FINANCIAL STATEMENTS AND NOTES
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1
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2
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3
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4
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Current Receivables
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5
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6
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7
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8
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9
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Revenues
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10
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Contract and Other Deferred Assets and Progress Collections and Deferred Income
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11
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12
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Investment contracts, insurance liabilities and insurance annuity benefits
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13
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14
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15
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16
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17
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18
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19
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Commitments, Guarantees, Product Warranties and Other Loss Contingencies
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20
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Cash Flows Information
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21
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22
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FINANCIAL STATEMENTS
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STATEMENT OF EARNINGS (LOSS)
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(UNAUDITED)
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Three months ended March 31
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General Electric Company
and consolidated affiliates
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(In millions; per-share amounts in dollars)
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2018
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2017
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|
|
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Revenues
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Sales of goods
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$
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17,282
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$
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16,744
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Sales of services
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9,592
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7,872
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GE Capital revenues from services
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1,786
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2,264
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Total revenues (Note 9)
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28,660
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26,881
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Costs and expenses
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Cost of goods sold
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14,181
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14,297
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Cost of services sold
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7,345
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5,933
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Selling, general and administrative expenses
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4,204
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4,287
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Interest and other financial charges
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1,285
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1,139
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Investment contracts, insurance losses and insurance annuity benefits
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630
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634
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Non-operating benefit costs
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688
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651
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Other costs and expenses
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121
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190
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Total costs and expenses
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28,453
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27,131
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Other income
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205
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|
197
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GE Capital earnings (loss) from continuing operations
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—
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—
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|
|
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Earnings (loss) from continuing operations before income taxes
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413
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(53
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)
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Benefit (provision) for income taxes
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27
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|
105
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Earnings (loss) from continuing operations
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440
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52
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Earnings (loss) from discontinued operations, net of taxes (Note 2)
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(1,553
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)
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(239
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)
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Net earnings (loss)
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(1,113
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)
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(187
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)
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Less net earnings (loss) attributable to noncontrolling interests
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34
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(104
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)
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Net earnings (loss) attributable to the Company
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(1,147
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)
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(83
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)
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Preferred stock dividends
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(37
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)
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(34
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)
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Net earnings (loss) attributable to GE common shareowners
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$
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(1,184
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)
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$
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(117
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)
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Amounts attributable to GE common shareowners
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Earnings (loss) from continuing operations
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$
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440
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$
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52
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Less net earnings (loss) attributable to noncontrolling interests,
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continuing operations
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34
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(104
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)
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Earnings (loss) from continuing operations attributable to the Company
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406
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|
156
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Preferred stock dividends
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(37
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)
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(34
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)
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Earnings (loss) from continuing operations attributable
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to GE common shareowners
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369
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122
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Earnings (loss) from discontinued operations, net of taxes
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(1,553
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)
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(239
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)
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Less net earnings (loss) attributable to
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noncontrolling interests, discontinued operations
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—
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—
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Net earnings (loss) attributable to GE common shareowners
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$
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(1,184
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)
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$
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(117
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)
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Per-share amounts (Note 16)
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Earnings (loss) from continuing operations
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Diluted earnings (loss) per share
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$
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0.04
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$
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0.01
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Basic earnings (loss) per share
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$
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0.04
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$
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0.01
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Net earnings (loss)
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Diluted earnings (loss) per share
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$
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(0.14
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)
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$
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(0.01
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)
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Basic earnings (loss) per share
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$
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(0.14
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)
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$
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(0.01
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)
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Dividends declared per common share
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$
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0.12
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$
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0.24
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Amounts may not add due to rounding.
See accompanying notes.
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STATEMENT OF EARNINGS (LOSS) (CONTINUED)
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(UNAUDITED)
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Three months ended March 31
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GE(a)
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Financial Services (GE Capital)
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(In millions; per-share amounts in dollars)
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2018
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2017
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2018
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2017
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|
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|
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Revenues
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Sales of goods
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$
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17,273
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$
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16,770
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$
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32
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$
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29
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Sales of services
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9,621
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8,011
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—
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—
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GE Capital revenues from services
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—
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—
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2,141
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2,652
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Total revenues
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26,894
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24,780
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2,173
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2,681
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Costs and expenses
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Cost of goods sold
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14,172
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14,328
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25
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23
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Cost of services sold
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6,855
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5,516
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525
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562
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Selling, general and administrative expenses
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3,999
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3,803
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343
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572
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Interest and other financial charges
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642
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564
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819
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812
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Investment contracts, insurance losses and insurance annuity benefits
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—
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—
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645
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636
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Non-operating benefit costs
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684
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649
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4
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2
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Other costs and expenses
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—
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—
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133
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214
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Total costs and expenses
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26,352
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24,860
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2,495
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2,820
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Other income
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193
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|
166
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—
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—
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GE Capital earnings (loss) from continuing operations
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(215
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)
|
(47
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)
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|
—
|
|
—
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|
|
|
|
|
|
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Earnings (loss) from continuing operations before income taxes
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519
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|
39
|
|
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(321
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)
|
(139
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)
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Benefit (provision) for income taxes
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(112
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)
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(23
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)
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|
139
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|
128
|
|
Earnings (loss) from continuing operations
|
407
|
|
16
|
|
|
(182
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)
|
(11
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)
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Earnings (loss) from discontinued operations, net of taxes (Note 2)
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(1,553
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)
|
(239
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)
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|
(1,553
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)
|
(242
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)
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Net earnings (loss)
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(1,146
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)
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(223
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)
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(1,735
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)
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(253
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)
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Less net earnings (loss) attributable to noncontrolling interests
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38
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(106
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)
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(4
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)
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2
|
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Net earnings (loss) attributable to the Company
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(1,184
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)
|
(117
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)
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(1,731
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)
|
(256
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)
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Preferred stock dividends
|
—
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|
—
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|
|
(37
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)
|
(34
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)
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Net earnings (loss) attributable to GE common shareowners
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$
|
(1,184
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)
|
$
|
(117
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)
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$
|
(1,768
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)
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$
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(290
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)
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|
|
|
|
|
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Amounts attributable to GE common shareowners:
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|
|
|
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Earnings (loss) from continuing operations
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$
|
407
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$
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16
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|
|
$
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(182
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)
|
$
|
(11
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)
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Less net earnings (loss) attributable to noncontrolling interests,
|
|
|
|
|
|
continuing operations
|
38
|
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(106
|
)
|
|
(4
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)
|
2
|
|
Earnings (loss) from continuing operations attributable to the Company
|
369
|
|
122
|
|
|
(179
|
)
|
(13
|
)
|
Preferred stock dividends
|
—
|
|
—
|
|
|
(37
|
)
|
(34
|
)
|
Earnings (loss) from continuing operations attributable
|
|
|
|
|
|
to GE common shareowners
|
369
|
|
122
|
|
|
(215
|
)
|
(47
|
)
|
Earnings (loss) from discontinued operations, net of taxes
|
(1,553
|
)
|
(239
|
)
|
|
(1,553
|
)
|
(242
|
)
|
Less net earnings (loss) attributable to
|
|
|
|
|
|
noncontrolling interests, discontinued operations
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Net earnings (loss) attributable to GE common shareowners
|
$
|
(1,184
|
)
|
$
|
(117
|
)
|
|
$
|
(1,768
|
)
|
$
|
(290
|
)
|
|
|
(a)
|
Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. See Note 1.
|
Amounts may not add due to rounding.
In the consolidating data on this page, “GE” means the basis of consolidation as described in Note 1 to the consolidated financial statements; “GE Capital” means GE Capital Global Holdings, LLC (GECGH) and all of their affiliates and associated companies. Separate information is shown for “GE” and “Financial Services (GE Capital).” Transactions between GE and GE Capital have been eliminated from the “General Electric Company and consolidated affiliates” columns on the prior page.
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GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
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|
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
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|
|
(UNAUDITED)
|
|
|
|
|
|
|
Three months ended March 31
|
(In millions)
|
2018
|
|
2017
|
|
|
|
|
Net earnings (loss)
|
$
|
(1,113
|
)
|
$
|
(187
|
)
|
Less net earnings (loss) attributable to noncontrolling interests
|
34
|
|
(104
|
)
|
Net earnings (loss) attributable to the Company
|
$
|
(1,147
|
)
|
$
|
(83
|
)
|
|
|
|
Other comprehensive income (loss)
|
|
|
Investment securities
|
$
|
99
|
|
$
|
(52
|
)
|
Currency translation adjustments
|
830
|
|
811
|
|
Cash flow hedges
|
55
|
|
20
|
|
Benefit plans
|
717
|
|
1,049
|
|
Other comprehensive income (loss)
|
1,702
|
|
1,828
|
|
Less other comprehensive income (loss) attributable to noncontrolling interests
|
160
|
|
6
|
|
Other comprehensive income (loss) attributable to the Company
|
$
|
1,542
|
|
$
|
1,822
|
|
|
|
|
Comprehensive income (loss)
|
$
|
588
|
|
$
|
1,641
|
|
Less comprehensive income (loss) attributable to noncontrolling interests
|
194
|
|
(98
|
)
|
Comprehensive income (loss) attributable to the Company
|
$
|
395
|
|
$
|
1,739
|
|
Amounts presented net of taxes.
Amounts may not add due to rounding.
See accompanying notes.
[PAGE INTENTIONALLY LEFT BLANK]
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STATEMENT OF FINANCIAL POSITION
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General Electric Company
and consolidated affiliates
|
(In millions, except share amounts)
|
March 31, 2018
|
|
December 31, 2017
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
Cash, cash equivalents and restricted cash(a)
|
$
|
32,129
|
|
$
|
43,967
|
|
Investment securities (Note 3)
|
37,156
|
|
38,696
|
|
Current receivables (Note 4)
|
22,560
|
|
24,209
|
|
Inventories (Note 5)
|
20,574
|
|
19,419
|
|
Financing receivables – net (Note 6)
|
10,134
|
|
10,336
|
|
Other GE Capital receivables
|
6,804
|
|
6,301
|
|
Property, plant and equipment – net (Note 7)
|
53,650
|
|
53,874
|
|
Receivable from GE Capital
|
—
|
|
—
|
|
Investment in GE Capital
|
—
|
|
—
|
|
Goodwill (Note 8)
|
85,468
|
|
83,968
|
|
Other intangible assets – net (Note 8)
|
20,661
|
|
20,273
|
|
Contract and other deferred assets (Note 10)
|
20,780
|
|
20,356
|
|
All other assets
|
26,735
|
|
28,949
|
|
Deferred income taxes (Note 14)
|
11,479
|
|
8,819
|
|
Assets of businesses held for sale (Note 2)
|
4,310
|
|
4,164
|
|
Assets of discontinued operations (Note 2)
|
5,670
|
|
5,912
|
|
Total assets(b)
|
$
|
358,109
|
|
$
|
369,245
|
|
|
|
|
Liabilities and equity
|
|
|
Short-term borrowings (Note 11)
|
$
|
19,371
|
|
$
|
24,036
|
|
Accounts payable, principally trade accounts
|
15,060
|
|
15,172
|
|
Progress collections and deferred income
|
21,950
|
|
22,117
|
|
Dividends payable
|
1,060
|
|
1,052
|
|
Other GE current liabilities
|
16,092
|
|
16,919
|
|
Non-recourse borrowings of consolidated securitization entities (Note 11)
|
1,335
|
|
1,980
|
|
Long-term borrowings (Note 11)
|
105,134
|
|
108,575
|
|
Investment contracts, insurance liabilities and insurance annuity benefits (Note 12)
|
36,889
|
|
38,136
|
|
Non-current compensation and benefits
|
41,126
|
|
41,630
|
|
All other liabilities
|
20,224
|
|
20,784
|
|
Liabilities of businesses held for sale (Note 2)
|
1,024
|
|
1,248
|
|
Liabilities of discontinued operations (Note 2)
|
2,104
|
|
706
|
|
Total liabilities(b)
|
281,367
|
|
292,355
|
|
|
|
|
Redeemable noncontrolling interests (Note 15)
|
3,549
|
|
3,391
|
|
|
|
|
Preferred stock (5,939,874 shares outstanding at both March 31, 2018
and December 31, 2017)
|
6
|
|
6
|
|
Common stock (8,685,338,000 and 8,680,571,000 shares outstanding
at March 31, 2018 and December 31, 2017, respectively)
|
702
|
|
702
|
|
Accumulated other comprehensive income (loss) – net attributable to GE(c)
|
|
|
Investment securities
|
(4
|
)
|
(102
|
)
|
Currency translation adjustments
|
(3,988
|
)
|
(4,661
|
)
|
Cash flow hedges
|
114
|
|
62
|
|
Benefit plans
|
(8,984
|
)
|
(9,702
|
)
|
Other capital
|
37,339
|
|
37,384
|
|
Retained earnings
|
115,477
|
|
117,245
|
|
Less common stock held in treasury
|
(84,697
|
)
|
(84,902
|
)
|
Total GE shareowners’ equity
|
55,965
|
|
56,030
|
|
Noncontrolling interests(d) (Note 15)
|
17,228
|
|
17,468
|
|
Total equity (Note 15)
|
73,193
|
|
73,498
|
|
Total liabilities, redeemable noncontrolling interests and equity
|
$
|
358,109
|
|
$
|
369,245
|
|
|
|
(a)
|
Includes restricted cash of
$501 million
and
$668 million
at
March 31, 2018
and
December 31, 2017
, respectively.
|
|
|
(b)
|
Our consolidated assets at
March 31, 2018
included total assets of
$3,927 million
of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs. These assets included current receivables and net financing receivables of
$1,460 million
within continuing operations and assets of discontinued operations of
$280 million
. Our consolidated liabilities at
March 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
$(665) million
within continuing operations. See Note 18.
|
|
|
(c)
|
The sum of accumulated other comprehensive income (loss) (AOCI) attributable to the Company was
$(12,862) million
and
$(14,404) million
at
March 31, 2018
and
December 31, 2017
, respectively.
|
|
|
(d)
|
Included AOCI attributable to noncontrolling interests of
$(66) million
and
$(226) million
at
March 31, 2018
and
December 31, 2017
, respectively.
|
Amounts may not add due to rounding.
See accompanying notes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATEMENT OF FINANCIAL POSITION (CONTINUED)
|
|
GE(a)
|
|
Financial Services (GE Capital)
|
(In millions, except share amounts)
|
March 31,
2018
|
|
December 31, 2017
|
|
|
March 31,
2018
|
|
December 31, 2017
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Assets
|
|
|
|
|
|
Cash, cash equivalents and restricted cash(b)
|
$
|
13,118
|
|
$
|
18,822
|
|
|
$
|
19,012
|
|
$
|
25,145
|
|
Investment securities (Note 3)
|
544
|
|
569
|
|
|
36,688
|
|
38,231
|
|
Current receivables (Note 4)
|
14,672
|
|
14,638
|
|
|
—
|
|
—
|
|
Inventories (Note 5)
|
20,506
|
|
19,344
|
|
|
67
|
|
75
|
|
Financing receivables - net (Note 6)
|
—
|
|
—
|
|
|
20,099
|
|
21,967
|
|
Other GE Capital receivables
|
—
|
|
—
|
|
|
16,133
|
|
16,945
|
|
Property, plant and equipment – net (Note 7)
|
23,681
|
|
23,963
|
|
|
30,723
|
|
30,595
|
|
Receivable from GE Capital(c)
|
35,903
|
|
39,844
|
|
|
—
|
|
—
|
|
Investment in GE Capital
|
11,972
|
|
13,493
|
|
|
—
|
|
—
|
|
Goodwill (Note 8)
|
84,484
|
|
82,985
|
|
|
984
|
|
984
|
|
Other intangible assets – net (Note 8)
|
20,397
|
|
20,014
|
|
|
264
|
|
259
|
|
Contract and other deferred assets (Note 10)
|
20,780
|
|
20,356
|
|
|
—
|
|
—
|
|
All other assets
|
11,704
|
|
13,627
|
|
|
15,211
|
|
15,606
|
|
Deferred income taxes (Note 14)
|
10,315
|
|
7,815
|
|
|
1,160
|
|
999
|
|
Assets of businesses held for sale (Note 2)
|
3,992
|
|
3,799
|
|
|
—
|
|
—
|
|
Assets of discontinued operations (Note 2)
|
—
|
|
—
|
|
|
5,670
|
|
5,912
|
|
Total assets
|
$
|
272,067
|
|
$
|
279,267
|
|
|
$
|
146,011
|
|
$
|
156,716
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
Short-term borrowings (Note 11)(c)
|
$
|
12,615
|
|
$
|
14,548
|
|
|
$
|
15,603
|
|
$
|
19,602
|
|
Accounts payable, principally trade accounts
|
20,492
|
|
21,851
|
|
|
1,945
|
|
1,853
|
|
Progress collections and deferred income
|
22,207
|
|
22,221
|
|
|
—
|
|
—
|
|
Dividends payable
|
1,060
|
|
1,052
|
|
|
—
|
|
—
|
|
Other GE current liabilities
|
16,092
|
|
16,919
|
|
|
—
|
|
—
|
|
Non-recourse borrowings of consolidated securitization entities (Note 11)
|
—
|
|
—
|
|
|
1,335
|
|
1,980
|
|
Long-term borrowings (Note 11)(c)
|
64,792
|
|
67,040
|
|
|
69,346
|
|
73,614
|
|
Investment contracts, insurance liabilities and insurance annuity benefits (Note 12)
|
—
|
|
—
|
|
|
37,453
|
|
38,587
|
|
Non-current compensation and benefits
|
40,369
|
|
40,820
|
|
|
748
|
|
801
|
|
All other liabilities
|
16,736
|
|
16,873
|
|
|
5,334
|
|
5,886
|
|
Liabilities of businesses held for sale (Note 2)
|
1,134
|
|
1,248
|
|
|
—
|
|
—
|
|
Liabilities of discontinued operations (Note 2)
|
23
|
|
23
|
|
|
2,081
|
|
683
|
|
Total liabilities
|
195,519
|
|
202,595
|
|
|
133,845
|
|
143,007
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests (Note 15)
|
3,549
|
|
3,391
|
|
|
—
|
|
—
|
|
|
|
|
|
|
|
Preferred stock (5,939,874 shares outstanding at both March 31, 2018
and December 31, 2017)
|
6
|
|
6
|
|
|
6
|
|
6
|
|
Common stock (8,685,338,000 and 8,680,571,000 shares outstanding
at March 31, 2018 and December 31, 2017, respectively)
|
702
|
|
702
|
|
|
—
|
|
—
|
|
Accumulated other comprehensive income (loss) - net attributable to GE
|
|
|
|
|
|
Investment securities
|
(4
|
)
|
(102
|
)
|
|
5
|
|
(99
|
)
|
Currency translation adjustments
|
(3,988
|
)
|
(4,661
|
)
|
|
(142
|
)
|
(225
|
)
|
Cash flow hedges
|
114
|
|
62
|
|
|
82
|
|
54
|
|
Benefit plans
|
(8,984
|
)
|
(9,702
|
)
|
|
(514
|
)
|
(524
|
)
|
Other capital
|
37,339
|
|
37,384
|
|
|
12,842
|
|
12,806
|
|
Retained earnings
|
115,477
|
|
117,245
|
|
|
(308
|
)
|
1,476
|
|
Less common stock held in treasury
|
(84,697
|
)
|
(84,902
|
)
|
|
—
|
|
—
|
|
Total GE shareowners’ equity
|
55,965
|
|
56,030
|
|
|
11,972
|
|
13,493
|
|
Noncontrolling interests (Note 15)
|
17,034
|
|
17,252
|
|
|
195
|
|
217
|
|
Total equity (Note 15)
|
72,999
|
|
73,282
|
|
|
12,166
|
|
13,709
|
|
Total liabilities, redeemable noncontrolling interests and equity
|
$
|
272,067
|
|
$
|
279,267
|
|
|
$
|
146,011
|
|
$
|
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
$439 million
and
$611 million
at March 31, 2018 and December 31, 2017, respectively, and GE Capital restricted cash was
$62 million
and
$57 million
at March 31, 2018 and December 31, 2017, respectively.
|
|
|
(c)
|
In 2015, senior unsecured notes and commercial paper were assumed by GE upon its merger with GE Capital, resulting in an intercompany receivable and payable between GE and GE Capital. See Note 11.
|
Amounts may not add due to rounding.
In the consolidating data on this page, “GE” means the basis of consolidation as described in Note 1 to the consolidated financial statements; “GE Capital” means GE Capital Global Holdings, LLC (GECGH) and all of their affiliates and associated companies. Separate information is shown for “GE” and “Financial Services (GE Capital).” Transactions between GE and GE Capital have been eliminated from the “General Electric Company and consolidated affiliates” columns on the prior page.
|
|
|
|
|
|
|
|
STATEMENT OF CASH FLOWS
|
(UNAUDITED)
|
|
|
|
Three months ended March 31
|
|
General Electric Company
and consolidated affiliates
|
(In millions)
|
2018
|
|
2017
|
|
|
|
|
Cash flows – operating activities
|
|
|
Net earnings (loss)
|
$
|
(1,113
|
)
|
$
|
(187
|
)
|
(Earnings) loss from discontinued operations
|
1,553
|
|
239
|
|
Adjustments to reconcile net earnings (loss) attributable to the
|
|
|
Company to cash provided from operating activities
|
|
|
Depreciation and amortization of property, plant and equipment
|
1,300
|
|
1,193
|
|
Amortization of intangible assets
|
613
|
|
539
|
|
(Earnings) loss from continuing operations retained by GE Capital
|
—
|
|
—
|
|
Deferred income taxes
|
(667
|
)
|
(324
|
)
|
Decrease (increase) in contract and other deferred assets
|
(398
|
)
|
(1,249
|
)
|
Decrease (increase) in GE current receivables
|
1,732
|
|
2,168
|
|
Decrease (increase) in inventories
|
(1,069
|
)
|
(815
|
)
|
Increase (decrease) in accounts payable
|
(38
|
)
|
(304
|
)
|
Increase (decrease) in GE progress collections
|
(40
|
)
|
(5
|
)
|
All other operating activities
|
(451
|
)
|
(679
|
)
|
Cash from (used for) operating activities – continuing operations
|
1,423
|
|
576
|
|
Cash from (used for) operating activities – discontinued operations
|
(33
|
)
|
(658
|
)
|
Cash from (used for) operating activities
|
1,390
|
|
(82
|
)
|
|
|
|
Cash flows – investing activities
|
|
|
Additions to property, plant and equipment
|
(1,818
|
)
|
(1,470
|
)
|
Dispositions of property, plant and equipment
|
624
|
|
812
|
|
Additions to internal-use software
|
(99
|
)
|
(130
|
)
|
Net decrease (increase) in GE Capital financing receivables
|
303
|
|
306
|
|
Proceeds from sale of discontinued operations
|
29
|
|
789
|
|
Proceeds from principal business dispositions
|
15
|
|
81
|
|
Net cash from (payments for) principal businesses purchased
|
—
|
|
(967
|
)
|
All other investing activities
|
(623
|
)
|
5,315
|
|
Cash from (used for) investing activities – continuing operations
|
(1,570
|
)
|
4,735
|
|
Cash from (used for) investing activities – discontinued operations
|
(74
|
)
|
(2,026
|
)
|
Cash from (used for) investing activities
|
(1,644
|
)
|
2,709
|
|
|
|
|
Cash flows – financing activities
|
|
|
Net increase (decrease) in borrowings (maturities of 90 days or less)
|
(1,291
|
)
|
777
|
|
Newly issued debt (maturities longer than 90 days)
|
199
|
|
326
|
|
Repayments and other debt reductions (maturities longer than 90 days)
|
(9,256
|
)
|
(8,666
|
)
|
Net dispositions (purchases) of GE shares for treasury
|
(8
|
)
|
(1,578
|
)
|
Dividends paid to shareowners
|
(1,043
|
)
|
(2,084
|
)
|
All other financing activities
|
(501
|
)
|
(959
|
)
|
Cash from (used for) financing activities – continuing operations
|
(11,899
|
)
|
(12,185
|
)
|
Cash from (used for) financing activities – discontinued operations
|
—
|
|
1,907
|
|
Cash from (used for) financing activities
|
(11,899
|
)
|
(10,278
|
)
|
Effect of currency exchange rate changes on cash, cash equivalents and
restricted cash
|
208
|
|
133
|
|
Increase (decrease) in cash, cash equivalents and restricted cash
|
(11,945
|
)
|
(7,518
|
)
|
Cash, cash equivalents and restricted cash at beginning of year
|
44,724
|
|
50,384
|
|
Cash, cash equivalents and restricted cash at March 31
|
32,779
|
|
42,866
|
|
Less cash, cash equivalents and restricted cash of discontinued operations at March 31
|
650
|
|
824
|
|
Cash, cash equivalents and restricted cash of continuing operations at March 31
|
$
|
32,129
|
|
$
|
42,042
|
|
Amounts may not add due to rounding.
