|
|
|||
Total(e)(f)
|
$
|
1,831
|
|
$
|
3,296
|
|
$
|
2,533
|
|
Other comprehensive income (loss)
|
(235
|
)
|
4,236
|
|
(2,070
|
)
|
|||
Less other comprehensive income (loss) attributable to noncontrolling interests
|
(225
|
)
|
51
|
|
(14
|
)
|
|||
Other comprehensive income (loss), net, attributable to GE
|
$
|
(10
|
)
|
$
|
4,184
|
|
$
|
(2,056
|
)
|
Balance at December 31
|
$
|
(14,414
|
)
|
$
|
(14,404
|
)
|
$
|
(18,588
|
)
|
Other capital
|
|
|
|
||||||
Balance at January 1
|
$
|
37,384
|
|
$
|
37,224
|
|
$
|
37,613
|
|
Gains (losses) on treasury stock dispositions and other(g)
|
(1,880
|
)
|
160
|
|
(389
|
)
|
|||
Balance at December 31
|
$
|
35,504
|
|
$
|
37,384
|
|
$
|
37,224
|
|
Retained earnings
|
|
|
|
||||||
Balance at January 1(h)
|
$
|
117,245
|
|
$
|
133,857
|
|
$
|
135,677
|
|
Net earnings (loss) attributable to the Company
|
(22,355
|
)
|
(8,484
|
)
|
7,500
|
|
|||
Dividends and other transactions with shareowners
|
(3,669
|
)
|
(7,741
|
)
|
(9,054
|
)
|
|||
Redemption value adjustment on redeemable noncontrolling interests(i)
|
(374
|
)
|
(388
|
)
|
(267
|
)
|
|||
Changes in accounting(j)
|
2,261
|
|
—
|
|
—
|
|
|||
Balance at December 31
|
$
|
93,109
|
|
$
|
117,245
|
|
$
|
133,857
|
|
Common stock held in treasury
|
|
|
|
||||||
Balance at January 1
|
$
|
(84,902
|
)
|
$
|
(83,038
|
)
|
$
|
(63,539
|
)
|
Purchases
|
(268
|
)
|
(3,849
|
)
|
(22,073
|
)
|
|||
Dispositions
|
1,244
|
|
1,985
|
|
2,574
|
|
|||
Balance at December 31
|
$
|
(83,925
|
)
|
$
|
(84,902
|
)
|
$
|
(83,038
|
)
|
Total equity
|
|
|
|
||||||
GE shareowners' equity balance
|
$
|
30,981
|
|
$
|
56,030
|
|
$
|
70,162
|
|
Noncontrolling interests balance
|
20,500
|
|
17,468
|
|
1,663
|
|
|||
Total equity balance at December 31
|
$
|
51,481
|
|
$
|
73,498
|
|
$
|
71,825
|
|
(a)
|
Included adjustments of
$1,825 million
,
$(1,259) million
and
$(57) million
in 2018, 2017 and 2016, 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 and losses been realized. See Note 12 for further information.
|
(b)
|
Primarily recorded in "GE Capital Revenues from Services" 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
,
$483 million
and
$211 million
in 2018, 2017 and 2016, 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 20
.
|
(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)
|
Included
$227 million
and
$782 million
after-tax reclassification of AOCI to Other Capital as part of the loss from sale of
12.1%
economic interest in BHGE in November, 2018, and recognition of noncontrolling interest in BHGE in 2017, respectively.
|
(f)
|
Included
$(1,815) million
deferred tax AOCI, primarily related to benefit plans
$(1,740) million
, reclassified to retained earnings for stranded tax effects as a result of adoption of ASU 2018-02 in 2018.
|
(g)
|
Included
$(1,696)
million loss recorded in Other Capital from the sale of
12.1%
economic interest in BHGE in November 2018.
|
(h)
|
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
.
|
(i)
|
Amount of redemption value adjustment on redeemable noncontrolling interest shown net of deferred taxes.
|
(j)
|
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
$446 million
, primarily due to an increase of
$410 million
related to ASU 2016-16. In the fourth quarter of 2018, we adopted ASU 2018-02 and reclassified
$1,815
stranded tax effects from the Tax Cuts and Jobs act on AOCI to retained earnings. See Note 1 for further information.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
COMMON SHARES ISSUES AND OUTSTANDING
December 31 (In thousands)
|
2018
|
2017
|
2016
|
|
|
|
|
Issued
|
11,693,841
|
11,693,841
|
11,693,841
|
In treasury
|
(2,991,614)
|
(3,013,270)
|
(2,951,227)
|
Outstanding
|
8,702,227
|
8,680,571
|
8,742,614
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
CHANGES TO NONCONTROLLING INTERESTS
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Balance at January 1
|
$
|
17,468
|
|
$
|
1,663
|
|
$
|
1,864
|
|
Net earnings (loss)
|
203
|
|
(47
|
)
|
(46
|
)
|
|||
Dividends
|
(362
|
)
|
(222
|
)
|
(72
|
)
|
|||
Other (including AOCI)(a)(b)(c)(d)
|
3,191
|
|
16,072
|
|
(83
|
)
|
|||
Balance at December 31(e)
|
$
|
20,500
|
|
$
|
17,468
|
|
$
|
1,663
|
|
(a)
|
Included impact of AOCI, acquisitions, dispositions and BHGE stock repurchases.
|
(b)
|
Included
$16,238 million
related to BHGE transaction in 2017
.
|
(c)
|
Included
$155 million
related to Arcam AB acquisition in our Aviation segment i
n 2016
.
|
(d)
|
Included
$(123) million
for deconsolidation of investment funds managed by GE Asset Management (GEAM) upon the adoption of ASU 2015-2,
Amendments to the Consolidation Analysis
in 2016.
|
(e)
|
Included
$19,239 million
and
$15,836 million
attributable to the BHGE Class A Shareholders at December 31, 2018 and 2017, respectively.
|
CHANGES TO REDEEMABLE NONCONTROLLING INTERESTS
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Balance at January 1
|
$
|
3,391
|
|
$
|
3,017
|
|
$
|
2,962
|
|
Net earnings (loss)
|
(291
|
)
|
(320
|
)
|
(243
|
)
|
|||
Dividends
|
(19
|
)
|
(62
|
)
|
(17
|
)
|
|||
Redemption value adjustment
|
408
|
|
419
|
|
267
|
|
|||
Other(a)(b)(c)
|
(3,106
|
)
|
337
|
|
49
|
|
|||
Balance at December 31
|
$
|
382
|
|
$
|
3,391
|
|
$
|
3,017
|
|
(a)
|
In 2016, included
$204 million
related to the Concept Laser GmbH acquisition in our Aviation segment.
|
(b)
|
Includes impact of foreign currency changes.
|
(c)
|
In 2018, included
$(3,105) million
to acquire Alstom’s interest in joint ventures described above.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
STOCK-BASED COMPENSATION ACTIVITY
|
|
Stock Options
|
|
RSUs
|
||||||||
|
|
Shares (in millions)
|
|
Weighted average exercise price
|
|
|
Shares (in millions)
|
|
Weighted average grant date fair value
|
|
||
Outstanding at January 1, 2018
|
|
399
|
|
$
|
21.91
|
|
|
17
|
|
$
|
26.94
|
|
Granted
|
|
108
|
|
12.13
|
|
|
22
|
|
13.96
|
|
||
Exercised
|
|
(2
|
)
|
11.46
|
|
|
(6
|
)
|
25.81
|
|
||
Forfeited
|
|
(13
|
)
|
20.09
|
|
|
(4
|
)
|
21.89
|
|
||
Expired
|
|
(26
|
)
|
24.49
|
|
|
N/A
|
|
N/A
|
|
||
Outstanding at December 31, 2018
|
|
466
|
|
$
|
19.59
|
|
|
29
|
|
$
|
18.07
|
|
Exercisable at December 31, 2018
|
|
318
|
|
$
|
21.46
|
|
|
N/A
|
|
N/A
|
|
|
Expected to vest
|
|
133
|
|
$
|
15.89
|
|
|
27
|
|
$
|
18.08
|
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Compensation expense (after-tax)(a)(b)
|
$
|
336
|
|
$
|
241
|
|
$
|
297
|
|
Cash received from stock options exercised
|
24
|
|
528
|
|
1,037
|
|
|||
Intrinsic value of stock options exercised and RSUs vested
|
83
|
|
493
|
|
860
|
|
(a)
|
Unrecognized compensation expense related to unvested equity awards as of
December 31, 2018
was
$740 million
, which will be amortized over approximately
2 years
.
|
(b)
|
Income tax benefit recognized in earnings was
$40 million
,
$138 million
, and
$274 million
in 2018, 2017, and 2016, respectively.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
(In millions; per-share amounts in dollars)
|
Diluted
|
|
Basic
|
|
|
Diluted
|
|
Basic
|
|
|
Diluted
|
|
Basic
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Amounts attributable to the Company:
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings (loss) from continuing operations for
per-share calculation(a)(b)
|
$
|
(20,636
|
)
|
$
|
(20,636
|
)
|
|
$
|
(8,193
|
)
|
$
|
(8,193
|
)
|
|
$
|
8,431
|
|
$
|
8,436
|
|
Preferred stock dividends
|
(447
|
)
|
(447
|
)
|
|
(436
|
)
|
(436
|
)
|
|
(656
|
)
|
(656
|
)
|
||||||
Earnings (loss) from continuing operations attributable to
common shareowners for per-share calculation(a)(b)
|
$
|
(21,083
|
)
|
$
|
(21,083
|
)
|
|
$
|
(8,629
|
)
|
$
|
(8,629
|
)
|
|
$
|
7,775
|
|
$
|
7,780
|
|
Earnings (loss) from discontinued operations
for per-share calculation(a)(b)
|
(1,734
|
)
|
(1,734
|
)
|
|
(328
|
)
|
(328
|
)
|
|
(955
|
)
|
(950
|
)
|
||||||
Net earnings (loss) attributable to GE common
shareowners for per-share calculation(a)(b)
|
$
|
(22,809
|
)
|
$
|
(22,809
|
)
|
|
$
|
(8,944
|
)
|
$
|
(8,944
|
)
|
|
$
|
6,824
|
|
$
|
6,829
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Average equivalent shares
|
|
|
|
|
|
|
|
|
||||||||||||
Shares of GE common stock outstanding
|
8,691
|
|
8,691
|
|
|
8,687
|
|
8,687
|
|
|
9,025
|
|
9,025
|
|
||||||
Employee compensation-related shares (including
stock options) and warrants
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
105
|
|
—
|
|
||||||
Total average equivalent shares
|
8,691
|
|
8,691
|
|
|
8,687
|
|
8,687
|
|
|
9,130
|
|
9,025
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Per-share amounts
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings (loss) from continuing operations
|
$
|
(2.43
|
)
|
$
|
(2.43
|
)
|
|
$
|
(0.99
|
)
|
$
|
(0.99
|
)
|
|
$
|
0.85
|
|
$
|
0.86
|
|
Earnings (loss) from discontinued operations
|
(0.20
|
)
|
(0.20
|
)
|
|
(0.04
|
)
|
(0.04
|
)
|
|
(0.10
|
)
|
(0.11
|
)
|
||||||
Net earnings (loss)
|
(2.62
|
)
|
(2.62
|
)
|
|
(1.03
|
)
|
(1.03
|
)
|
|
0.75
|
|
0.76
|
|
(a)
|
Included a dilutive adjustment of an insignificant amount of dividend equivalents in each of the three years presented.
|
(b)
|
Included in
2016
is a dilutive adjustment for the change in income for forward purchase contracts that may be settled in stock.
|
December 31 (In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
GE
|
|
|
|
||||||
Purchases and sales of business interests(a)
|
$
|
1,294
|
|
$
|
1,021
|
|
$
|
3,731
|
|
Licensing and royalty income
|
221
|
|
193
|
|
175
|
|
|||
Associated companies
|
(111
|
)
|
202
|
|
76
|
|
|||
Net interest and investment income
|
669
|
|
425
|
|
263
|
|
|||
Other items
|
182
|
|
96
|
|
(17
|
)
|
|||
|
2,255
|
|
1,937
|
|
4,227
|
|
|||
Eliminations
|
4
|
|
189
|
|
(87
|
)
|
|||
Total
|
$
|
2,259
|
|
$
|
2,126
|
|
$
|
4,140
|
|
(a)
|
Included pre-tax gains of
$737 million
on the sale of Distributed Power,
$681 million
on the sale of Healthcare Value-Based Care and
$267 million
on the sale of Industrial Solutions, partially offset by charges to the valuation allowance on businesses classified as held for sale of
$554 million
in 2018. Included a pre-tax gain of
$1,931 million
on the sale of our Water business, partially offset by charges to the valuation allowance on businesses classified as held for sale of
$1,000 million
in 2017.
Included a pre-tax gain of
$3,106 million
on the sale of our Appliances business and
$398 million
on the sale of GE Asset Management in 2016.
See Note 2 for further information.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3(a)
|
|
Netting
adjustment(d) |
|
Net balance(b)
|
|
|||||
December 31, 2018
|
|
|
|
|
|
||||||||||
Assets
|
|
|
|
|
|
||||||||||
Investment securities
|
$
|
126
|
|
$
|
29,408
|
|
$
|
4,301
|
|
$
|
—
|
|
$
|
33,835
|
|
Derivatives
|
—
|
|
2,294
|
|
8
|
|
(2,001
|
)
|
301
|
|
|||||
Total
|
$
|
126
|
|
$
|
31,701
|
|
$
|
4,309
|
|
$
|
(2,001
|
)
|
$
|
34,136
|
|
|
|
|
|
|
|
||||||||||
Liabilities
|
|
|
|
|
|
||||||||||
Derivatives
|
$
|
—
|
|
$
|
1,913
|
|
$
|
6
|
|
$
|
(1,234
|
)
|
$
|
686
|
|
Other(c)
|
—
|
|
722
|
|
—
|
|
—
|
|
722
|
|
|||||
Total
|
$
|
—
|
|
$
|
2,635
|
|
$
|
6
|
|
$
|
(1,234
|
)
|
$
|
1,408
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017
|
|
|
|
|
|
||||||||||
Assets
|
|
|
|
|
|
||||||||||
Investment securities
|
$
|
158
|
|
$
|
34,126
|
|
$
|
4,413
|
|
$
|
—
|
|
$
|
38,696
|
|
Derivatives
|
—
|
|
3,343
|
|
21
|
|
(2,986
|
)
|
378
|
|
|||||
Total
|
$
|
158
|
|
$
|
37,469
|
|
$
|
4,433
|
|
$
|
(2,986
|
)
|
$
|
39,074
|
|
Liabilities
|
|
|
|
|
|
||||||||||
Derivatives
|
$
|
—
|
|
$
|
2,354
|
|
$
|
7
|
|
$
|
(2,034
|
)
|
$
|
327
|
|
Other(c)
|
—
|
|
999
|
|
—
|
|
—
|
|
999
|
|
|||||
Total
|
$
|
—
|
|
$
|
3,353
|
|
$
|
7
|
|
$
|
(2,034
|
)
|
$
|
1,325
|
|
(a)
|
Included debt securities classified within Level 3 of
$3,498
million of U.S. corporate and
$580
million of Government and agencies securities at December 31, 2018, and
$3,629 million
of U.S. corporate and
$614 million
of Government and agencies securities at December 31, 2017.
|
(b)
|
See Notes 3 and 20 for further information on the composition of our investment securities and derivative portfolios.
|
(c)
|
Primarily represents the liabilities associated with certain of our deferred incentive compensation plans.
|
(d)
|
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.
|
(In millions)
|
Balance at
January 1 |
|
Net
realized/ unrealized gains (losses) included in earnings(a) |
|
Net
realized/ unrealized gains (losses) included in AOCI(b) |
|
Purchases(c)
|
|
Sales
|
|
Settlements
|
|
Transfers
into Level 3 |
|
Transfers
out of Level 3 |
|
Balance at
December 31 |
|
|||||||||
2018
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Debt securities
|
$
|
4,413
|
|
$
|
2
|
|
$
|
(234
|
)
|
$
|
804
|
|
$
|
(65
|
)
|
$
|
(358
|
)
|
$
|
2
|
|
$
|
(262
|
)
|
$
|
4,301
|
|
2017
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Debt securities
|
$
|
4,406
|
|
$
|
54
|
|
66
|
|
$
|
1,108
|
|
$
|
(38
|
)
|
$
|
(641
|
)
|
$
|
32
|
|
$
|
(575
|
)
|
$
|
4,413
|
|
(a)
|
Earnings effects are primarily included in the “GE Capital revenues from services” and “Interest and other financial charges” captions in our consolidated Statement of Earnings (Loss).
|
(b)
|
Includes unrealized net gains and losses of
$(233) million
and
$97 million
and realized net gains and losses of
$(1) million
and
$(32) million
in other comprehensive income for the years ended December 31, 2018 and December 31, 2017, respectively.
|
(c)
|
Included
$615 million
and
$675 million
of U.S. corporate debt securities for the years ended
December 31, 2018
and 2017.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
ASSETS MEASURED AT FAIR VALUE ON A NONRECURRING
|
Remeasured during the years ended December 31
|
||||||||||||
BASIS
|
2018
|
|
2017
|
||||||||||
(In millions)
|
Level 2
|
Level 3
|
|
Level 2
|
Level 3
|
||||||||
|
|
|
|
|
|
||||||||
Financing receivables and financing receivables held for sale
|
$
|
—
|
|
$
|
47
|
|
|
$
|
32
|
|
$
|
1,649
|
|
Equity securities without readily determinable fair value and equity method investments
|
479
|
|
874
|
|
|
—
|
|
2,076
|
|
||||
Long-lived assets
|
152
|
|
422
|
|
|
177
|
|
591
|
|
||||
Goodwill
|
—
|
|
2,440
|
|
|
—
|
|
—
|
|
||||
Total
|
$
|
631
|
|
$
|
3,783
|
|
|
$
|
209
|
|
$
|
4,316
|
|
(a)
|
Discount rates are determined based on inputs that market participants would use when pricing investments, including credit and liquidity risk. An increase in the discount rate would result in a decrease in the fair value.