See accompanying notes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATEMENT OF CASH FLOWS (CONTINUED)
|
|
|
|
(UNAUDITED)
|
|
Three months ended March 31
|
|
GE(a)
|
|
Financial Services (GE Capital)
|
(In millions)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
Cash flows – operating activities
|
|
|
|
|
|
Net earnings (loss)
|
$
|
(1,146
|
)
|
$
|
(223
|
)
|
|
$
|
(1,735
|
)
|
$
|
(253
|
)
|
(Earnings) loss from discontinued operations
|
1,553
|
|
239
|
|
|
1,553
|
|
242
|
|
Adjustments to reconcile net earnings (loss) attributable to the
|
|
|
|
|
|
Company to cash provided from operating activities
|
|
|
|
|
|
Depreciation and amortization of property, plant and equipment
|
758
|
|
589
|
|
|
531
|
|
595
|
|
Amortization of intangible assets
|
601
|
|
519
|
|
|
12
|
|
20
|
|
(Earnings) loss from continuing operations retained by GE Capital(b)
|
215
|
|
2,047
|
|
|
—
|
|
—
|
|
Deferred income taxes
|
(429
|
)
|
(412
|
)
|
|
(238
|
)
|
87
|
|
Decrease (increase) in contract and other deferred assets
|
(398
|
)
|
(1,249
|
)
|
|
—
|
|
—
|
|
Decrease (increase) in GE current receivables
|
(106
|
)
|
193
|
|
|
—
|
|
—
|
|
Decrease (increase) in inventories
|
(1,073
|
)
|
(819
|
)
|
|
8
|
|
5
|
|
Increase (decrease) in accounts payable
|
(302
|
)
|
(407
|
)
|
|
49
|
|
8
|
|
Increase (decrease) in GE progress collections
|
114
|
|
(9
|
)
|
|
—
|
|
—
|
|
All other operating activities
|
(798
|
)
|
(101
|
)
|
|
359
|
|
(585
|
)
|
Cash from (used for) operating activities – continuing operations
|
(1,012
|
)
|
368
|
|
|
539
|
|
119
|
|
Cash from (used for) operating activities – discontinued operations
|
—
|
|
—
|
|
|
(33
|
)
|
(658
|
)
|
Cash from (used for) operating activities
|
(1,012
|
)
|
368
|
|
|
506
|
|
(538
|
)
|
|
|
|
|
|
|
Cash flows – investing activities
|
|
|
|
|
|
Additions to property, plant and equipment
|
(882
|
)
|
(992
|
)
|
|
(972
|
)
|
(688
|
)
|
Dispositions of property, plant and equipment
|
166
|
|
355
|
|
|
459
|
|
619
|
|
Additions to internal-use software
|
(91
|
)
|
(124
|
)
|
|
(8
|
)
|
(6
|
)
|
Net decrease (increase) in GE Capital financing receivables
|
—
|
|
—
|
|
|
2,933
|
|
2,967
|
|
Proceeds from sale of discontinued operations
|
—
|
|
—
|
|
|
29
|
|
789
|
|
Proceeds from principal business dispositions
|
15
|
|
81
|
|
|
—
|
|
—
|
|
Net cash from (payments for) principal businesses purchased
|
—
|
|
(967
|
)
|
|
—
|
|
—
|
|
All other investing activities
|
(721
|
)
|
(177
|
)
|
|
46
|
|
3,114
|
|
Cash from (used for) investing activities – continuing operations
|
(1,514
|
)
|
(1,824
|
)
|
|
2,487
|
|
6,795
|
|
Cash from (used for) investing activities – discontinued operations
|
—
|
|
—
|
|
|
(74
|
)
|
(2,026
|
)
|
Cash from (used for) investing activities
|
(1,514
|
)
|
(1,825
|
)
|
|
2,412
|
|
4,768
|
|
|
|
|
|
|
|
Cash flows – financing activities
|
|
|
|
|
|
Net increase (decrease) in borrowings (maturities of 90 days or less)
|
(1,287
|
)
|
(254
|
)
|
|
(892
|
)
|
132
|
|
Newly issued debt (maturities longer than 90 days)
|
412
|
|
4,118
|
|
|
72
|
|
292
|
|
Repayments and other debt reductions (maturities longer than 90 days)
|
(916
|
)
|
(1,411
|
)
|
|
(8,383
|
)
|
(8,594
|
)
|
Net dispositions (purchases) of GE shares for treasury
|
(8
|
)
|
(1,578
|
)
|
|
—
|
|
—
|
|
Dividends paid to shareowners
|
(1,043
|
)
|
(2,084
|
)
|
|
—
|
|
(2,000
|
)
|
All other financing activities
|
(469
|
)
|
(217
|
)
|
|
(32
|
)
|
(737
|
)
|
Cash from (used for) financing activities – continuing operations
|
(3,311
|
)
|
(1,424
|
)
|
|
(9,234
|
)
|
(10,907
|
)
|
Cash from (used for) financing activities – discontinued operations
|
—
|
|
—
|
|
|
—
|
|
1,907
|
|
Cash from (used for) financing activities
|
(3,311
|
)
|
(1,424
|
)
|
|
(9,234
|
)
|
(8,999
|
)
|
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash
|
133
|
|
71
|
|
|
75
|
|
61
|
|
Increase (decrease) in cash, cash equivalents and restricted cash
|
(5,705
|
)
|
(2,809
|
)
|
|
(6,241
|
)
|
(4,708
|
)
|
Cash, cash equivalents and restricted cash at beginning of year
|
18,822
|
|
11,083
|
|
|
25,902
|
|
39,301
|
|
Cash, cash equivalents and restricted cash at March 31
|
13,118
|
|
8,274
|
|
|
19,661
|
|
34,592
|
|
Less cash, cash equivalents and restricted cash of discontinued operations at March 31
|
—
|
|
—
|
|
|
650
|
|
824
|
|
Cash, cash equivalents and restricted cash of continuing operations at March 31
|
$
|
13,118
|
|
$
|
8,274
|
|
|
$
|
19,012
|
|
$
|
33,768
|
|
|
|
(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.
|
Amounts may not add due to rounding.
In the consolidating data on this page, “GE” means the basis of consolidation as described in Note 1 to the consolidated financial statements; "GE Capital" means GE Capital Global Holdings, LLC (GECGH) and all of their affiliates and associated companies. Separate information is shown for “GE” and “Financial Services (GE Capital).” Transactions between GE and GE Capital have been eliminated from the “Consolidated” columns and are discussed in Note 21.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements represent the consolidation of General Electric Company (the Company) and all companies that we directly or indirectly control, either through majority ownership or otherwise. See Note 1 to the consolidated financial statements in
our Annual Report on Form 10-K for the year ended
December 31, 2017
that discusses our consolidation and financial statement presentation. As used in this report on Form 10-Q (Report), “GE” represents the adding together of all affiliated companies except GE Capital (GE Capital or Financial Services), whose continuing operations are presented on a one-line basis; GE Capital consists of GE Capital Global Holdings, LLC (GECGH) and all of its affiliates; and “Consolidated” represents the adding together of GE and GE Capital with the effects of transactions between the two eliminated.
We have reclassified certain prior-period amounts to conform to the current-period presentation. Certain columns and rows may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers in millions. Unless otherwise indicated, information in these notes to the consolidated financial statements relates to continuing operations.
INTERIM PERIOD PRESENTATION
The consolidated financial statements and notes thereto are unaudited. These statements include all adjustments (consisting of normal recurring accruals) that we considered necessary to present a fair statement of our results of operations, financial position and cash flows. The results reported in these consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in our consolidated financial statements of our Annual Report on Form 10-K for the year ended
December 31, 2017
.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Please refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies, to the consolidated financial statements of our Annual Report on Form 10-K for the year ended
December 31, 2017
for the discussion of our significant accounting policies as well as the additional revenue accounting policy information provided in Note 9, reflective of our adoption of ASC 606.
ACCOUNTING CHANGES
On January 1, 2018, we adopted Accounting Standards Update (ASU) 2014-09,
Revenue from Contracts with Customers
, and the related amendments (ASC 606), which supersedes most previous U.S. GAAP revenue guidance. We elected to adopt the new standard on a retrospective basis to ensure a consistent basis of presentation within our consolidated financial statements for all periods reported. In addition, we elected the practical expedient for contract modifications, which essentially means that the terms of the contract that existed at the beginning of the earliest period presented can be assumed to have been in place since the inception of the contract (i.e., not practical to separately evaluate the effects of all prior contract modifications).
ASC 606 requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time based on when control of goods and services transfers to a customer. As a result of the adoption of the standard, we recorded significant changes in the timing of revenue recognition and in the classification between revenues and costs. The financial statement effect of the adoption was a decrease to our previously reported retained earnings as of January 1, 2016 of
$4,240 million
and a decrease to our previously reported revenues and earnings (loss) from continuing operations of
$2,224 million
and
$2,668 million
, respectively, for the year ended December 31, 2017 and
$220 million
and
$1,182 million
, respectively, for the year ended December 31, 2016. The effect on our statement of financial position was principally comprised of changes to our contract assets, inventories, deferred taxes, deferred income and progress collections balances resulting in an
$8,317 million
decrease to previously reported total assets as of December 31, 2017.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
As discussed in prior filings, some of the impacts of adopting the ASC 606 are:
Long-Term Service Agreements
- For our long-term service agreements, we will continue to recognize revenue over time using percentage of completion based on costs incurred relative to total expected costs. We will also continue to record cumulative effect adjustments resulting from changes to our estimated contract billings or costs (excluding those resulting from contract modifications as discussed below). Our accounting will be impacted by various changes in the new revenue standard including (1) accounting for contract modifications and their related impacts and (2) changes in the accounting scope and term of our contracts.
|
|
•
|
Modifications - Under the new revenue standard, contract modifications will generally be accounted for as if we entered into a new contract, resulting in prospective recognition of changes to our estimates of contract billings and costs. That is, cumulative effect adjustments will generally no longer be recognized in the period that modifications occur.
|
There was limited guidance for accounting for contract modifications under prior U.S. GAAP. As a result, our previous method of accounting for contract modifications was developed with the objective of accounting for the nature of the contract modifications. Generally, contract modifications were accounted for as cumulative effect adjustments, which reflected an update to the contract margin for the impact of the modification (i.e., changes to estimates of future contract billings and costs); however, modifications that substantially changed the economics of the arrangement were effectively accounted for as a new contract.
|
|
•
|
Scope and term - The new revenue standard provides more prescriptive guidance on identifying the elements of long-term service type contracts that should be accounted for as separate performance obligations. Application of this guidance, which focuses on understanding the nature of the arrangement, including our customers' discretion in purchasing decisions, has resulted in changes to the scope of elements included in our accounting model for long-term service agreements. For example, significant equipment upgrades offered as part of our long-term service agreements will generally be accounted for as separate performance obligations under the new revenue standard.
|
Also, the term of our contracts is now defined as the shorter of the stated term or the term not subject to unilateral termination. Over this contract term, we estimate our revenues and related costs, including estimates of fixed and variable payments related to asset utilization and related costs to fulfill our performance obligations. Historically, our accounting for long-term contracts did not reflect an expectation that a contract would be terminated prior to the stated term, particularly when the probability of termination was considered remote. Under prior U.S. GAAP, while termination rights were considered, more emphasis was placed on more likely outcomes (i.e., use of best estimates). For example, we used historical experience with similar types of contracts as well as other evidence (e.g., customer intent, economic compulsion and future plans for operating the asset) to determine the contract term for application of our accounting model.
These changes to our long-term service agreement accounting have significantly impacted all of our industrial businesses except for Renewable Energy, Healthcare, and Lighting and were some of the drivers in the reduction of the related contract asset balance of
$8,255 million
as of December 31, 2017. While these contract asset balances have been reduced due to the accounting changes, the economics and cash impact of these contracts remain unchanged.
Aviation Commercial Engines
- For Aviation Commercial engines our previous method applied contract-specific estimated margin rates, which included the effect of estimated cost improvements over time, to costs incurred to determine the amount of revenue that should be recognized. The new revenue standard will result in a significant change from our previous long-term contract accounting model. While we will continue to recognize revenue at delivery, each engine is now accounted for as a separate performance obligation, reflecting the contractually stated price and manufacturing cost of each engine. The most significant effect of this change is on our new engine launches, where the cost of earlier production units is higher than the cost of later production units driven by expected cost improvements over the life of the engine program, which will generally result in lower earnings or increased losses on our early program engine deliveries to our airframer customers. The effect of this change reduced the related contract asset balance of
$1,755 million
as of December 31, 2017.
All Other Large Equipment
- For the remainder of our equipment businesses, the new revenue standard’s emphasis on transfer of control rather than risks and rewards has resulted in an accelerated timing of revenue recognition versus our previous accounting for certain products. While this change impacts all our businesses, our Renewable Energy business was most significantly impacted on a year over year basis with certain of their products recognized at an earlier point in time compared to historical standards. Consistent with our industry peers, certain of our businesses’ products have transitioned either to a point in time or over time recognition based on the nature of the arrangement. This change in timing of revenue had an effect on inventory, contract assets and progress collections to reflect the transfer of control at an earlier point in time.
Refer to our Form 8-K filed on April 13, 2018 for supplemental information on the effect of the adoption of ASC 606 to our financial statements.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
On January 1, 2018, we adopted ASU No. 2017-07,
Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
. The ASU requires the service cost component of the net periodic costs for pension and postretirement plans to be presented in the same line item in the statement of earnings as other employee-related compensation costs. The non-service related costs are now required to be presented separately from the service cost component. This change to the income statement has been reflected on a retrospective basis and had no effect on continuing or net income. The new standard also added guidance requiring entities to exclude these non-service related costs from capitalization in inventory or other internally-developed assets on a prospective basis, which is not expected to have a significant effect.
On January 1, 2018 we adopted ASU No. 2016-18,
Statement of Cash Flows: Restricted Cash
. The ASU requires the changes in the total of cash and restricted cash to be presented in the statement of cash flows. In addition, when cash and restricted cash are presented on separate lines on the balance sheet, an entity is required to reconcile the totals in the statement of cash flows to the related line items in the balance sheet. While not a direct effect of the adoption of the standard, to simplify the reconciliation of the statement of cash flows to the cash balances presented in our statement of financial position, we have elected to present cash and restricted cash as a single line on the balance sheet, which resulted in an increase of
$668 million
and
$654 million
to our previously reported December 31, 2017 and December 31, 2016 cash balances, respectively. The change to our cash balances and cash flows has been reflected on a retrospective basis for all periods presented.
On January 1, 2018, we adopted ASU No. 2016-16,
Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory
. The ASU eliminates the deferral of the tax effects of intra-entity asset transfers other than inventory and was required to be adopted on a modified retrospective basis. As a result, the tax expense from the intercompany sale of assets, other than inventory, and associated changes to deferred taxes will be recognized when the sale occurs even though the pre-tax effects of the transaction have not been recognized as they are eliminated in consolidation. This change to our income tax provision has been reflected as a
$464 million
cumulative catch up adjustment to increase retained earnings as of January 1, 2018 and is not reflected in periods prior to this date.
On January 1, 2018, we adopted ASU No. 2016-15,
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments
. The ASU is required to be reflected on a retrospective basis and provides guidance on the classification of certain cash receipts and cash payments, including requiring cash payments for debt prepayment or debt extinguishment costs be classified as financing activities and payments from a beneficial interest in securitization transactions be classified as investing activities. As part of the adoption, we will reclassify
$553 million
of cash receipts from our beneficial interest in securitized trade receivables within our consolidated statement of cash flows from cash inflows from operating activities to cash inflows from investing activities for the year ended December 31, 2017 (no effect to periods prior to 2017). The adoption of the ASU did not have a significant effect on our GE Industrial cash flows.
On January 1, 2018 we adopted ASU 2016-01,
Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.
The ASU provides guidance related to the recognition and measurement of financial assets and financial liabilities with changes primarily affecting equity investments and disclosure of financial instruments. Under the new guidance, equity investments with readily determinable fair value, except those accounted for under the equity method of accounting, will be measured at fair value with changes in fair value recognized in earnings. The adoption had an insignificant impact to retained earnings and other comprehensive income.
Effective January 1, 2018, we voluntarily changed the cost method of the GE U.S. inventories that were previously measured on a last-in, first-out (LIFO) basis to first-in, first-out (FIFO) basis. We believe the FIFO method is a preferable measure for our inventories as it is expected to better reflect the current value of inventory reported in the consolidated statement of financial position, improve the matching of costs of goods sold with related revenue, and provide for greater consistency and uniformity across our operations with respect to the method of inventory valuation. While this change will also require us to make a conforming change for U.S. income tax purposes, all existing GE businesses previously using LIFO are expected to be in a deflationary cost environment due to the manufacturing life cycle of the products and continuous reduction in the manufacturing costs due to better efficiencies, which would significantly decrease the tax benefit that LIFO would otherwise provide. Prior to the change and as reported in our 2017 10-K, LIFO was used for approximately
32%
of GE inventories as of December 31, 2017.
As required by U.S. GAAP, we have reflected this change in accounting principle on a retrospective basis resulting in changes to the
historical periods presented. The retrospective application of the change resulted in a decrease to our January 1, 2016 retained
earnings of
$105 million
and a decrease to our net loss from continuing operations by
$15 million
and
$124 million
for the three months ended March 31, 2017 and the year ended December 31, 2017, respectively, and a decrease to our net earnings from continuing operations by
$147
million for the year ended December 31, 2016. This change did not affect our previously reported cash flows from operating, investing or financing activities.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 2. BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS
ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE
On November 13, 2017, the Company announced its intention to exit approximately
$20 billion
of assets over the next
one
to
two years
. In the fourth quarter of 2017, in connection with this announcement, GE classified various businesses with assets of
$1,684 million
and liabilities of
$721 million
as held for sale. These businesses span across our Power, Lighting, Aviation and Healthcare segments and resulted in a pre-tax loss on the planned disposals of
$1,075 million
(
$1,045 million
after-tax) as of March 31, 2018, of which
$1,033 million
of pre-tax loss (
$1,024 million
after-tax) was recorded in the fourth quarter of 2017.
O
n September 25, 2017, we signed an agreement to sell our Industrial Solutions business within our Power segment with assets of
$2,308
million and liabilities of $
413
million, to ABB for approximately
$2,600 million
(approximately
$1,900 million
net cash proceeds after adjusting for deal taxes and for cash to be received by GE Capital for receivables originated in our Industrial Solutions business and sold to them). The transaction is targeted to close in mid-2018.
|
|
|
|
|
|
|
|
FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE
|
(In millions)
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
|
Assets
|
|
|
|
Current receivables(a)
|
$
|
593
|
|
$
|
612
|
|
Inventories
|
964
|
|
931
|
|
Property, plant, and equipment – net
|
964
|
|
931
|
|
Goodwill
|
1,659
|
|
1,619
|
|
Other intangible assets – net
|
411
|
|
403
|
|
Contract assets
|
660
|
|
619
|
|
Valuation allowance on disposal group classified as held for sale (b)
|
(1,049
|
)
|
(1,000
|
)
|
Other assets
|
107
|
|
49
|
|
Assets of businesses held for sale
|
$
|
4,310
|
|
$
|
4,164
|
|
|
|
|
Liabilities
|
|
|
Accounts payable(a)
|
$
|
672
|
|
$
|
602
|
|
Progress collections and deferred income
|
146
|
|
179
|
|
Non-current compensation and benefits
|
42
|
|
162
|
|
Other liabilities
|
163
|
|
305
|
|
Liabilities of businesses held for sale
|
$
|
1,024
|
|
$
|
1,248
|
|
|
|
(a)
|
Included transactions in our industrial businesses that were made on an arms-length basis with GE Capital, including GE current receivables sold to GE Capital of $
318
million and $
366
million at
March 31, 2018
and
December 31, 2017
,
respectively and GE Capital services for material procurement of
$(111) million
at March 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.
|
DISCONTINUED OPERATIONS
Discontinued operations primarily relate to our financial services businesses
. Discontinued operations primarily comprise residual assets and liabilities related to our exited U.S. mortgage business (WMC)
, our mortgage portfolio in Poland, and trailing liabilities associated with the sale of our GE Capital businesses as a result of the GE Capital Exit Plan (our plan announced in 2015 to reduce the size of our financial services businesses). Results of operations, financial position and cash flows for these businesses are separately reported as discontinued operations for all periods presented. See Note 19 for further information about indemnifications and further discussion on WMC.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS
|
|
|
|
Three months ended March 31
|
(In millions)
|
2018
|
|
2017
|
|
|
|
|
Operations
|
|
|
|
|
Total revenues and other income (loss)
|
$
|
(1,472
|
)
|
$
|
79
|
|
|
|
|
Earnings (loss) from discontinued operations before income taxes
|
$
|
(1,574
|
)
|
$
|
(196
|
)
|
Benefit (provision) for income taxes(a)
|
19
|
|
62
|
|
Earnings (loss) from discontinued operations, net of taxes
|
$
|
(1,555
|
)
|
$
|
(134
|
)
|
|
|
|
Disposal
|
|
|
Gain (loss) on disposal before income taxes
|
$
|
4
|
|
$
|
(27
|
)
|
Benefit (provision) for income taxes(a)
|
(1
|
)
|
(78
|
)
|
Gain (loss) on disposal, net of taxes
|
$
|
3
|
|
$
|
(105
|
)
|
|
|
|
Earnings (loss) from discontinued operations, net of taxes(b)(c)
|
$
|
(1,553
|
)
|
$
|
(239
|
)
|
|
|
(a)
|
GE Capital's total tax benefit (provision) for discontinued operations and disposals included current tax benefit (provision) of
$(9) million
and
$(576) million
for the three months ended
March 31, 2018
and
2017
, respectively, including current U.S. Federal tax benefit (provision) of
$24 million
and
$(587) million
for the three months ended
March 31, 2018
and
2017
, respectively. The deferred tax benefit (provision) was
$27 million
and
$560 million
for the three months ended
March 31, 2018
and
2017
, respectively.
|
|
|
(b)
|
The sum of GE Industrial earnings (loss) from discontinued operations, net of taxes, and GE Capital earnings (loss) from discontinued operations, net of taxes, after adjusting for earnings (loss) attributable to noncontrolling interests related to discontinued operations, is reported within earnings (loss) from discontinued operations, net of taxes, in the GE Industrial column of the Consolidated Statement of Earnings (Loss).
|
|
|
(c)
|
Earnings (loss) from discontinued operations attributable to the Company, before income taxes, was
$(1,571) million
and
$(223) million
for the three months ended
March 31, 2018
and
2017
, respectively.
|
|
|
|
|
|
|
|
|
(In millions)
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
Assets
|
|
|
Cash, cash equivalents and restricted cash
|
$
|
650
|
|
$
|
757
|
|
Investment securities
|
590
|
|
647
|
|
Deferred income taxes
|
1,024
|
|
951
|
|
Financing receivables held for sale
|
3,180
|
|
3,215
|
|
Other assets
|
226
|
|
342
|
|
Assets of discontinued operations
|
$
|
5,670
|
|
$
|
5,912
|
|
|
|
|
Liabilities
|
|
|
Accounts payable
|
53
|
|
51
|
|
Borrowings
|
—
|
|
1
|
|
Other liabilities
|
2,052
|
|
654
|
|
Liabilities of discontinued operations
|
$
|
2,104
|
|
$
|
706
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 3. INVESTMENT SECURITIES
Substantially all of our investment securities are classified as available-for-sale and comprise mainly investment-grade debt securities supporting obligations to annuitants and policyholders in our run-off insurance operations. We do not have any securities classified as held-to-maturity.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
(In millions)
|
Amortized
cost
|
|
Gross
unrealized
gains
|
|
Gross
unrealized
losses
|
|
Estimated
fair value(a)
|
|
|
Amortized
cost
|
|
Gross
unrealized
gains
|
|
Gross
unrealized
losses
|
|
Estimated
fair value(a)
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
|
|
|
|
|
|
|
U.S. corporate
|
$
|
21,637
|
|
$
|
3,014
|
|
$
|
(130
|
)
|
$
|
24,522
|
|
|
$
|
20,104
|
|
$
|
3,775
|
|
$
|
(35
|
)
|
$
|
23,843
|
|
Non-U.S. corporate
|
3,394
|
|
77
|
|
(14
|
)
|
3,458
|
|
|
5,455
|
|
86
|
|
(13
|
)
|
5,528
|
|
State and municipal
|
3,674
|
|
439
|
|
(53
|
)
|
4,061
|
|
|
3,775
|
|
534
|
|
(40
|
)
|
4,269
|
|
Mortgage and asset-backed
|
3,313
|
|
62
|
|
(45
|
)
|
3,330
|
|
|
2,820
|
|
81
|
|
(23
|
)
|
2,878
|
|
Government and agencies
|
1,636
|
|
64
|
|
(68
|
)
|
1,632
|
|
|
1,927
|
|
75
|
|
(2
|
)
|
2,000
|
|
Equity (b)
|
154
|
|
—
|
|
—
|
|
154
|
|
|
166
|
|
12
|
|
—
|
|
178
|
|
Total
|
$
|
33,808
|
|
$
|
3,657
|
|
$
|
(309
|
)
|
$
|
37,156
|
|
|
$
|
34,246
|
|
$
|
4,564
|
|
$
|
(114
|
)
|
$
|
38,696
|
|
|
|
(a)
|
Included
$544
million and
$569
million of investment securities held by GE at March 31, 2018 and December 31, 2017, respectively, of which
$119
million and
$141
million are equity securities
with readily determinable fair value.
|
|
|
(b)
|
Net unrealized gains (losses) recorded to earnings related to these securities with readily determinable fair value were
$(17) million
and
an insignificant amount
for the
three
months ended
March 31, 2018
and 2017, respectively.
|
Investments with a fair value of
$4,226 million
and
$4,413 million
were classified within Level 3 (significant inputs to the valuation model are unobservable) at
March 31, 2018
and December 31, 2017, respectively. The remaining investments are substantially all classified within Level 2 (determined based on significant observable inputs). During the
three
months ended
March 31, 2018
and 2017, there were no significant transfers into or out of Level 3
.
In addition to equity securities with readily determinable fair value, we hold
$757 million
of equity securities without readily determinable fair value at March 31, 2018 that are recorded at cost less impairment and adjusted for observable price changes for identical or similar instruments. During the three months ended March 31, 2018, we recorded fair value increases of $
8
million to those securities based on observable transactions and impairments of
$5 million
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESTIMATED FAIR VALUE AND GROSS UNREALIZED LOSSES OF AVAILABLE-FOR-SALE DEBT SECURITIES
|
|
In loss position for
|
|
Less than 12 months
|
|
12 months or more
|
(In millions)
|
Estimated
fair value
|
|
Gross
unrealized
losses
|
|
|
Estimated
fair value
|
|
Gross
unrealized
losses
|
|
|
|
|
|
|
|
March 31, 2018
|
|
|
|
|
|
U.S. corporate
|
$
|
3,160
|
|
$
|
(77
|
)
|
|
$
|
568
|
|
$
|
(53
|
)
|
Non-U.S. corporate
|
426
|
|
(5
|
)
|
|
2,041
|
|
(8
|
)
|
State and municipal
|
205
|
|
(4
|
)
|
|
263
|
|
(49
|
)
|
Mortgage and asset-backed
|
1,534
|
|
(30
|
)
|
|
325
|
|
(15
|
)
|
Government and agencies
|
486
|
|
(68
|
)
|
|
20
|
|
—
|
|
Total
|
$
|
5,810
|
|
$
|
(183
|
)
|
|
$
|
3,216
|
|
$
|
(125
|
)
|
|
|
|
|
|
|
December 31, 2017
|
|
|
|
|
|
U.S. corporate
|
$
|
502
|
|
$
|
(6
|
)
|
|
$
|
605
|
|
$
|
(30
|
)
|
Non-U.S. corporate
|
1,169
|
|
(4
|
)
|
|
3,685
|
|
(10
|
)
|
State and municipal
|
48
|
|
(1
|
)
|
|
272
|
|
(39
|
)
|
Mortgage and asset-backed
|
979
|
|
(11
|
)
|
|
318
|
|
(12
|
)
|
Government and agencies
|
395
|
|
(2
|
)
|
|
69
|
|
—
|
|
Total
|
$
|
3,093
|
|
$
|
(23
|
)
|
|
$
|
4,949
|
|
$
|
(91
|
)
|
Unrealized losses are not indicative of the amount of credit loss that would be recognized and at
March 31, 2018
are primarily due to increases in market yields subsequent to our purchase of the securities. We presently do not intend to sell the vast majority of our debt securities that are in an unrealized loss position and believe that it is not more likely than not that we will be required to sell the vast majority of these securities before anticipated recovery of our amortized cost. The methodologies and significant inputs used to measure the amount of credit loss for our debt securities during
2018
have not changed.
Total pre-tax, other-than-temporary impairments on debt securities recognized in earnings were an insignificant amount for the
three
months ended
March 31, 2018
and 2017.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
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
|
$
|
2,729
|
|
$
|
2,730
|
|
After one year through five years
|
3,159
|
|
3,276
|
|
After five years through ten years
|
6,163
|
|
6,617
|
|
After ten years
|
18,352
|
|
21,124
|
|
We expect actual maturities to differ from contractual maturities because borrowers have the right to call or prepay certain obligations.
Although we generally do not have the intent to sell any specific securities at the end of the period, in the ordinary course of managing our investment securities portfolio, we may sell securities prior to their maturities for a variety of reasons, including diversification, credit quality, yield and liquidity requirements and the funding of claims and obligations to policyholders.
Gross realized gains on available-for-sale debt securities were
$13 million
and
$95 million
, and gross realized losses were
$(1) million
and
$(1) million
in the three months ended
March 31, 2018
and 2017, respectively.
Proceeds from investment securities sales and early redemptions by issuers totaled
$322 million
and
$1,073
million in the three months ended
March 31, 2018
and 2017, respectively primarily from sales of U.S. Corporate, government and agencies and state and municipal securities.
NOTE 4.
CURRENT RECEIVABLES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated(a)(b)
|
|
GE(c)
|
(In millions)
|
March 31, 2018
|
|
December 31, 2017
|
|
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
|
|
|
Current receivables
|
$
|
23,573
|
|
$
|
25,282
|
|
|
$
|
15,671
|
|
$
|
15,693
|
|
Allowance for losses
|
(1,014
|
)
|
(1,073
|
)
|
|
(999
|
)
|
(1,055
|
)
|
Total
|
$
|
22,560
|
|
$
|
24,209
|
|
|
$
|
14,672
|
|
$
|
14,638
|
|
|
|
(a)
|
Included GE industrial customer receivables sold to a GE Capital affiliate and recorded on GE Capital’s balance sheet of $
8,677
million and $
10,370
million at
March 31, 2018
and
December 31, 2017
, respectively. The consolidated total included a deferred purchase price receivable of $
407
million and $
388
million at
March 31, 2018
and
December 31, 2017
, respectively, related to our Receivables Facility (described below).
|
|
|
(b)
|
In order to manage credit exposure, the Company sells additional current receivables to third parties outside the Receivables Facility, substantially all of which are serviced by the Company. The outstanding balance of these current receivables was $
2,330
million and $
2,541
million at
March 31, 2018
and
December 31, 2017
, respectively. Of these balances, $
1,170
million and $
1,621
million was sold by GE to GE Capital prior to the sale to third parties at
March 31, 2018
and
December 31, 2017
, respectively. At
March 31, 2018
and
December 31, 2017
, our maximum exposure to loss under the limited recourse arrangements is $
80
million and $
90
million, respectively.
|
|
|
(c)
|
GE current receivables balances at
March 31, 2018
and
December 31, 2017
, before allowance for losses, included $
10,544
million and $
10,452
million, respectively, from sales of goods and services to customers. The remainder of the balances primarily relates to supplier advances, revenue sharing programs and other non-income based tax receivables.
|
RECEIVABLES FACILITY
The Company has a $
3,750
million revolving Receivables Facility under which receivables are sold directly to third-party purchasers. The third-party purchasers have no recourse to other assets of the Company in the event of non-payment by the debtors. Where the purchasing entity is a bank multi-seller commercial paper conduit, assets transferred by other parties to that entity form a majority of the entity’s assets. Upon sale of the receivables, we receive proceeds of cash and a deferred purchase price (DPP). The DPP is an interest in specified assets of the purchasers (the receivables sold by GE Capital) that entitles GE Capital to the residual cash flows of those specified assets.
During the
three months ended
March 31, 2018
, GE Industrial sold current receivables of $
5,416
million to GE Capital, which GE Capital sold immediately to third parties under the Receivables Facility. GE Capital continues to service the current receivables for the purchasers. The Company received total cash collections of $
5,315
million on previously sold current receivables owed to the purchasing entities. The purchasing entities reinvested $
4,610
million of those collections to purchase newly originated current receivables from the Company and paid
$720
million to purchase newly originated current receivables from the company. In addition, the purchase of additional receivables by the purchasing entities increased their DPP obligation to the Company by
$61
million and they paid $
42
million to reduce their DPP obligation.
During the
three months ended
March 31, 2018
, the Company recorded a loss of $
32
million on sales of current receivables to the third party purchasers.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
At
March 31, 2018
and
December 31, 2017
, GE Capital, under the Receivables Facility, serviced $
3,323
million and
$3,222 million
of transferred receivables that remain outstanding, respectively. During the
three months ended
March 31, 2018
, the purchasers paid GE Capital servicing fees of
$8
million.
Given the short-term nature of the underlying receivables, discount rates and prepayments are not factors in determining the value of the DPP. Collections on the DPP are presented within Cash flows from investing activities in the GE Capital and consolidated columns in the Statement of Cash Flows. As the performance of the transferred current receivables is similar to the performance of our other current receivables, delinquencies are not expected to be significant.
NOTE 5. INVENTORIES
|
|
|
|
|
|
|
|
(In millions)
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
Raw materials and work in process
|
$
|
10,983
|
|
$
|
10,131
|
|
Finished goods
|
9,334
|
|
8,847
|
|
Unbilled shipments
|
256
|
|
441
|
|
Total Inventories
|
$
|
20,574
|
|
$
|
19,419
|
|
NOTE 6. GE CAPITAL FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES
|
|
|
|
|
|
|
|
FINANCING RECEIVABLES, NET
|
(In millions)
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
Loans, net of deferred income
|
$
|
15,764
|
|
$
|
17,404
|
|
Investment in financing leases, net of deferred income
|
4,383
|
|
4,614
|
|
|
20,146
|
|
22,018
|
|
Allowance for losses
|
(47
|
)
|
(51
|
)
|
Financing receivables – net
|
$
|
20,099
|
|
$
|
21,967
|
|
We manage our financing receivables portfolio using delinquency and nonaccrual data as key performance indicators. At
March 31, 2018
,
$864 million
(
4.3%
),
$408 million
(
2.0%
) and
$324 million
(
1.6%
) of financing receivables were over 30 days past due, over 90 days past due and on nonaccrual, respectively. Of the
$324 million
of nonaccrual financing receivables at
March 31, 2018
, the vast majority are secured by collateral and
$202 million
are currently paying in accordance with the contractual terms. At
December 31, 2017
,
$550 million
(
2.5%
),
$140 million
(
0.6%
) and
$252 million
(
1.1%
) of financing receivables were over 30 days past due, over 90 days past due and on nonaccrual, respectively.
The recorded investment in impaired loans at
March 31, 2018
and
December 31, 2017
was
$357 million
and
$286 million
, respectively. The method used to measure impairment for these loans is primarily based on collateral value. At
March 31, 2018
, troubled debt restructurings included in impaired loans were
$130 million
.
The GE Capital financing receivable portfolio includes
$904 million
and
$890 million
of loans that are guaranteed by GE, of which
$257 million
and
$239 million
of these loans are on nonaccrual at March 31, 2018 and December 31, 2017, respectively. These impaired loans are measured based on market and collateral value at a consolidated level, however, are not impaired loans at GE Capital because of the GE guarantee and are therefore not included in the nonaccrual receivables mentioned above. At March 31, 2018,
$248 million
of these non accrual loans are also
90 days
past due. In addition to the allowance for loan losses recorded at GE Capital, an additional allowance for loan losses of
$160
and
$161 million
was recorded at GE and on a consolidated level for guaranteed loans at March 31, 2018 and December 31, 2017, respectively.
In connection with the strategic shift to make GE Capital smaller and more focused, we classified
$2,231 million
of Energy Financial Services financing receivables as held for sale at December 31, 2017, as we no longer intend to hold these financing receivables for the foreseeable future. The related held for sale balance at March 31, 2018 is
$2,081 million
. Pre-tax provisions for losses on financing receivables of
$14 million
and
$137 million
and write-offs of
$14 million
and
$156 million
were recorded at March 31, 2018 and December 31, 2017, respectively to reduce the carrying value of the financing receivables to the lower of cost or fair value, less the cost to sell.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 7. PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
(In millions)
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
Original cost
|
$
|
90,214
|
|
$
|
89,607
|
|
Less accumulated depreciation and amortization
|
(36,564
|
)
|
(35,733
|
)
|
Property, plant and equipment – net
|
$
|
53,650
|
|
$
|
53,874
|
|
Consolidated depreciation and amortization on property, plant and equipment was
$1,300 million
and
$1,193 million
in the three months ended
March 31, 2018
and
2017
, respectively.
NOTE 8. ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
ACQUISITIONS
On
April 20, 2017
, we acquired LM Wind Power, the Danish maker of rotor blades for approximately
$1,700
million.
The preliminary purchase price allocation resulted in goodwill of approximately
$1,600
million and amortizable intangible assets of approximately
$210
million. The allocation of the purchase price will be finalized upon completion of post-closing procedures.
On January 10, 2017, we acquired the remaining
96%
of ServiceMax, a leader in cloud-based field service management solutions, for $
867
million, net of cash acquired of $
91
million. Upon gaining control, we fair valued the business including our previously held
4%
equity interest. The purchase price allocation resulted in goodwill of $
686
million and amortizable intangible assets of $
279
million.
In 2016, we acquired a total of
76.2%
of the shares of Arcam AB, a Swedish company specializing in electron beam melting systems, in our Aviation segment for
$477 million
, net of cash acquired. Upon gaining control, we fair valued the business including our previously held
14.3%
equity interest. The purchase price allocation resulted in goodwill of
$523 million
and amortizable intangible assets of
$96 million
. In the first quarter of 2018, we acquired an additional
20%
interest in Arcam for approximately $
203
million, bringing our total ownership stake to
96.2
%. We are obligated to purchase the remaining
3.8%
noncontrolling interest, which we expect to do over the next twelve months.
BAKER HUGHES
On July 3, 2017, GE completed the combination of GE’s Oil & Gas business (GE Oil & Gas) with Baker Hughes Incorporated (Baker Hughes). As part of the transaction, GE contributed GE Oil & Gas
and
$7,498 million
in cash in exchange for an ownership interest of approximately
62.5%
in the new combined company. The operating assets of the new combined company are held through a partnership named Baker Hughes, a GE company, LLC (BHGE LLC). GE holds an economic interest of approximately
62.5%
in this partnership, and Baker Hughes’ former shareholders hold an ownership interest of approximately
37.5%
through a newly NYSE listed corporation, Baker Hughes, a GE company (BHGE), which controls the partnership. In turn, GE holds a controlling, voting interest of approximately
62.5%
in BHGE through Class B Common Stock, which grants voting rights but no economic rights. Baker Hughes’ former shareholders received
one
share of BHGE Class A Common Stock and a special one-time cash dividend of
$17.50
per share at closing. Total consideration was
$24,798 million
, including the
$7,498 million
cash contribution.
The Baker Hughes acquisition has been accounted for as a business combination, using the acquisition method. The net assets of Baker Hughes’ contributed businesses were recorded at their estimated fair value, and GE Oil & Gas continues at its historical or carryover basis. We recorded noncontrolling interest of
$16,231 million
for the approximate
37.5%
ownership interest in the combined company held by BHGE’s Class A shareholders. The noncontrolling interest is recorded at fair value for the portion attributable to Baker Hughes and at our historical cost for the portion attributable to GE Oil & Gas. The fair value of the noncontrolling interest associated with the acquired net assets was determined by the publicly traded share price of Baker Hughes at the close of the transaction. The impact of recognizing the noncontrolling interest in GE Oil & Gas resulted in an increase to additional paid in capital of
$97 million
. Previously we disclosed that the impact of recognizing the noncontrolling interest was a decrease to additional paid in capital of
$126 million
. The primary reason for the change from prior quarter is the adoption of ASC 606 in the first quarter of 2018.
The tables below present the fair value of the consideration exchanged and the preliminary allocation of purchase price to the major classes of assets and liabilities of the acquired Baker Hughes business and the associated fair value of preexisting noncontrolling interest related to the acquired net assets of Baker Hughes. The estimated values are not yet final and are subject to change, and the changes could be significant. We will finalize our purchase accounting once we obtain the information necessary to complete our analysis but no later than one year from the acquisition date.
|
|
|
|
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
|
|
|
|
|
|
|
PRELIMINARY IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED
|
|
(In millions)
|
July 3, 2017
|
|
|
|
Cash and cash equivalents
|
$
|
4,133
|
|
Accounts receivable
|
2,342
|
|
Inventories
|
1,706
|
|
Property, plant, and equipment - net
|
4,571
|
|
Other intangible assets - net
|
4,078
|
|
All other assets
|
1,596
|
|
Accounts payable
|
(1,242
|
)
|
Borrowings
|
(3,370
|
)
|
Deferred taxes (a)
|
(390
|
)
|
All other liabilities
|
(2,235
|
)
|
Total identifiable net assets
|
11,189
|
|
Fair value of existing noncontrolling interest
|
(76
|
)
|
Goodwill
|
13,685
|
|
Total allocated purchase price
|
$
|
24,798
|
|
|
|
(a)
|
Includes an increase of approximately
$1,080 million
primarily related to fair value adjustments to identifiable assets and liabilities (excluding goodwill)
partially offset by a tax asset of approximately
$572 million
associated with the recognition of foreign tax credits.
|
The estimated fair value of intangible assets and related useful lives in the preliminary purchase price allocation included:
|
|
|
|
|
|
(In millions)
|
Estimated fair value
|
|
Estimated useful life (in years)
|
Trademarks - Baker Hughes
|
$
|
2,100
|
|
Indefinite life
|
Customer-related
|
1,320
|
|
15
|
Patents and technology
|
465
|
|
10
|
Trademarks - Other
|
40
|
|
10
|
Capitalized software
|
62
|
|
3-7
|
In-process research and development
|
70
|
|
Indefinite life
|
Favorable lease contracts
|
21
|
|
10
|
Total
|
$
|
4,078
|
|
|
The above goodwill represents future economic benefits expected to be recognized from combining the operations of GE Oil & Gas and Baker Hughes, including expected future synergies and operating efficiencies. Goodwill resulting from the acquisition has been allocated to our Oil & Gas reporting units, of which
$67 million
is deductible for tax purposes.
During the first quarter of 2018, the Company made measurement period adjustments to reflect facts and circumstances in existence as of the acquisition date. These adjustments resulted in an increase in goodwill of approximately
$329
million primarily due to a reduction to the fair values of property, plant and equipment of $
288
million and intangible assets of $
45
million. As a result of the decrease in property, plant and equipment and intangible assets during the first quarter of 2018, we recorded a cumulative decrease to depreciation and amortization expense of $
27
million. In addition, we reclassified certain legacy Baker Hughes business balances to conform to our presentation.
INCOME TAXES
BHGE LLC is treated as a disregarded entity for U.S. federal income tax purposes and, accordingly, does not incur any material current or deferred U.S. federal income taxes. BHGE LLC’s foreign subsidiaries, however, are expected to incur current and deferred foreign income taxes.
At closing, GE and BHGE, entered into a Tax Matters Agreement. The Tax Matters Agreement governs the administration and allocation between the parties of tax liabilities and benefits arising prior to, as a result of, and subsequent to the transaction. GE will be responsible for certain taxes related to the formation of the transaction undertaken by GE and Baker Hughes and their respective subsidiaries. We have assumed approximately
$33 million
of tax obligations of Baker Hughes related to the formation of the transaction.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
The Tax Matters Agreement will also provide for the sharing of certain tax benefits arising from the transaction. GE will be entitled to
100%
of these tax benefits to the extent that GE has borne certain taxes related to the formation of the transaction. Thereafter, these tax benefits will be shared by GE and BHGE in accordance with their ownership of the partnership, which will initially be approximately
62.5%
and approximately
37.5%
, respectively.