|
(b)
|
Comprises substantially all of U.S. corporate and government Non-U.S. securities
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
2018
|
|
2017
|
||||||||||
December 31 (In millions)
|
Carrying
amount (net) |
|
Estimated
fair value |
|
|
Carrying
amount (net) |
|
Estimated
fair value |
|
||||
|
|
|
|
|
|
||||||||
GE
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
||||||||
Notes receivable
|
$
|
798
|
|
$
|
787
|
|
|
$
|
700
|
|
$
|
700
|
|
Liabilities
|
|
|
|
|
|
||||||||
Borrowings(a)(b)
|
32,309
|
|
29,586
|
|
|
34,473
|
|
35,416
|
|
||||
Borrowings (assumed by GE)(a)(c)
|
36,262
|
|
36,298
|
|
|
47,114
|
|
53,502
|
|
||||
|
|
|
|
|
|
||||||||
GE Capital
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
||||||||
Loans
|
10,820
|
|
10,807
|
|
|
17,363
|
|
17,331
|
|
||||
Other commercial mortgages
|
1,747
|
|
1,792
|
|
|
1,489
|
|
1,566
|
|
||||
Loans held for sale
|
404
|
|
405
|
|
|
3,274
|
|
3,274
|
|
||||
Liabilities
|
|
|
|
|
|
||||||||
Borrowings(a)(d)(e)(f)
|
43,028
|
|
42,006
|
|
|
55,353
|
|
60,415
|
|
||||
Investment contracts
|
2,388
|
|
2,630
|
|
|
2,569
|
|
2,996
|
|
(a)
|
See Note 11 for further information.
|
(b)
|
Included
$210 million
and
$217 million
of accrued interest in estimated fair value at
December 31, 2018
and
December 31, 2017
, respectively.
|
(c)
|
Included
$568 million
and
$696 million
of accrued interest in estimated fair value at
December 31, 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
December 31, 2018
and
December 31, 2017
would have been reduced by
$1,300 million
and
$1,754 million
, respectively.
|
(e)
|
Included
$583 million
and
$731 million
of accrued interest in estimated fair value at
December 31, 2018
and
December 31, 2017
, respectively.
|
(f)
|
Excluded
$22,513 million
and
$39,844 million
of net intercompany payable to GE at
December 31, 2018
and
December 31, 2017
, respectively.
|
NOTIONAL AMOUNTS OF LOAN COMMITMENTS
December 31 (In millions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Ordinary course of business lending commitments(a)
|
$
|
767
|
|
$
|
1,105
|
|
Unused revolving credit lines
|
34
|
|
198
|
|
(a)
|
Excluded investment commitments of
$1,373 million
and
$677 million
at
December 31, 2018
and
December 31, 2017
, respectively.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FAIR VALUE OF DERIVATIVES
|
2018
|
|
2017
|
||||||||||
December 31 (in millions)
|
Assets
|
|
Liabilities
|
|
|
Assets
|
|
Liabilities
|
|
||||
|
|
|
|
|
|
||||||||
Derivatives accounted for as hedges
|
|
|
|
|
|
||||||||
Interest rate contracts
|
$
|
1,335
|
|
$
|
23
|
|
|
$
|
1,862
|
|
$
|
148
|
|
Currency exchange contracts
|
175
|
|
121
|
|
|
160
|
|
70
|
|
||||
Other contracts
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||
|
$
|
1,511
|
|
$
|
145
|
|
|
$
|
2,021
|
|
$
|
218
|
|
|
|
|
|
|
|
||||||||
Derivatives not accounted for as hedges
|
|
|
|
|
|
||||||||
Interest rate contracts
|
28
|
|
2
|
|
|
93
|
|
8
|
|
||||
Currency exchange contracts
|
747
|
|
1,562
|
|
|
1,111
|
|
2,043
|
|
||||
Other contracts
|
16
|
|
211
|
|
|
139
|
|
91
|
|
||||
|
$
|
791
|
|
$
|
1,775
|
|
|
$
|
1,343
|
|
$
|
2,143
|
|
|
|
|
|
|
|
||||||||
Gross derivatives recognized in Statement of
Financial Position
|
|
|
|
|
|
||||||||
Gross derivatives
|
2,301
|
|
1,920
|
|
|
3,364
|
|
2,361
|
|
||||
Gross accrued interest
|
209
|
|
6
|
|
|
469
|
|
(38
|
)
|
||||
|
$
|
2,511
|
|
$
|
1,926
|
|
|
$
|
3,833
|
|
$
|
2,323
|
|
|
|
|
|
|
|
||||||||
Amounts offset in Statement of Financial Position
|
|
|
|
|
|
||||||||
Netting adjustments(a)
|
(963
|
)
|
(971
|
)
|
|
(1,457
|
)
|
(1,456
|
)
|
||||
Cash collateral(b)
|
(1,042
|
)
|
(267
|
)
|
|
(1,529
|
)
|
(578
|
)
|
||||
|
$
|
(2,005
|
)
|
$
|
(1,238
|
)
|
|
$
|
(2,986
|
)
|
$
|
(2,034
|
)
|
|
|
|
|
|
|
||||||||
Net derivatives recognized in Statement of
Financial Position
|
|
|
|
|
|
||||||||
Net derivatives
|
505
|
|
687
|
|
|
847
|
|
289
|
|
||||
|
|
|
|
|
|
||||||||
Amounts not offset in Statement of
Financial Position
|
|
|
|
|
|
||||||||
Securities held as collateral(c)
|
(235
|
)
|
—
|
|
|
(405
|
)
|
—
|
|
||||
|
|
|
|
|
|
||||||||
Net amount(d)
|
$
|
270
|
|
$
|
687
|
|
|
$
|
441
|
|
$
|
289
|
|
(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
December 31, 2018
and
December 31, 2017
, the cumulative adjustment for non-performance risk was
$8 million
and
$(1) million
, respectively.
|
(b)
|
Excluded excess cash collateral received and posted of
$3 million
and
$439 million
at
December 31, 2018
, respectively, and
$10 million
and
$255 million
at
December 31, 2017
, respectively.
|
(c)
|
Excluded excess securities collateral received with a fair value of
zero
and
$16 million
at
December 31, 2018
and
December 31, 2017
, respectively.
|
(d)
|
At December 31, 2018, our exposures to counterparties (including accrued interest), net of collateral we held, was
$170 million
; counterparties' exposures to our derivative liability (including accrued interest), net of collateral posted by us, was
$657 million
at December 31, 2018. These exposures exclude embedded derivatives.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
(In millions)
|
Effect on hedging instrument
|
|
Effect on underlying
|
|
Effect on earnings(a)
|
|
|||
|
|
|
|
||||||
2018
|
|
|
|
||||||
Cash flow hedges
|
$
|
(154
|
)
|
$
|
154
|
|
$
|
—
|
|
Fair value hedges
|
(724
|
)
|
617
|
|
(107
|
)
|
|||
Net investment hedges(b)
|
669
|
|
(646
|
)
|
23
|
|
|||
Economic hedges(c)
|
(2,068
|
)
|
1,560
|
|
(508
|
)
|
|||
Total
|
|
|
$
|
(592
|
)
|
2017
|
|
|
|
||||||
Cash flow hedges
|
$
|
199
|
|
$
|
(199
|
)
|
$
|
—
|
|
Fair value hedges
|
(556
|
)
|
371
|
|
(185
|
)
|
|||
Net investment hedges(b)
|
(1,833
|
)
|
1,852
|
|
19
|
|
|||
Economic hedges(c)
|
1,147
|
|
(1,683
|
)
|
(536
|
)
|
|||
Total
|
|
|
$
|
(702
|
)
|
(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
$(12,458) million
and
$(13,028) million
at December 31, 2018 and December 31, 2017, respectively. Total pre-tax reclassifications from CTA to gain (loss) was
$(1) million
and
$125 million
in 2018 and 2017, respectively. Total pre-tax reclassifications from CTA to gain (loss) included
zero
and
$125 million
recorded in discontinued operations in 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.
|
CASH FLOW HEDGE ACTIVITY
|
Gains (losses) recognized in AOCI
|
|
Gains (losses) reclassified
from AOCI into earnings
|
||||||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
$
|
(3
|
)
|
$
|
4
|
|
$
|
6
|
|
|
$
|
(11
|
)
|
$
|
(27
|
)
|
$
|
(79
|
)
|
Currency exchange contracts
|
(152
|
)
|
195
|
|
(281
|
)
|
|
(92
|
)
|
176
|
|
(282
|
)
|
||||||
Commodity contracts
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(2
|
)
|
||||||
Total(a)
|
$
|
(154
|
)
|
$
|
199
|
|
$
|
(274
|
)
|
|
$
|
(102
|
)
|
$
|
149
|
|
$
|
(364
|
)
|
(a)
|
Gains (losses) is recorded in “GE Capital revenues from services”, “Interest and other financial charges”, and “Other costs and expenses” in our consolidated Statement of Earnings (Loss) when reclassified.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
ASSETS AND LIABILITIES
|
|
GE Capital
|
|
||||||||||||
OF CONSOLIDATED VIES
|
|
Customer
|
Trade
|
|
|
||||||||||
(In millions)
|
GE
|
Notes receivables(a)
|
receivables(b)
|
Other(c)
|
Total
|
||||||||||
|
|
|
|
|
|
||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|||||||
Assets
|
|
|
|
|
|
|
|
|
|||||||
Financing receivables, net
|
$
|
—
|
|
$
|
—
|
|
$
|
1,774
|
|
$
|
930
|
|
$
|
2,704
|
|
Current receivables
|
129
|
|
366
|
|
—
|
|
—
|
|
496
|
|
|||||
Investment securities
|
35
|
|
—
|
|
—
|
|
—
|
|
35
|
|
|||||
Other assets
|
593
|
|
830
|
|
—
|
|
944
|
|
2,367
|
|
|||||
Total
|
$
|
756
|
|
$
|
1,197
|
|
$
|
1,774
|
|
$
|
1,874
|
|
$
|
5,601
|
|
|
|
|
|
|
|
||||||||||
Liabilities
|
|
|
|
|
|
||||||||||
Borrowings
|
$
|
44
|
|
$
|
—
|
|
$
|
—
|
|
$
|
806
|
|
$
|
850
|
|
Non-recourse borrowings
|
—
|
|
534
|
|
1,341
|
|
—
|
|
1,875
|
|
|||||
Other liabilities
|
342
|
|
546
|
|
423
|
|
490
|
|
1,801
|
|
|||||
Total
|
$
|
386
|
|
$
|
1,079
|
|
$
|
1,765
|
|
$
|
1,296
|
|
$
|
4,526
|
|
|
|
|
|
|
|
||||||||||
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 entities were established to purchase customer notes receivable from GE,
one
of which is partially funded by third-party debt.
|
(b)
|
On September 28, 2018, GE Capital entered a new
$1,500 million
current receivables facility with an alternative funding vehicle that it controlled. This facility, which will expire in
eighteen months
, unless extended, is a pan-European multi-jurisdiction, multi-currency revolving receivables facility. The alternative funding vehicle purchases GE current receivables on a daily basis and issues non-recourse debt to third-party banks to fund its purchases. GE Capital consolidates the entity because it services the purchased current receivables.
|
(c)
|
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.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Balance at January 1
|
$
|
2,348
|
|
$
|
1,929
|
|
$
|
1,733
|
|
Current-year provisions
|
1,071
|
|
961
|
|
801
|
|
|||
Expenditures
|
(960
|
)
|
(827
|
)
|
(734
|
)
|
|||
Other changes(a)
|
51
|
|
286
|
|
130
|
|
|||
Balance at December 31
|
$
|
2,510
|
|
$
|
2,348
|
|
$
|
1,929
|
|
(a)
|
Included
$172 million
related to Baker Hughes and LM Wind Power acquisitions in 2017.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
ROLLFORWARD OF THE RESERVE RELATED TO REPURCHASE CLAIMS
(In millions)
|
2018
|
|
2017
|
|
||
|
|
|
||||
Balance at January 1
|
$
|
416
|
|
$
|
626
|
|
Provision
|
2
|
|
51
|
|
||
Claim resolutions / rescissions
|
(208
|
)
|
(261
|
)
|
||
Balance at December 31
|
$
|
210
|
|
$
|
416
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
For the years ended December 31 (In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
All other operating activities
|
|
|
|
||||||
Other gains on investing activities
|
$
|
(510
|
)
|
$
|
(138
|
)
|
$
|
(90
|
)
|
Restructuring and other charges(a)
|
990
|
|
1,951
|
|
1,668
|
|
|||
Increase (decrease) in equipment project accruals
|
(951
|
)
|
(186
|
)
|
(595
|
)
|
|||
Other(b)
|
596
|
|
(406
|
)
|
(1,834
|
)
|
|||
|
$
|
125
|
|
$
|
1,221
|
|
$
|
(851
|
)
|
All other investing activities
|
|
|
|
||||||
Derivative settlements (net)(c)
|
$
|
(861
|
)
|
$
|
(1,142
|
)
|
$
|
—
|
|
Investments in intangible assets (net)
|
(496
|
)
|
(321
|
)
|
(499
|
)
|
|||
Investments in associated companies (net)
|
127
|
|
(226
|
)
|
(420
|
)
|
|||
Other investments (net)
|
(50
|
)
|
(281
|
)
|
(160
|
)
|
|||
Other
|
90
|
|
(90
|
)
|
(270
|
)
|
|||
|
$
|
(1,190
|
)
|
$
|
(2,061
|
)
|
$
|
(1,349
|
)
|
All other financing activities
|
|
|
|
||||||
Proceeds from BHGE public share offering
|
$
|
2,273
|
|
$
|
—
|
|
$
|
—
|
|
Acquisition of noncontrolling interests(d)
|
(3,732
|
)
|
(499
|
)
|
(102
|
)
|
|||
Dividends paid to noncontrolling interests
|
(366
|
)
|
(263
|
)
|
(49
|
)
|
|||
Other
|
102
|
|
234
|
|
(122
|
)
|
|||
|
$
|
(1,723
|
)
|
$
|
(528
|
)
|
$
|
(273
|
)
|
Net dispositions (purchases) of GE shares for treasury
|
|
|
|
||||||
Open market purchases under share repurchase program(e)
|
$
|
(245
|
)
|
$
|
(3,506
|
)
|
$
|
(22,581
|
)
|
Other purchases
|
(23
|
)
|
(67
|
)
|
(399
|
)
|
|||
Dispositions
|
250
|
|
1,021
|
|
1,550
|
|
|||
|
$
|
(17
|
)
|
$
|
(2,550
|
)
|
$
|
(21,429
|
)
|
(a)
|
Reflected the effects of restructuring and other charges of
$2,941 million
,
$3,947 million
and
$3,350 million
and restructuring and other cash expenditures of
$(1,951) million
,
$(1,996) million
and
$(1,682) million
for the years ended
December 31, 2018
,
2017
and
2016
, respectively. Excludes non-cash adjustments reflected as "Depreciation and amortization of property, plant and equipment" or "Amortization of intangible assets" in our consolidated Statement of Cash Flows.
|
(b)
|
Included other adjustments to net income, such as write-downs of assets and 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 and customer allowances.
|
(c)
|
The classification of settlements of derivative instruments was corrected from operating cash flows to investing cash flows in 2017. Such settlements of
$178 million
in 2016 were not reclassified and corrected in investing cash flows as they were not considered material.
|
(d)
|
Included the acquisition of Alstom's interest in the grid technology, renewable energy, and global nuclear and French steam power joint ventures for
$(3,105) million
in the fourth quarter of 2018. See Note 15.
|
(e)
|
Included
$(11,370) million
paid under ASR agreements in 2016.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
For the years ended December 31 (In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
All other operating activities
|
|
|
|
||||||
Cash collateral on derivative contracts
|
$
|
(595
|
)
|
$
|
131
|
|
$
|
(428
|
)
|
Increase (decrease) in other liabilities
|
240
|
|
(798
|
)
|
3,256
|
|
|||
Other(a)
|
483
|
|
11,783
|
|
1,204
|
|
|||
|
$
|
127
|
|
$
|
11,115
|
|
$
|
4,032
|
|
Net decrease (increase) in GE Capital financing receivables
|
|
|
|
||||||
Increase in loans to customers
|
$
|
(30,207
|
)
|
$
|
(45,251
|
)
|
$
|
(65,055
|
)
|
Principal collections from customers - loans
|
37,237
|
|
47,471
|
|
60,375
|
|
|||
Investment in equipment for financing leases
|
(306
|
)
|
(585
|
)
|
(690
|
)
|
|||
Principal collections from customers - financing leases
|
802
|
|
1,011
|
|
856
|
|
|||
Sales of financing receivables
|
2,458
|
|
251
|
|
3,235
|
|
|||
|
$
|
9,986
|
|
$
|
2,897
|
|
$
|
(1,279
|
)
|
All other investing activities
|
|
|
|
||||||
Purchases of investment securities
|
$
|
(5,775
|
)
|
$
|
(2,867
|
)
|
$
|
(18,588
|
)
|
Dispositions and maturities of investment securities
|
8,309
|
|
10,001
|
|
7,343
|
|
|||
Decrease (increase) in other assets - investments
|
(4,516
|
)
|
(8,497
|
)
|
8,853
|
|
|||
Other(b)
|
2,464
|
|
4,375
|
|
3,690
|
|
|||
|
$
|
482
|
|
$
|
3,013
|
|
$
|
1,297
|
|
Repayments and other reductions (maturities longer than 90 days)
|
|
|
|
||||||
Short-term (91 to 365 days)
|
$
|
(14,251
|
)
|
$
|
(18,591
|
)
|
$
|
(44,519
|
)
|
Long-term (longer than one year)
|
(5,460
|
)
|
(2,054
|
)
|
(13,418
|
)
|
|||
Principal payments - non-recourse, leveraged leases
|
(125
|
)
|
(362
|
)
|
(348
|
)
|
|||
|
$
|
(19,836
|
)
|
$
|
(21,007
|
)
|
$
|
(58,285
|
)
|
All other financing activities
|
|
|
|
||||||
Proceeds from sales of investment contracts
|
$
|
5
|
|
$
|
10
|
|
$
|
19
|
|
Redemption of investment contracts
|
(268
|
)
|
(344
|
)
|
(346
|
)
|
|||
Other
|
(2,145
|
)
|
54
|
|
(2,134
|
)
|
|||
|
$
|
(2,408
|
)
|
$
|
(280
|
)
|
$
|
(2,460
|
)
|
(a)
|
Primarily included non-cash adjustments for insurance-related charges recorded in the fourth quarter of 2017.
|
(b)
|
Primarily included net activity related to settlements between our continuing operations (primarily our treasury operations) and businesses in discontinued operations.