INTEGRATION AND ACQUISITION COSTS
During the three months ended March 31, 2018 and March 31, 2017, integration and acquisition costs of $
46 million
and $
65 million
, respectively were expensed as incurred and were reported as selling, general and administrative expenses.
UNAUDITED PRO FORMA INFORMATION
The following unaudited pro forma information has been presented as if the Baker Hughes transaction occurred on January 1, 2016. This information has been prepared by combining the historical results of the Company and historical results of Baker Hughes. The unaudited pro forma combined financial data for all periods presented were adjusted to give effect to proforma events that 1) are directly attributable to the aforementioned transaction, 2) factually supportable, and 3) expected to have a continuing impact on the consolidated results of operations.
The unaudited combined pro forma results do not include any incremental cost savings that may result from the integration. The adjustments are based on information available to the Company at this time. Accordingly, the adjustments are subject to change and the impact of such changes may be material. The unaudited combined pro forma information is for informational purposes only.
The pro forma information is not necessarily indicative of what the combined company’s results actually would have been had the acquisition been completed as of the beginning of the periods as indicated. In addition, the unaudited pro forma information does not purport to project the future results of the combined company.
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(In millions)
|
2018
|
|
2017
|
|
|
|
|
Revenues
|
$
|
28,660
|
|
$
|
29,140
|
|
Earnings (loss) from continuing operations
|
477
|
|
(32
|
)
|
Significant adjustments to the pro forma information above include recognition of non-recurring direct incremental integration and acquisition costs in the three month period ended March 31, 2017; the amortization associated with an estimate of the acquired intangible assets; and the depreciation associated with an estimate of the fair value step-up of property, plant and equipment.
GOODWILL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHANGES IN GOODWILL BALANCES
|
(In millions)
|
Balance at
January 1, 2018
|
|
Acquisitions
|
|
Dispositions,
currency
exchange
and other
|
|
Balance at
March 31, 2018
|
|
|
|
|
|
|
Power
|
$
|
25,269
|
|
$
|
—
|
|
$
|
617
|
|
$
|
25,886
|
|
Renewable Energy
|
4,093
|
|
—
|
|
231
|
|
4,324
|
|
Oil & Gas
|
23,943
|
|
—
|
|
466
|
|
24,410
|
|
Aviation
|
10,008
|
|
—
|
|
129
|
|
10,138
|
|
Healthcare
|
17,306
|
|
—
|
|
33
|
|
17,339
|
|
Transportation
|
902
|
|
—
|
|
5
|
|
907
|
|
Lighting (a)
|
—
|
|
—
|
|
—
|
|
—
|
|
Capital
|
984
|
|
—
|
|
—
|
|
984
|
|
Corporate
|
1,463
|
|
—
|
|
17
|
|
1,480
|
|
Total
|
$
|
83,968
|
|
$
|
—
|
|
$
|
1,498
|
|
$
|
85,468
|
|
|
|
(a)
|
Substantial majority of Lighting segment classified as held for sale in the fourth quarter of 2017.
|
Goodwill balances increased by
$1,498
million in 2018, primarily as a result of
the currency effect of a weaker U.S. dollar and adjustments to the allocation of purchase price associated with our acquisitions of Baker Hughes and LM Wind Power.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
We perform our annual impairment test of goodwill in the third quarter for all of our reporting units. In addition, to our annual testing, we also test goodwill for impairment between annual impairment testing dates whenever events or circumstances occur, that, in our judgment, could more likely than not reduce the fair value of one or more of our reporting units below its carrying amount.
In assessing the possibility that a reporting unit’s fair value has been reduced below its carrying amount due to the occurrence of events or circumstances between annual impairment testing dates, we consider all available evidence, including (i) the results of our impairment testing from the most recent testing date (in particular, the magnitude of the excess of fair value over carrying value observed), (ii) downward revisions to internal forecasts or decreases in market multiples (and the magnitude thereof), if any, and (iii) declines in our market capitalization below our book value (and the magnitude and duration of those declines), if any. In the first quarter of 2018 we did not identify any reporting units that required an interim impairment test.
As of March 31, 2018, we believe goodwill is recoverable for all of our reporting units. However, the Power and Oil & Gas markets continue to be challenging and there can be no assurances that goodwill will not be impaired in future periods as a result of sustained declines in macroeconomic or business conditions affecting our reporting units.
OTHER INTANGIBLE ASSETS
|
|
|
|
|
|
|
|
OTHER INTANGIBLE ASSETS - NET
|
|
(In millions)
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
Intangible assets subject to amortization
|
$
|
18,412
|
|
$
|
18,056
|
|
Indefinite-lived intangible assets(a)
|
2,249
|
|
2,217
|
|
Total
|
$
|
20,661
|
|
$
|
20,273
|
|
|
|
(a)
|
Indefinite-lived intangible assets principally comprise trademarks and in-process research and development.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTANGIBLE ASSETS SUBJECT TO AMORTIZATION
|
|
March 31, 2018
|
|
December 31, 2017
|
(In millions)
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
|
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
|
|
|
|
|
|
|
|
|
|
Customer-related(a)
|
$
|
10,844
|
|
$
|
(3,319
|
)
|
$
|
7,528
|
|
|
$
|
10,614
|
|
$
|
(3,095
|
)
|
$
|
7,521
|
|
Patents and technology
|
10,906
|
|
(4,072
|
)
|
6,834
|
|
|
10,271
|
|
(3,899
|
)
|
6,372
|
|
Capitalized software
|
8,083
|
|
(5,054
|
)
|
3,029
|
|
|
8,064
|
|
(4,974
|
)
|
3,089
|
|
Trademarks
|
1,257
|
|
(475
|
)
|
782
|
|
|
1,280
|
|
(421
|
)
|
859
|
|
Lease valuations
|
161
|
|
(83
|
)
|
79
|
|
|
170
|
|
(80
|
)
|
89
|
|
All other
|
264
|
|
(102
|
)
|
162
|
|
|
218
|
|
(92
|
)
|
125
|
|
Total
|
$
|
31,516
|
|
$
|
(13,105
|
)
|
$
|
18,412
|
|
|
$
|
30,618
|
|
$
|
(12,561
|
)
|
$
|
18,056
|
|
|
|
(a)
|
Balance includes payments made to our customers, primarily within our Aviation business.
|
Intangible assets subject to amortization increased by $
356
million in the
three
months ended
March 31, 2018
, primarily as a result of
the acquisition of a technology intangible asset of
$632 million
at our Aviation business and currency effects of a stronger U.S. dollar partially offset by amortization
.
GE amortization expense related to intangible assets subject to amortization was $
601
million and $
519
million in the three months ended
March 31, 2018
and
2017
, respectively. GE Capital amortization expense related to intangible assets subject to amortization was $
12
million and $
20
million in the three months ended
March 31, 2018
and
2017
, respectively.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 9.
REVENUES
REVENUES FROM THE SALE OF EQUIPMENT
PERFORMANCE OBLIGATIONS SATISFIED OVER TIME
We recognize revenue on agreements for the sale of customized goods including power generation equipment, nuclear fuel assemblies, larger oil drilling equipment projects, military development contracts, locomotive units, and long-term construction projects on an over time basis. We recognize revenue using percentage of completion based on costs incurred relative to total expected costs. Our estimate of costs to be incurred to fulfill our promise to a customer is based on our history of manufacturing or constructing similar assets for customers and is updated routinely to reflect changes in quantity or pricing of the inputs. We recognize revenue as we customize the customer's equipment during the manufacturing or integration process and obtain right to payment for work performed. We provide for potential losses on any of these agreements when it is probable that we will incur the loss.
Our billing terms for these over-time contracts vary, but are generally based on achieving specified milestones. The differences between the timing of our revenue recognized (based on costs incurred) and customer billings (based on contractual terms) results in changes to our contract asset or contract liability positions (see Note 10 for further information).
PERFORMANCE OBLIGATIONS SATISFIED AT A POINT IN TIME
We recognize revenue on agreements for non-customized equipment including commercial aircraft engines, healthcare equipment, resource extraction equipment and other goods we manufacture on a standardized basis for sale to the market at a point in time. We recognize revenue at the point in time that the customer obtains control of the good, which is generally no earlier than when the customer has physical possession of the product. We use proof of delivery for certain large equipment with more complex logistics, whereas the delivery of other equipment is estimated based on historical averages of in-transit periods (i.e., time between shipment and delivery).
In situations where arrangements include customer acceptance provisions based on seller or customer-specified objective criteria, we recognize revenue when we have concluded that the customer has control of the goods and that acceptance is likely to occur. We generally do not provide for anticipated losses on point in time transactions prior to transferring control of the equipment to the customer.
Our billing terms for these point in time equipment contracts vary and generally coincide with delivery to the customer; however, within certain businesses, we receive progress payments from customers for large equipment purchases, which is generally to reserve production slots.
REVENUES FROM THE SALE OF SERVICES
Consistent with our discussion in the MD&A and the way we manage our businesses, we refer to sales under product services agreements and sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs) as sales of “services,” which is an important part of our operations.
PERFORMANCE OBLIGATIONS SATISFIED OVER TIME
We enter into long-term product service agreements with our customers primarily within our Aviation, Power, Oil & Gas and Transportation segments. These agreements require us to provide preventative maintenance, asset overhaul / updates, and standby "warranty-type" services that include certain levels of assurance regarding asset performance and uptime throughout the contract periods, which generally range from
5
to
25 years
. We account for items that are integral to the maintenance of the equipment as part of our service related performance obligation, unless the customer has a substantive right to make a separate purchasing decision (e.g., equipment upgrade). We recognize revenue as we perform under the arrangements using percentage of completion based on costs incurred relative to total expected costs. Throughout the life of a contract, this measure of progress captures the nature, timing and extent of our underlying performance activities as our stand-ready services often fluctuate between routine inspections and maintenance, unscheduled service events and major overhauls at pre-determined usage intervals. Contract modifications that extend or revise contract terms are not uncommon and generally result in our recognizing the impact of the revised terms prospectively over the remaining life of the modified contract (i.e., effectively like a new contract).
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Our billing terms for these arrangements are generally based on the utilization of the asset (e.g., per hour of usage) or upon the occurrence of a major maintenance event within the contract, such as an overhaul. The differences between the timing of our revenue recognized (based on costs incurred) and customer billings (based on contractual terms) results in changes to our contract asset or contract liability positions (see Note 10 for further information).
Changes in customer utilization can influence the timing and extent of overhauls and other service events over the life of the contract. As a result, the revenue recognized each period is dependent on our estimate of how customers will utilize their assets over the term of the agreement. We generally use a combination of both historical utilization trends as well as forward-looking information such as market conditions and potential asset retirements in developing our revenue estimates. This estimate of customer utilization will impact both the total contract billings and costs to satisfy our obligation to maintain the equipment. In developing our cost estimates, we utilize a combination of our historical cost experience and expected cost improvements. Cost improvements are generally only included in future cost estimates after savings have been observed in actual results or proven to be effective through an extensive regulatory engineering approval process.
We also enter into long-term product services agreements in our Healthcare and Renewable Energy segments. Revenues are recognized for these arrangements on a straight line basis consistent with the nature, timing and extent of our services, which primarily relate to ongoing maintenance and as needed product repairs. Our billing terms for these contracts vary, but we generally invoice periodically as services are provided.
PERFORMANCE OBLIGATIONS SATISFIED AT A POINT IN TIME
We sell certain tangible products, largely spare equipment, through our services businesses. We recognize revenues and bill our customers for this equipment at the point in time that the customer obtains control of the good, which is at the point in time we deliver the spare part to the customer.
DISAGGREGATED REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUIPMENT & SERVICES REVENUES(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(In millions)
|
2018
|
|
2017
|
|
Equipment Revenues
|
Services Revenues
|
Total Revenues
|
|
Equipment Revenues
|
Services Revenues
|
Total Revenues
|
|
|
|
|
|
|
|
|
Power
|
$
|
3,524
|
|
$
|
3,698
|
|
$
|
7,222
|
|
|
$
|
4,186
|
|
$
|
3,755
|
|
$
|
7,940
|
|
|
|
|
|
|
|
|
|
Renewable Energy
|
1,204
|
|
442
|
|
1,646
|
|
|
1,506
|
|
261
|
|
1,767
|
|
|
|
|
|
|
|
|
|
Oil & Gas
|
2,229
|
|
3,156
|
|
5,385
|
|
|
1,291
|
|
1,795
|
|
3,086
|
|
|
|
|
|
|
|
|
|
Aviation
|
2,539
|
|
4,573
|
|
7,112
|
|
|
2,599
|
|
4,074
|
|
6,673
|
|
|
|
|
|
|
|
|
|
Healthcare
|
2,607
|
|
2,095
|
|
4,702
|
|
|
2,323
|
|
1,982
|
|
4,305
|
|
|
|
|
|
|
|
|
|
Transportation
|
266
|
|
606
|
|
872
|
|
|
498
|
|
481
|
|
979
|
|
|
|
|
|
|
|
|
|
Lighting
|
444
|
|
12
|
|
456
|
|
|
450
|
|
13
|
|
462
|
|
|
|
|
|
|
|
|
|
Total Industrial Segment Revenues
|
$
|
12,813
|
|
$
|
14,582
|
|
$
|
27,395
|
|
|
$
|
12,853
|
|
$
|
12,360
|
|
$
|
25,213
|
|
|
|
(a)
|
Revenues classification consistent with our MD&A defined Services revenue
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
SUB-SEGMENT REVENUES
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(In millions)
|
2018
|
|
|
2017
|
|
|
|
|
|
Power
|
|
|
|
Gas Power Systems
|
$
|
1,535
|
|
|
$
|
2,104
|
|
Power Services
|
2,832
|
|
|
2,608
|
|
Steam Power Systems
|
459
|
|
|
375
|
|
Energy Connections
|
2,216
|
|
|
2,199
|
|
Other
|
181
|
|
|
654
|
|
Power Revenues
|
$
|
7,222
|
|
|
$
|
7,940
|
|
|
|
|
|
Renewable Energy
|
|
|
|
Onshore Wind
|
$
|
1,260
|
|
|
$
|
1,545
|
|
Hydro
|
233
|
|
|
187
|
|
Offshore Wind
|
152
|
|
|
36
|
|
Renewable Energy Revenues
|
$
|
1,646
|
|
|
$
|
1,767
|
|
|
|
|
|
Oil & Gas
|
|
|
|
Turbomachinery & Process Solutions (TPS)
|
$
|
1,447
|
|
|
$
|
1,663
|
|
Oilfield Services (OFS)
|
2,678
|
|
|
212
|
|
Oilfield Equipment (OFE)
|
664
|
|
|
716
|
|
Digital Solutions
|
596
|
|
|
494
|
|
Oil & Gas Revenues
|
$
|
5,385
|
|
|
$
|
3,086
|
|
|
|
|
|
Aviation
|
|
|
|
Commercial Engines & Services
|
$
|
5,272
|
|
|
$
|
4,970
|
|
Military
|
971
|
|
|
929
|
|
Systems & Other
|
870
|
|
|
773
|
|
Aviation Revenues
|
$
|
7,112
|
|
|
$
|
6,673
|
|
|
|
|
|
Healthcare
|
|
|
|
Healthcare Systems
|
$
|
3,330
|
|
|
$
|
3,031
|
|
Life Sciences
|
1,125
|
|
|
1,013
|
|
Healthcare Digital
|
246
|
|
|
261
|
|
Healthcare Revenues
|
$
|
4,702
|
|
|
$
|
4,305
|
|
|
|
|
|
Transportation
|
|
|
|
Locomotives
|
$
|
171
|
|
|
$
|
455
|
|
Services
|
506
|
|
|
406
|
|
Mining
|
116
|
|
|
47
|
|
Other
|
80
|
|
|
72
|
|
Transportation Revenues
|
$
|
872
|
|
|
$
|
979
|
|
|
|
|
|
Lighting
|
|
|
|
Current
|
$
|
216
|
|
|
$
|
233
|
|
GE Lighting
|
240
|
|
|
230
|
|
Lighting Revenues
|
$
|
456
|
|
|
$
|
462
|
|
|
|
|
|
Total Industrial Segment Revenues
|
$
|
27,395
|
|
|
$
|
25,213
|
|
Capital Revenues (a)
|
2,173
|
|
|
2,681
|
|
Corporate items and eliminations
|
(908
|
)
|
|
(1,013
|
)
|
Consolidated Revenues (a)
|
$
|
28,660
|
|
|
$
|
26,881
|
|
|
|
(a)
|
Includes
$2,117 million
and
$2,621 million
of revenues at GE Capital outside of the scope of ASC 606 for the three months ended March 31, 2018 and 2017, respectively.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
REMAINING PERFORMANCE OBLIGATION
As of March 31, 2018, the aggregate amount of the contracted revenues allocated to our unsatisfied (or partially unsatisfied) performance obligations was
$252,523 million
. We expect to recognize revenue as we satisfy our remaining performance obligations as follows:
|
|
•
|
Equipment - total remaining performance obligation of
$53,680 million
of which
55%
,
75%
and
96%
is expected to be satisfied within
1
,
2
and
5 years
, respectively, and the remaining thereafter.
|
|
|
•
|
Service - total remaining performance obligation of
$198,843 million
of which
17%
,
56%
,
78%
and
90%
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
|
NOTE 10.
CONTRACT & OTHER DEFERRED ASSETS
AND PROGRESS COLLECTIONS & DEFERRED INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018 (In millions)
|
Power
|
Aviation
|
Oil & Gas
|
Renewable Energy
|
Transportation
|
Other(a)
|
Total
|
|
|
|
|
|
|
|
|
GE
|
|
|
|
|
|
|
|
Revenues in excess of billings
|
|
|
|
|
|
|
|
Long-term product service agreements(b)
|
$
|
3,359
|
|
$
|
2,795
|
|
$
|
520
|
|
$
|
—
|
|
$
|
450
|
|
$
|
—
|
|
$
|
7,124
|
|
Equipment contract revenues(c)
|
4,745
|
|
418
|
|
1,108
|
|
344
|
|
132
|
|
526
|
|
7,272
|
|
Total contract assets
|
8,104
|
|
3,213
|
|
1,628
|
|
344
|
|
582
|
|
526
|
|
14,396
|
|
|
|
|
|
|
|
|
|
Deferred inventory costs(d)
|
1,090
|
|
563
|
|
208
|
|
1,008
|
|
40
|
|
331
|
|
3,240
|
|
Nonrecurring engineering costs(e)
|
147
|
|
1,765
|
|
—
|
|
—
|
|
95
|
|
—
|
|
2,007
|
|
Customer advances and other
|
1
|
|
1,095
|
|
—
|
|
19
|
|
1
|
|
20
|
|
1,136
|
|
Contract and other deferred assets
|
$
|
9,343
|
|
$
|
6,635
|
|
$
|
1,836
|
|
$
|
1,371
|
|
$
|
718
|
|
$
|
877
|
|
$
|
20,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017 (In millions)
|
Power
|
Aviation
|
Oil & Gas
|
Renewable Energy
|
Transportation
|
Other(a)
|
Total
|
|
|
|
|
|
|
|
|
GE
|
|
|
|
|
|
|
|
Revenues in excess of billings
|
|
|
|
|
|
|
|
Long-term product service agreements(b)
|
$
|
3,357
|
|
$
|
2,614
|
|
$
|
517
|
|
$
|
1
|
|
$
|
413
|
|
$
|
—
|
|
$
|
6,902
|
|
Equipment contract revenues(c)
|
4,757
|
|
280
|
|
1,095
|
|
295
|
|
76
|
|
371
|
|
6,874
|
|
Total contract assets
|
8,115
|
|
2,893
|
|
1,612
|
|
296
|
|
488
|
|
371
|
|
13,775
|
|
|
|
|
|
|
|
|
|
Deferred inventory costs(d)
|
1,304
|
|
564
|
|
358
|
|
950
|
|
43
|
|
359
|
|
3,579
|
|
Nonrecurring engineering costs(e)
|
122
|
|
1,696
|
|
—
|
|
—
|
|
87
|
|
—
|
|
1,905
|
|
Customer advances and other
|
—
|
|
1,098
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,098
|
|
Contract and other deferred assets
|
$
|
9,539
|
|
$
|
6,251
|
|
$
|
1,971
|
|
$
|
1,246
|
|
$
|
619
|
|
$
|
729
|
|
$
|
20,356
|
|
|
|
(a)
|
Primarily includes our Healthcare segment
|
|
|
(b)
|
Long-term product service agreement balances are presented net of related billings in excess of revenues of
$5,098 million
and
$5,498 million
at March 31, 2018 and December 31, 2017, respectively.
|
|
|
(c)
|
Included in this balance are amounts due from customers for the sale of equipment upgrades, which we collect through higher fixed or usage-based fees from servicing the equipment under long-term product service agreements. Amounts due from these financing arrangements totaled
$751 million
and
$748 million
, as of March 31, 2018 and December 31, 2017, respectively.
|
|
|
(d)
|
Represents cost deferral for shipped goods (such as components for wind turbine assembly within our Renewable Energy segment) and labor and overhead costs on time and material service contracts (primarily originating in Power and Aviation) and other costs for which the criteria for revenue recognition has not yet been met.
|
|
|
(e)
|
Includes costs incurred prior to production (e.g., requisition engineering) for equipment production contracts, primarily within our Aviation segment, which are allocated ratably to each unit produced.
|
Contract and other deferred assets increased
$424 million
in 2018, which was primarily driven by a change in estimated profitability of
$178 million
within
our long-term product service agreements primarily within Aviation
(
$81 million
)
and Power
(
$74 million
).
In addition, our equipment related contract assets increased
$398 million
, primarily within Healthcare (
$158 million
), Aviation $(
138 million
) and Transportation (
$56 million
) due to the timing of revenue recognized for work performed relative to the timing of billings. In addition, non-recurring engineering costs increased
$102 million
primarily within Aviation (
$69 million
) while deferred inventory costs decreased
$390 million
within Power (
$214 million
) and Oil & Gas (
$201 million
).
|
|
|
|
|
|
|
|
|
PROGRESS COLLECTIONS & DEFERRED INCOME
|
|
|
|
|
|
|
|
(In millions)
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
GE Contract Liabilities
|
|
|
|
|
|
|
|
Progress collections
|
$
|
18,290
|
|
|
$
|
18,310
|
|
Deferred income
|
3,917
|
|
|
3,911
|
|
Total progress collections & deferred income
|
$
|
22,207
|
|
|
$
|
22,221
|
|
Revenues recognized for balances that were included in our contract liabilities at the beginning of the period was
$5,747 million
and
$6,254 million
for the three months ended March 31, 2018 and 2017, respectively
.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 11. BORROWINGS
|
|
|
|
|
|
|
|
(In millions)
|
March 31, 2018
|
December 31, 2017
|
|
|
|
Short-term borrowings
|
|
|
GE
|
|
|
Commercial paper
|
$
|
3,005
|
|
$
|
3,000
|
|
Current portion of long-term borrowings
|
7,801
|
|
9,452
|
|
Other
|
1,809
|
|
2,095
|
|
Total GE short-term borrowings
|
12,615
|
|
14,548
|
|
|
|
|
GE Capital
|
|
|
Commercial paper
|
3,949
|
|
5,013
|
|
Current portion of long-term borrowings(a)
|
3,776
|
|
5,781
|
|
Intercompany payable to GE
|
7,405
|
|
8,310
|
|
Other
|
473
|
|
497
|
|
Total GE Capital short-term borrowings
|
15,603
|
|
19,602
|
|
|
|
|
Eliminations
|
(8,847
|
)
|
(10,114
|
)
|
Total short-term borrowings
|
$
|
19,371
|
|
$
|
24,036
|
|
|
|
|
Long-term borrowings
|
|
|
GE
|
|
|
Senior notes(b)
|
$
|
60,496
|
|
$
|
62,724
|
|
Subordinated notes
|
2,984
|
|
2,913
|
|
Other
|
1,312
|
|
1,403
|
|
Total GE long-term borrowings
|
64,792
|
|
67,040
|
|
|
|
|
GE Capital
|
|
|
Senior notes
|
39,580
|
|
40,754
|
|
Subordinated notes
|
191
|
|
208
|
|
Intercompany payable to GE(c)
|
28,497
|
|
31,533
|
|
Other(a)
|
1,078
|
|
1,118
|
|
Total GE Capital long-term borrowings
|
69,346
|
|
73,614
|
|
|
|
|
Eliminations(c)
|
(29,004
|
)
|
(32,079
|
)
|
Total long-term borrowings
|
$
|
105,134
|
|
$
|
108,575
|
|
Non-recourse borrowings of consolidated securitization entities(d)
|
$
|
1,335
|
|
$
|
1,980
|
|
Total borrowings
|
$
|
125,839
|
|
$
|
134,591
|
|
|
|
(a)
|
Included
$257 million
and
$1,078 million
of short- and long-term borrowings, respectively, at
March 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,
$341 million
and
$458 million
is non-recourse to GE Capital at
March 31, 2018
and
December 31, 2017
, respectively.
|
|
|
(b)
|
Included
$6,197
million and
$6,206
million of BHGE senior notes at
March 31, 2018
and
December 31, 2017
, respectively. Total BHGE borrowings were
$6,480
million and
$7,225
million at
March 31, 2018
and
December 31, 2017
, respectively.
|
|
|
(c)
|
Included a reduction of
$7,556 million
and
$7,271 million
for long-term intercompany loans from GE Capital to GE at
March 31, 2018
and
December 31, 2017
, respectively, which bear the right of offset against amounts owed under the assumed debt agreement. Excluding intercompany loans, total long-term assumed debt was
$36,054 million
and
$38,804 million
at
March 31, 2018
and
December 31, 2017
, respectively. The
$7,556
million of intercompany loans collectively have a weighted average interest rate of
3.6%
and term of approximately
15
years.
|
|
|
(d)
|
Included
$363 million
and
$621 million
of current portion of long-term borrowings at
March 31, 2018
and
December 31, 2017
, respectively. See Note 17 for further information.
|
On April 10, 2015, GE provided a full and unconditional guarantee on the payment of the principal and interest on all tradable senior and subordinated outstanding long-term debt securities and all commercial paper issued or guaranteed by GE Capital. At
March 31, 2018
, the Guarantee applies to
$41,318 million
of GE Capital debt.
See Note 17 for further information about borrowings and associated interest rate swaps.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 12. INVESTMENT CONTRACTS, INSURANCE LIABILITIES AND INSURANCE ANNUITY BENEFITS
Insurance and investment contract liabilities comprise mainly obligations to policyholders and annuitants in our run-off insurance activities.
|
|
|
|
|
|
|
|
(In millions)
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
Future policy benefit reserves
|
|
|
Long-term care insurance contracts
|
$
|
16,438
|
|
$
|
16,522
|
|
Structured settlement annuities with life contingencies and other contracts
|
9,524
|
|
9,448
|
|
Shadow adjustments(a)
|
3,371
|
|
4,582
|
|
|
29,333
|
|
30,552
|
|
Investment contracts
|
2,520
|
|
2,569
|
|
Claim reserves(b)
|
5,126
|
|
5,094
|
|
Unearned premiums and other
|
473
|
|
372
|
|
|
37,453
|
|
38,587
|
|
Eliminations
|
(564
|
)
|
(451
|
)
|
Total
|
$
|
36,889
|
|
$
|
38,136
|
|
|
|
(a)
|
To the extent that unrealized gains on debt securities supporting our insurance contracts would result in a premium deficiency should those gains be realized, an increase in future policy benefit reserves is recorded, with an offsetting amount recorded in Other comprehensive income, net of taxes.
|
|
|
(b)
|
Includes
$3,665 million
and
$3,590
million related to long term-care insurance contracts and
$351 million
and
$364 million
related to short-duration contracts, net of eliminations, at March 31, 2018 and December 31, 2017, respectively.
|
During 2017, in response to elevated claim experience for a portion of our long-term care insurance contracts that was most pronounced for policyholders with higher attained ages, we initiated a comprehensive review of premium deficiency assumptions across all insurance products, which included reconstructing our future claim cost assumptions for long-term care contracts utilizing trends observed in our emerging experience for older claimant ages and later duration policies. Certain of our long-term care policyholders only recently started to reach the prime claim paying period and our new claim cost assumptions considered the emerging credibility of this claim data. In addition to the adverse impact from the increased expected future claim cost assumptions over a long-term horizon, our premium deficiency assumptions considered mortality, length of time a policy will remain in force and both near-term and longer-term investment return expectations. Future investment yields estimated in 2017 were lower than in previous premium deficiency tests, primarily due to the effect of near term yields on approximately
$14.5 billion
of future expected capital contributions. The indicated premium deficiency resulted in a
$9,481 million
pre-tax charge to earnings in the fourth quarter of 2017.
In response to the premium deficiency, our future policy benefit reserves at December 31, 2017 were unlocked and updated to reflect our most recent assumptions. Our future policy benefit reserves are subject to premium deficiency testing at least annually, which we expect to perform in the second half of the year. Any future adverse changes in our assumptions could result in an increase to future policy benefit reserves. Any favorable changes to these assumptions could result in additional margin in our premium deficiency test and higher income over the remaining duration of the portfolio, including higher investment income.
Claim reserves included incurred claims of
$492 million
for both the three months ended March 31, 2018 and 2017, of which
$1 million
and
$31 million
related to the recognition of adjustments to prior year claim reserves arising from our periodic reserve evaluation, in the three months ended March 31, 2018 and 2017, respectively. Paid claims were
$484 million
and
$428 million
in the three months ended March 31, 2018 and 2017, respectively. The vast majority of paid claims relate to prior year insured events primarily as a result of the length of time long-term care policyholders remain on claim.
When insurance companies cede insurance risk to third parties, such as reinsurers, they are not relieved of their primary obligation to policyholders and cedents. When losses on ceded risks give rise to claims for recovery, we establish allowances for probable losses on such receivables from reinsurers as required. Reinsurance recoverables, net are included in the caption “Other GE Capital receivables” on our consolidated Statement of Financial Position, and amounted to
$2,450 million
and included
$757 million
related to ceded claim reserves at March 31, 2018. Reinsurance recoverables amounted to
$2,458 million
and included
$733 million
related to ceded claim reserves at December 31, 2017. The vast majority of our remaining net reinsurance recoverables are secured by assets held in a trust for which we are the beneficiary.
We recognize reinsurance recoveries as a reduction of the consolidated Statement of Earnings (Loss) caption “Investment contracts, insurance losses and insurance annuity benefits.” Reinsurance recoveries were
$61 million
and
$126 million
in the three months ended March 31, 2018 and 2017, respectively.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Our run-off insurance subsidiaries are required to prepare statutory financial statements in accordance with statutory accounting practices that differ in certain respects from GAAP. Statutory accounting practices are set forth by the National Association of Insurance Commissioners as well as state laws, regulation and general administrative rules. In the fourth quarter of 2017 we recorded a premium deficiency pre-tax charge to earnings of
$9,481 million
on a GAAP basis. For statutory accounting purposes, the Kansas Insurance Department approved our request for a permitted statutory accounting practice to recognize the reserve increase over a
seven
-year period. As a result, GE Capital contributed capital to its insurance subsidiaries of
$3.5 billion
in the first quarter of 2018 and expects to contribute approximately an additional
$11 billion
through 2024 subject to ongoing monitoring by the Kansas Insurance Department. GE is required to maintain specified capital levels at these insurance subsidiaries under capital maintenance agreements.
NOTE 13. POSTRETIREMENT BENEFIT PLANS
We sponsor a number of pension and retiree health and life insurance benefit plans. Principal pension plans are the GE Pension Plan and the GE Supplementary Pension Plan. Principal retiree benefit plans provide health and life insurance benefits to certain eligible participants and these participants share in the cost of the healthcare benefits. Other pension plans include the U.S. and non-U.S. pension plans with pension assets or obligations greater than
$50 million
. Smaller pension plans and other retiree benefit plans are not material individually or in the aggregate.
|
|
|
|
|
|
|
|
|
|
EFFECT ON OPERATIONS OF PENSION PLANS
|
|
|
|
|
|
Principal pension plans
|
|
|
Three months ended March 31
|
|
(In millions)
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
Service cost for benefits earned
|
$
|
232
|
|
|
$
|
289
|
|
|
Prior service cost amortization
|
36
|
|
|
73
|
|
|
Expected return on plan assets
|
(820
|
)
|
|
(849
|
)
|
|
Interest cost on benefit obligations
|
666
|
|
|
717
|
|
|
Net actuarial loss amortization
|
951
|
|
|
710
|
|
|
Curtailment loss
|
—
|
|
|
43
|
|
(a)
|
Pension plans cost
|
$
|
1,065
|
|
|
$
|
983
|
|
|
|
|
(a)
|
Curtailment loss resulting from our intent to sell the Industrial Solutions business within our Power segment.
|
|
|
|
|
|
|
|
|
|
|
|
Other pension plans
|
|
|
Three months ended March 31
|
|
(In millions)
|
2018
|
|
2017
|
|
|
|
|
|
|
Service cost for benefits earned
|
$
|
95
|
|
|
$
|
151
|
|
|
Prior service credit amortization
|
—
|
|
|
(1
|
)
|
|
Expected return on plan assets
|
(358
|
)
|
|
(294
|
)
|
|
Interest cost on benefit obligations
|
156
|
|
|
142
|
|
|
Net actuarial loss amortization
|
82
|
|
|
103
|
|
|
Pension plans cost (income)
|
$
|
(25
|
)
|
|
$
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT ON OPERATIONS OF PRINCIPAL RETIREE BENEFIT PLANS
|
|
|
|
|
|
Principal retiree benefit plans
|
|
|
Three months ended March 31
|
|
(In millions)
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
Service cost for benefits earned
|
$
|
13
|
|
|
$
|
26
|
|
|
Prior service credit amortization
|
(56
|
)
|
|
(43
|
)
|
|
Expected return on plan assets
|
(7
|
)
|
|
(9
|
)
|
|
Interest cost on benefit obligations
|
49
|
|
|
57
|
|
|
Net actuarial gain amortization
|
(20
|
)
|
|
(21
|
)
|
|
Curtailment loss
|
—
|
|
|
3
|
|
(a)
|
Retiree benefit plans cost (income)
|
$
|
(21
|
)
|
|
$
|
13
|
|
|
|
|
(a)
|
Curtailment loss resulting from our intent to sell the Industrial Solutions business within our Power segment.
|
The components of net periodic benefit costs other than the service cost component are included in the line item "non-operating benefit costs" in our consolidated Statement of Earnings (Loss).
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 14. INCOME TAXES
Our consolidated effective income tax rates were
(6.5)%
and
198.1%
during the three months ended March 31, 2018 and 2017, respectively. The rate for 2018 benefited from U.S. business credits and as described below, an adjustment for Baker Hughes related to the provisional estimate of the impact of enactment of tax reform and an adjustment to decrease the 2018 three-month tax rate to be in line with the lower expected full-year rate partially offset by the cost of the newly enacted base erosion and global intangible income provisions in excess of the benefit from other global activities. The rate for 2017 benefited from the tax difference on global activities and U.S. business credits partially offset by an adjustment to increase the 2017 three-month tax rate to be in line with the higher expected full-year rate.
On December 22, 2017, the U.S. enacted legislation commonly known as the Tax Cuts and Jobs Act (“U.S. tax reform”) that lowered the statutory tax rate on U.S. earnings to 21%, taxes historic foreign earnings at a reduced rate of tax, establishes a territorial tax system and enacts new taxes associated with global operations.
The impact of enactment of U.S. tax reform has been recorded on a provisional basis as the legislation provides for additional guidance to be issued by the U.S. Department of the Treasury on several provisions including the computation of the transition tax. Guidance during 2018 could impact the information required for and the calculation of the transition tax charge and could affect decisions that affect the tax on various U.S. and foreign items, which would further impact the final amounts included in the transition charge and impact the revaluation of deferred taxes. In addition, analysis performed and conclusions reached as part of the tax return filing process and additional guidance on accounting for U.S. tax reform could affect the provisional amount.
Additionally, as part of tax reform, the U.S. has enacted a minimum tax on foreign earnings (“global intangible low tax income”). We have not made an accounting policy election on the deferred tax treatment and, consequently, we have not made an accrual for the deferred tax aspects of this provision.
With the enactment of U.S. tax reform, we recorded, for the period ending December 31, 2017, tax expense of
$4,512 million
to reflect our provisional estimate of both the transition tax on historic foreign earnings (
$1,155 million
including
$2,925 million
at GE and
$(1,770) million
at GE Capital) and the revaluation of deferred taxes (
$3,357 million
including
$1,980 million
at GE and
$1,377 million
at GE Capital). We have not significantly adjusted our provisional estimate during the first quarter of 2018 as we continue to analyze information related to our operations as well as new guidance and other aspects of the enacted provisions. However, there were discrete changes in the provisional estimate of the change in tax rate on deferred taxes identified at Baker Hughes in connection with the measurement period adjustments to purchase price allocation that reduced the provisional amounts recorded by
$103 million
in the quarter. Of this benefit,
$134 million
relates to non-consolidated operations and did not affect net earnings attributable to the company as there is an offsetting adjustment in income from noncontrolling interests. The cost of
$31 million
relates to the revaluation of deferred taxes corresponding to measurement period adjustments to the purchase price allocation for the Baker Hughes acquisition.
Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining our tax expense and in evaluating our tax positions. We assess our income tax positions and record tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting date.
|
|
|
|
|
|
|
|
UNRECOGNIZED TAX BENEFITS
|
|
(In millions)
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
Unrecognized tax benefits
|
$
|
5,403
|
|
$
|
5,449
|
|
Portion that, if recognized, would reduce tax expense and effective tax rate(a)
|
3,676
|
|
3,626
|
|
Accrued interest on unrecognized tax benefits
|
853
|
|
810
|
|
Accrued penalties on unrecognized tax benefits
|
198
|
|
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)
|
0-1,100
|
|
0-900
|
|
|
|
(a)
|
Some portion of such reduction may be reported as discontinued operations.
|
The Internal Revenue Service (IRS) is currently auditing our consolidated U.S. income tax returns for
2012
-
2013
and has begun the audit for 2014-2015. In addition, certain other U.S. tax deficiency issues and refund claims for previous years are still unresolved. It is reasonably possible that a portion of the unresolved items could be resolved during the next 12 months, which could result in a decrease in our balance of "unrecognized tax benefits" - that is, the aggregate tax effect of differences between tax return positions and the benefits recognized in our financial statements. We believe that there are no other jurisdictions in which the outcome of unresolved issues or claims is likely to be material to our results of operations, financial position or cash flows. We further believe that we have made adequate provision for all income tax uncertainties.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 15. SHAREOWNERS’ EQUITY
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(In millions)
|
2018
|
|
2017
|
|
|
|
|
Preferred stock issued
|
$
|
6
|
|
$
|
6
|
|
Common stock issued
|
$
|
702
|
|
$
|
702
|
|
Accumulated other comprehensive income (loss)
|
|
|
Balance at January 1
|
$
|
(14,404
|
)
|
$
|
(18,588
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
|
Investment securities - net of deferred taxes of $65 and $13(a)
|
109
|
|
18
|
Currency translation adjustments (CTA) - net of deferred taxes of $(149) and $(33)
|
832
|
|
258
|
Cash flow hedges - net of deferred taxes of $31 and $5
|
105
|
|
20
|
Benefit plans - net of deferred taxes of $(1) and $101
|
(58
|
)
|
474
|
Total
|
$
|
988
|
|
$
|
770
|
|
Reclassifications from other comprehensive income
|
|
|
Investment securities - net of deferred taxes of $(2) and $(36)(b)
|
(10
|
)
|
(69
|
)
|
Currency translation gains (losses) on dispositions - net of deferred taxes of zero and $(540)(b)
|
(2
|
)
|
554
|
|
Cash flow hedges - net of deferred taxes of $(15) and $1(c)
|
(50
|
)
|
—
|
|
Benefit plans - net of deferred taxes of $218 and $288(d)
|
775
|
|
574
|
|
Total
|
$
|
713
|
|
$
|
1,059
|
|
Other comprehensive income (loss)
|
1,702
|
|
1,828
|
|
Less other comprehensive income (loss) attributable to noncontrolling interests
|
160
|
|
6
|
|
Other comprehensive income (loss), net, attributable to GE
|
$
|
1,542
|
|
$
|
1,822
|
|
Ending Balance
|
$
|
(12,862
|
)
|
$
|
(16,766
|
)
|
Other capital
|
|
|
Balance at January 1
|
$
|
37,384
|
|
$
|
37,224
|
|
Gains (losses) on treasury stock dispositions and other
|
(45
|
)
|
224
|
|
Ending Balance
|
$
|
37,339
|
|
$
|
37,448
|
|
Retained earnings
|
|
|
Balance at January 1(e)
|
$
|
117,245
|
|
$
|
133,856
|
|
Net earnings (loss) attributable to the Company
|
(1,147
|
)
|
(83
|
)
|
Dividends and other transactions with shareowners
|
(1,078
|
)
|
(2,128
|
)
|
Redemption value adjustment on redeemable noncontrolling interests(f)
|
(44
|
)
|
(101
|
)
|
Other changes(g)
|
500
|
|
—
|
|
Ending Balance
|
$
|
115,477
|
|
$
|
131,544
|
|
Common stock held in treasury
|
|
|
Balance at January 1
|
$
|
(84,902
|
)
|
$
|
(83,038
|
)
|
Purchases
|
(85
|
)
|
(2,359
|
)
|
Dispositions
|
290
|
|
564
|
|
Ending Balance
|
$
|
(84,697
|
)
|
$
|
(84,833
|
)
|
Total equity
|
|
|
GE shareowners' equity balance
|
$
|
55,965
|
|
$
|
68,100
|
|
Noncontrolling interests balance
|
17,228
|
|
1,639
|
|
Total equity balance at March 31
|
$
|
73,193
|
|
$
|
69,740
|
|
|
|
(a)
|
Included adjustments of
$938 million
and
$(99) million
for the three months ended March 31, 2018 and 2017, respectively, to investment contracts, insurance liabilities and annuity benefits in our run-off insurance operations to reflect the effects that would have been recognized had the related unrealized investment securities holding gains been realized. See Note 12 for further information.
|
|
|
(b)
|
Recorded in total revenues and other income and income taxes in benefit (provision) for income taxes in the Statement of Earnings (Loss). Currency translation gains (losses) on dispositions included
zero
and
$510 million
million for the three months ended March 31, 2018 and 2017, respectively, in earnings (loss) from discontinued operations, net of taxes.
|
|
|
(c)
|
Cash flow hedges primarily includes impact of foreign exchange contracts and gains (losses) on interest rate derivatives, primarily recorded in GE Capital revenue from services, interest and other financial charges and other costs and expenses. See Note 17 for further information.
|
|
|
(d)
|
Primarily includes amortization of actuarial gains (losses), amortization of prior service cost and curtailment gain (loss). These components are included in the computation of net periodic pension cost. See Note 13 for further information.
|
|
|
(e)
|
Amount has been adjusted to reflect retrospective adoption of ASC 606 (
$8,061 million
) and preferable accounting change from LIFO to FIFO (
$377 million
).
|
|
|
(f)
|
Amount of redemption value adjustment on redeemable noncontrolling interest shown net of deferred taxes.
|
|
|
(g)
|
On January 1, 2018, we adopted several new accounting standards on a modified retrospective basis. Cumulative impact of these changes was recorded in the opening retained earnings and it increased our retained earnings by
$500 million
, primarily due to an increase of
$464 million
related to ASU 2016-16. See Note 1 for further information.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
SHARES OF GE PREFERRED STOCK
On January 20, 2016, we issued
$5,694 million
of GE Series D preferred stock following an exchange offer for existing GE series A, B and C. The Series D preferred stock bear a fixed interest rate of
5.00%
through January 21, 2021 and floating rate equal to three-month LIBOR plus
3.33%
thereafter. The Series D preferred stock are callable on January 21, 2021. Following the exchange offer,
$250 million
of GE Series A, B and C preferred stock still remain outstanding with an initial average fixed dividend rate of
4.07%
. The total carrying value of GE preferred stock at March 31, 2018 was
$5,461 million
and will increase to
$5,944 million
through periodic accretion. Dividends on GE preferred stock are payable semi-annually, in June and December and accretion is recorded on a quarterly basis. Dividends on GE preferred stock for accretion totaled
$37 million
and
$34 million
for the three months ended March 31, 2018 and 2017, respectively.
In conjunction with the 2016 exchange of the GE Capital preferred stock into GE preferred stock and the exchange of Series A, B and C preferred stock into Series D preferred stock, GE Capital issued preferred stock to GE for which the amount and terms mirror the GE preferred stock held by external investors (
$5,461 million
carrying value at March 31, 2018).
NONCONTROLLING INTERESTS
Noncontrolling interests in equity of consolidated affiliates include common shares in consolidated affiliates and preferred stock issued by our affiliates.
|
|
|
|
|
|
|
|
CHANGES TO NONCONTROLLING INTERESTS
|
|
Three months ended March 31
|
(In millions)
|
2018
|
|
2017
|
|
|
|
|
Balance at January 1
|
$
|
17,468
|
|
$
|
1,663
|
|
Net earnings (loss)
|
67
|
|
5
|
|
Dividends
|
(83
|
)
|
(9
|
)
|
Other(a)
|
(224
|
)
|
(20
|
)
|
Ending balance at March 31
|
$
|
17,228
|
|
$
|
1,639
|
|
|
|
(a)
|
Includes impact of AOCI, acquisitions, dispositions and BHGE stock repurchases.
|
REDEEMABLE NONCONTROLLING INTERESTS
Redeemable noncontrolling interests presented in our Statement of Financial Position include common shares issued by our affiliates that are redeemable at the option of the holder of those interests.
As part of the Alstom acquisition in 2015, we formed
three
joint ventures in grid technology, renewable energy, and global nuclear and French steam power. Noncontrolling interests in these joint ventures hold certain redemption rights. Our retained earnings is adjusted for subsequent changes in the redemption value of the noncontrolling interest in these entities to the extent that the redemption value exceeds the carrying amount of the noncontrolling interest.