|
•
|
GE Capital dividends to GE,
|
•
|
GE Capital working capital services to GE, including trade receivables and supply chain finance programs
,
|
•
|
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.
|
•
|
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.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
Cash from (used for) operating activities-continuing operations
|
|
|
|
||||||
Combined
|
$
|
3,839
|
|
$
|
13,408
|
|
$
|
29,753
|
|
GE current receivables sold to GE Capital(a)
|
198
|
|
(2,611
|
)
|
697
|
|
|||
GE long-term receivables sold to GE Capital
|
1,079
|
|
(250
|
)
|
(1,569
|
)
|
|||
GE Capital common dividends to GE
|
—
|
|
(4,016
|
)
|
(20,095
|
)
|
|||
Other reclassifications and eliminations(b)
|
(455
|
)
|
470
|
|
(1,282
|
)
|
|||
Total cash from (used for) operating activities-continuing operations
|
$
|
4,662
|
|
$
|
7,000
|
|
$
|
7,503
|
|
Cash from (used for) investing activities-continuing operations
|
|
|
|
||||||
Combined
|
$
|
14,054
|
|
$
|
(49
|
)
|
$
|
58,087
|
|
GE current receivables sold to GE Capital(a)
|
(1,149
|
)
|
2,538
|
|
(170
|
)
|
|||
GE long-term receivables sold to GE Capital
|
(1,079
|
)
|
250
|
|
1,569
|
|
|||
GE Capital long-term loans to GE
|
5,999
|
|
7,271
|
|
—
|
|
|||
GE Capital short-term loans to GE
|
480
|
|
(1,329
|
)
|
1,329
|
|
|||
Other reclassifications and eliminations(b)
|
(252
|
)
|
(335
|
)
|
1,751
|
|
|||
Total cash from (used for) investing activities-continuing operations
|
$
|
18,052
|
|
$
|
8,348
|
|
$
|
62,566
|
|
Cash from (used for) financing activities-continuing operations
|
|
|
|
||||||
Combined
|
$
|
(26,212
|
)
|
$
|
(19,065
|
)
|
$
|
(109,024
|
)
|
GE current receivables sold to GE Capital
|
952
|
|
72
|
|
(527
|
)
|
|||
GE Capital common dividends to GE
|
—
|
|
4,016
|
|
20,095
|
|
|||
GE Capital long-term loans to GE
|
(5,999
|
)
|
(7,271
|
)
|
—
|
|
|||
GE Capital short-term loans to GE
|
(480
|
)
|
1,329
|
|
(1,329
|
)
|
|||
Other reclassifications and eliminations(b)
|
706
|
|
(135
|
)
|
(468
|
)
|
|||
Total cash from (used for) financing activities-continuing operations
|
$
|
(31,033
|
)
|
$
|
(21,055
|
)
|
$
|
(91,253
|
)
|
(a)
|
Excludes
$5,192
million
,
$4,411
million
and
zero
related to cash payments received on the Receivable facility DPP in the years ended December 31, 2018, 2017 and 2016, respectively, which are reflected as Cash from investing activities in the GE Capital and the consolidated GE Company columns of our Statement of Cash Flows. Sales of current receivables from GE to GE Capital are classified as Cash from operating activities in the GE column of our Statement of Cash flows. See Note 1 and Note 4.
|
(b)
|
Includes eliminations of other cash flows activities, including financing of supply chain finance programs of
$(318) million
,
$122 million
and
$(586) million
in the years ended December 31, 2018, 2017 and 2016, respectively, and various investments, loans and allocations of GE corporate overhead costs.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Total revenues(a)
|
|
Intersegment revenues(b)
|
|
External revenues
|
||||||||||||||||||||||||
REVENUES
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Power
|
$
|
27,300
|
|
$
|
34,878
|
|
$
|
35,835
|
|
|
$
|
1,795
|
|
$
|
1,385
|
|
$
|
1,325
|
|
|
$
|
25,505
|
|
$
|
33,493
|
|
$
|
34,510
|
|
Renewable Energy
|
9,533
|
|
9,205
|
|
9,752
|
|
|
25
|
|
70
|
|
11
|
|
|
9,508
|
|
9,135
|
|
9,740
|
|
|||||||||
Aviation
|
30,566
|
|
27,013
|
|
26,240
|
|
|
448
|
|
573
|
|
718
|
|
|
30,119
|
|
26,440
|
|
25,522
|
|
|||||||||
Oil & Gas
|
22,859
|
|
17,180
|
|
12,938
|
|
|
363
|
|
646
|
|
382
|
|
|
22,496
|
|
16,535
|
|
12,556
|
|
|||||||||
Healthcare
|
19,784
|
|
19,017
|
|
18,212
|
|
|
20
|
|
15
|
|
12
|
|
|
19,765
|
|
19,002
|
|
18,201
|
|
|||||||||
Transportation
|
3,898
|
|
3,935
|
|
4,585
|
|
|
25
|
|
10
|
|
—
|
|
|
3,873
|
|
3,925
|
|
4,585
|
|
|||||||||
Lighting(c)
|
1,723
|
|
1,941
|
|
4,762
|
|
|
2
|
|
28
|
|
19
|
|
|
1,721
|
|
1,913
|
|
4,743
|
|
|||||||||
Total industrial segment revenues
|
115,664
|
|
113,168
|
|
112,324
|
|
|
2,678
|
|
2,725
|
|
2,467
|
|
|
112,986
|
|
110,443
|
|
109,857
|
|
|||||||||
Capital
|
9,551
|
|
9,070
|
|
10,905
|
|
|
1,384
|
|
1,620
|
|
1,288
|
|
|
8,166
|
|
7,451
|
|
9,617
|
|
|||||||||
Corporate items
and eliminations
|
(3,600
|
)
|
(3,995
|
)
|
(3,760
|
)
|
|
(4,062
|
)
|
(4,345
|
)
|
(3,755
|
)
|
|
463
|
|
350
|
|
(5
|
)
|
|||||||||
Total
|
$
|
121,615
|
|
$
|
118,243
|
|
$
|
119,469
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
121,615
|
|
$
|
118,243
|
|
$
|
119,469
|
|
(a)
|
Revenues of GE businesses include income from sales of goods and services to customers.
|
(b)
|
Sales from one component to another generally are priced at equivalent commercial selling prices.
|
(c)
|
Lighting segment included Appliances through its disposition in the second quarter of 2016.
|
(a)
|
Lighting segment included Appliances through its disposition in the second quarter of 2016.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Assets(a)
|
|
Property, plant and
equipment additions(b) |
|
Depreciation and amortization(c)
|
||||||||||||||||||||||||
|
At December 31
|
|
For the years ended December 31
|
|
For the years ended December 31
|
||||||||||||||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Power
|
$
|
33,809
|
|
$
|
66,552
|
|
$
|
68,165
|
|
|
$
|
378
|
|
$
|
1,072
|
|
$
|
963
|
|
|
$
|
1,474
|
|
$
|
1,358
|
|
$
|
1,549
|
|
Renewable Energy
|
10,974
|
|
10,467
|
|
7,812
|
|
|
285
|
|
624
|
|
166
|
|
|
309
|
|
255
|
|
183
|
|
|||||||||
Aviation
|
38,021
|
|
37,473
|
|
35,614
|
|
|
1,070
|
|
1,426
|
|
1,328
|
|
|
1,042
|
|
979
|
|
811
|
|
|||||||||
Oil & Gas
|
54,300
|
|
59,072
|
|
24,426
|
|
|
624
|
|
5,469
|
|
284
|
|
|
1,486
|
|
1,100
|
|
548
|
|
|||||||||
Healthcare
|
28,048
|
|
28,408
|
|
28,331
|
|
|
378
|
|
393
|
|
432
|
|
|
832
|
|
806
|
|
785
|
|
|||||||||
Transportation
|
4,270
|
|
3,757
|
|
3,746
|
|
|
104
|
|
128
|
|
108
|
|
|
156
|
|
136
|
|
170
|
|
|||||||||
Lighting(d)
|
699
|
|
619
|
|
1,570
|
|
|
17
|
|
34
|
|
160
|
|
|
1
|
|
86
|
|
173
|
|
|||||||||
Capital(e)
|
123,939
|
|
156,716
|
|
182,970
|
|
|
4,569
|
|
3,680
|
|
3,769
|
|
|
2,163
|
|
2,343
|
|
2,514
|
|
|||||||||
Corporate items
and eliminations(f)
|
15,068
|
|
6,182
|
|
6,488
|
|
|
(65
|
)
|
(100
|
)
|
94
|
|
|
760
|
|
367
|
|
340
|
|
|||||||||
Total
|
$
|
309,129
|
|
$
|
369,245
|
|
$
|
359,122
|
|
|
$
|
7,360
|
|
$
|
12,728
|
|
$
|
7,305
|
|
|
$
|
8,223
|
|
$
|
7,429
|
|
$
|
7,073
|
|
(a)
|
Total assets of Power, Renewable Energy, Aviation, Oil & Gas, Healthcare, Transportation and Capital operating segments at December 31, 2018, include investments in and advances to associated companies of
$1,140 million
,
$46 million
,
$2,013 million
,
$133 million
,
$271 million
,
$59 million
and
$3,029 million
, respectively. Lighting held an insignificant balance as of
December 31, 2018
. Investments in and advances to associated companies contributed approximately
$(1) million
,
$3 million
,
$126 million
,
$(136) million
,
$16 million
,
$4 million
,
$(2) million
and
$185 million
to segment pre-tax income for the year ended December 31, 2018 of Power, Renewable Energy, Aviation, Oil & Gas, Healthcare, Transportation, Lighting and Capital operating segments, respectively.
|
(b)
|
Additions to property, plant and equipment include amounts relating to principal businesses purchased.
|
(c)
|
Includes amortization expense related to intangible assets.
|
(d)
|
Lighting segment included Appliances through its disposition in the second quarter of 2016.
|
(e)
|
Includes Capital discontinued operations.
|
(f)
|
Includes deferred income taxes that are presented as assets for purposes of our consolidating balance sheet presentation.
|
|
Interest and other financial charges
|
|
Benefit (provision) for income taxes
|
||||||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Capital
|
$
|
2,982
|
|
$
|
3,145
|
|
$
|
3,790
|
|
|
$
|
374
|
|
$
|
6,302
|
|
$
|
1,431
|
|
Corporate items and eliminations(a)
|
2,077
|
|
1,724
|
|
1,234
|
|
|
(957
|
)
|
(3,691
|
)
|
(298
|
)
|
||||||
Total
|
$
|
5,059
|
|
$
|
4,869
|
|
$
|
5,025
|
|
|
$
|
(583
|
)
|
$
|
2,611
|
|
$
|
1,133
|
|
(a)
|
Included amounts for Power, Renewable Energy, Aviation, Oil & Gas, Healthcare, Transportation and Lighting, for which our measure of segment profit excludes interest and other financial charges and income taxes.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
GE funded
|
Customer funded(c)
|
Partner funded
|
Total R&D
|
||||||||||||||||||||||||||||||||
(In millions)
|
2018
|
2017
|
2016
|
2018
|
2017
|
2016
|
2018
|
2017
|
2016
|
2018
|
2017
|
2016
|
||||||||||||||||||||||||
Aviation
|
$
|
950
|
|
$
|
907
|
|
$
|
1,092
|
|
$
|
564
|
|
$
|
586
|
|
$
|
498
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,514
|
|
$
|
1,492
|
|
$
|
1,591
|
|
Healthcare
|
968
|
|
908
|
|
869
|
|
23
|
|
26
|
|
32
|
|
—
|
|
—
|
|
—
|
|
991
|
|
934
|
|
901
|
|
||||||||||||
Power
|
579
|
|
885
|
|
949
|
|
5
|
|
18
|
|
4
|
|
2
|
|
17
|
|
45
|
|
586
|
|
920
|
|
998
|
|
||||||||||||
Oil & Gas
|
624
|
|
450
|
|
287
|
|
22
|
|
9
|
|
—
|
|
55
|
|
42
|
|
28
|
|
700
|
|
501
|
|
315
|
|
||||||||||||
Renewable Energy
|
311
|
|
299
|
|
213
|
|
11
|
|
3
|
|
7
|
|
—
|
|
—
|
|
—
|
|
323
|
|
302
|
|
220
|
|
||||||||||||
Corporate(a)
|
547
|
|
1,124
|
|
1,092
|
|
48
|
|
65
|
|
83
|
|
—
|
|
—
|
|
—
|
|
595
|
|
1,189
|
|
1,175
|
|
||||||||||||
All Other(b)
|
155
|
|
165
|
|
235
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
155
|
|
165
|
|
235
|
|
||||||||||||
Total
|
$
|
4,134
|
|
$
|
4,738
|
|
$
|
4,737
|
|
$
|
671
|
|
$
|
707
|
|
$
|
625
|
|
$
|
57
|
|
$
|
59
|
|
$
|
73
|
|
$
|
4,862
|
|
$
|
5,504
|
|
$
|
5,436
|
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
||||||
GE
|
$
|
1,850
|
|
$
|
1,699
|
|
$
|
1,576
|
|
GE Capital
|
107
|
|
105
|
|
91
|
|
|||
|
1,958
|
|
1,804
|
|
1,668
|
|
|||
Eliminations
|
(110
|
)
|
(143
|
)
|
(126
|
)
|
|||
Total
|
$
|
1,848
|
|
$
|
1,661
|
|
$
|
1,542
|
|
(In millions)
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
|||||
|
|
|
|
|
|
||||||||||
GE
|
$
|
1,162
|
|
$
|
1,010
|
|
$
|
844
|
|
$
|
707
|
|
$
|
579
|
|
GE Capital
|
29
|
|
27
|
|
27
|
|
59
|
|
56
|
|
|||||
|
1,191
|
|
1,037
|
|
871
|
|
766
|
|
635
|
|
|||||
Eliminations
|
(103
|
)
|
(99
|
)
|
(95
|
)
|
(85
|
)
|
(70
|
)
|
|||||
Total
|
$
|
1,088
|
|
$
|
938
|
|
$
|
776
|
|
$
|
681
|
|
$
|
565
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
•
|
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 that issued the guaranteed notes 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.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||
FOR THE YEAR ENDED DECEMBER 31, 2018
|
||||||||||||||||||
|
||||||||||||||||||
(in millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Revenues
|
|
|
|
|
|
|
||||||||||||
Sales of goods and services
|
$
|
34,972
|
|
$
|
—
|
|
$
|
—
|
|
$
|
164,691
|
|
$
|
(86,119
|
)
|
$
|
113,543
|
|
GE Capital revenues from services
|
—
|
|
917
|
|
1,038
|
|
9,531
|
|
(3,414
|
)
|
8,072
|
|
||||||
Total revenues and other income
|
34,972
|
|
917
|
|
1,038
|
|
174,222
|
|
(89,533
|
)
|
121,615
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Costs and expenses
|
|
|
|
|
|
|
||||||||||||
Interest and other financial charges
|
6,939
|
|
911
|
|
2,560
|
|
5,238
|
|
(10,589
|
)
|
5,059
|
|
||||||
Other costs and expenses
|
42,233
|
|
—
|
|
1
|
|
183,511
|
|
(86,795
|
)
|
138,950
|
|
||||||
Total costs and expenses
|
49,171
|
|
911
|
|
2,561
|
|
188,748
|
|
(97,384
|
)
|
144,008
|
|
||||||
Other income
|
7,640
|
|
—
|
|
—
|
|
29,269
|
|
(34,650
|
)
|
2,259
|
|
||||||
Equity in earnings (loss) of affiliates
|
(15,162
|
)
|
—
|
|
1,554
|
|
240,036
|
|
(226,428
|
)
|
—
|
|
||||||
Earnings (loss) from continuing
operations before income taxes
|
(21,721
|
)
|
6
|
|
31
|
|
254,778
|
|
(253,228
|
)
|
(20,134
|
)
|
||||||
Benefit (provision) for income taxes
|
1,092
|
|
5
|
|
—
|
|
(2,381
|
)
|
701
|
|
(583
|
)
|
||||||
Earnings (loss) from continuing operations
|
(20,629
|
)
|
11
|
|
31
|
|
252,397
|
|
(252,527
|
)
|
(20,717
|
)
|
||||||
Earnings (loss) from discontinued
operations, net of taxes
|
(1,726
|
)
|
—
|
|
(39
|
)
|
—
|
|
39
|
|
(1,726
|
)
|
||||||
Net earnings (loss)
|
(22,355
|
)
|
11
|
|
(8
|
)
|
252,396
|
|
(252,488
|
)
|
(22,443
|
)
|
||||||
Less net earnings (loss) attributable to
noncontrolling interests
|
—
|
|
—
|
|
—
|
|
(204
|
)
|
116
|
|
(89
|
)
|
||||||
Net earnings (loss) attributable to
the Company
|
(22,355
|
)
|
11
|
|
(8
|
)
|
252,601
|
|
(252,604
|
)
|
(22,355
|
)
|
||||||
Other comprehensive income
|
(10
|
)
|
—
|
|
(82
|
)
|
(2,917
|
)
|
2,999
|
|
(10
|
)
|
||||||
Comprehensive income (loss) attributable
to the Company
|
$
|
(22,364
|
)
|
$
|
11
|
|
$
|
(90
|
)
|
$
|
249,683
|
|
$
|
(249,604
|
)
|
$
|
(22,364
|
)
|
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||
FOR THE YEAR ENDED DECEMBER 31, 2017
|
||||||||||||||||||
|
||||||||||||||||||
(in millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Revenues
|
|
|
|
|
|
|
||||||||||||
Sales of goods and services
|
$
|
35,551
|
|
$
|
—
|
|
$
|
—
|
|
$
|
161,158
|
|
$
|
(85,742
|
)
|
$
|
110,968
|
|
GE Capital revenues from services
|
—
|
|
703
|
|
800
|
|
9,888
|
|
(4,115
|
)
|
7,276
|
|
||||||
Total revenues and other income
|
35,551
|
|
703
|
|
800
|
|
171,046
|
|
(89,857
|
)
|
118,243
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Costs and expenses
|
|
|
|
|
|
|
||||||||||||
Interest and other financial charges
|
4,396
|
|
652
|
|
2,006
|
|
4,928
|
|
(7,112
|
)
|
4,869
|
|
||||||
Other costs and expenses
|
36,263
|
|
—
|
|
18
|
|
175,676
|
|
(85,306
|
)
|
126,651
|
|
||||||
Total costs and expenses
|
40,659
|
|
653
|
|
2,023
|
|
180,604
|
|
(92,418
|
)
|
131,520
|
|
||||||
Other income
|
3,769
|
|
—
|
|
—
|
|
76,453
|
|
(78,096
|
)
|
2,126
|
|
||||||
Equity in earnings (loss) of affiliates
|
(3,985
|
)
|
—
|
|
1,938
|
|
109,525
|
|
(107,477
|
)
|
—
|
|
||||||
Earnings (loss) from continuing
operations before income taxes
|
(5,324
|
)
|
50
|
|
714
|
|
176,420
|
|
(183,012
|
)
|
(11,151
|
)
|
||||||
Benefit (provision) for income taxes
|
(2,842
|
)
|
(5
|
)
|
115
|
|
5,926
|
|
(583
|
)
|
2,611
|
|
||||||
Earnings (loss) from continuing operations
|
(8,166
|
)
|
45
|
|
829
|
|
182,346
|
|
(183,595
|
)
|
(8,540
|
)
|
||||||
Earnings (loss) from discontinued
operations, net of taxes
|
(319
|
)
|
—
|
|
41
|
|
4
|
|
(35
|
)
|
(309
|
)
|
||||||
Net earnings (loss)
|
(8,484
|
)
|
45
|
|
870
|
|
182,350
|
|
(183,629
|
)
|
(8,849
|
)
|
||||||
Less net earnings (loss) attributable to
noncontrolling interests
|
—
|
|
—
|
|
—
|
|
(137
|
)
|
(228
|
)
|
(365
|
)
|
||||||
Net earnings (loss) attributable to
the Company
|
(8,484
|
)
|
45
|
|
870
|
|
182,487
|
|
(183,402
|
)
|
(8,484
|
)
|
||||||
Other comprehensive income
|
4,184
|
|
—
|
|
567
|
|
(7,474
|
)
|
6,908
|
|
4,184
|
|
||||||
Comprehensive income (loss) attributable
to the Company
|
$
|
(4,300
|
)
|
$
|
45
|
|
$
|
1,436
|
|
$
|
175,013
|
|
$
|
(176,494
|
)
|
$
|
(4,300
|
)
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||
FOR THE YEAR ENDED DECEMBER 31, 2016
|
||||||||||||||||||
|
||||||||||||||||||
(in millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Revenues
|
|
|
|
|
|
|
||||||||||||
Sales of goods and services
|
$
|
40,315
|
|
$
|
—
|
|
$
|
—
|
|
$
|
152,047
|
|
$
|
(82,191
|
)
|
$
|
110,171
|
|
GE Capital revenues from services
|
—
|
|
897
|
|
1,419
|
|
12,994
|
|
(6,012
|
)
|
9,297
|
|
||||||
Total revenues and other income
|
40,315
|
|
897
|
|
1,419
|
|
165,041
|
|
(88,203
|
)
|
119,469
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Costs and expenses
|
|
|
|
|
|
|
||||||||||||
Interest and other financial charges
|
3,505
|
|
831
|
|
2,567
|
|
5,429
|
|
(7,308
|
)
|
5,025
|
|
||||||
Other costs and expenses
|
42,047
|
|
—
|
|
143
|
|
168,259
|
|
(98,897
|
)
|
111,553
|
|
||||||
Total costs and expenses
|
45,552
|
|
831
|
|
2,711
|
|
173,688
|
|
(106,205
|
)
|
116,577
|
|
||||||
Other income
|
10,949
|
|
—
|
|
—
|
|
63,363
|
|
(70,172
|
)
|
4,140
|
|
||||||
Equity in earnings (loss) of affiliates
|
115
|
|
—
|
|
1,542
|
|
116,897
|
|
(118,554
|
)
|
—
|
|
||||||
Earnings (loss) from continuing
operations before income taxes
|
5,826
|
|
66
|
|
250
|
|
171,613
|
|
(170,724
|
)
|
7,031
|
|
||||||
Benefit (provision) for income taxes
|
2,565
|
|
(10
|
)
|
(105
|
)
|
(1,906
|
)
|
589
|
|
1,133
|
|
||||||
Earnings (loss) from continuing operations
|
8,392
|
|
56
|
|
145
|
|
169,707
|
|
(170,135
|
)
|
8,165
|
|
||||||
Earnings (loss) from discontinued
operations, net of taxes
|
(891
|
)
|
—
|
|
(1,927
|
)
|
351
|
|
1,514
|
|
(954
|
)
|
||||||
Net earnings (loss)
|
7,500
|
|
56
|
|
(1,782
|
)
|
170,058
|
|
(168,621
|
)
|
7,211
|
|
||||||
Less net earnings (loss) attributable to
noncontrolling interests
|
—
|
|
—
|
|
—
|
|
(149
|
)
|
(141
|
)
|
(289
|
)
|
||||||
Net earnings (loss) attributable to
the Company
|
7,500
|
|
56
|
|
(1,782
|
)
|
170,207
|
|
(168,480
|
)
|
7,500
|
|
||||||
Other comprehensive income
|
(2,056
|
)
|
(12
|
)
|
1,126
|
|
(3,393
|
)
|
2,279
|
|
(2,056
|
)
|
||||||
Comprehensive income (loss) attributable
to the Company
|
$
|
5,444
|
|
$
|
44
|
|
$
|
(657
|
)
|
$
|
166,814
|
|
$
|
(166,201
|
)
|
$
|
5,444
|
|
CONDENSED CONSOLIDATING STATEMENT OF FINANCIAL POSITION
|
||||||||||||||||||
DECEMBER 31, 2018
|
||||||||||||||||||
|
||||||||||||||||||
(In millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
|
|
||||||||||||
Cash, cash equivalents and restricted cash
|
$
|
9,561
|
|
$
|
—
|
|
$
|
—
|
|
$
|
25,975
|
|
$
|
(516
|
)
|
$
|
35,020
|
|
Receivables - net
|
28,426
|
|
17,467
|
|
2,792
|
|
69,268
|
|
(84,161
|
)
|
33,791
|
|
||||||
Investment in subsidiaries(a)
|
215,434
|
|
—
|
|
45,832
|
|
733,535
|
|
(994,801
|
)
|
—
|
|
||||||
All other assets
|
29,612
|
|
12
|
|
—
|
|
359,066
|
|
(148,372
|
)
|
240,318
|
|
||||||
Total assets
|
$
|
283,033
|
|
$
|
17,479
|
|
$
|
48,623
|
|
$
|
1,187,844
|
|
$
|
(1,227,850
|
)
|
$
|
309,129
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities and equity
|
|
|
|
|
|
|
||||||||||||
Short-term borrowings
|
$
|
150,426
|
|
$
|
—
|
|
$
|
9,854
|
|
$
|
9,649
|
|
$
|
(157,080
|
)
|
$
|
12,849
|
|
Long-term and non-recourse borrowings
|
59,800
|
|
16,115
|
|
24,341
|
|
41,066
|
|
(44,213
|
)
|
97,109
|
|
||||||
All other liabilities
|
41,826
|
|
336
|
|
245
|
|
152,889
|
|
(47,987
|
)
|
147,308
|
|
||||||
Total Liabilities
|
252,052
|
|
16,452
|
|
34,439
|
|
203,604
|
|
(249,281
|
)
|
257,266
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total liabilities, redeemable
noncontrolling interests and equity
|
$
|
283,033
|
|
$
|
17,479
|
|
$
|
48,623
|
|
$
|
1,187,844
|
|
$
|
(1,227,850
|
)
|
$
|
309,129
|
|
(a)
|
Included within the subsidiaries of the Subsidiary Guarantor are cash and cash equivalent balances of
$6,892 million
and net assets of discontinued operations of
$3,482 million
.
|
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
|
|
Receivables - net
|
50,923
|
|
17,316
|
|
32,381
|
|
87,776
|
|
(147,551
|
)
|
40,846
|
|
||||||
Investment in subsidiaries(a)
|
277,929
|
|
—
|
|
77,488
|
|
715,936
|
|
(1,071,353
|
)
|
—
|
|
||||||
All other assets
|
49,147
|
|
16
|
|
32
|
|
437,537
|
|
(202,301
|
)
|
284,431
|
|
||||||
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
|
|
Long-term and non-recourse borrowings
|
71,023
|
|
16,632
|
|
34,730
|
|
55,367
|
|
(67,197
|
)
|
110,556
|
|
||||||
All other liabilities
|
62,612
|
|
484
|
|
131
|
|
172,020
|
|
(77,483
|
)
|
157,764
|
|
||||||
Total Liabilities
|
325,442
|
|
17,116
|
|
80,894
|
|
249,991
|
|
(381,088
|
)
|
292,355
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
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
.
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
|
||||||||||||||||||
FOR THE YEAR ENDED DECEMBER 31, 2018
|
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||
(In millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Cash from (used for) operating activities(a)
|
$
|
42,999
|
|
$
|
(387
|
)
|
$
|
34,361
|
|
$
|
294,372
|
|
$
|
(367,099
|
)
|
$
|
4,246
|
|
|
|
|
|
|
|
|
||||||||||||
Cash from (used for) investing activities
|
1,430
|
|
457
|
|
27,415
|
|
(259,216
|
)
|
248,152
|
|
18,239
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Cash from (used for) financing activities
|
(38,340
|
)
|
(70
|
)
|
(61,779
|
)
|
(50,018
|
)
|
119,175
|
|
(31,033
|
)
|
||||||
Effect of currency exchange rate changes
on cash, cash equivalents and restricted cash
|
—
|
|
—
|
|
—
|
|
(628
|
)
|
—
|
|
(628
|
)
|
||||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
6,089
|
|
—
|
|
(3
|
)
|
(15,490
|
)
|
228
|
|
(9,176
|
)
|
||||||
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 end of year
|
9,561
|
|
—
|
|
—
|
|
26,503
|
|
(516
|
)
|
35,548
|
|
||||||
Less cash, cash equivalents and restricted cash of discontinued operations at end of year
|
—
|
|
—
|
|
—
|
|
528
|
|
—
|
|
528
|
|
||||||
Cash, cash equivalents and restricted cash of continuing operations at end of year
|
$
|
9,561
|
|
$
|
—
|
|
$
|
—
|
|
$
|
25,975
|
|
$
|
(516
|
)
|
$
|
35,020
|
|
(a)
|
Parent Company Guarantor cash flows included cash from (used for) operating activities of discontinued operations of
$(1,726) million
.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
|
||||||||||||||||||
FOR THE YEAR ENDED DECEMBER 31, 2017
|
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||
(In millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Cash from (used for) operating activities(a)
|
$
|
(29,470
|
)
|
$
|
52
|
|
$
|
4,305
|
|
$
|
248,524
|
|
$
|
(217,379
|
)
|
$
|
6,032
|
|
|
|
|
|
|
|
|
||||||||||||
Cash from (used for) investing activities
|
(4,251
|
)
|
(52
|
)
|
(1,871
|
)
|
(326,789
|
)
|
339,527
|
|
6,564
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Cash from (used for) financing activities
|
34,465
|
|
—
|
|
(2,473
|
)
|
70,163
|
|
(121,302
|
)
|
(19,146
|
)
|
||||||
Effect of currency exchange rate changes
on cash, cash equivalents and restricted cash
|
—
|
|
—
|
|
—
|
|
891
|
|
—
|
|
891
|
|
||||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
743
|
|
—
|
|
(39
|
)
|
(7,211
|
)
|
846
|
|
(5,660
|
)
|
||||||
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 end of year
|
3,472
|
|
—
|
|
3
|
|
41,993
|
|
(743
|
)
|
44,724
|
|
||||||
Less cash, cash equivalents and restricted cash of discontinued operations at end of year
|
—
|
|
—
|
|
—
|
|
757
|
|
—
|
|
757
|
|
||||||
Cash, cash equivalents and restricted cash of continuing operations at end of year
|
$
|
3,472
|
|
$
|
—
|
|
$
|
3
|
|
$
|
41,236
|
|
$
|
(743
|
)
|
$
|
43,967
|
|
(a)
|
Parent Company Guarantor cash flows included cash from (used for) operating activities of discontinued operations of
$(319) million
.
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
|
||||||||||||||||||
FOR THE YEAR ENDED DECEMBER 31, 2016
|
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||
(In millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Cash from (used for) operating activities(a)
|
$
|
(5,344
|
)
|
$
|
(10
|
)
|
$
|
(387
|
)
|
$
|
229,968
|
|
$
|
(223,067
|
)
|
$
|
1,160
|
|
|
|
|
|
|
|
|
||||||||||||
Cash from (used for) investing activities
|
13,708
|
|
16,384
|
|
35,443
|
|
(11,842
|
)
|
(4,557
|
)
|
49,135
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Cash from (used for) financing activities
|
(9,879
|
)
|
(16,374
|
)
|
(35,388
|
)
|
(275,647
|
)
|
246,825
|
|
(90,464
|
)
|
||||||
Effect of currency exchange rate changes
on cash, cash equivalents and restricted cash
|
—
|
|
—
|
|
—
|
|
(1,146
|
)
|
—
|
|
(1,146
|
)
|
||||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
(1,516
|
)
|
—
|
|
(332
|
)
|
(58,667
|
)
|
19,201
|
|
(41,315
|
)
|
||||||
Cash, cash equivalents and restricted cash at beginning of year
|
4,244
|
|
—
|
|
374
|
|
107,871
|
|
(20,791
|
)
|
91,698
|
|
||||||
Cash, cash equivalents and restricted cash at end of year
|
2,729
|
|
—
|
|
41
|
|
49,204
|
|
(1,590
|
)
|
50,384
|
|
||||||
Less cash, cash equivalents and restricted cash of discontinued operations at end of year
|
—
|
|
—
|
|
—
|
|
1,601
|
|
—
|
|
1,601
|
|
||||||
Cash, cash equivalents and restricted cash of continuing operations at end of year
|
$
|
2,729
|
|
$
|
—
|
|
$
|
41
|
|
$
|
47,603
|
|
$
|
(1,590
|
)
|
$
|
48,783
|
|
(a)
|
Parent Company Guarantor cash flows included cash from (used for) operating activities of discontinued operations of
$(891) million
.
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
First quarter
|
|
Second quarter
|
|
Third quarter
|
|
Fourth quarter
|
||||||||||||||||||||
(In millions; per-share amounts in dollars)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Consolidated operations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Earnings (loss) from continuing operations
|
$
|
440
|
|
$
|
52
|
|
|
$
|
789
|
|
$
|
1,164
|
|
|
$
|
(22,899
|
)
|
$
|
1,297
|
|
|
$
|
952
|
|
$
|
(11,053
|
)
|
Earnings (loss) from discontinued
operations
|
(1,553
|
)
|
(239
|
)
|
|
(121
|
)
|
(146
|
)
|
|
39
|
|
(106
|
)
|
|
(92
|
)
|
182
|
|
||||||||
Net earnings (loss)
|
(1,113
|
)
|
(187
|
)
|
|
669
|
|
1,019
|
|
|
(22,859
|
)
|
1,191
|
|
|
860
|
|
(10,872
|
)
|
||||||||
Less net earnings (loss) attributable to
noncontrolling interests
|
34
|
|
(104
|
)
|
|
(132
|
)
|
(38
|
)
|
|
(90
|
)
|
(169
|
)
|
|
99
|
|
(53
|
)
|
||||||||
Net earnings (loss) attributable to
the Company
|
$
|
(1,147
|
)
|
$
|
(83
|
)
|
|
$
|
800
|
|
$
|
1,057
|
|
|
$
|
(22,769
|
)
|
$
|
1,360
|
|
|
$
|
761
|
|
$
|
(10,818
|
)
|
Per-share amounts – earnings (loss) from
continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Diluted earnings (loss) per share
|
$
|
0.04
|
|
$
|
0.01
|
|
|
$
|
0.08
|
|
$
|
0.12
|
|
|
$
|
(2.63
|
)
|
$
|
0.16
|
|
|
$
|
0.08
|
|
$
|
(1.29
|
)
|
Basic earnings (loss) per share
|
0.04
|
|
0.01
|
|
|
0.08
|
|
0.12
|
|
|
(2.63
|
)
|
0.16
|
|
|
0.08
|
|
(1.29
|
)
|
||||||||
Per-share amounts – earnings (loss)
from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Diluted earnings (loss) per share
|
(0.18
|
)
|
(0.03
|
)
|
|
(0.01
|
)
|
(0.02
|
)
|
|
—
|
|
(0.01
|
)
|
|
(0.01
|
)
|
0.02
|
|
||||||||
Basic earnings (loss) per share
|
(0.18
|
)
|
(0.03
|
)
|
|
(0.01
|
)
|
(0.02
|
)
|
|
—
|
|
(0.01
|
)
|
|
(0.01
|
)
|
0.02
|
|
||||||||
Per-share amounts – net earnings (loss)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Diluted earnings (loss) per share
|
(0.14
|
)
|
(0.01
|
)
|
|
0.07
|
|
0.10
|
|
|
(2.62
|
)
|
0.15
|
|
|
0.07
|
|
(1.27
|
)
|
||||||||
Basic earnings (loss) per share
|
(0.14
|
)
|
(0.01
|
)
|
|
0.07
|
|
0.10
|
|
|
(2.62
|
)
|
0.15
|
|
|
0.07
|
|
(1.27
|
)
|
||||||||
Dividends declared
|
0.12
|
|
0.24
|
|
|
0.12
|
|
0.24
|
|
|
0.12
|
|
0.24
|
|
|
0.01
|
|
0.12
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Selected data
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
GE
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Sales of goods and services
|
$
|
26,894
|
|
$
|
24,780
|
|
|
$
|
28,079
|
|
$
|
27,129
|
|
|
$
|
27,456
|
|
$
|
28,774
|
|
|
$
|
31,213
|
|
$
|
30,571
|
|
Gross profit from sales
|
5,867
|
|
4,936
|
|
|
6,202
|
|
5,971
|
|
|
5,107
|
|
5,676
|
|
|
5,738
|
|
5,671
|
|
||||||||
GE Capital
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total revenues
|
2,173
|
|
2,681
|
|
|
2,429
|
|
2,446
|
|
|
2,473
|
|
2,397
|
|
|
2,476
|
|
1,545
|
|
||||||||
Earnings (loss) from continuing operations
attributable to the Company
|
(179
|
)
|
(13
|
)
|
|
(22
|
)
|
10
|
|
|
58
|
|
60
|
|
|
101
|
|
(6,385
|
)