Alstom holds redemption rights with respect to its interest in the grid technology and renewable energy joint ventures, which, if exercised, would require us to purchase all of their interest during September 2018 or September 2019. Alstom also holds similar redemption rights for the global nuclear and French steam power joint venture that are exercisable during the first quarter of 2021 or the first quarter of 2022. The redemption price would generally be equal to Alstom's initial investment plus annual accretion of
3%
for the grid technology and renewable energy joint ventures and plus annual accretion of
2%
for the nuclear and French steam power joint venture, with potential upside sharing based on an EBITDA multiple. Alstom also holds additional redemption rights in other limited circumstances as well as a call option to require GE to sell all of its interests in the renewable energy joint venture at the higher of fair value or Alstom's initial investment plus annual accretion of
3%
during the month of May in the years 2017 through 2019 and also upon a decision to IPO the joint venture.
In January 2018, Alstom informed us that they intend to exercise their redemption rights with respect to the grid technology and renewable energy joint ventures in September 2018. The minimum price that GE would be required to pay, pursuant to the agreements, to purchase Alstom’s interest at that time would be a net amount of
€1,828 million
for the grid technology joint venture and
€636 million
for the renewable energy joint venture. Alstom has also informed us that they intend to exercise their redemption rights with respect to the global nuclear and French steam power joint venture in the first quarter of 2021.
GE holds a call option on Alstom's interest in the global nuclear and French steam power joint venture at the same amount as Alstom's redemption price in the event that Alstom exercises its put option in the grid technology or renewable energy joint ventures. GE also has call options on Alstom's interest in the three joint ventures in other limited circumstances. In addition, the French Government holds a preferred interest in the global nuclear and French steam power joint venture, giving it certain protective rights.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
CHANGES TO REDEEMABLE NONCONTROLLING INTERESTS
|
|
|
Three months ended March 31
|
(In millions)
|
2018
|
|
2017
|
|
|
|
|
Balance at January 1
|
$
|
3,391
|
|
$
|
3,017
|
|
Net earnings (loss)
|
(33
|
)
|
(109
|
)
|
Dividends
|
(13
|
)
|
(10
|
)
|
Redemption value adjustment
|
65
|
|
101
|
|
Other
|
139
|
|
47
|
|
Balance at March 31(a)
|
$
|
3,549
|
|
$
|
3,046
|
|
|
|
(a)
|
Included
$3,208
million and
$2,760
million related to the Alstom joint ventures at March 31, 2018 and 2017, respectively.
|
OTHER
Common dividends from GE Capital to GE were
zero
and
$2,000
million in the three months ended March 31, 2018 and 2017, respectively.
NOTE 16. EARNINGS PER SHARE INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
|
2018
|
|
2017
|
(In millions; per-share amounts in dollars)
|
Diluted
|
|
Basic
|
|
|
Diluted
|
|
Basic
|
|
|
|
|
|
|
|
Amounts attributable to the Company:
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
Earnings from continuing operations
for per-share calculation(a)(b)
|
$
|
401
|
|
$
|
401
|
|
|
$
|
150
|
|
$
|
150
|
|
Preferred stock dividends
|
(37
|
)
|
(37
|
)
|
|
(34
|
)
|
(34
|
)
|
Earnings from continuing operations attributable to
common shareowners for per-share calculation(a)(b)
|
$
|
364
|
|
$
|
364
|
|
|
$
|
116
|
|
$
|
116
|
|
Loss from discontinued operations
for per-share calculation(a)(b)
|
(1,556
|
)
|
(1,556
|
)
|
|
(243
|
)
|
(243
|
)
|
Net earnings attributable to GE common
shareowners for per-share calculation(a)(b)
|
$
|
(1,189
|
)
|
$
|
(1,189
|
)
|
|
$
|
(123
|
)
|
$
|
(123
|
)
|
|
|
|
|
|
|
Average equivalent shares
|
|
|
|
|
|
Shares of GE common stock outstanding
|
8,683
|
|
8,683
|
|
|
8,714
|
|
8,714
|
|
Employee compensation-related shares (including stock options)
|
13
|
|
—
|
|
|
98
|
|
—
|
|
Total average equivalent shares
|
8,696
|
|
8,683
|
|
|
8,811
|
|
8,714
|
|
|
|
|
|
|
|
Per-share amounts
|
|
|
|
|
|
Earnings from continuing operations
|
$
|
0.04
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
$
|
0.01
|
|
Loss from discontinued operations
|
(0.18
|
)
|
(0.18
|
)
|
|
(0.03
|
)
|
(0.03
|
)
|
Net earnings
|
(0.14
|
)
|
(0.14
|
)
|
|
(0.01
|
)
|
(0.01
|
)
|
|
|
(a)
|
Our unvested restricted stock unit awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities. For the three months ended
March 31, 2018
and 2017, pursuant to the two-class method, as a result of excess dividends in respect to the current period earnings, losses were not allocated to the participating securities.
|
|
|
(b)
|
Included an insignificant amount of dividend equivalents in each of the periods presented.
|
F
or the three months ended
March 31, 2018
and
2017
, approximately
395 million
and
15 million
of outstanding stock awards were not included in the computation of diluted earnings per share because their effect was antidilutive.
Earnings per share amounts are computed independently for earnings from continuing operations, loss from discontinued operations and net earnings. As a result, the sum of per-share amounts from continuing operations and discontinued operations may not equal the total per-share amounts for net earnings.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 17. FINANCIAL INSTRUMENTS
The following table provides information about assets and liabilities not carried at fair value. The table excludes finance leases, equity investments without readily determinable fair value and non-financial assets and liabilities. Substantially all of the assets discussed below are considered to be Level 3. The vast majority of our liabilities’ fair value can be determined based on significant observable inputs and thus considered Level 2. Few of the instruments are actively traded and their fair values must often be determined using financial models. Realization of the fair value of these instruments depends upon market forces beyond our control, including marketplace liquidity.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
(In millions)
|
Carrying
amount
(net)
|
|
Estimated
fair value
|
|
|
Carrying
amount
(net)
|
|
Estimated
fair value
|
|
|
|
|
|
|
|
GE
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Notes receivable
|
$
|
798
|
|
$
|
798
|
|
|
$
|
700
|
|
$
|
700
|
|
Liabilities
|
|
|
|
|
|
Borrowings(a)(b)
|
33,948
|
|
33,750
|
|
|
34,473
|
|
35,416
|
|
Borrowings (debt assumed)(a)(c)
|
43,459
|
|
47,600
|
|
|
47,114
|
|
53,502
|
|
|
|
|
|
|
|
GE Capital
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Loans
|
15,734
|
|
15,673
|
|
|
17,363
|
|
17,331
|
|
Other commercial mortgages
|
1,497
|
|
1,553
|
|
|
1,489
|
|
1,566
|
|
Loans held for sale
|
3,145
|
|
3,145
|
|
|
3,274
|
|
3,274
|
|
Liabilities
|
|
|
|
|
|
Borrowings(a)(d)(e)(f)
|
50,381
|
|
52,974
|
|
|
55,353
|
|
60,415
|
|
Investment contracts
|
2,521
|
|
2,851
|
|
|
2,569
|
|
2,996
|
|
|
|
(b)
|
Included $
286
million and $
217
million of accrued interest in estimated fair value at
March 31, 2018
and
December 31, 2017
, respectively.
|
|
|
(c)
|
Included $
522
million and $
696
million of accrued interest in estimated fair value at
March 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
March 31, 2018
and
December 31, 2017
would have been reduced by $
1,565
million and $
1,754
million, respectively.
|
|
|
(e)
|
Included $
587
million and $
731
million of accrued interest in estimated fair value at
March 31, 2018
and
December 31, 2017
, respectively.
|
|
|
(f)
|
Excluded $
35,903
million and $
39,844
million of net intercompany payable to GE at
March 31, 2018
and
December 31, 2017
, respectively.
|
|
|
|
|
|
|
|
|
NOTIONAL AMOUNTS OF LOAN COMMITMENTS
|
|
|
|
|
|
(In millions)
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
Ordinary course of business lending commitments(a)
|
$
|
1,076
|
|
$
|
1,105
|
|
Unused revolving credit lines
|
158
|
|
198
|
|
|
|
(a)
|
Excluded investment commitments of $
653
million and $
677
million at
March 31, 2018
and
December 31, 2017
, respectively.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
DERIVATIVES AND HEDGING
FORMS OF HEDGING
In this section we explain the hedging methods we use and their effects on our financial statements.
Cash flow hedges
–
We use cash flow hedging primarily to reduce or eliminate the effects of foreign exchange rate changes on purchase and sale contracts in our industrial businesses and to convert foreign currency debt that we have issued in our financial services business back to our functional currency.
As part of our ongoing effort to reduce borrowings, we may repurchase debt that was in a cash flow hedge accounting relationship. At the time of determining that the debt cash flows are probable of not occurring any related OCI will be released to earnings.
Fair value hedges
–
These derivatives are used to hedge the effects of interest rate and currency exchange rate changes on debt that we have issued.
Net investment hedges
–
We invest in foreign operations that conduct their financial services activities in currencies other than the U.S. dollar. We hedge the currency risk associated with those investments primarily using non-derivative instruments such as debt denominated in a foreign currency and short-term currency exchange contracts under which we receive U.S. dollars and pay foreign currency.
Economic Hedges
-
These derivatives are not designated as hedges from an accounting standpoint (and therefore we do not apply hedge accounting to the relationship) but otherwise serve the same economic purpose as other hedging arrangements. We use economic hedges when we have exposures to currency exchange risk for which we are unable to meet the requirements for hedge accounting or when changes in the carrying amount of the hedged item are already recorded in earnings in the same period as the derivative making hedge accounting unnecessary. Even though the derivative is an effective economic hedge, there may be a net effect on earnings in each period due to differences in the timing of earnings recognition between the derivative and the hedged item.
NOTIONAL AMOUNT OF DERIVATIVES
The notional amount of a derivative is the number of units of the underlying (for example, the notional principal amount of the debt in an interest rate swap). The notional amount is used to compute interest or other payment streams to be made under the contract and is a measure of our level of activity. We generally disclose derivative notional amounts on a gross basis. The majority of the outstanding notional amount of
$161 billion
at
March 31, 2018
is related to managing interest rate and currency risk between financial assets and liabilities in our financial services business. The remaining derivative notional amount primarily relates to hedges of anticipated sales and purchases in foreign currency, commodity purchases and contractual terms in contracts that are considered embedded derivatives.
The table below provides additional information about how derivatives are reflected in our financial statements. Derivative assets and liabilities are recorded at fair value exclusive of interest earned or owed on interest rate derivatives, which is presented separately on our Statement of Financial Position. Cash collateral and securities held as collateral represent assets that have been provided by our derivative counterparties as security for amounts they owe us (derivatives that are in an asset position).
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FAIR VALUE OF DERIVATIVES
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
(In millions)
|
Assets
|
|
Liabilities
|
|
|
Assets
|
|
Liabilities
|
|
|
|
|
|
|
|
Derivatives accounted for as hedges
|
|
|
|
|
|
Interest rate contracts
|
$
|
1,619
|
|
$
|
208
|
|
|
$
|
1,862
|
|
$
|
148
|
|
Currency exchange contracts
|
329
|
|
71
|
|
|
160
|
|
70
|
|
|
1,948
|
|
279
|
|
|
2,021
|
|
218
|
|
|
|
|
|
|
|
Derivatives not accounted for as hedges
|
|
|
|
|
|
Interest rate contracts
|
39
|
|
10
|
|
|
93
|
|
8
|
|
Currency exchange contracts
|
1,264
|
|
1,658
|
|
|
1,111
|
|
2,043
|
|
Other contracts
|
89
|
|
127
|
|
|
139
|
|
91
|
|
|
1,392
|
|
1,795
|
|
|
1,343
|
|
2,143
|
|
|
|
|
|
|
|
Gross derivatives recognized in statement of financial position
|
|
|
|
|
|
Gross derivatives
|
3,340
|
|
2,074
|
|
|
3,364
|
|
2,361
|
|
Gross accrued interest
|
231
|
|
(26
|
)
|
|
469
|
|
(38
|
)
|
|
3,571
|
|
2,048
|
|
|
3,833
|
|
2,323
|
|
|
|
|
|
|
|
Amounts offset in statement of financial position
|
|
|
|
|
|
Netting adjustments(a)
|
(1,534
|
)
|
(1,536
|
)
|
|
(1,457
|
)
|
(1,456
|
)
|
Cash collateral(b)
|
(1,329
|
)
|
(155
|
)
|
|
(1,529
|
)
|
(578
|
)
|
|
(2,863
|
)
|
(1,691
|
)
|
|
(2,986
|
)
|
(2,034
|
)
|
|
|
|
|
|
|
Net derivatives recognized in statement of financial position
|
|
|
|
|
|
Net derivatives
|
708
|
|
357
|
|
|
847
|
|
289
|
|
|
|
|
|
|
|
Amounts not offset in statement of financial position
|
|
|
|
|
|
Securities held as collateral(c)
|
(350
|
)
|
—
|
|
|
(405
|
)
|
—
|
|
|
|
|
|
|
|
Net amount
|
$
|
358
|
|
$
|
357
|
|
|
$
|
441
|
|
$
|
289
|
|
Derivatives are classified in the captions "All other assets" and "All other liabilities" and the related accrued interest is classified in "Other GE Capital receivables" and "All other liabilities" in our Statement of Financial Position.
|
|
(a)
|
The netting of derivative receivables and payables is permitted when a legally enforceable master netting agreement exists. Amounts include fair value adjustments related to our own and counterparty non-performance risk. At
March 31, 2018
and
December 31, 2017
, the cumulative adjustment for non-performance risk was
$1 million
and
$(1) million
, respectively.
|
|
|
(b)
|
Excluded excess cash collateral received and posted of
$103 million
and
$432 million
at
March 31, 2018
, respectively, and
$10 million
and
$255 million
at
March 31, 2018
and
December 31, 2017
, respectively.
|
|
|
(c)
|
Excluded excess securities collateral received of
$34 million
and
$16 million
at
March 31, 2018
and
December 31, 2017
, respectively.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
EFFECTS OF DERIVATIVES ON EARNINGS
All derivatives are marked to fair value on our balance sheet, whether they are designated in a hedging relationship for accounting purposes or are used as economic hedges.
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(In millions)
|
Effect on hedging instrument
|
Effect on underlying
|
Effect on earnings (a)
|
|
|
|
|
2018
|
|
|
|
Cash flow hedges
|
$
|
142
|
|
$
|
(142
|
)
|
$
|
—
|
|
Fair value hedges
|
(697
|
)
|
672
|
|
(26
|
)
|
Net investment hedges(b)
|
(603
|
)
|
605
|
|
2
|
|
Economic hedges(c)
|
464
|
|
(574
|
)
|
(110
|
)
|
Total
|
|
|
$
|
(134
|
)
|
|
|
|
|
2017
|
|
|
|
Cash flow hedges
|
$
|
22
|
|
$
|
(22
|
)
|
$
|
—
|
|
Fair value hedges
|
(225
|
)
|
163
|
|
(62
|
)
|
Net investment hedges(b)
|
(563
|
)
|
573
|
|
10
|
|
Economic hedges(c)
|
(339
|
)
|
224
|
|
(115
|
)
|
Total
|
|
|
$
|
(167
|
)
|
The amounts in the table above generally do not include associated derivative accruals in income or expense.
|
|
(a)
|
For cash flow and fair value hedges, the effect on earnings is primarily related to ineffectiveness. For net investment hedges, the effect on earnings is related to ineffectiveness and spot-forward differences.
|
|
|
(b)
|
Both non-derivatives and derivatives hedging instruments are included. The carrying value of non-derivative instruments designated as net investment hedges was
$(13,627) million
and
$(3,328) million
at
March 31, 2018
and 2017, respectively. Total pre-tax reclassifications from CTA to gain (loss) was
zero
and
$60 million
at
March 31, 2018
and 2017, respectively. Total pre-tax reclassifications from CTA to gain (loss) included
zero
and
$60 million
recorded in discontinued operations at
March 31, 2018
and 2017, respectively.
|
|
|
(c)
|
Net effect is substantially offset by the change in fair value of the hedged item that will affect earnings in future periods.
|
Changes in the fair value of cash flow hedges are recorded in a separate component of equity (referred to below as Accumulated Other Comprehensive Income, or AOCI) and are recorded in earnings in the period in which the hedged transaction occurs. The table below summarizes this activity by hedging instrument.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW HEDGE ACTIVITY
|
|
|
|
|
|
|
|
|
Gain (loss) recognized in AOCI
|
|
Gain (loss) reclassified
from AOCI into earnings
|
|
for the three months ended March 31
|
|
for the three months ended March 31
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
$
|
(4
|
)
|
$
|
(2
|
)
|
19
|
|
|
$
|
(2
|
)
|
$
|
(9
|
)
|
(30
|
)
|
Currency exchange contracts
|
146
|
|
22
|
|
(77
|
)
|
|
66
|
|
8
|
|
(53
|
)
|
Commodity contracts
|
—
|
|
2
|
|
1
|
|
|
—
|
|
—
|
|
(2
|
)
|
Total(a)
|
$
|
142
|
|
$
|
22
|
|
(57
|
)
|
|
$
|
65
|
|
$
|
(1
|
)
|
$
|
(84
|
)
|
|
|
(a)
|
Gain (loss) is recorded in "GE Capital revenues from services", "Interest and other financial charges", and "Other costs and expenses" in our Statement of Earnings when reclassified.
|
The total pre-tax amount in AOCI related to cash flow hedges of forecasted transactions was a
$167 million
gain at
March 31, 2018
. We expect to transfer
$7 million
gain to earnings as an expense in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions.
In the three mo
nths ended March 31, 2018, 2017 a
nd
2016
, we recognized insignificant gains and losses related to hedged forecasted transactions and firm commitments that did not occur by the end of the originally specified period. At March 31, 2018, 2017 and 2016, the maximum term of derivative instruments that hedge forecasted transactions was
15 years
,
16 years
and
17 years
, respectively.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
For cash flow hedges, the amount of ineffectiveness in the hedging relationship and amount of the changes in fair value of the derivatives that are not included in the measurement of ineffectiveness were insignificant for each reporting period.
COUNTERPARTY CREDIT RISK
Fair values of our derivatives can change significantly from period to period based on, among other factors, market movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not make payments to us according to the terms of our agreements) on an individual counterparty basis. Where we have agreed to netting of derivative exposures with a counterparty, we net our exposures with that counterparty and apply the value of collateral posted to us to determine the exposure. We actively monitor these net exposures against defined limits and take appropriate actions in response, including requiring additional collateral.
As discussed above, we have provisions in certain of our master agreements that require counterparties to post collateral (typically, cash or U.S. Treasury securities) when our receivables due from the counterparties, measured at current market value, exceeds specified limits. The fair value of such collateral was
$1,678 million
at
March 31, 2018
, of which
$1,329 million
was cash and
$350 million
was in the form of securities held by a custodian for our benefit. Under certain of these same agreements, we post collateral to our counterparties for our derivative obligations, the fair value of cash collateral posted was
$155 million
at
March 31, 2018
. At
March 31, 2018
, our exposures to counterparties (including accrued interest), net of collateral we hold, was
$288 million
. This excludes exposures related to embedded derivatives.
Additionally, our master agreements typically contain mutual downgrade provisions that provide the ability of each party to require termination if the long-term credit rating of the counterparty were to fall below A-/A3 or other ratings levels agreed upon with the counterparty. In certain of these master agreements, each party also has the ability to require termination if the short-term rating of the counterparty were to fall below A-1/P-1. Our master agreements also typically contain provisions that provide termination rights upon the occurrence of certain other events, such as a bankruptcy or events of default by one of the parties. If an agreement was terminated under any of these circumstances, the termination amount payable would be determined on a net basis and could also take into account any collateral posted. The net amount of our derivative liability, after consideration of collateral posted by us and outstanding interest payments was
$252 million
at
March 31, 2018
. This excludes exposure related to embedded derivatives.
NOTE 18.
VARIABLE INTEREST ENTITIES
A VIE is an entity that has one of three characteristics: (1) it is controlled by someone other than its shareowners or partners, (2) its shareowners or partners are not economically exposed to the entity's earnings (for example, they are protected against losses), or (3) it was thinly capitalized when it was formed.
In the normal course of business we become involved with VIEs either because we help create them or we invest in them. Our VIEs either provide goods and services to customers or provide financing to third parties for the purchase of GE goods and services. If we control the VIE, we consolidate it and provide disclosure below. However, if the VIE is a business and use of its assets is not limited to settling its liabilities, ongoing disclosures are not required.
CONSOLIDATED VARIABLE INTEREST ENTITIES
Our most significant consolidated VIEs are
four
joint ventures used to complete acquisitions.
The newest of these, BHGE LLC was formed as part of the Baker Hughes transaction. BHGE LLC owns the operating assets of GE Oil & Gas and Baker Hughes. BHGE LLC is a VIE as we hold an economic interest of approximately
62.5%
in the partnership, but we hold no voting or participating rights through our direct economic ownership. BHGE LLC is a SEC Registrant with separate filing requirements with the SEC and its separate financial information can be obtained from www.sec.gov.
The remaining
three
joint ventures were formed as part of the Alstom acquisition. These joint ventures include grid technology, renewable energy, and global nuclear and French steam power and have combined assets, liabilities and redeemable non-controlling interest as of March 31, 2018 and December 31, 2017 of
$16,357
million
,
$10,896
million
and
$3,208
million
and
$16,344 million
,
$11,463 million
and
$3,065 million
, respectively. These joint ventures are considered VIEs because the equity held by Alstom does not participate fully in the earnings of the ventures due to contractual features allowing Alstom to sell their interests back to GE
(see Note 14 for further information).
We consolidate these joint ventures because we control all their significant activities. These joint ventures are in all other respects regular businesses and are therefore exempt from ongoing disclosure requirements for consolidated VIEs provided below.