|
OTHER INFORMATION
|
|
|
|
|
|
|
|
|
Date assumed
|
|
|
|
|
|
|
Executive
|
Name
|
|
Position
|
|
Age
|
|
Officer Position
|
|
|
|
|
|
|
|
H. Lawrence Culp, Jr.
|
|
Chairman of the Board & Chief Executive Officer
|
|
55
|
|
October 2018
|
Jamie S. Miller
|
|
Senior Vice President & Chief Financial Officer
|
|
50
|
|
November 2017
|
Michael J. Holston
|
|
Senior Vice President, General Counsel & Secretary
|
|
56
|
|
April 2018
|
David L. Joyce
|
|
Vice Chairman of General Electric Company;
|
|
62
|
|
September 2016
|
|
|
President & CEO, GE Aviation
|
|
|
|
|
Raghu Krishnamoorthy
|
|
Senior Vice President, Chief Human Resources Officer
|
|
58
|
|
December 2017
|
Kieran P. Murphy
|
|
Senior Vice President of General Electric Company;
|
|
55
|
|
September 2018
|
|
|
President & CEO, GE Healthcare
|
|
|
|
|
Jérôme Pécresse
|
|
Senior Vice President of General Electric Company;
|
|
51
|
|
September 2018
|
|
|
President & CEO, GE Renewable Energy
|
|
|
|
|
Russell Stokes
|
|
Senior Vice President of General Electric Company;
|
|
47
|
|
September 2018
|
|
|
President & CEO, GE Power Portfolio
|
|
|
|
|
Scott Strazik
|
|
Senior Vice President of General Electric Company;
|
|
40
|
|
January 2019
|
|
|
CEO, GE Gas Power
|
|
|
|
|
Thomas S. Timko
|
|
Vice President, Controller & Chief Accounting Officer
|
|
50
|
|
September 2018
|
OTHER INFORMATION
|
|
|
Exhibit
Number |
|
Description
|
|
2(a)
|
|
||
|
|
|
|
2(b)
|
|
||
|
|
|
|
3(i)
|
|
The Restated Certificate of Incorporation of General Electric Company (
Incorporated by reference to Exhibit 3(i) to GE’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013
), as amended by the Certificate of Amendment, dated December 2, 2015 (
Incorporated by reference to Exhibit 3.1 to GE’s Current Report on Form 8-K, dated December 3, 2015
), as further amended by the Certificate of Amendment, dated January 19, 2016 (
Incorporated by reference to Exhibit 3.1 to GE’s Current Report on Form 8-K, dated January 20, 2016
) and as further amended by the Certificate of Change of General Electric Company (
Incorporated by reference to Exhibit 3(1) to GE’s Current Report on Form 8-K, dated September 1, 2016
(in each case, under Commission file number 001-00035).
|
|
|
|||
3(ii)
|
|
||
|
|||
4(a)
|
|
||
|
|||
4(b)
|
|
||
|
|||
4(c)
|
|
||
|
|||
4(d)
|
|
||
|
|||
4(e)
|
|
||
|
|||
4(f)
|
|
||
|
OTHER INFORMATION
|
|
|
4(g)
|
|
||
|
|
|
|
4(h)
|
|
||
|
|
|
|
4(i)
|
|
||
|
|
|
|
4(j)
|
|
||
|
|
|
|
4(k)
|
|
||
|
|||
4(l)
|
|
||
|
|||
(10)
|
|
Except for 10(t), (x) and (cc) below, all of the following exhibits consist of Executive Compensation Plans or Arrangements:
|
|
|
|||
|
|
(a)
|
General Electric Incentive Compensation Plan, as amended effective July 1, 1991 (Incorporated by reference to Exhibit 10(a) to GE’s Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 1991).
|
|
|||
|
|
(b)
|
|
|
|||
|
|
(c)
|
General Electric Supplemental Life Insurance Program, as amended February 8, 1991 (Incorporated by reference to Exhibit 10(i) to GE’s Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 1990).
|
|
|||
|
|
(d)
|
|
|
|||
|
|
(e)
|
|
|
|||
|
|
(f)
|
|
|
|
|
|
|
|
(g)
|
|
|
|||
|
|
(h)
|
|
|
|||
|
|
(i)
|
|
|
|||
|
|
(j)
|
|
|
|||
|
|
(k)
|
|
|
|||
|
|
(l)
|
|
|
OTHER INFORMATION
|
|
|
OTHER INFORMATION
|
|
|
31(b)
|
|
||
|
|||
(32)
|
|
||
|
|||
(95)
|
|
||
|
|
|
|
99(a)
|
|
Undertaking for Inclusion in Registration Statements on Form S-8 of General Electric Company (Incorporated by reference to Exhibit 99(b) to General Electric Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 1992).
|
|
|
|
|
|
99(b)
|
|
||
|
|
|
|
99(c)
|
|
||
|
|
|
|
(101)
|
|
The following materials from General Electric Company's Annual Report on Form 10-K for the year ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language); (i) Statement of Earnings (Loss) for the years ended December 31, 2018, 2017 and 2016, (ii) Consolidated Statement of Comprehensive Income (Loss) for the years ended December 31, 2018, 2017 and 2016, (iii) Statement of Financial Position at December 31, 2018 and 2017, (iv) Statement of Cash Flows for the years ended December 31, 2018, 2017 and 2016, and (v) the Notes to Consolidated Financial Statements.*
|
|
|
|||
*
|
Filed electronically herewith.
|
||
**
|
Information required to be presented in Exhibit 11 is provided in Note 17 to the consolidated financial statements in this Form 10-K Report in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification 260,
Earnings Per Share
.
|
OTHER INFORMATION
|
|
|
(a)
|
Incorporated by reference to “Compensation” in the 2019 Proxy Statement.
|
(b)
|
Incorporated by reference to “Stock Ownership Information” in the 2019 Proxy Statement.
|
(c)
|
Incorporated by reference to “Related Person Transactions” and “How We Assess Director Independence” in the 2019 Proxy Statement.
|
(d)
|
Incorporated by reference to “Independent Auditor Information” in the 2019 Proxy Statement.
|
By
|
/s/ Jamie S. Miller
|
|
Jamie S. Miller
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
Signer
|
|
Title
|
|
Date
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/s/ Jamie S. Miller
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Principal Financial Officer
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February 26, 2019
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Jamie S. Miller
Senior Vice President and
Chief Financial Officer
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/s/ Thomas S. Timko
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Principal Accounting Officer
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February 26, 2019
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Thomas S. Timko
Vice President, Chief Accounting Officer and Controller
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/s/ H. Lawrence Culp, Jr.
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Principal Executive Officer
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February 26, 2019
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H. Lawrence Culp, Jr.*
Chairman of the Board of Directors
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Sébastien M. Bazin*
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Director
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W. Geoffrey Beattie*
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Director
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Francisco D’Souza*
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Director
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Edward P. Garden*
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Director
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Thomas W. Horton*
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Director
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Risa Lavizzo-Mourey*
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Director
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James J. Mulva*
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Director
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Paula Rosput Reynolds*
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Director
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Leslie F. Seidman*
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Director
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James S. Tisch*
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Director
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A majority of the Board of Directors
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*By
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/s/ Christoph A. Pereira
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Christoph A. Pereira
Attorney-in-fact |
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February 26, 2019
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Jennifer B. VanBelle
Vice President and GE Treasurer
General Electric Company
901 Main Avenue
Norwalk, CT 06856
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/s/ Jennifer B. VanBelle
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Jennifer B. VanBelle
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Vice President and GE Treasurer
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Grant Date
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PSUs Granted
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Restriction Lapse Date
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Dec/31/2018
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5,000,000 Granted
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The earlier to occur of (x) September 30, 2022, and (y) a Change in Control (as defined in the Employment Agreement dated as of October 1, 2018 between the Grantee and the Company (the “Employment Agreement”)), subject to the terms and conditions set forth below.
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1.
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Grant of PSUs.
The Management Development and Compensation Committee (“Committee”) of the Board of Directors of General Electric Company (“Company”) has granted Performance Stock Units with Dividend Equivalents (“PSUs”) to the individual named on the front of this Certificate (“Grantee”). The Award is granted to the Grantee in connection with his commencement of employment with the Company and is regarded by the Company and the Grantee as an inducement material to the Grantee being hired by the Company within the meaning of NYSE Listing Rule 303A.08. Each PSU entitles the Grantee to receive from the Company (i) one share of General Electric Company common stock, par value $0.06 per share (“Common Stock”), and (ii) cash payments based on dividends paid to shareholders of such stock, for each PSU for which the restrictions set forth in paragraph 3 (including subparagraph 3.1) lapse in accordance with their terms, each in accordance with the terms of this Grant, the Employment Agreement, the Company’s 2007 Long-Term Incentive Plan (the “Plan”) as in effect from time to time, and any rules and procedures adopted by the Committee.
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2.
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Dividend Equivalents.
Until such time as the following restrictions lapse, or the PSUs are cancelled, whichever occurs first, the Company will establish an amount to be paid to the Grantee (“Dividend Equivalent”) equal to the number of PSUs subject to restriction times the per share quarterly dividend payments made to shareholders of the Company’s Common Stock. The Company shall accumulate Dividend Equivalents and will pay the Grantee a cash amount equal to the Dividend Equivalents accumulated and unpaid as of the date that restrictions lapse (without interest) reasonably promptly after such date. Notwithstanding the foregoing, any accumulated and unpaid Dividend Equivalents attributable to PSUs that are cancelled will not be paid and are immediately forfeited upon cancellation of the PSUs.
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3.
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Restrictions/Performance Goals.
Restrictions on the number of PSUs specified in this Grant Agreement, as further subject to and adjusted based on performance as set forth in subparagraph 3.1 (“Adjusted PSUs”), will lapse on the designated Restriction Lapse Date only if the Grantee has been continuously employed by the Company pursuant to the terms of the Employment Agreement. PSUs shall be immediately cancelled upon termination of employment, except as set forth under Section 5(d)(ii)(C) of the Employment Agreement.
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a.
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Initial Stock Price.
For purposes of this Grant, “Initial Stock Price” shall mean $12.40, which equals the average of the closing prices of the Shares over the period of 30 consecutive trading days immediately preceding October 1, 2018.
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b.
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Share.
For purposes of this Grant, “Share” means one share of Common Stock, and such other securities as may become the subject of awards granted pursuant to the Plan, or become subject to such awards, pursuant to any adjustments made under Sections 5(d)(iii) – (v) of the Employment Agreement.
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a.
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if the highest average stock price achieved based on the average of the closing prices of the Shares over any period of 30 consecutive trading days (the “Highest Average Price”) is less than 150% of the Initial Stock Price, no PSUs will be earned, and the Adjusted PSUs shall equal 0 Shares;
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b.
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if the Highest Average Price equals 150% of the Initial Stock Price, the Adjusted PSUs shall equal 2.5 million Shares (“Threshold”);
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c.
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if the Highest Average Price equals 200% of the Initial Stock Price, the Adjusted PSUs shall equal 5.0 million Shares (“Target”);
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d.
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if the Highest Average Price equals or exceeds 250% of the Initial Stock Price, the Adjusted PSUs shall equal 7.5 million Shares (“Maximum”); and
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e.
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if the Highest Average Price is between 150% and 250% of the Initial Stock Price, the Adjusted PSUs will be determined by linear mathematical interpolation.
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4.
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Delivery and Withholding Tax.
Upon the lapse of restrictions set forth in paragraph 3 in accordance with their terms, the Adjusted PSUs shall be settled in Shares on or within 10 days following the Settlement Date (as defined in the Employment Agreement), and the Company shall deliver to the Grantee by mail or otherwise a certificate for such Shares as soon as practicable, provided however, that the date of issuance or delivery may be postponed by the Company for such period as may be required for it with reasonable diligence to comply with any applicable listing requirements of any national securities exchange and requirements under any law or regulation applicable to the issuance or transfer of such Shares. Further, the Grantee shall pay to or reimburse the Company for any federal, state, local or foreign taxes required to be withheld and paid over by it, at such time and upon such terms and conditions as the Company may prescribe before the Company shall be required to deliver such Shares.
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5.
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Alteration/Termination.
The Company shall have the right at any time in its sole discretion to amend, alter, suspend, discontinue or terminate any PSUs without the consent of the Grantee. Also, the PSUs shall be null and void to the extent the grant of PSUs or the lapse of restrictions thereon is prohibited under the laws of the country of residence of the Grantee.
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6.
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Employment Agreement Terms.
All capitalized but undefined terms used in this Grant Agreement have the same meaning as given to such terms in the Employment Agreement.
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7.
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Relationship to the Plan.
Unless otherwise set forth herein, the PSUs granted hereunder shall be subject to and governed by, and shall be administered in accordance with, the terms and conditions of the Plan. A copy of the Plan will be made available to the Grantee upon request. Notwithstanding the foregoing, the PSUs are not awarded under the Plan, and the grant of the PSUs shall not reduce the number of shares available for issuance under the Plan.
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8.
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Entire Agreement.
This Grant Agreement, the Employment Agreement, the Plan, country addendums and the rules and procedures adopted by the Committee contain all of the provisions applicable to the PSUs and no other statements, documents or practices may modify, waive or alter such provisions unless expressly set forth in writing, signed by an authorized officer of the Company and delivered to the Grantee. In the event the terms set forth herein (including the provisions from the Employment Agreement which are incorporated by reference) are inconsistent with the terms of the Plan, the terms of this Grant Agreement shall govern.
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1.
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Separation Date and Consideration/Other Payments
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a.
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Separation Date
. The Employee’s employment with the Company ended on September 30, 2018 (the “Separation Date”).
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b.
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Severance Pay
. The Company will pay the Employee severance in the amount of $ 4,250,000.00, which will be paid in equal installments on the Company’s regular pay dates for the twelve-month period beginning on the first pay period following the Separation Date (this period is the “Severance Period”). During the Severance Period, the Employee must be available to provide reasonable transition assistance and answer questions related to his Company employment, subject to the provisions of the final sentence of Section 5. Severance Pay will not be considered as compensation under the Company’s benefit plans and, except to the extent specifically provided in this Agreement, no service credits will be awarded for the Severance Period.
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c.
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Paid Time Off
. The Employee understands and agrees that the consideration provided in this Agreement includes any paid time off and that he will not receive any payment for unused or accrued paid time off of any kind.
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d.
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Health Benefits
. Following the Separation Date, the Employee can elect COBRA health care continuation coverage. If he timely does so, his cost for such coverage during the Severance Period will be the same amount as if he had remained actively employed, and such costs (premiums) will be deducted from any severance payments during the Severance Period. Following the
Severance Period, the Employee will be solely responsible for the full cost of COBRA coverage, which the Employee must pay directly to the COBRA Administrator. Except as otherwise provided in this paragraph, the Company’s regular COBRA rules and procedures will apply.
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e.
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Life Insurance
. The Company will discontinue premium payments on behalf of the Employee under the Executive Life Insurance Plan and/or Leadership Life Insurance Plan effective at the end of the current policy year. As these Policies are portable, they may be maintained solely by the Employee in his discretion.
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f.
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Stock Options
. Any stock option grants the Employee has not held for at least one year as of the Separation Date will be cancelled. Any other options that would otherwise vest through December 31, 2020 will be vested as soon as practicable following the Separation Date. The Employee can exercise all vested options until the earlier of their expiration date(s) or December 31, 2020.
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g.
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Restricted Stock Units (RSUs)
. Any RSU grants the Employee has not held for at least one year as of the Separation Date will be cancelled. The restrictions on any other RSUs that would normally lapse through December 31, 2020 will lapse (i.e., those RSUs will be vested) as soon as practicable following the Separation Date.
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h.
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Performance Stock Units (PSUs).
With the exception of 5/12 of the February 2018 PSU grant, any PSU grants the Employee has not held for at least one year as of the Separation Date will be cancelled. The restrictions on 5/12 (333,333 units) of the February 2018 grant and any other outstanding PSUs will remain eligible to lapse following the Separation Date, but the number of PSUs earned will be contingent upon satisfying the performance conditions set forth in such PSUs, and to the extent earned, will be payable in accordance with normal Company procedures.
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i.
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Executive Deferred Salary Plans
. Payments from any Executive Deferred Salary Plan in which the Employee participated will be made after the Separation Date in accordance with the rules of the Plan. A schedule of such estimated payments is attached as an Exhibit .
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j.
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Deferred Incentive Compensation/AEIP
. Employee’s deferred Incentive Compensation and/or deferred AEIP, if any, will be paid out in accordance with the rules of the applicable program. A schedule of such estimated payments is attached as an Exhibit.
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k.
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Allowance
. The Employee will receive the Allowance described in the
ALLOWANCE EXHIBIT
to this Agreement and the Company agrees to the terms and conditions therein.
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l.
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2016-18 Long-Term Performance Award (LTPA)
. The Employee will be eligible to receive a pro rata payment under the 2016-18 LTPA Program equal to 33/36 of the award the Employee would have been eligible to receive if he remained employed during the entire award period. The payout will be based on factors set forth in the original performance award granted to the Employee and the payout, if any, will be paid at the end of the LTPA award period in accordance with the terms of the Program.
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m.
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Company Car
. The Employee represents that he has already turned in his Company-provided car to the Company’s fleet services provider.
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n.
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Financial Planner
. The Employee may continue to avail himself of the services of a Company-paid financial planner until December 31, 2018 in accordance with the terms of the program.
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o.
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Tax Equalization
. The GE tax equalization policy will continue to apply on any form of Employee compensation that is assignment-related or is otherwise taxable relating to or arising out of the Employee’s assignment activities on behalf of the Company. This includes equity gains accrued during the assignment period. A final tax equalization calculation must be prepared by the preferred global tax provider for each year (or part of a calendar year) in which assignment-related income was received by the Employee. In accordance with the Company’s tax equalization policy (which terms will control), during the tax equalization period, the Employee agrees: (a) to cooperate with the Company’s preferred global tax provider to prepare the Employee’s home and host country income tax returns, at the Company’s expense, (b) to reimburse the Company for any refunds or payments from the tax authorities that are related to, or previously paid by, the Company under the Company’s tax equalization policy, (c) that any amounts the Company may owe the Employee, less any applicable social and income tax withholdings, will be paid to the Employee’s bank account, and (d) that any host country taxes that relate to the Employee remaining in the host country post the Separation Date will be the sole obligation of the Employee.