The table below provides information about consolidated VIEs that are subject to ongoing disclosure requirements. Substantially all of these entities were created to help our customers finance the purchase of GE goods and services or to purchase GE customer notes receivable arising from sales of GE goods and services. These entities have no features that could expose us to losses that could significantly exceed the difference between the consolidated assets and liabilities.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS AND LIABILITIES OF CONSOLIDATED VIEs
|
|
|
GE Capital
|
|
(In millions)
|
GE
|
Customer Notes receivables(a)
|
Other(b)
|
Total
|
|
|
|
|
|
March 31, 2018
|
|
|
|
|
Assets
|
|
|
|
|
Financing receivables, net
|
$
|
—
|
|
$
|
—
|
|
$
|
750
|
|
$
|
750
|
|
Current receivables
|
86
|
|
442
|
|
—
|
|
528
|
|
Other assets
|
530
|
|
1,121
|
|
1,259
|
|
2,909
|
|
Total
|
$
|
616
|
|
$
|
1,563
|
|
$
|
2,008
|
|
$
|
4,187
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Borrowings
|
$
|
41
|
|
$
|
—
|
|
$
|
928
|
|
$
|
968
|
|
Non-recourse borrowings
|
—
|
|
650
|
|
16
|
|
665
|
|
Other liabilities
|
264
|
|
817
|
|
555
|
|
1,636
|
|
Total
|
$
|
305
|
|
$
|
1,467
|
|
$
|
1,498
|
|
$
|
3,270
|
|
|
|
|
|
|
December 31, 2017
|
|
|
|
|
Assets
|
|
|
|
|
Financing receivables, net
|
$
|
—
|
|
$
|
—
|
|
$
|
792
|
|
$
|
792
|
|
Current receivables
|
59
|
|
570
|
|
—
|
|
630
|
|
Investment securities
|
—
|
|
—
|
|
918
|
|
918
|
|
Other assets
|
586
|
|
1,182
|
|
1,920
|
|
3,688
|
|
Total
|
$
|
646
|
|
$
|
1,752
|
|
$
|
3,630
|
|
$
|
6,028
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Borrowings
|
$
|
39
|
|
$
|
—
|
|
$
|
1,027
|
|
$
|
1,066
|
|
Non-recourse borrowings
|
—
|
|
669
|
|
16
|
|
685
|
|
Other liabilities
|
345
|
|
1,021
|
|
1,525
|
|
2,891
|
|
Total
|
$
|
384
|
|
$
|
1,690
|
|
$
|
2,568
|
|
$
|
4,642
|
|
|
|
(a)
|
Two
funding vehicles established to purchase customer notes receivable from GE,
one
of which is partially funded by third-party debt.
|
|
|
(b)
|
In January 2018, ownership of the equity shares of Electric Insurance Company ("EIC") were distributed to GE Capital by a bankruptcy trustee. We have previously reported EIC as a VIE because we received a
100%
beneficial interest in the assets, liabilities and operations of EIC, related to an interim distribution in 2001. As EIC is now a consolidated voting interest entity we removed EIC from our VIE disclosure. In 2017,
$1,470 million
of assets and
$959 million
of liabilities were included related to EIC.
|
Total revenues from our consolidated VIEs were
$174
million
and
$252 million
for the three months ended March 31, 2018 and 2017, respectively. Related expenses consisted primarily of cost of goods and services of
$73
million
and
$95
million for the three months ended March 31, 2018 and 2017, respectively.
Where we provide servicing for third-party investors, we are contractually permitted to commingle cash collected from customers on financing receivables sold to third-party investors with our own cash prior to payment to third-party investors, provided our short-term credit rating does not fall below A-1/P1. These third-party investors also owe us amounts for purchased financial assets and scheduled interest and principal payments. At March 31, 2018 and December 31, 2017, the amounts of commingled cash owed to the third-party investors were $
53
million
and $
92
million,
respectively.
UNCONSOLIDATED VARIABLE INTEREST ENTITIES
We become involved with unconsolidated VIEs primarily through assisting in the formation and financing of the entity. We do not consolidate these entities because we do not have power over decisions that significantly affect their economic performance. Our investments in unconsolidated VIEs, at March 31, 2018 and December 31, 2017 were
$5,191
million
and
$5,833 million
, respectively. Substantially all of these investments are held by Energy Financial Services. Obligations to make additional investments in these entities are not significant.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 19. COMMITMENTS, GUARANTEES, PRODUCT WARRANTIES AND OTHER LOSS CONTINGENCIES
COMMITMENTS
The GE Capital Aviation Services (GECAS) business in GE Capital has placed multiple-year orders for various Boeing, Airbus and other aircraft manufacturers with list prices approximating $
36,506
million and secondary orders with airlines for used aircraft of approximately $
3,271
million at
March 31, 2018
. In our Aviation segment, we have committed to provide financing assistance of $
1,937
million of future customer acquisitions of aircraft equipped with our engines.
GUARANTEES
Our guarantees are provided in the ordinary course of business. We underwrite these guarantees considering economic, liquidity and credit risk of the counterparty. We believe that the likelihood is remote that any such arrangements could have a significant adverse effect on our financial position, results of operations or liquidity. We record liabilities for guarantees at estimated fair value, generally the amount of the premium received, or if we do not receive a premium, the amount based on appraisal, observed market values or discounted cash flows. Any associated expected recoveries from third parties are recorded as other receivables, not netted against the liabilities.
At
March 31, 2018
, we were committed under the following guarantee arrangements beyond those provided on behalf of VIEs. See Note 18.
Credit Support.
We have provided $
1,667
million of credit support on behalf of certain customers or associated companies, predominantly joint ventures and partnerships, using arrangements such as standby letters of credit and performance guarantees. These arrangements enable these customers and associated companies to execute transactions or obtain desired financing arrangements with third parties. Should the customer or associated company fail to perform under the terms of the transaction or financing arrangement, we would be required to perform on their behalf. Under most such arrangements, our guarantee is secured, usually by the asset being purchased or financed, or possibly by certain other assets of the customer or associated company. The length of these credit support arrangements parallels the length of the related financing arrangements or transactions. The liability for such credit support was $
80
million at
March 31, 2018
.
Indemnification Agreements – Continuing Operations.
We have agreements that require us to fund up to $
241
million at
March 31, 2018
under residual value guarantees on a variety of leased equipment. Under most of our residual value guarantees, our commitment is secured by the leased asset. The liability for these indemnification agreements was $
7
million at
March 31, 2018
.
At
March 31, 2018
, we also had $
1,852
million of other indemnification commitments, substantially all of which relate to representations and warranties in sales of businesses or assets. The liability for these indemnification commitments was $
260
million at
March 31, 2018
.
Indemnification Agreements – Discontinued Operations.
At
March 31, 2018
, we provided specific indemnifications to buyers of GE Capital’s assets that, in the aggregate, represent substantially all of the maximum potential claim of $
2,786
million
.
The majority of these indemnifications relate to the sale of businesses and assets under the GE Capital Exit Plan.
We have recorded related liabilities of
$
301
million
, which incorporates our evaluation of risk and the likelihood of making payments under the indemnities.
The recognized liabilities represent the estimated fair value of the indemnities when issued as adjusted for any subsequent probable and estimable losses.
In addition, in connection with the 2015 public offering and sale of Synchrony Financial, GE Capital indemnified Synchrony Financial and its directors, officers, and employees against the liabilities of GECC's businesses other than historical liabilities of the businesses that are part of Synchrony Financial's ongoing operations.
Contingent Consideration.
These are agreements to provide additional consideration to a buyer or seller in a business combination if contractually specified conditions related to the acquisition or disposition are achieved. Amount of contingent consideration was insignificant at
March 31, 2018
.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
PRODUCT WARRANTIES
We provide for estimated product warranty expenses when we sell the related products. Because warranty estimates are forecasts that are based on the best available information – mostly historical claims experience – claims costs may differ from amounts provided. An analysis of changes in the liability for product warranties follows.
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(In millions)
|
2018
|
|
2017
|
|
|
|
|
Balance at January 1
|
$
|
2,348
|
|
$
|
1,929
|
|
Current-year provisions
|
245
|
|
155
|
|
Expenditures
|
(237
|
)
|
(210
|
)
|
Other changes(a)
|
149
|
|
17
|
|
Balance as of March 31
|
$
|
2,505
|
|
$
|
1,891
|
|
(
a) Primarily includes effect of currency exchange and acquisitions.
OTHER LOSS CONTINGENCIES
LEGAL MATTERS
WMC.
During the fourth quarter of 2007, we completed the sale of WMC, our U.S. mortgage business. WMC substantially discontinued all new loan originations by the second quarter of 2007, and was never a loan servicer. In connection with the sale, WMC retained certain representation and warranty obligations related to loans sold to third parties prior to the disposal of the business and contractual obligations to repurchase previously sold loans that had an early payment default. All claims received by WMC for early payment default have either been resolved or are no longer being pursued.
The remaining active claims have been brought by securitization trustees or administrators seeking recovery from WMC for alleged breaches of representations and warranties on mortgage loans that serve as collateral for residential mortgage-backed securities (RMBS). At March 31, 2018, such claims consisted of
$298 million
of individual claims generally submitted before the filing of a lawsuit (compared to
$462 million
at December 31, 2017) and
$3,107 million
of additional claims asserted against WMC in litigation without making a prior claim (Litigation Claims) (compared to
$3,198 million
at December 31, 2017). The total amount of these claims,
$3,404 million
, reflects the purchase price or unpaid principal balances of the loans at the time of purchase and does not give effect to pay downs or potential recoveries based upon the underlying collateral, which in many cases are substantial, nor to accrued interest or fees. WMC believes that repurchase claims brought based upon representations and warranties made more than six years before WMC was notified of the claim would be disallowed in legal proceedings under applicable law and the June 11, 2015 decision of the New York Court of Appeals in ACE Securities Corp. v. DB Structured Products, Inc., on the statute of limitations period governing such claims.
Reserves related to repurchase claims made against WMC were
$342 million
at March 31, 2018, reflecting a net decrease to reserves in the three months ended March 31, 2018 of
$74 million
due to settlements. The reserve estimate takes into account recent settlement activity and is based upon WMC’s evaluation of the remaining exposures as a percentage of estimated lifetime mortgage loan losses within the pool of loans supporting each securitization for which timely claims have been asserted in litigation against WMC. Settlements in prior periods reduced WMC’s exposure on claims asserted in certain securitizations and the claim amounts reported above give effect to these settlements. During the first quarter of 2018, we also recorded a reserve of
$1,500 million
in connection with the U.S. Department of Justice's (DOJ) ongoing investigation regarding potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) by WMC and GE Capital discussed in Legal Proceedings.
|
|
|
|
|
|
|
|
|
ROLLFORWARD OF THE RESERVE RELATED TO REPURCHASE CLAIMS
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(In millions)
|
2018
|
|
|
2017
|
|
|
|
|
|
Balance, beginning of period
|
$
|
416
|
|
|
$
|
626
|
|
Provision
|
—
|
|
|
—
|
|
Claim resolutions / rescissions
|
(74
|
)
|
|
—
|
|
Balance, end of period
|
$
|
342
|
|
|
$
|
626
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Given the significant litigation activity and WMC’s continuing efforts to resolve the lawsuits involving claims made against WMC, it is difficult to assess whether future losses will be consistent with WMC’s past experience. Adverse changes to WMC’s assumptions supporting the reserve may result in an increase to these reserves. WMC estimates a range of reasonably possible loss from
$0
to approximately
$500 million
over its recorded reserve at March 31, 2018. This estimate involves significant judgment and may not reflect the range of uncertainties and unpredictable outcomes inherent in litigation, including the matters discussed in Legal Proceedings and potential changes in WMC’s legal strategy. This estimated range of reasonably possible loss excludes any possible loss associated with an adverse court decision on the applicable statute of limitations, as well as any additional loss beyond the amount of our current reserve for the FIRREA investigation, as we are unable at this time to develop such a meaningful estimate. With respect to the FIRREA investigation, this inability to develop a meaningful estimate of any additional loss beyond the amount of our current reserve reflects, among other factors, the wide variety and broad range of penalties and other sanctions incurred by various financial institutions in proceedings and settlements involving claims made under FIRREA by the DOJ, and the possibility WMC will file for bankruptcy in the event of a finding of liability in the TMI case discussed in Legal Proceedings. It is possible, however, that the ultimate liability of GE Capital and/or WMC could be higher than our current reserve if a negotiated settlement of the FIRREA investigation cannot be reached at a level commensurate with the reserve, or if we face adverse litigation outcomes if a negotiated settlement cannot be reached.
At March 31, 2018, there were
four
lawsuits involving claims made against WMC arising from alleged breaches of representations and warranties on mortgage loans included in
five
securitizations,
one
of which was dismissed in April 2018. The adverse parties in these cases are securitization trustees or parties claiming to act on their behalf. As discussed in Legal Proceedings,
two
of the
three
remaining lawsuits have been stayed pending court approval of settlement agreements. The sole remaining active lawsuit against WMC is the TMI case, and a bench trial in that case began on January 16, 2018.
Although the alleged claims for relief vary from case to case, the complaints and counterclaims in these actions generally assert claims for breach of contract, indemnification, and/or declaratory judgment, and seek specific performance (repurchase of defective mortgage loans) and/or money damages. Adverse court decisions, including in cases not involving WMC, could result in new claims and lawsuits on additional loans. However, WMC continues to believe that it has defenses to the claims asserted in litigation, including, for example, based on causation and materiality requirements and applicable statutes of limitations. It is not possible to predict the outcome or impact of these defenses and other factors, any of which could materially affect the amount of any loss ultimately incurred by WMC on these claims.
WMC has also received indemnification demands, nearly all of which are unspecified, from depositors/underwriters/sponsors of RMBS in connection with lawsuits brought by RMBS investors concerning alleged misrepresentations in the securitization offering documents to which WMC is not a party, or, in two cases, involving mortgage loan repurchase claims made against RMBS sponsors. WMC believes that it has defenses to these demands.
To the extent WMC is required to repurchase loans, WMC’s loss also would be affected by several factors, including pay downs, accrued interest and fees, and the value of the underlying collateral. The reserve and estimate of possible loss reflect judgment, based on currently available information, and a number of assumptions, including economic conditions, claim and settlement activity, pending and threatened litigation, court decisions regarding WMC’s legal defenses, indemnification demands, government activity, and other variables in the mortgage industry. Actual losses arising from claims against WMC could exceed these amounts and additional claims and lawsuits could result if actual claim rates, governmental actions, litigation and indemnification activity, adverse court decisions, actual settlement rates or losses WMC incurs on repurchased loans differ from its assumptions. Adverse developments under any of these scenarios, or a finding of liability in the TMI case discussed above, could be in an amount exceeding the total value of WMC's assets.
Alstom legacy matters
.
On November 2, 2015, we acquired the Thermal, Renewables and Grid businesses from Alstom. Prior to the acquisition, the seller was the subject of
two
significant cases involving anti-competitive activities and improper payments: (1) in January 2007, Alstom was fined
€65 million
by the European Commission for participating in a gas insulated switchgear cartel that operated from 1988 to 2004 (that fine was later reduced to
€59 million
), and (2) in December 2014, Alstom pled guilty in the United States to multiple violations of the Foreign Corrupt Practices Act and paid a criminal penalty of
$772 million
. As part of GE’s accounting for the acquisition, we established a reserve amounting to
$858 million
for legal and compliance matters related to the legacy business practices that were the subject of these and related cases in various jurisdictions.
Regardless of jurisdiction, the allegations relate to claimed anti-competitive conduct or improper payments in the pre-acquisition period as the source of legal violations and/or damages. Given the significant litigation and compliance activity related to these matters and our ongoing efforts to resolve them, it is difficult to assess whether the disbursements will ultimately be consistent with the reserve established. The estimation of this reserve involved significant judgment and may not reflect the full range of uncertainties and unpredictable outcomes inherent in litigation and investigations of this nature. Damages sought may include disgorgement of profits on the underlying business transactions, fines and/or penalties, interest, or other forms of resolution. Factors that can affect the ultimate amount of losses associated with these matters include the way cooperation is assessed and valued, prosecutorial discretion in the determination of damages, formulas for determining fines and penalties, the duration and amount of legal and investigative resources applied, and political and social influences within each jurisdiction, among other considerations. Actual losses arising from claims in these matters could exceed the amount provided. At this time, we are unable to develop a meaningful estimate of the range of reasonably possible additional losses for this exposure.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
ENVIRONMENTAL MATTERS
Our operations, like operations of other companies engaged in similar businesses, involve the use, disposal and cleanup of substances regulated under environmental protection laws. We are involved in numerous remediation actions to clean up hazardous wastes as required by federal and state laws. Liabilities for remediation costs exclude possible insurance recoveries and, when dates and amounts of such costs are not known, are not discounted. When there appears to be a range of possible costs with equal likelihood, liabilities are based on the low end of such range. It is reasonably possible that our environmental remediation exposure will exceed amounts accrued. However, due to uncertainties about the status of laws, regulations, technology and information related to individual sites, such amounts are not reasonably estimable. For further information, see our Annual Report on Form 10-K for the fiscal year ended
December 31, 2017
.
NOTE 20. CASH FLOWS INFORMATION
Changes in operating assets and liabilities are net of acquisitions and dispositions of principal businesses.
Amounts reported in the “Proceeds from sales of discontinued operations” and “Proceeds from principal business dispositions” lines in the Statement of Cash Flows are net of cash disposed and included certain deal-related costs. Amounts reported in the “Net cash from (payments for) principal businesses purchased” line is net of cash acquired and included certain deal-related costs and debt assumed and immediately repaid in acquisitions. Amounts reported in the “All other operating activities” line in the Statement of Cash Flows reflect cash sources and uses as well as non-cash adjustments to net income including those related to taxes, pension, gains (losses) on principal business dispositions, and restructuring and other charges. Certain supplemental information related to our cash flows is shown below.
GE
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(In millions)
|
2018
|
|
2017
|
|
|
|
|
All other operating activities
|
|
|
(Gains) losses on purchases and sales of business interests(a)
|
$
|
63
|
|
$
|
(13
|
)
|
Income taxes(b)
|
242
|
|
(239
|
)
|
Principal pension plans(c)
|
720
|
|
929
|
|
Other postretirement benefit plans(d)
|
(423
|
)
|
(267
|
)
|
Restructuring and other charges(e)
|
132
|
|
365
|
|
Other(f)
|
(1,532
|
)
|
(875
|
)
|
|
$
|
(798
|
)
|
$
|
(101
|
)
|
All other investing activities
|
|
|
Derivative settlements (net)(g)
|
$
|
(163
|
)
|
$
|
—
|
|
Investments in intangible assets (net)
|
(584
|
)
|
(154
|
)
|
Other
|
26
|
|
(23
|
)
|
|
$
|
(721
|
)
|
$
|
(177
|
)
|
Net dispositions (purchases) of GE shares for treasury
|
|
|
Open market purchases under share repurchase program
|
$
|
(80
|
)
|
$
|
(1,875
|
)
|
Other purchases
|
(4
|
)
|
(13
|
)
|
Dispositions
|
77
|
|
309
|
|
|
$
|
(8
|
)
|
$
|
(1,578
|
)
|
|
|
(a)
|
Included a pre-tax valuation allowance on businesses classified as held for sale of
$49 million
in the three months ended
March 31, 2018
. See Note 2.
|
|
|
(b)
|
Reflected the effects of current tax expense of
$541 million
and
$435 million
and net cash paid during the year for income taxes of
$(299) million
and
$(674) million
for the three months ended March 31, 2018 and 2017, respectively. Cash flows effects of deferred tax provisions (benefits) are shown separately within Cash flows from operating activities in the Statement of Cash Flows.
|
|
|
(c)
|
Reflected the effects of pension costs of
$1,065 million
and
$983 million
and employer contributions of
$(345) million
and
$(54) million
for the three months ended March 31, 2018 and 2017, respectively. See Note 13.
|
|
|
(d)
|
Reflected the effects of other postretirement plans costs (income) of
$(46) million
and
$114 million
and employer contributions of
$(377) million
and
$(267) million
for the three months ended March 31, 2018 and 2017, respectively. See Note 13.
|
|
|
(e)
|
Reflected the effects of restructuring and other charges of
$585 million
and
$979 million
and restructuring and other cash expenditures of
$(453) million
and
$(614) million
for the three months ended March 31, 2018 and 2017, respectively. Excludes non-cash adjustments reflected as Depreciation and amortization of property, plant and equipment in the Statement of Cash Flows.
|
|
|
(f)
|
Included other non-cash 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, contract-related costs and customer allowances.
|
|
|
(g)
|
Excluded net derivative settlements of
$(151) million
in the three months ended March 31, 2017. The classification of the settlement of derivative instruments was changed from operating cash flows to investing cash flows in the second half of 2017.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 21. INTERCOMPANY TRANSACTIONS
Transactions between related companies are made on arm's length terms and are reported in the respective GE and GE Capital columns of our financial statements, but are eliminated in deriving our consolidated financial statements. These transactions include, but are not limited to, the following:
|
|
•
|
GE Capital dividends to GE,
|
|
|
•
|
GE Capital working capital solutions to optimize GE cash management,
|
|
|
•
|
GE Capital enabled GE industrial orders, including related GE guarantees to GE Capital,
|
|
|
•
|
GE Capital financing of GE long-term receivables, and
|
|
|
•
|
Aircraft engines, power equipment,
renewable energy equipment
and healthcare equipment manufactured by GE that are installed on GE Capital investments, including leased equipment.
|
In addition to the above transactions that primarily enable growth for the GE businesses, there are routine related party transactions, which include, but are not limited to, the following:
|
|
•
|
Expenses related to parent-subsidiary pension plans,
|
|
|
•
|
Buildings and equipment leased between GE and GE Capital, including sale-leaseback transactions,
|
|
|
•
|
Information technology (IT) and other services sold to GE Capital by GE
|
|
|
•
|
Settlements of tax liabilities, and
|
|
|
•
|
Various investments, loans and allocations of GE corporate overhead costs.
|
Presented below is a walk of intercompany eliminations from the combined GE and GE Capital totals to the consolidated cash flows from continuing operations.
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2018
|
(In millions)
|
2018
|
|
2017
|
|
|
|
|
Cash from (used for) operating activities-continuing operations
|
|
|
Combined
|
$
|
(473
|
)
|
$
|
487
|
|
GE current receivables sold to GE Capital
|
1,815
|
|
1,958
|
|
GE Capital dividends to GE
|
—
|
|
(2,000
|
)
|
Other reclassifications and eliminations(a)
|
81
|
|
131
|
|
Total cash from (used for) operating activities-continuing operations
|
$
|
1,423
|
|
$
|
576
|
|
Cash from (used for) investing activities-continuing operations
|
|
|
Combined
|
$
|
973
|
|
$
|
4,971
|
|
GE current receivables sold to GE Capital
|
(2,371
|
)
|
(2,412
|
)
|
GE Capital long-term loans to GE
|
285
|
|
4,075
|
|
GE Capital short-term loan to GE
|
—
|
|
(1,329
|
)
|
Other reclassifications and eliminations(a)
|
(457
|
)
|
(570
|
)
|
Total cash from (used for) investing activities-continuing operations
|
$
|
(1,570
|
)
|
$
|
4,735
|
|
Cash from (used for) financing activities-continuing operations
|
|
|
Combined
|
$
|
(12,545
|
)
|
$
|
(12,331
|
)
|
GE current receivables sold to GE Capital
|
556
|
|
454
|
|
GE Capital dividends to GE
|
—
|
|
2,000
|
|
GE Capital long-term loans to GE
|
(285
|
)
|
(4,075
|
)
|
GE Capital short-term loan to GE
|
—
|
|
1,329
|
|
Other reclassifications and eliminations(a)
|
375
|
|
438
|
|
Total cash from (used for) financing activities-continuing operations
|
$
|
(11,899
|
)
|
$
|
(12,185
|
)
|
|
|
(a)
|
Includes eliminations of other cash flows activities, including those related to GE Capital enabled GE industrial orders, financing of long-term receivables, various investments, loans and allocations of GE corporate overhead costs.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 22. GUARANTOR FINANCIAL INFORMATION
GUARANTOR AND NON-GUARANTOR CONDENSED CONSOLIDATING FINANCIAL INFORMATION
On October 26, 2015, GE Capital International Funding Company Unlimited Company, formerly GE Capital International Funding Company (the Issuer), then a finance subsidiary of General Electric Capital Corporation, settled its previously announced private offers to exchange (the Exchange Offers) the Issuer’s new senior unsecured notes for certain outstanding debt securities of General Electric Capital Corporation.