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p.
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Spin-Off
. In connection with any spin-off or similar transaction involving any business of the Company or its affiliates, the Employee’s equity compensation and performance goals shall be adjusted consistent with other similarly situated former employees.
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q.
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Indemnification.
The Company shall provide indemnification under its bylaws and D&O insurance to the Employee on terms not less favorably than for its current directors and officers.
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2.
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Employee Acknowledgments and Representations
. The Employee acknowledges, represents and agrees:
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a.
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Receipt of Wages and Benefits
. Except as stated above, Employee agrees that he has received all wages and compensation due to him. He is not entitled to certain of the payments and benefits he is receiving under this Agreement, except as a result of his agreement to the terms herein. Employee agrees that those payments and benefits are sufficient consideration for this Agreement.
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b.
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Taxes & Withholdings
. All payments and benefits received under this Agreement are subject to applicable taxes and withholdings.
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c.
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Time to Review & Revoke
. The Employee has 21 days to consider this Agreement, and his waiver of rights under the Age Discrimination in Employment Act, as amended, before signing it, and can revoke this Agreement within 7 days after signing it by sending written notice of that revocation to the Company’s Senior Vice-President, General Counsel (the day following this revocation period is the “Effective Date” of this Agreement). Employee also agrees that he has had the opportunity to consult with an attorney of his choice before signing it.
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d.
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Disclosure of Past and Present Claims
. The Employee is not aware of (or has already disclosed to the Company orally or in writing) any conduct by the Company or any of the Releasees of which the Company is not otherwise aware that he has any reason to believe violates any domestic or foreign law or regulation or Company policy, or involves or may involve false claims to the United States.
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e.
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Alternative Dispute Resolution
. The Employee agrees that his agreement to Solutions or any applicable prior internal Company alternative dispute resolution process (for purposes of this Agreement collectively called “Company ADR”) remains in effect. Employee further agrees to submit to the Company ADR any claims not released by this Agreement and covered by the Company ADR, or any claims that arise after the date the Employee signs this Agreement, to the maximum extent permitted by law, including but not limited to, disputes about the Agreement itself. The Employee understands he is giving up the right to a jury trial for such claims and that all such claims submitted to final and binding arbitration pursuant to the Company ADR will be decided solely by an arbitrator. Employee may ask the Company’s Senior Vice-President, Human Resources for another copy of the Company ADR process.
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f.
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Company’s Reliance on Employee Representations
. The Employee understands that the Company is relying on the Employee’s representations and obligations contained in this Agreement, including but not limited to his Release of Claims.
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3.
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Confidentiality of Agreement
. Unless compelled by law to do so, the Employee has not, and will not, discuss this Agreement with anyone other than his spouse, legal or financial advisor, or U.S. governmental officials who seek such information as part of their official duties. If a third-party requests or demands that the Employee disclose or produce this Agreement or any terms or conditions in it, the Employee will not take any action related to such request or subpoena without first notifying the Company and giving it a reasonable opportunity to respond.
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4.
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Release of Claims
. In return for the consideration provided by this Agreement, the Employee, his heirs, assigns, and agents waive and release all waivable claims of any kind (whether known or unknown, and including those under the Age Discrimination in Employment Act (ADEA)) that the Employee may have against Releasees (defined below), which arise from or relate to his employment and/or the termination of his employment with the Company. The released/waived claims include, but are not limited to, any and all claims that Releasees discriminated, harassed or retaliated against the Employee on the basis of
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5.
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Employee Availability
. The Employee agrees to make himself reasonably available to the Company to respond to requests for information related to his employment with the Company. The Employee will fully cooperate with the Company in connection with existing
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6.
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Non-Disparagement
. The Employee agrees, subject to any obligations he may have under applicable law or legal process, that he will not make or cause to be made any statements or take any actions that disparage or in any way damage the reputation of the Company or any of its affiliates, subsidiaries, officers, Senior Executives, directors or, as a group, employees. The Employee understands that nothing in this paragraph prevents him from disclosing statements, of any nature, regarding possible violations of law or regulation to government agencies or authorities or otherwise making such statements in response to legal action.
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7.
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Return of Company Property
. The Employee agrees that he has, or as of December 15, 2018 will have, returned to the Company all Company property or equipment in his possession, including but not limited to: any documents (whether in electronic or hard copy), computer, computer related hardware, external data storage or other memory device, phone, tablet, printer, scanner, credit card, keys, and security badge assigned to him. The Employee agrees that as of the Separation Date he will have submitted the appropriate T&L expense reports for any expenses on his/her corporate credit card.
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8.
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Confidential Information
. The Employee acknowledges that the Employee Innovation and Proprietary Information Agreement (“EIPIA”) he signed will remain in full force and effect. The Employee understands that nothing herein prevents the Employee from disclosing a trade secret or other confidential and proprietary information of the Company (“Confidential Information”) when reporting, in confidence, potential violations of law or regulation to U.S. government authorities, including but not limited to the Department of Justice and the Securities and Exchange Commission, or to a U.S. court. The Employee represents that he has not and will not copy, transfer or take any GE Confidential Information to any external storage device, external personal email or disclose in any other manner without written approval by the Company’s Senior Vice-President, General Counsel. GE Confidential Information includes but is not limited to documents and data containing work product that the Employee or others prepared for the Company during his employment. Confidential Information does not include materials of a solely personal or social nature or documents that relate to Company-provided compensation or benefits received by the Employee or his dependents. If the Employee has any questions regarding what he can/cannot copy, transfer or take, he will raise those questions to the Company’s Senior Vice-President, General Counsel prior to signing this Agreement. If the Employee has previously copied, transferred or taken Confidential Information, he will tell the Company, permit the Company to retrieve such information in a forensically sound manner, and allow and/or assist the Company, or its designee, to permanently delete the data from his personal computer or
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9.
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Non-Solicitation
. Employee agrees that up until the Separation Date and continuing for two years following that date, he will not, without prior written approval from the Company’s Senior Vice-President, General Counsel: (a) directly or indirectly solicit or encourage any person who is an employee of the Company to terminate his or her employment relationship with, or accept any other employment outside of, the Company; (b) directly hire, or recommend or cause to be hired by an entity for which the Employee works, any person who is, or was within 12 months before or after the Separation Date, an employee of the Company; or (c) provide any non-public information regarding an employee of the Company to any external person in connection with employment outside the Company, including, but not limited to, recruiters and prospective employers. Notwithstanding the foregoing, nothing herein shall prohibit Employee, on his own behalf or on behalf of others, from (a) soliciting or hiring employee’s pursuant to a generalized solicitation not targeted at Company employees, (b) serving as a reference to employees, or (c) soliciting or hiring anyone who was terminated by the Company in a Company initiated termination or a termination for the benefit for the Company.
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10.
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Non-Competition
. The Employee agrees that for one year following the Separation Date, he will not, for or on behalf of himself or any person or entity with which he 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 United Technologies, Siemens , Philips Healthcare, Canon/Toshiba, Merck, MilliporeSigma, Thermo-Fischer, Danaher or Honeywell. The parties agree that this Section 10 shall not prohibit the Employee from engaging in passive investments of not more than three percent (3%) of the outstanding shares of, or any other equity interest in, any company or entity listed or traded on a national securities exchange or in an over-the-counter securities market.
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11.
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Breach by Employee
. The Company’s obligations to the Employee after the Effective Date are contingent on the Employee fulfilling his obligations under this Agreement. Employee acknowledges and agrees that any breach by him of the obligations under this Agreement inevitably would cause substantial and irreparable damage to the Company and its subsidiaries, for which money damages may not be an adequate remedy. Accordingly, Employee acknowledges and agrees that the Company will be entitled to an injunction and/or other equitable relief, without the necessity of posting security, to prevent the breach of such obligations.
If the Company proves a breach in court or arbitration, the Employee shall indemnify and hold the Company harmless from any loss, claim or damages, including without limitation all reasonable attorneys’ fees, costs and expenses incurred in enforcing its rights under this Agreement as well as repay all compensation and benefits (other than those already vested) paid as consideration under the terms of this Agreement, except to the extent that such reimbursement is prohibited by law or would result in the invalidation of the release above.
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12.
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Severability of Provisions
. If a court or arbitrator holds that any provision in this Agreement is legally invalid or unenforceable, and cannot be modified to be enforceable, the affected provision will be stricken from the Agreement and the remaining terms of the Agreement and its enforceability shall remain unaffected; provided, however, if the Employee challenges the validity or enforceability of the Release in paragraph 4 above, and as a result of such challenge the Release is deemed invalid or unenforceable, the Company shall have no further obligations under this Agreement.
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13.
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Compliance with Section 409A of the Internal Revenue Code
. This Agreement is intended to satisfy the requirements of Section 409A of the Internal Revenue Code (and any related guidance issued by the IRS or the Treasury Department), so as to avoid the imposition of any additional taxes, penalties or interest under those rules. Accordingly, the Company will modify this Agreement to the extent necessary to avoid the imposition of any such additional taxes, penalties or interest. In the unlikely event that this need arises, the Company will take reasonable efforts to provide advance notice to the Employee. All payments under this Agreement will be delayed to the extent necessary to comply with the rules in Section 409A(a)(2)(B)(i) (generally requiring a delay of six months after separation from service for certain payments made to top-50 officers determined in accordance with Company rules).
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14.
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Benefits Plans
. The Company reserves the right to terminate, amend, suspend, replace or modify any of its benefit plans and compensation programs at any time and for any reason, and the Employee will be subject to any such termination, amendment, suspension, replacement, or modification. If a plan or program is terminated, the Employee will not receive any further benefits under that plan/program, other than payment for benefits for services or coverages incurred before it was terminated. This paragraph shall not alter any vested benefits to which the Employee may be entitled under the terms of the GE Pension Plan and/or GE Retirement Savings Plan as modified and/or enhanced by this Agreement. In addition, to the extent any of the provisions in this Agreement conflict with the terms and conditions of any Company plan document, award agreement or grant agreement, the provisions in this Agreement (and not those documents) shall be controlling, otherwise the terms and conditions of the plan documents apply.
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15.
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Entire Agreement
. This Agreement sets forth the entire agreement and understanding between the parties. Except as specifically provided in Section 2.d. of this Agreement, the parties agree they have not relied on any oral statements that are not included in this Agreement. This Agreement supersedes all prior agreements and understandings concerning the subject matter of this Agreement, other than as described in this Agreement. Any modifications to this Agreement must be in writing, must reference this Agreement, and must be signed by the Employee and an authorized employee or agent of the Company.
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16.
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Applicable Law
. This Agreement shall be construed, interpreted and applied in accordance with the law of the State of New York.
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17.
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Format
. The Employee and the Company agree that a facsimile (“fax”), photographic, or electronic copy of this Agreement shall be as valid as the original.
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Signed
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/s/ John Flannery
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John Flannery
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Date
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10/26/18
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(a)
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“Affiliate” shall mean (i) any entity that, directly or through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, as determined by the Committee.
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(b)
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“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent, or Other Stock-Based Award granted under the Plan.
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(c)
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“Award Agreement” shall mean any written agreement, contract, or other instrument or document, including an electronic communication, as may from time to time be designated by the Company as evidencing any Award granted under the Plan.
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(d)
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“Board” shall mean the Board of Directors of the Company.
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(e)
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“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
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(f)
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“Committee” shall mean a committee of the Board, acting in accordance with the provisions of Section 3, designated by the Board to administer the Plan and composed of not less than three non-employee directors. Unless otherwise determined by the Board, the Management Development and Compensation Committee of the Board generally serves as the Committee for purposes of the Plan, except that the Governance and Public Affairs Committee of the Board is responsible for administering the Plan as it relates to any Award provided to a Director.
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(g)
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“Director” shall mean any member of the Board who is not a Salaried Employee at the time of receiving an Award under the Plan.
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(h)
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“Dividend Equivalent” shall mean any right granted under Section 6(e) of the Plan.
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(i)
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“Fair Market Value” shall mean, with respect to any Shares or other securities, the closing price of a Share on the date as of which the determination is being made or as otherwise determined in a manner specified by the Committee.
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(j)
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“Incentive Stock Option” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code, or any successor provision thereto.
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(k)
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“Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
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(l)
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“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
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(m)
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“Other Stock-Based Award” shall mean any right, including a Deferred Stock Unit, granted under Section 6(f) of the Plan.
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(n)
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“Participant” shall mean a Salaried Employee or Director designated to be granted an Award under the Plan.
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(o)
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“Performance Award” shall mean any right granted under Section 6(d) of the Plan.
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(p)
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“Performance Criteria” shall mean any quantitative and/or qualitative measures, as determined by the Committee, which may be used to measure the level of performance of the Company or any individual Participant during a Performance Period, including any Qualifying Performance Criteria.
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(q)
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“Performance Period” shall mean any period as determined by the Committee in its sole discretion.
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(r)
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“Person” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof.
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(s)
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“Qualifying Performance Criteria” shall mean one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the company as a whole or to a business unit or related company, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to a previous year’s results or to a designated comparison group, in each case as specified by the Committee in the Award: sales and revenue; income, earnings, profit and margins; earnings per share; return on capital, return on equity and return on investment; cash flow and cash returned to investors; and total shareowner return, subject to adjustment by the Committee to remove the effect of charges for restructurings, discontinued operations and all items of gain, loss or expense determined to be unusual in nature or infrequent in occurrence, related to the disposal of a segment or a business, or related to a change in accounting principle or otherwise.
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(t)
|
“Restricted Stock” shall mean any award of Shares granted under Section 6(c) of the Plan.
|
(u)
|
“Restricted Stock Unit” shall mean any right granted under Section 6(c) of the Plan that is denominated in Shares.
|
(v)
|
“Salaried Employee” shall mean any salaried employee of the Company or of any Affiliate.
|
(w)
|
“Shares” shall mean the common shares of the Company and such other securities as may become the subject of Awards, or become subject to Awards, pursuant to an adjustment made under Section 4(b) of the Plan.
|
(x)
|
“Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan.
|
(a)
|
Subject to the terms of the Plan and applicable law, the Committee shall have full power and authority to:
|
ii.
|
determine the type or types of Awards to be granted to each Participant under the Plan and grant Awards to such Participants;
|
iii.
|
determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated in connection with) Awards;
|
iv.
|
determine the terms and conditions of any Award and of Award Agreements, and verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award;
|
v.
|
determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, or other Awards, or canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended;
|
vi.
|
determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee;
|
vii.
|
interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan;
|
viii.
|
establish, amend, suspend, or waive such rules and guidelines;
|
ix.
|
appoint such agents as it shall deem appropriate for the proper administration of the Plan;
|
x.
|
make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and
|
xi.
|
correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to carry the Plan into effect.
|
(b)
|
Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, any shareowner, and any employee of the Company or of any Affiliate. Actions of the Committee may be taken by:
|
i.
|
the Chairman of the Committee;
|
ii.
|
a subcommittee, designated by the Committee;
|
iii.
|
the Committee but with one or more members abstaining or recusing himself or herself from acting on the matter, so long as two or more members remain to act on the matter. Such action, authorized by the Chairman, such a subcommittee or by the Committee (whether upon the abstention or recusal of such members or otherwise), shall be the action of the Committee for purposes of the Plan; or
|
iv.
|
one or more officers or managers of the Company or any Affiliate, or a committee of such officers or managers whose authority is subject to such terms and limitations set forth by the Committee, and only with respect to Salaried Employees who are not officers or directors of the Company for purposes of Section 16 of the Securities Exchange Act of 1934, as amended. This delegation shall include modifications necessary to accommodate changes in the laws or regulations of jurisdictions outside the U.S.
|
(a)
|
SHARES AVAILABLE. Subject to adjustment as provided in Section 4(b):
|
i.
|
The total number of Shares reserved and available for delivery pursuant to Awards granted under the Plan shall be 1,075,000,000; of which no more than 230,000,000 may be available for Awards granted in any form provided for under the Plan other than Options or Stock Appreciation Rights. If any Shares covered by an Award granted under the Plan, or to which such an Award or award relates, are forfeited, or if an Award or award otherwise terminates without the delivery of Shares or of other consideration, then the Shares covered by such Award or award, or to which such Award or award relates, or the number of Shares otherwise counted against the aggregate number of Shares available under the Plan with respect to such Award or award, to the extent of any such forfeiture or termination, shall again be available for granting Awards under the Plan. Notwithstanding the foregoing, but subject to adjustment as provided in Section 4(b), no more than 1,075,000,000 Shares shall be available for delivery pursuant to the exercise of Incentive Stock Options.
|
ii.
|
ACCOUNTING FOR AWARDS. For purposes of this Section 4,
|
A.
|
If an Award (other than a Dividend Equivalent) is denominated in Shares, the number of Shares covered by such Award, or to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan;
|
B.
|
Dividend Equivalents denominated in Shares and Awards not denominated, but potentially payable, in Shares shall be counted against the aggregate number of Shares available for granting Awards under the Plan in such amount and at such time as the Dividend Equivalents and such Awards are settled in Shares, PROVIDED, HOWEVER, that Awards that operate in tandem with (whether granted simultaneously with or at a different time from), or that are substituted for, other Awards may only be counted once against the aggregate number of shares available, and the Committee shall adopt procedures, as it deems appropriate, in order to avoid double counting. Any Shares that are delivered by the Company, and any Awards that are granted by, or become obligations of, the Company through the assumption by the Company or an Affiliate of, or in substitution for, outstanding awards previously granted by an acquired company, shall not be counted against the Shares available for granting Awards under this Plan; and
|
C.
|
Notwithstanding anything herein to the contrary, any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or, subject to Section 6(g)(ix), are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under this Plan. Shares subject to an Award under the Plan may not again be made available for issuance under the Plan if such Shares are: (w) Shares delivered to or withheld by the Company to pay taxes on Awards other than
|
iii.
|
SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.
|
(b)
|
ADJUSTMENTS.
|
i.
|
In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, or other securities), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event constitutes an equity restructuring transaction, as that term is defined in Accounting Standards Codification Topic 718 (or any successor thereto) or otherwise affects the Shares, then the Committee shall adjust the following in a manner that is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan:
|
A.
|
the number and type of Shares or other securities which thereafter may be made the subject of Awards including the limit specified in Section 4(a)(i) regarding the number of shares that may be granted in the form of Restricted Stock, Restricted Stock Units, Performance Awards, or Other Stock-Based Awards;
|
B.
|
the number and type of Shares or other securities subject to outstanding Awards;
|
C.
|
the grant, purchase, or exercise price with respect to any Award, or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award; and
|
D.
|
other value determinations applicable to outstanding awards.
PROVIDED, HOWEVER, in each case, that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b)(1) of the Code or any successor provision thereto; and PROVIDED FURTHER, HOWEVER, that the number of Shares subject to any Award denominated in Shares shall always be a whole number. |
ii.
|
ADJUSTMENTS OF AWARDS UPON CERTAIN ACQUISITIONS. In the event the Company or any Affiliate shall assume outstanding employee awards or the right or obligation to make future such awards in connection with the acquisition of another business or another corporation or business entity, the Committee may make such adjustments, not inconsistent with the terms of the Plan, in the terms of Awards as it shall deem appropriate in order to achieve reasonable comparability or other equitable relationship between the assumed awards and the Awards granted under the Plan as so adjusted.
|
iii.
|
ADJUSTMENTS OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR NONRECURRING EVENTS. The Committee shall be authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits to be made available under the Plan.
|
(a)
|
OPTIONS. The Committee is hereby authorized to grant Options to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:
|
i.
|
EXERCISE PRICE. The purchase price per Share purchasable under an Option shall be determined by the Committee; provided, however, and except as provided in Section 4(b), that such purchase price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option.
|
ii.
|
OPTION TERM. The term of each Option shall not exceed ten (10) years from the date of grant.
|
iii.
|
TIME AND METHOD OF EXERCISE. The Committee shall establish in the applicable Award Agreement the time or times at which an Option may be exercised in whole or in part, and the method or methods by which, and the form or forms, including, without limitation, cash, Shares, or other Awards, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price, in which, payment of the exercise price with respect thereto may be made or deemed to have been made.
|
iv.
|
INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Option granted under the Plan shall be designed to comply in all respects with the provisions of Section 422 of the Code, or any successor provision thereto, and any regulations promulgated thereunder. For the avoidance of doubt, Incentive Stock Options shall not be granted to Directors. Notwithstanding anything in this Section 6(a) to the contrary, Options designated as Incentive Stock Options shall not be eligible for treatment under the Code as Incentive Stock Options (and will be deemed to be Non-Qualified Stock Options) to the extent that either (1) the aggregate Fair Market Value of Shares (determined as of the time of grant) with respect to which such Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any subsidiary) exceeds $100,000, taking Options into account in the order in which they were granted, or (2) such Options otherwise remain exercisable but are not exercised within three (3) months of termination of employment (or such other period of time provided in Section 422 of the Code).
|
(b)
|
STOCK APPRECIATION RIGHTS. The Committee is hereby authorized to grant Stock Appreciation Rights to Participants. Subject to the terms of the Plan and any applicable Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (1) the Fair Market Value of one Share on the date of exercise over (2) the grant price of the right as specified by the Committee.
|
i.
|
GRANT PRICE. The grant price per share of each Stock Appreciation Right shall be determined by the Committee, provided, however, and except as provided in Section 4(b), that such price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right, except that if a Stock Appreciation Right is at any time granted in tandem to an Option, the grant price of the Stock Appreciation Right shall not be less than the exercise price of such Option.
|
ii.
|
TERM. The term of each Stock Appreciation Right shall not exceed ten (10) years from the date of grant.
|
iii.
|
TIME AND METHOD OF EXERCISE. The Committee shall establish in the applicable Award Agreement the time or times at which a Stock Appreciation Right may be exercised in whole or in part.
|
(c)
|
RESTRICTED STOCK AND RESTRICTED STOCK UNITS.
|
i.
|
ISSUANCE. The Committee is hereby authorized to grant Awards of Restricted Stock and Restricted Stock Units to Participants.
|
ii.
|
RESTRICTIONS. Awards of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may establish in the applicable Award Agreement (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate. Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be delivered to the holder of Restricted Stock promptly after such restrictions have lapsed.
|
iii.
|
REGISTRATION. Any Restricted Stock or Restricted Stock Units granted under the Plan may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Shares of Restricted Stock granted under the Plan, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.
|
iv.
|
FORFEITURE. Upon termination of employment during the applicable restriction period, except as determined otherwise by the Committee, all Shares of Restricted Stock and all Restricted Stock Units still, in either case, subject to restriction shall be forfeited and reacquired by the Company.
|
(d)
|
PERFORMANCE AWARDS. The Committee is hereby authorized to grant Performance Awards to Participants. Performance Awards include arrangements under which the grant, issuance, retention, exercisability, vesting and/or transferability of any Award is subject to such Performance Criteria and such additional conditions or terms as the Committee may designate. Subject to the terms of the Plan and any applicable Award Agreement, a Performance Award granted under the Plan:
|
i.
|
may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock), other securities, or other Awards; and
|
ii.
|
shall confer on the holder thereof rights valued as determined by the Committee and payable to, or exercisable by, the holder of the Performance Award, in whole or in part, upon the achievement of such performance goals during such Performance Periods as the Committee shall establish.
|
(e)
|
DIVIDEND EQUIVALENTS. The Committee is hereby authorized to grant to Participants Awards (other than Options and Stock Appreciation Rights) under which the holders thereof shall be entitled to receive payments equivalent to dividends or interest with respect to a number of Shares determined by the Committee, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares and paid out only on and when Shares actually vest, are earned or are received under such Awards. Subject to the terms of the Plan and any applicable Award Agreement, such Awards may have such terms and conditions as the Committee shall determine.
|
(f)
|
OTHER STOCK-BASED AWARDS. The Committee is hereby authorized to grant to Participants such other Awards, including, but not limited to, Deferred Stock Units, that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purposes of the Plan, provided, however, that such grants must comply with applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of such Awards. Shares or other securities delivered pursuant to a purchase right granted under this Section 6(f) shall be purchased for such consideration, which may be paid by such method or methods and in such form or forms, including, without limitation, cash, Shares, other securities, or other Awards, or any combination thereof, as the Committee shall determine, the value of which consideration, as established by the Committee, and except as provided in Section 4(b), shall not be less than the Fair Market Value of such Shares or other securities as of the date such purchase right is granted.
|
(g)
|
GENERAL.
|
i.
|
NO CASH CONSIDERATION FOR AWARDS. Awards shall be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law.
|
ii.
|
AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards or awards.
|
iii.
|
FORMS OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise, or payment of an Award may be made in such form or forms as the Committee shall determine, including, without limitation, cash, Shares, rights in or to Shares issuable under the Award or other Awards, other securities, or other Awards, or any combination thereof, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents in respect of installment or deferred payments.
|
iv.
|
LIMITS ON TRANSFER OF AWARDS. Except as provided by the Committee, no Award and no right under any such Award, shall be assignable, alienable, saleable, or transferable by a Participant otherwise than by will or by the laws of descent and distribution provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant with respect to any Award upon the death of the Participant. Each Award, and each right under any Award, shall be exercisable, during the Participant’s lifetime, only by the Participant or, if permissible under applicable law, by the Participant’s guardian or legal representative. No Award and no right under any such Award, may be pledged, alienated, attached, or otherwise encumbered, and any purported pledge, alienation, attachment, or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate.
|
v.
|
PER-PERSON LIMITATION FOR SALARIED EMPLOYEES. The aggregate dollar value of any Awards granted to a Salaried Employee under the Plan (based on the grant date fair value of Awards as determined for financial reporting purposes, which shall be calculated based on the target value for any performance based award) in any fiscal year may not exceed $20,000,000.
|
vi.
|
PER-PERSON LIMITATION FOR DIRECTORS. The aggregate dollar value of (A) any Awards granted to a Director under the Plan (based on the grant date fair value of Awards as determined for financial reporting purposes) and (B) any cash or other compensation that is not equity-based and that is paid by the Company with respect to the Director’s service as a Director for any fiscal year may not exceed $1,500,000. The Committee may make exceptions to the foregoing limit for a Director or committee of Directors, as it may determine in its discretion, provided that (C) the aggregate dollar value of any such additional compensation may not exceed $1,000,000 for the fiscal year and (D) the Director receiving such additional compensation does not participate in the decision to award such compensation.
|
vii.
|
CONDITIONS AND RESTRICTIONS UPON SECURITIES SUBJECT TO AWARDS. The Committee may provide
|
viii.
|
SHARE CERTIFICATES. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares or other securities are then listed, and any applicable
|
ix.
|
NO REPRICING. Except in connection with a corporate transaction or adjustment described in Section 4(b) of the Plan, the terms of outstanding Options, Stock Appreciation Rights or other Stock-Based Awards encompassing rights to purchase Shares that have an exercise or purchase price in excess of the Fair Market Value of a Share may not be amended to reduce the exercise or purchase price of such Awards, and any such outstanding Options, Stock Appreciation Rights or other Stock-Based Awards encompassing rights to purchase Shares may not be exchanged for cash or property, other Awards, or Options, Stock Appreciation Rights or other Stock-Based Awards encompassing rights to purchase Shares with an exercise or purchase price that is less than the exercise or purchase price of the original Awards, in each case unless approved by shareowners.
|
x.
|
RECOUPMENT. The Plan will be administered in compliance with Section 10D of the Securities Exchange Act of 1934, as amended, any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Shares may be traded, and any Company policy adopted with respect to compensation recoupment. This Section 6(g)(x) will not be the Company’s exclusive remedy with respect to such matters.
|
(a)
|
AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend, discontinue, or terminate the Plan, in whole or in part; provided, however, that without the prior approval of the Company’s shareowners, no material amendment shall be made if shareowner approval is required by law, regulation, or stock exchange, and; PROVIDED, FURTHER, that, notwithstanding any other provision of the Plan or any Award Agreement, no such amendment, alteration, suspension, discontinuation, or termination shall be made without the approval of the shareowners of the Company that would:
|
i.
|
increase the total number of Shares available for Awards under the Plan, except as provided in Section 4 hereof; or
|
ii.
|
amend Section 6(g)(ix) or, except as provided in Section 4(b), permit Options, Stock Appreciation Rights, or other Stock-Based Awards encompassing rights to purchase Shares to be repriced, replaced, or exchanged as described in Section 6(g)(ix).
|
(b)
|
AMENDMENTS TO AWARDS. Subject to Section 6(g)(ix), the Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue, or terminate, any Awards theretofore granted, prospectively or retroactively. No such amendment or alteration shall be made which would impair the rights of any Participant, without such Participant’s consent, under any Award theretofore granted, provided that no such consent shall be required with respect to any amendment or alteration if the Committee determines in its sole discretion that such amendment or alteration either (i) is required or advisable in order for the Company, the Plan or the Award to satisfy or conform to any law or regulation or to meet the requirements of any accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award.
|
(a)
|
NO RIGHTS TO AWARDS. No Salaried Employee, Participant or other Person shall have any claim to be granted any Award under the Plan, or, having been selected to receive an Award under this Plan, to be selected to receive a future Award, and further there is no obligation for uniformity of treatment of Salaried Employees, Participants, or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each recipient.
|
(b)
|
WITHHOLDING. The Company or any Affiliate shall be authorized to withhold from any Award granted or any payment due or transfer made under any Award or under the Plan the amount (in cash, Shares, other securities, or other Awards) of taxes required or permitted to be withheld (up to the maximum statutory tax rate in the relevant jurisdiction) in respect of an Award, its exercise, or any payment or transfer under such Award or under the Plan and to take such other action as may be necessary or appropriate in the opinion of the Company or Affiliate to satisfy withholding taxes.
|
(c)
|
NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases.
|
(d)
|
NO RIGHT TO EMPLOYMENT. The grant of an Award shall not constitute an employment contract nor be construed as giving a Participant the right to be retained in the employ of the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant from employment, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.
|
(e)
|
GOVERNING LAW. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of New York and applicable Federal law without regard to conflict of law.
|
(f)
|
SEVERABILITY. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.
|
(g)
|
NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.
|
(h)
|
NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, or other securities shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.
|
(i)
|
HEADINGS. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.
|
(j)
|
INDEMNIFICATION. Subject to requirements of New York State law, each individual who is or shall have been a member of the Board, or a Committee appointed by the Board, or an officer or manager of the Company to whom authority was delegated in accordance with Section 3, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf, unless such loss, cost, liability, or expense is a result of his/her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
|
(k)
|
COMPLIANCE WITH SECTION 409A OF THE CODE. Except to the extent specifically provided otherwise by the Committee, Awards under the Plan are intended to be exempt from or satisfy the requirements of Section 409A of the Code (and the Treasury Department guidance and regulations issued thereunder) so as to avoid the imposition of any additional taxes or penalties under Section 409A of the Code. If the Committee determines that an Award, Award Agreement, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under Section 409A of the Code, then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan and/or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Section 409A of the Code to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant.
|
(l)
|
NO REPRESENTATIONS OR COVENANTS WITH RESPECT TO TAX QUALIFICATION. Although the Company may endeavor to (i) qualify an Award for favorable U.S. or foreign tax treatment (e.g., incentive stock options under Section 422 of the Code or French qualified stock options) or (ii) avoid adverse tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows any covenant to maintain favorable or avoid unfavorable tax treatment. The Company shall be unconstrained in its corporate activities without regard to the potential negative tax impact on holders of Awards under the Plan.
|
(m)
|
AWARDS TO NON-U.S. EMPLOYEES. The Committee shall have the power and authority to determine which Affiliates shall be covered by this Plan and which employees outside the U.S. shall be eligible to participate in the Plan. The Committee may adopt, amend or rescind rules, procedures or sub-plans relating to the operation and administration of the Plan to accommodate the specific requirements of local laws, procedures, and practices. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules, procedures and sub-plans with provisions that limit or modify rights on death, disability or retirement or on termination of employment; available methods of exercise or settlement of an award; payment of income, social insurance contributions and payroll taxes; the withholding procedures and handling of any stock certificates or other indicia of ownership which vary with local requirements. The Committee may also adopt rules, procedures or sub-plans applicable to particular Affiliates or locations.
|
(n)
|
COMPLIANCE WITH LAWS. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or stock exchanges on which the Company’s securities are listed as may be required. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Plan prior to:
|
i.
|
obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and
|
ii.
|
completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable or at a time when any such registration or qualification is not current, has been suspended or otherwise has ceased to be effective.
|
Grant Date
|
PSUs Granted
|
Restriction Lapse Date
|
<<Date>>
|
<<No. of PSUs>> Granted
|
The date of the February 2021 Management Development & Compensation Committee meeting, subject to the terms and conditions set forth below.
|
1.
|
Grant of PSUs.
The Management Development and Compensation Committee (“Committee”) of the Board of Directors of General Electric Company (“Company”) has granted Performance Stock Units with Dividend Equivalents (“PSUs”) to the individual named on the front of this Certificate (“Grantee”). Each PSU entitles the Grantee to receive from the Company (i) one share of General Electric Company common stock, par value $0.06 per share (“Common Stock”), and (ii) cash payments based on dividends paid to shareholders of such stock, for each PSU for which the restrictions set forth in paragraph 3 (including subparagraph 3.1) lapse in accordance with their terms, each in accordance with the terms of this Grant, the GE 2007 Long Term Incentive Plan (“Plan”), and any rules and procedures adopted by the Committee.
|
2.
|
Dividend Equivalents.
Until such time as the following restrictions lapse, or the PSUs are cancelled, whichever occurs first, the Company will establish an amount to be paid to the Grantee (“Dividend Equivalent”) equal to the number of PSUs subject to restriction times the per share quarterly dividend payments made to shareholders of the Company’s Common Stock. The Company shall accumulate Dividend Equivalents and will pay the Grantee a cash amount equal to the Dividend Equivalents accumulated and unpaid as of the date that restrictions lapse (without interest) reasonably promptly after such date. Notwithstanding the foregoing, any accumulated and unpaid Dividend Equivalents attributable to PSUs that are cancelled will not be paid and are immediately forfeited upon cancellation of the PSUs.
|
3.
|
Restrictions/Performance Goals.
Restrictions on the number of PSUs specified in this Grant Agreement, as further subject to and adjusted based on performance as set forth in subparagraph 3.1 (“Adjusted PSUs”), will lapse on the designated Restriction Lapse Date only if the Grantee has been continuously employed by the Company or one of its affiliates to such date. PSUs shall be immediately cancelled upon termination of employment, except as follows:
|
a.
|
Employment Termination Due to Death.
If the Grantee’s employment with the Company or any of its affiliates terminates as a result of the Grantee’s death, then restrictions on all Adjusted PSUs shall lapse.
|
b.
|
Employment Termination Due to Transfer of Business to Successor Employer.
If the Grantee’s employment with the Company or any of its affiliates terminates as a result of employment by a successor employer to which the Company has transferred a business operation, then restrictions on all Adjusted PSUs shall lapse.
|
c.
|
Employment Termination More Than One Year After Grant Date.
If, on or after the first anniversary of the Grant Date, the Grantee’s employment with the Company or any of its affiliates terminates as a result of any of the reasons set forth below, or the Grantee becomes eligible to retire or meets the age and service requirements, each as specified in (c)(i) below, then restrictions on Adjusted PSUs shall lapse or the PSUs shall be cancelled as provided below (subject to any rules adopted by the Committee):
|
i.
|
Termination/Eligibility for Retirement or Termination for Total Disability.
Restrictions on all Adjusted PSUs shall lapse if (a) the Grantee attains at least age 60 while still employed by the Company or an affiliate and completes 5 or more years of continuous service with the Company and any of its affiliates, or (b) the Grantee’s employment with the Company or any of its affiliates terminates as a result of a total disability, i.e., the inability to perform any job for which the Grantee is reasonably suited by means of education, training or experience.
|
ii.
|
Termination for Layoff or Plant Closing.
If the Grantee’s employment with the Company or any of its affiliates terminates as a result of a layoff or plant closing (without regard to any period of protected service), each as contemplated in the Company’s U.S. Layoff Benefit Plan, then restrictions on Adjusted PSUs shall lapse.
|
iii.
|
Termination Due to Other Reasons.
If the Grantee’s employment with the Company or any of its affiliates terminates for any other reason, and the Grantee and the Company have not entered into a written agreement explicitly providing otherwise in accordance with rules and procedures adopted by the Committee, then the PSUs shall be immediately cancelled.
|
d.
|
Affiliate.