The new notes that were issued were fully and unconditionally, jointly and severally guaranteed by both the Company and GE Capital International Holdings Limited (GECIHL) (each a Guarantor, and together, the Guarantors).
Under the terms of a registration rights agreement entered into in connection with the Exchange Offers, the Issuer and the Company agreed to file a registration statement with the U.S. Securities and Exchange Commission (SEC) for an offer to exchange new senior notes of the Issuer registered with the SEC and guaranteed by the Guarantors for certain of the Issuer’s outstanding unregistered senior notes. This exchange was completed in July 2016.
PRESENTATION
In connection with the registration of the senior notes, the Company is required to provide certain financial information regarding the Issuer and the Guarantors of the registered securities. Included are the Condensed Consolidating Statements of Earnings and Comprehensive Income for the
three
months ended
March 31, 2018
and
2017
, Condensed Consolidating Statements of Financial Position as of
March 31, 2018
and
December 31, 2017
and Condensed Consolidating Statements of Cash Flows for the
three
months ended
March 31, 2018
and
2017
for:
|
|
•
|
General Electric Company (the Parent Company Guarantor)
- prepared with investments in subsidiaries accounted for under the equity method of accounting and excluding any inter-segment eliminations;
|
|
|
•
|
GE Capital International Funding Company Unlimited Company (the Subsidiary Issuer)
– finance subsidiary for debt;
|
|
|
•
|
GE Capital International Holdings Limited (GECIHL)
(the Subsidiary Guarantor)
- prepared with investments in non-guarantor subsidiaries accounted for under the equity method of accounting;
|
|
|
•
|
Non-Guarantor Subsidiaries
- prepared on an aggregated basis excluding any elimination or consolidation adjustments and includes predominantly all non-cash adjustments for cash flows;
|
|
|
•
|
Consolidating Adjustments
- adjusting entries necessary to consolidate the Parent Company Guarantor with the Subsidiary Issuer, the Subsidiary Guarantor and Non-Guarantor Subsidiaries and in the comparative periods, this category includes the impact of new accounting policies adopted as described in Note 1 ; and
|
|
|
•
|
Consolidated
- prepared on a consolidated basis.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
|
FOR THE THREE MONTHS ENDED MARCH 31, 2018 (UNAUDITED)
|
|
(in millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
Sales of goods and services
|
$
|
7,704
|
|
$
|
—
|
|
$
|
—
|
|
$
|
37,980
|
|
$
|
(18,810
|
)
|
$
|
26,874
|
|
GE Capital revenues from services
|
—
|
|
208
|
|
226
|
|
1,557
|
|
(205
|
)
|
1,786
|
|
Total revenues
|
7,704
|
|
208
|
|
226
|
|
39,538
|
|
(19,015
|
)
|
28,660
|
|
|
|
|
|
|
|
|
Costs and expenses
|
|
|
|
|
|
|
Interest and other financial charges
|
1,380
|
|
206
|
|
547
|
|
1,263
|
|
(2,111
|
)
|
1,285
|
|
Other costs and expenses
|
8,137
|
|
—
|
|
—
|
|
38,143
|
|
(19,113
|
)
|
27,168
|
|
Total costs and expenses
|
9,517
|
|
206
|
|
547
|
|
39,407
|
|
(21,224
|
)
|
28,453
|
|
Other income (loss)
|
275
|
|
—
|
|
—
|
|
(1,873
|
)
|
1,804
|
|
205
|
|
Equity in earnings (loss) of affiliates
|
2,592
|
|
—
|
|
620
|
|
(159
|
)
|
(3,054
|
)
|
—
|
|
Earnings (loss) from continuing operations before income taxes
|
1,054
|
|
2
|
|
299
|
|
(1,901
|
)
|
959
|
|
413
|
|
Benefit (provision) for income taxes
|
(648
|
)
|
—
|
|
—
|
|
600
|
|
75
|
|
27
|
|
Earnings (loss) from continuing operations
|
406
|
|
2
|
|
299
|
|
(1,301
|
)
|
1,034
|
|
440
|
|
Earnings (loss) from discontinued operations, net of taxes
|
(1,553
|
)
|
—
|
|
(17
|
)
|
1
|
|
16
|
|
(1,553
|
)
|
Net earnings (loss)
|
(1,147
|
)
|
2
|
|
282
|
|
(1,300
|
)
|
1,050
|
|
(1,113
|
)
|
Less net earnings (loss) attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
(5
|
)
|
39
|
|
34
|
|
Net earnings (loss) attributable to the Company
|
(1,147
|
)
|
2
|
|
282
|
|
(1,294
|
)
|
1,011
|
|
(1,147
|
)
|
Other comprehensive income (loss)
|
1,542
|
|
—
|
|
39
|
|
878
|
|
(917
|
)
|
1,542
|
|
Comprehensive income (loss) attributable to the Company
|
$
|
395
|
|
$
|
2
|
|
$
|
321
|
|
$
|
(416
|
)
|
$
|
94
|
|
$
|
395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
|
FOR THE THREE MONTHS ENDED MARCH 31, 2017 (UNAUDITED)
|
|
(in millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
Sales of goods and services
|
$
|
8,792
|
|
$
|
—
|
|
$
|
—
|
|
$
|
36,090
|
|
$
|
(20,265
|
)
|
$
|
24,617
|
|
GE Capital revenues from services
|
—
|
|
156
|
|
186
|
|
2,270
|
|
(347
|
)
|
2,264
|
|
Total revenues
|
8,792
|
|
156
|
|
186
|
|
38,360
|
|
(20,612
|
)
|
26,881
|
|
|
|
|
|
|
|
|
Costs and expenses
|
|
|
|
|
|
|
Interest and other financial charges
|
910
|
|
150
|
|
455
|
|
1,082
|
|
(1,457
|
)
|
1,139
|
|
Other costs and expenses
|
9,630
|
|
—
|
|
13
|
|
35,940
|
|
(19,591
|
)
|
25,992
|
|
Total costs and expenses
|
10,539
|
|
150
|
|
468
|
|
37,022
|
|
(21,048
|
)
|
27,131
|
|
Other income (loss)
|
54
|
|
—
|
|
—
|
|
4,620
|
|
(4,477
|
)
|
197
|
|
Equity in earnings (loss) of affiliates
|
1,708
|
|
—
|
|
242
|
|
36,682
|
|
(38,632
|
)
|
—
|
|
Earnings (loss) from continuing operations before income taxes
|
15
|
|
6
|
|
(40
|
)
|
42,640
|
|
(42,673
|
)
|
(53
|
)
|
Benefit (provision) for income taxes
|
145
|
|
(1
|
)
|
115
|
|
(469
|
)
|
315
|
|
105
|
|
Earnings (loss) from continuing operations
|
159
|
|
5
|
|
74
|
|
42,171
|
|
(42,358
|
)
|
52
|
|
Earnings (loss) from discontinued operations, net of taxes
|
(242
|
)
|
—
|
|
283
|
|
1
|
|
(280
|
)
|
(239
|
)
|
Net earnings (loss)
|
(83
|
)
|
5
|
|
357
|
|
42,172
|
|
(42,638
|
)
|
(187
|
)
|
Less net earnings (loss) attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
(48
|
)
|
(55
|
)
|
(104
|
)
|
Net earnings (loss) attributable to the Company
|
(83
|
)
|
5
|
|
357
|
|
42,220
|
|
(42,583
|
)
|
(83
|
)
|
Other comprehensive income (loss)
|
1,822
|
|
—
|
|
617
|
|
(1,457
|
)
|
840
|
|
1,822
|
|
Comprehensive income (loss) attributable to the Company
|
$
|
1,739
|
|
$
|
5
|
|
$
|
974
|
|
$
|
40,763
|
|
$
|
(41,743
|
)
|
$
|
1,739
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF FINANCIAL POSITION
|
MARCH 31, 2018 (UNAUDITED)
|
|
(In millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash
|
$
|
18
|
|
$
|
—
|
|
$
|
3
|
|
$
|
32,749
|
|
$
|
(641
|
)
|
$
|
32,129
|
|
Investment securities
|
1
|
|
—
|
|
—
|
|
38,148
|
|
(992
|
)
|
37,156
|
|
Receivables - net
|
46,397
|
|
17,468
|
|
32,603
|
|
82,863
|
|
(139,833
|
)
|
39,498
|
|
Inventories
|
4,705
|
|
—
|
|
—
|
|
22,165
|
|
(6,297
|
)
|
20,574
|
|
Property, plant and equipment - net
|
5,789
|
|
—
|
|
—
|
|
49,614
|
|
(1,753
|
)
|
53,650
|
|
Investment in subsidiaries(a)
|
283,079
|
|
—
|
|
78,928
|
|
717,025
|
|
(1,079,032
|
)
|
—
|
|
Goodwill and intangible assets
|
8,483
|
|
—
|
|
—
|
|
91,260
|
|
6,387
|
|
106,129
|
|
All other assets
|
10,087
|
|
16
|
|
191
|
|
219,939
|
|
(166,931
|
)
|
63,303
|
|
Assets of discontinued operations
|
—
|
|
—
|
|
—
|
|
—
|
|
5,670
|
|
5,670
|
|
Total assets
|
$
|
358,558
|
|
$
|
17,484
|
|
$
|
111,725
|
|
$
|
1,253,765
|
|
$
|
(1,383,423
|
)
|
$
|
358,109
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
Short-term borrowings
|
$
|
167,854
|
|
$
|
—
|
|
$
|
47,485
|
|
$
|
17,468
|
|
$
|
(213,435
|
)
|
$
|
19,371
|
|
Accounts payable
|
16,362
|
|
—
|
|
—
|
|
48,275
|
|
(49,577
|
)
|
15,060
|
|
Other current liabilities
|
11,662
|
|
8
|
|
3
|
|
34,175
|
|
(6,747
|
)
|
39,102
|
|
Long-term and non-recourse borrowings
|
64,468
|
|
15,916
|
|
34,772
|
|
54,626
|
|
(63,313
|
)
|
106,469
|
|
All other liabilities
|
42,247
|
|
542
|
|
135
|
|
65,808
|
|
(9,470
|
)
|
99,262
|
|
Liabilities of discontinued operations
|
—
|
|
—
|
|
—
|
|
—
|
|
2,104
|
|
2,104
|
|
Total Liabilities
|
302,593
|
|
16,466
|
|
82,395
|
|
220,351
|
|
(340,437
|
)
|
281,367
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests
|
—
|
|
—
|
|
—
|
|
2,787
|
|
762
|
|
3,549
|
|
|
|
|
|
|
|
|
GE shareowners' equity
|
55,965
|
|
1,018
|
|
29,330
|
|
1,029,234
|
|
(1,059,582
|
)
|
55,965
|
|
Noncontrolling interests
|
—
|
|
—
|
|
—
|
|
1,394
|
|
15,835
|
|
17,228
|
|
Total equity
|
55,965
|
|
1,018
|
|
29,330
|
|
1,030,627
|
|
(1,043,747
|
)
|
73,193
|
|
Total liabilities, redeemable noncontrolling interests and equity
|
$
|
358,558
|
|
$
|
17,484
|
|
$
|
111,725
|
|
$
|
1,253,765
|
|
$
|
(1,383,423
|
)
|
$
|
358,109
|
|
|
|
(a)
|
Included within the subsidiaries of the Subsidiary Guarantor are cash and cash equivalent balances of
$9,099 million
and net assets of discontinued operations of
$3,589 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
|
|
Investment securities
|
1
|
|
—
|
|
—
|
|
39,809
|
|
(1,113
|
)
|
38,696
|
|
Receivables - net
|
50,923
|
|
17,316
|
|
32,381
|
|
87,776
|
|
(147,551
|
)
|
40,846
|
|
Inventories
|
4,587
|
|
—
|
|
—
|
|
22,215
|
|
(7,383
|
)
|
19,419
|
|
Property, plant and equipment - net
|
5,808
|
|
—
|
|
—
|
|
48,516
|
|
(450
|
)
|
53,874
|
|
Investment in subsidiaries(a)
|
277,929
|
|
—
|
|
77,488
|
|
715,936
|
|
(1,071,353
|
)
|
—
|
|
Goodwill and intangible assets
|
8,014
|
|
—
|
|
—
|
|
90,226
|
|
6,002
|
|
104,242
|
|
All other assets
|
30,737
|
|
16
|
|
32
|
|
236,771
|
|
(205,269
|
)
|
62,288
|
|
Assets of discontinued operations
|
—
|
|
—
|
|
—
|
|
—
|
|
5,912
|
|
5,912
|
|
Total assets
|
$
|
381,472
|
|
$
|
17,332
|
|
$
|
109,904
|
|
$
|
1,282,485
|
|
$
|
(1,421,948
|
)
|
$
|
369,245
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
Short-term borrowings
|
$
|
191,807
|
|
$
|
0
|
|
$
|
46,033
|
|
$
|
22,603
|
|
$
|
(236,407
|
)
|
$
|
24,036
|
|
Accounts payable
|
8,126
|
|
—
|
|
—
|
|
77,509
|
|
(70,462
|
)
|
15,172
|
|
Other current liabilities
|
11,892
|
|
8
|
|
3
|
|
28,218
|
|
(34
|
)
|
40,088
|
|
Long-term and non-recourse borrowings
|
71,023
|
|
16,632
|
|
34,730
|
|
55,367
|
|
(67,197
|
)
|
110,556
|
|
All other liabilities
|
42,594
|
|
475
|
|
128
|
|
66,293
|
|
(7,694
|
)
|
101,797
|
|
Liabilities of discontinued operations
|
—
|
|
—
|
|
—
|
|
—
|
|
706
|
|
706
|
|
Total Liabilities
|
325,442
|
|
17,116
|
|
80,894
|
|
249,991
|
|
(381,088
|
)
|
292,355
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests
|
—
|
|
—
|
|
—
|
|
2,627
|
|
764
|
|
3,391
|
|
|
|
|
|
|
|
|
GE shareowners' equity
|
56,030
|
|
216
|
|
29,010
|
|
1,028,311
|
|
(1,057,537
|
)
|
56,030
|
|
Noncontrolling interests
|
—
|
|
—
|
|
—
|
|
1,556
|
|
15,912
|
|
17,468
|
|
Total equity
|
56,030
|
|
216
|
|
29,010
|
|
1,029,867
|
|
(1,041,625
|
)
|
73,498
|
|
Total liabilities, redeemable noncontrolling interests and equity
|
$
|
381,472
|
|
$
|
17,332
|
|
$
|
109,904
|
|
$
|
1,282,485
|
|
$
|
(1,421,948
|
)
|
$
|
369,245
|
|
|
|
(a)
|
Included within the subsidiaries of the Subsidiary Guarantor are cash and cash equivalent balances of
$15,225 million
and net assets of discontinued operations of
$4,318 million
.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
|
THREE MONTHS ENDED MARCH 31, 2018 (UNAUDITED)
|
|
|
|
|
|
|
|
(In millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Cash flows – operating activities
|
|
|
|
|
|
|
Cash from (used for) operating activities - continuing operations
|
$
|
19,897
|
|
$
|
146
|
|
$
|
(427
|
)
|
$
|
(17,187
|
)
|
$
|
(1,006
|
)
|
$
|
1,423
|
|
Cash from (used for) operating activities - discontinued operations
|
(1,553
|
)
|
—
|
|
—
|
|
1,521
|
|
(1
|
)
|
(33
|
)
|
Cash from (used for) operating activities
|
18,344
|
|
146
|
|
(427
|
)
|
(15,666
|
)
|
(1,007
|
)
|
1,390
|
|
|
|
|
|
|
|
|
Cash flows – investing activities
|
|
|
|
|
|
|
Cash from (used for) investing activities – continuing operations
|
6,242
|
|
(75
|
)
|
(788
|
)
|
(15,541
|
)
|
8,591
|
|
(1,570
|
)
|
Cash from (used for) investing activities – discontinued operations
|
—
|
|
—
|
|
—
|
|
(74
|
)
|
—
|
|
(74
|
)
|
Cash from (used for) investing activities
|
6,242
|
|
(75
|
)
|
(788
|
)
|
(15,615
|
)
|
8,591
|
|
(1,644
|
)
|
|
|
|
|
|
|
|
Cash flows – financing activities
|
|
|
|
|
|
|
Cash from (used for) financing activities – continuing operations
|
(28,041
|
)
|
(70
|
)
|
1,214
|
|
22,479
|
|
(7,482
|
)
|
(11,899
|
)
|
Cash from (used for) financing activities – discontinued operations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Cash from (used for) financing activities
|
(28,041
|
)
|
(70
|
)
|
1,214
|
|
22,479
|
|
(7,482
|
)
|
(11,899
|
)
|
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
—
|
|
—
|
|
208
|
|
—
|
|
208
|
|
Increase (decrease) in cash, cash equivalents and restricted cash
|
(3,454
|
)
|
—
|
|
—
|
|
(8,593
|
)
|
103
|
|
(11,945
|
)
|
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 March 31
|
18
|
|
—
|
|
3
|
|
33,399
|
|
(641
|
)
|
32,779
|
|
Less cash, cash equivalents and restricted cash of discontinued operations at March 31
|
—
|
|
—
|
|
—
|
|
650
|
|
—
|
|
650
|
|
Cash, cash equivalents and restricted cash of continuing operations at March 31
|
$
|
18
|
|
$
|
—
|
|
$
|
3
|
|
$
|
32,749
|
|
$
|
(641
|
)
|
$
|
32,129
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
|
THREE MONTHS ENDED MARCH 31, 2017 (UNAUDITED)
|
|
|
|
|
|
|
|
(In millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Cash flows – operating activities
|
|
|
|
|
|
|
Cash from (used for) operating activities - continuing operations
|
$
|
(9,938
|
)
|
$
|
13
|
|
$
|
627
|
|
$
|
77,587
|
|
$
|
(67,713
|
)
|
$
|
576
|
|
Cash from (used for) operating activities - discontinued operations
|
(242
|
)
|
—
|
|
—
|
|
(418
|
)
|
3
|
|
(658
|
)
|
Cash from (used for) operating activities
|
(10,180
|
)
|
13
|
|
627
|
|
77,169
|
|
(67,710
|
)
|
(82
|
)
|
|
|
|
|
|
|
|
Cash flows – investing activities
|
|
|
|
|
|
|
Cash from (used for) investing activities – continuing operations
|
4,386
|
|
(13
|
)
|
584
|
|
(70,181
|
)
|
69,958
|
|
4,735
|
|
Cash from (used for) investing activities – discontinued operations
|
—
|
|
—
|
|
—
|
|
(2,026
|
)
|
—
|
|
(2,026
|
)
|
Cash from (used for) investing activities
|
4,386
|
|
(13
|
)
|
584
|
|
(72,207
|
)
|
69,958
|
|
2,709
|
|
|
|
|
|
|
|
|
Cash flows – financing activities
|
|
|
|
|
|
|
Cash from (used for) financing activities – continuing operations
|
3,713
|
|
—
|
|
(1,212
|
)
|
(13,212
|
)
|
(1,474
|
)
|
(12,185
|
)
|
Cash from (used for) financing activities – discontinued operations
|
—
|
|
—
|
|
—
|
|
1,907
|
|
—
|
|
1,907
|
|
Cash from (used for) financing activities
|
3,713
|
|
—
|
|
(1,212
|
)
|
(11,305
|
)
|
(1,474
|
)
|
(10,278
|
)
|
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
—
|
|
—
|
|
133
|
|
—
|
|
133
|
|
Increase (decrease) in cash, cash equivalents and restricted cash
|
(2,081
|
)
|
—
|
|
(1
|
)
|
(6,209
|
)
|
773
|
|
(7,518
|
)
|
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 March 31
|
647
|
|
—
|
|
41
|
|
42,994
|
|
(816
|
)
|
42,866
|
|
Less cash, cash equivalents and restricted cash of discontinued operations at March 31
|
—
|
|
—
|
|
—
|
|
824
|
|
—
|
|
824
|
|
Cash, cash equivalents and restricted cash of continuing operations at March 31
|
$
|
647
|
|
$
|
—
|
|
$
|
41
|
|
$
|
42,170
|
|
$
|
(816
|
)
|
$
|
42,042
|
|
EXHIBITS
|
|
|
|
|
General Electric Company Annual Executive Incentive Plan, effective January 1, 2018.
|
|
Computation of Per Share Earnings.*
Computation of Ratio of Earnings to Fixed Charges.
Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
|
|
Preferability Letter of KPMG LLP, dated May 1, 2018.
|
|
Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended.
|
|
Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended.
|
|
Certification Pursuant to 18 U.S.C. Section 1350.
|
|
Mine Safety Disclosure.
|
Exhibit 101
|
The following materials from General Electric Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, formatted in XBRL (eXtensible Business Reporting Language); (i) Statement of Earnings (Loss) for the three months ended March 31, 2018 and 2017, (ii) Consolidated Statement of Comprehensive Income (Loss) for the three months ended March 31, 2018 and 2017, (iii) Statement of Financial Position at March 31, 2018 and December 31, 2017, (v) Statement of Cash Flows for the three months ended March 31, 2018 and 2017, and (iv) Notes to Consolidated Financial Statements.
|
|
|
|
|
*
|
Data required by Financial Accounting Standards Board Accounting Standards Codification 260,
Earnings Per Share
, is provided in Note 16 to the Consolidated Financial Statements in this Report.
|
FORM 10-Q CROSS REFERENCE INDEX
|
|
|
|
|
|
Item Number
|
|
Page(s)
|
Part I – FINANCIAL INFORMATION
|
Item 1.
|
|
Financial Statements
|
|
53-102
|
|
|
|
|
|
Item 2.
|
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
4-47
|
|
|
|
|
|
Item 3.
|
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
Not applicable(a)
|
|
|
|
|
|
Item 4.
|
|
Controls and Procedures
|
|
48
|
|
|
|
|
|
Part II – OTHER INFORMATION
|
Item 1.
|
|
Legal Proceedings
|
|
50-51
|
|
|
|
|
|
Item 1A.
|
|
Risk Factors
|
|
Not applicable(b)
|
|
|
|
|
|
Item 2.
|
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
49
|
|
|
|
|
|
Item 3.
|
|
Defaults Upon Senior Securities
|
|
Not applicable
|
|
|
|
|
|
Item 4.
|
|
Mine Safety Disclosures
|
|
41
|
|
|
|
|
|
Item 5.
|
|
Other Information
|
|
Not applicable
|
|
|
|
|
|
Item 6.
|
|
Exhibits
|
|
103
|
|
|
|
|
|
Signatures
|
|
|
105
|
|
|
(a)
|
There have been no significant changes to our market risk since
December 31, 2017
. For a discussion of our exposure to market risk, refer to our Annual Report on Form 10-K for the year ended
December 31, 2017
.
|
|
|
(b)
|
There have been no significant changes to our risk factors since
December 31, 2017
. For a discussion of our risk factors, refer to our Annual Report on Form 10-K for the year ended
December 31, 2017
.
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
General Electric Company
(Registrant)
|
May 1, 2018
|
|
/s/ Jan R. Hauser
|
Date
|
|
Jan R. Hauser
Vice President and Controller
Duly Authorized Officer and Principal Accounting Officer
|
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