For purposes of this Grant, “affiliate” shall mean (i) any entity that, directly or indirectly, is owned 50% or more by the Company and thereby deemed under its control and (ii) any entity in which the Company has a significant equity interest as determined by the Committee. Transfer of employment among the Company and any of its affiliates is not a termination of employment for purposes of this Grant.
|
a.
|
If the Company’s Total Shareowner % Return (“TSR”) is equal to the 55th percentile (“target”) of the Total Shareowner % Return for the S&P 500 companies (“S&P 500 TSR”), then 100% of the PSUs shall be eligible for the lapse of restrictions.
|
b.
|
If the Company TSR is equal to the 35th percentile (“threshold”) of the S&P 500 TSR, then one-quarter (25%) of the PSUs shall be eligible for the lapse of restrictions. All PSUs shall be cancelled if Company TSR is less than Threshold performance.
|
c.
|
If the Company TSR is equal to or exceeds the 80th percentile (“maximum”) of the S&P 500 TSR, then the PSUs to be eligible for the lapse of restrictions shall be adjusted upward by 75% (175%).
|
4.
|
Delivery and Withholding Tax.
Upon the lapse of restrictions set forth in paragraph 3 in accordance with their terms, the Company shall deliver to the Grantee by mail or otherwise a certificate for such shares as soon as practicable, provided however, that the date of issuance or delivery may be postponed by the Company for such period as may be required for it with reasonable diligence to comply with any applicable listing requirements of any national securities exchange and requirements under any law or regulation applicable to the issuance or transfer of such shares. Further, the Grantee shall pay to or reimburse the Company for any federal, state, local or foreign taxes required to be withheld and paid over by it, at such time and upon such terms and conditions as the Company may prescribe before the Company shall be required to deliver such shares.
|
5.
|
Alteration/Termination.
The Company shall have the right at any time in its sole discretion to amend, alter, suspend, discontinue or terminate any PSUs without the consent of the Grantee. Also, the PSUs shall be null and void to the extent the grant of PSUs or the lapse of restrictions thereon is prohibited under the laws of the country of residence of the Grantee.
|
6.
|
Plan Terms.
All terms used in this Grant have the same meaning as given such terms in the Plan, a copy of which will be furnished upon request.
|
7.
|
Entire Agreement.
This Grant, the Plan, country addendums and the rules and procedures adopted by the Committee contain all of the provisions applicable to the PSUs and no other statements, documents or practices may modify, waive or alter such provisions unless expressly set forth in writing, signed by an authorized officer of the Company and delivered to the Grantee.
|
By:
|
/s/ Raghu Krishnamoorthy
Name: Raghu Krishnamoorthy Title: Senior Vice President, Chief Human Resources Officer |
|
|
Percentage of voting
|
|
|
|
|
securities directly or
|
|
State or Country
|
|
|
indirectly owned by
|
|
of incorporation
|
|
|
registrant (1)
|
|
or organization
|
|
|
|
|
|
ALSTOM Power Systems
|
|
100
|
|
France
|
ALSTOM UK Holdings Ltd.
|
|
100
|
|
United Kingdom & Northern Ireland
|
Amersham Health Norge AS
|
|
100
|
|
Norway
|
Baker Hughes, a GE company, LLC
|
|
50
|
|
Delaware
|
Bently Nevada, LLC
|
|
50
|
|
Delaware
|
CALGEN Holdings, Inc.
|
|
100
|
|
Delaware
|
Cardinal Cogen, Inc.
|
|
100
|
|
Delaware
|
Caribe GE International of Puerto Rico, Inc.
|
|
100
|
|
Puerto Rico
|
Concept Laser GmbH
|
|
75
|
|
Germany
|
Datex-Ohmeda, Inc.
|
|
100
|
|
Delaware
|
Dresser, LLC
|
|
50
|
|
Delaware
|
Druck, LLC
|
|
50
|
|
Connecticut
|
FieldCore Service, Inc.
|
|
100
|
|
Delaware
|
GE Aero Energy Power, LLC
|
|
100
|
|
Delaware
|
GE Albany CH GmbH
|
|
100
|
|
Switzerland
|
GE Albany C.V.
|
|
100
|
|
Netherlands
|
GE Albany Global Holdings BV
|
|
100
|
|
Netherlands
|
GE Albany US Holdings LLC
|
|
100
|
|
Delaware
|
GE Aviation Systems Group Limited
|
|
100
|
|
United Kingdom & Northern Ireland
|
GE Aviation Systems North America LLC
|
|
100
|
|
Delaware
|
GE Aviation UK
|
|
100
|
|
United Kingdom & Northern Ireland
|
GE Caledonian Limited
|
|
100
|
|
United Kingdom & Northern Ireland
|
GE Canada Holdings, Inc.
|
|
100
|
|
Delaware
|
GE Capital Fleet Services International Holdings, LLC
|
|
100
|
|
Delaware
|
GE Capital Global Financial Holdings, LLC
|
|
100
|
|
Connecticut
|
GE Capital Global Holdings, LLC
|
|
100
|
|
Delaware
|
GE Capital UK Finance
|
|
100
|
|
United Kingdom & Northern Ireland
|
GE Celma LTDA
|
|
100
|
|
Brazil
|
GE Digital Holdings LLC
|
|
100
|
|
Delaware
|
GE Drives & Controls, Inc.
|
|
100
|
|
Delaware
|
GE Druck Holdings Limited
|
|
50
|
|
United Kingdom & Northern Ireland
|
GE Energias Renovaveis Ltda.
|
|
75
|
|
Brazil
|
GE Energy Europe B.V.
|
|
50
|
|
Netherlands
|
GE Energy Netherlands, B.V.
|
|
100
|
|
Netherlands
|
GE Energy Parts, Inc.
|
|
100
|
|
Delaware
|
GE Energy Power Conversion GmbH
|
|
100
|
|
Germany
|
GE Energy Power Conversion Group
|
|
100
|
|
France
|
GE Energy Power Conversion UK Holdings Limited
|
|
100
|
|
United Kingdom & Northern Ireland
|
|
|
Percentage of voting
|
|
|
GE Energy Power Conversion USA Inc.
|
|
100
|
|
Delaware
|
GE Energy Products France SNC
|
|
100
|
|
France
|
GE Energy Services, Inc.
|
|
100
|
|
Delaware
|
GE Energy Switzerland GmbH
|
|
100
|
|
Switzerland
|
GE Energy (USA), LLC
|
|
100
|
|
Delaware
|
GE Engine Services, LLC
|
|
100
|
|
Delaware
|
GE Engine Services - Dallas, LP
|
|
100
|
|
Delaware
|
GE Engine Services Distribution, L.L.C.
|
|
100
|
|
Delaware
|
GE Engine Services - Miami, Inc.
|
|
100
|
|
Delaware
|
GE Engine Services UNC Holding I, Inc.
|
|
100
|
|
Delaware
|
GE Europe Holdings LLC
|
|
100
|
|
Delaware
|
GE Financial Assurance Holdings, LLC
|
|
100
|
|
Delaware
|
GE Financial Funding Unlimited Company
|
|
100
|
|
Ireland
|
GE Financial Ireland Unlimited Company
|
|
100
|
|
Ireland
|
GE France
|
|
100
|
|
France
|
GE France Financial Holdings, LLC
|
|
100
|
|
Delaware
|
GE Gas Turbines (Greenville) L.L.C.
|
|
100
|
|
Delaware
|
GE Global Parts & Products GmbH
|
|
100
|
|
Switzerland
|
GE Global Sourcing LLC
|
|
100
|
|
Delaware
|
GE Grid Alliance B.V.
|
|
100
|
|
Netherlands
|
GE Grid Solutions UK B.V.
|
|
100
|
|
Netherlands
|
GE Healthcare AS
|
|
100
|
|
Norway
|
GE Healthcare Bio-Sciences AB
|
|
100
|
|
Sweden
|
GE Healthcare BVBA
|
|
100
|
|
Belgium
|
GE Healthcare European Holdings SARL
|
|
100
|
|
Luxembourg
|
GE Healthcare Finland Oy
|
|
100
|
|
Finland
|
GE Healthcare Holding Norge AS
|
|
100
|
|
Norway
|
GE Healthcare Japan Corporation
|
|
100
|
|
Japan
|
GE Healthcare Life Sciences Holding AB
|
|
100
|
|
Sweden
|
GE Healthcare Limited
|
|
100
|
|
United Kingdom & Northern Ireland
|
GE Healthcare Norge AS
|
|
100
|
|
Norway
|
GE Healthcare Sweden Holding AB
|
|
100
|
|
Sweden
|
GE Healthcare USA Holding LLC
|
|
100
|
|
Delaware
|
GE HOLDINGS LUXEMBOURG & CO S.a.r.l.
|
|
100
|
|
Luxembourg
|
GE Holdings (US), Inc.
|
|
100
|
|
Delaware
|
GE Hungary Kft.
|
|
100
|
|
Hungary
|
GE Industrial Consolidation Limited
|
|
100
|
|
United Kingdom & Northern Ireland
|
GE Infrastructure Aviation
|
|
100
|
|
United Kingdom & Northern Ireland
|
GE Infrastructure, LLC
|
|
100
|
|
Delaware
|
GE Infrastructure Technology International LLC
|
|
100
|
|
Delaware
|
GE Inspection and Repair Services Limited
|
|
100
|
|
United Kingdom & Northern Ireland
|
GE Intelligent Platforms, Inc.
|
|
100
|
|
Delaware
|
GE Investments, LLC
|
|
100
|
|
Delaware
|
GE Italia Holding S.r.l.
|
|
100
|
|
Italy
|
GE Japan Investments Coöperatief U.A.
|
|
100
|
|
Netherlands
|
GE LIGHTING SYSTEMS S.R.L.
|
|
100
|
|
Italy
|
GE Maintenance Services, Inc.
|
|
100
|
|
Delaware
|
GE Media Holdings, Inc.
|
|
100
|
|
Delaware
|
GE Medical Systems Global Technology Company, LLC
|
|
100
|
|
Delaware
|
GE Medical Systems Information Technologies, Inc.
|
|
100
|
|
Wisconsin
|
|
|
Percentage of voting
|
|
|
GE Medical Systems, Inc.
|
|
100
|
|
Delaware
|
GE Medical Systems, L.L.C.
|
|
100
|
|
Delaware
|
GE Medical Systems Societe en Commandite Simple
|
|
100
|
|
France
|
GE Medical Systems, Ultrasound & Primary Care Diagnostics, LLC
|
|
100
|
|
Delaware
|
GE Mexico, S.A. de C.V.
|
|
100
|
|
Mexico
|
GE Military Systems
|
|
100
|
|
Delaware
|
GE Oil & Gas Angola, Limitada
|
|
50
|
|
Angola
|
GE Oil & Gas Pressure Control LP
|
|
50
|
|
Texas
|
GE Oil & Gas US Holdings I, Inc.
|
|
100
|
|
Delaware
|
GE Oil & Gas US Holdings IV, Inc.
|
|
100
|
|
Delaware
|
GE Pacific Holdings II B.V.
|
|
100
|
|
Netherlands
|
GE Pacific Holdings Pte. Ltd.
|
|
100
|
|
Singapore
|
GE Pacific Private Limited
|
|
100
|
|
Singapore
|
GE Packaged Power, Inc.
|
|
100
|
|
Delaware
|
GE Packaged Power, L.P.
|
|
100
|
|
Delaware
|
GE Power Netherlands B.V.
|
|
100
|
|
Netherlands
|
GE Renewable Holding B.V.
|
|
100
|
|
Netherlands
|
GE Renewables North America, LLC
|
|
100
|
|
Delaware
|
GE Repair Solutions Singapore Pte. Ltd.
|
|
100
|
|
Singapore
|
GE Transportation Parts, LLC
|
|
100
|
|
Delaware
|
GE Treasury Services Industrial Ireland Limited
|
|
100
|
|
Ireland
|
GE UK Group
|
|
100
|
|
United Kingdom & Northern Ireland
|
GE UK Holdings
|
|
100
|
|
United Kingdom & Northern Ireland
|
GE WIND France SAS
|
|
100
|
|
France
|
GEAE Technology, Inc.
|
|
100
|
|
Delaware
|
GEAST SAS
|
|
100
|
|
France
|
GEH HOLDINGS
|
|
100
|
|
United Kingdom & Northern Ireland
|
GENE Holding LLC
|
|
100
|
|
Delaware
|
General Electric (Bermuda) Ltd.
|
|
100
|
|
Bermuda
|
General Electric Canada Company
|
|
100
|
|
Canada
|
General Electric Canada Holdings Company
|
|
100
|
|
Canada
|
General Electric Deutschland Holding GmbH
|
|
100
|
|
Germany
|
GENERAL ELECTRIC ENERGY UK LIMITED
|
|
100
|
|
United Kingdom & Northern Ireland
|
General Electric Europe Holdings C.V.
|
|
100
|
|
Netherlands
|
General Electric Financing C.V.
|
|
100
|
|
Netherlands
|
General Electric Foreign Sales Corporation
|
|
100
|
|
The Bahamas & Eleuthera Island
|
General Electric International (Benelux) B.V.
|
|
100
|
|
Netherlands
|
General Electric International, Inc.
|
|
100
|
|
Delaware
|
General Electric International Japan Investments I SARL
|
|
100
|
|
Luxembourg
|
General Electric International Operations Company, Inc.
|
|
100
|
|
Delaware
|
General Electric Services (Bermuda) Ltd.
|
|
100
|
|
Bermuda
|
General Electric Services Luxembourg SARL
|
|
100
|
|
Luxembourg
|
General Electric (Switzerland) GmbH
|
|
100
|
|
Switzerland
|
General Electric Technology GmbH
|
|
100
|
|
Switzerland
|
GMC Consolidation LLC
|
|
100
|
|
Delaware
|
Grid Solutions SAS
|
|
100
|
|
France
|
Grid Solutions (U.S.) LLC
|
|
100
|
|
Delaware
|
IDX Systems Corporation
|
|
100
|
|
Vermont
|
Inland Empire Energy Center, LLC
|
|
100
|
|
Delaware
|
|
|
Percentage of voting
|
|
|
Inland Empire Holding Limited I, Inc.
|
|
100
|
|
Delaware
|
International General Electric (U.S.A.)
|
|
100
|
|
United Kingdom &
North Ireland
|
LM Wind Power Holding A/S
|
|
100
|
|
Denmark
|
MRA Systems, LLC
|
|
100
|
|
Delaware
|
Nuclear Fuel Holding Co., Inc.
|
|
100
|
|
Delaware
|
Nuovo Pignone Holding S.p.a.
|
|
50
|
|
Italy
|
Nuovo Pignone International S.r.l.
|
|
50
|
|
Italy
|
OEC Medical Systems, Inc.
|
|
100
|
|
Delaware
|
One GE Healthcare UK
|
|
100
|
|
United Kingdom & Northern Ireland
|
Panametrics Limited
|
|
50
|
|
Bermuda
|
Patent Licensing International, Inc.
|
|
100
|
|
Delaware
|
PII Limited
|
|
50
|
|
United Kingdom & Northern Ireland
|
Power Holding LLC
|
|
100
|
|
Delaware
|
Reuter-Stokes, LLC
|
|
50
|
|
Delaware
|
Ropcor, Inc.
|
|
100
|
|
Delaware
|
Unison Industries, LLC
|
|
100
|
|
Delaware
|
Viceroy, Inc.
|
|
100
|
|
Delaware
|
Whatman Limited
|
|
100
|
|
United Kingdom & Northern Ireland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
With respect to certain companies, shares in names of nominees and qualifying shares in names of directors are included in above percentages.
|
/s/ KPMG LLP
|
KPMG LLP
|
|
|
/s/ H. Lawrence Culp, Jr.
|
|
|
||
|
|
H. Lawrence Culp, Jr.
|
|
|
||
|
|
Chairman of the Board
|
|
|
||
|
|
(Principal Executive
|
|
|
||
|
|
Officer and Director)
|
|
|
||
|
|
|
||||
|
|
|
||||
/s/ Jamie S. Miller
|
|
/s/ Thomas S. Timko
|
||||
Jamie S. Miller
|
|
Thomas S. Timko
|
||||
Senior Vice President and
|
|
Vice President and Controller
|
||||
Chief Financial Officer
|
|
(Principal Accounting Officer)
|
||||
(Principal Financial Officer)
|
|
|
/s/ Sébastien M. Bazin
|
|
/s/ Risa Lavizzo-Mourey
|
Sébastien M. Bazin
Director
|
|
Risa Lavizzo-Mourey
Director |
|
||
|
|
|
|
|
|
/s/ W. Geoffrey Beattie
|
|
/s/ James J. Mulva
|
W. Geoffrey Beattie
Director
|
|
James J. Mulva
Director |
|
||
|
|
|
|
|
|
/s/ Francisco D’Souza
|
|
/s/ Paula Rosput Reynolds
|
Francisco D’Souza
Director
|
|
Paula Rosput Reynolds
Director
|
|
||
|
|
|
|
|
|
/s/ Edward P. Garden
|
|
/s/ Leslie F. Seidman
|
Edward P. Garden
Director
|
|
Leslie F. Seidman
Director
|
|
|
|
|
|
|
/s/ Thomas W. Horton
|
|
/s/ James S. Tisch
|
Thomas W. Horton
Director
|
|
James S. Tisch
Director |
|
||
|
|
|
1.
|
I have reviewed this annual report on Form 10-K 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.
|
/s/ H. Lawrence Culp, Jr.
|
H. Lawrence Culp, Jr.
|
Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K 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.
|
/s/ Jamie S. Miller
|
Jamie S. Miller
|
Chief Financial Officer
|
(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.
|
/s/ H. Lawrence Culp, Jr.
|
|
H. Lawrence Culp, Jr.
|
|
Chief Executive Officer
|
|
/s/ Jamie S. Miller
|
|
Jamie S. Miller
|
|
Chief Financial Officer
|
|
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
|
2
|
0
|
0
|
0
|
0
|
$
|
513
|
|
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 MSHAon or before December 31, 2018 for citations and orders occurring during the year ended December 31, 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.
|
FIVE-YEAR PERFORMANCE GRAPH
|
|
|
|
|||||||||||||||
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
GE
|
$
|
100
|
|
$
|
93
|
|
$
|
119
|
|
$
|
124
|
|
$
|
71
|
|
$
|
32
|
|
S&P 500
|
100
|
|
114
|
|
115
|
|
129
|
|
157
|
|
150
|
|
||||||
DJIA
|
100
|
|
110
|
|
110
|
|
128
|
|
165
|
|
159
|
|