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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Goodwill and Other Intangible Assets
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9
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Revenues
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10
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Contract & Other Deferred Assets and Progress Collections & Deferred Income
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11
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12
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Insurance Liabilities and 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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STATEMENT OF EARNINGS (LOSS)
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Three months ended March 31
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(UNAUDITED)
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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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2019
|
|
2018
|
|
|
|
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Revenues
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|
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Sales of goods
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$
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16,198
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$
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16,742
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Sales of services
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9,144
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9,260
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GE Capital revenues from services
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1,944
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1,786
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Total revenues (Note 9)
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27,286
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27,788
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Costs and expenses
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Cost of goods sold
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13,551
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13,756
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Cost of services sold
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6,802
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7,155
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Selling, general and administrative expenses
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4,146
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4,088
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Interest and other financial charges
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1,133
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1,282
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Insurance losses and annuity benefits
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611
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|
630
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Non-operating benefit costs
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566
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|
685
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Other costs and expenses
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81
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|
121
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Total costs and expenses
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26,889
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27,716
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Other income
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878
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|
204
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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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1,275
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|
277
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Benefit (provision) for income taxes
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(222
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)
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50
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|
Earnings (loss) from continuing operations
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1,053
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|
328
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Earnings (loss) from discontinued operations, net of taxes (Note 2)
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2,592
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(1,441
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)
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Net earnings (loss)
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3,645
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(1,113
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)
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Less net earnings (loss) attributable to noncontrolling interests
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57
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|
34
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Net earnings (loss) attributable to the Company
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3,588
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(1,147
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)
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Preferred stock dividends
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(40
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)
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(37
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)
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Net earnings (loss) attributable to GE common shareowners
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$
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3,549
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$
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(1,184
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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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1,053
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$
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328
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Less net earnings (loss) attributable to noncontrolling interests,
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continuing operations
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59
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|
30
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|
Earnings (loss) from continuing operations attributable to the Company
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994
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297
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Preferred stock dividends
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(40
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)
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(37
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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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954
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261
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Earnings (loss) from discontinued operations, net of taxes
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2,592
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(1,441
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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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(2
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)
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4
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Net earnings (loss) attributable to GE common shareowners
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$
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3,549
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$
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(1,184
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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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0.11
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$
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0.03
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Basic earnings (loss) per share
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$
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0.11
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$
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0.03
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Net earnings (loss)
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Diluted earnings (loss) per share
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$
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0.40
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$
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(0.14
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)
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Basic earnings (loss) per share
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$
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0.41
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$
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(0.14
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)
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Dividends declared per common share
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$
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0.01
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$
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0.12
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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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Three months ended March 31
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(UNAUDITED)
|
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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2019
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|
2018
|
|
|
2019
|
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2018
|
|
|
|
|
|
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Revenues
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|
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|
|
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Sales of goods
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$
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16,264
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$
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16,733
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$
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16
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$
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32
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Sales of services
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9,145
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9,288
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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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2,210
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2,141
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Total revenues
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25,409
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26,022
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2,227
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2,173
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Costs and expenses
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Cost of goods sold
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13,625
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13,748
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13
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25
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Cost of services sold
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6,351
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6,665
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|
486
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|
525
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Selling, general and administrative expenses
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3,939
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3,883
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267
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343
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Interest and other financial charges
|
588
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|
639
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|
677
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819
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Insurance losses and annuity benefits
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—
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—
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|
633
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|
645
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Non-operating benefit costs
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562
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|
681
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5
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4
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Other costs and expenses
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—
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—
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|
99
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|
133
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Total costs and expenses
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25,065
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25,615
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2,180
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2,495
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Other income
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884
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|
192
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—
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—
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GE Capital earnings (loss) from continuing operations
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135
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(215
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)
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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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1,363
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|
383
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|
|
47
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|
(321
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)
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Benefit (provision) for income taxes
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(350
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)
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(89
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)
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|
128
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|
139
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Earnings (loss) from continuing operations
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1,013
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|
295
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|
|
175
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(182
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)
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Earnings (loss) from discontinued operations, net of taxes (Note 2)
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2,592
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|
(1,441
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)
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|
35
|
|
(1,553
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)
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Net earnings (loss)
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3,606
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(1,146
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)
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|
210
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|
(1,735
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)
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Less net earnings (loss) attributable to noncontrolling interests
|
57
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|
38
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|
|
—
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(4
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)
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Net earnings (loss) attributable to the Company
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3,549
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(1,184
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)
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|
210
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(1,731
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)
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Preferred stock dividends
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—
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|
—
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|
|
(40
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)
|
(37
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)
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Net earnings (loss) attributable to GE common shareowners
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$
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3,549
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|
$
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(1,184
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)
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$
|
171
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|
$
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(1,768
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)
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|
|
|
|
|
|
Amounts attributable to GE common shareowners:
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
$
|
1,013
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|
$
|
295
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|
|
$
|
175
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|
$
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(182
|
)
|
Less net earnings (loss) attributable to noncontrolling interests,
|
|
|
|
|
|
continuing operations
|
59
|
|
34
|
|
|
—
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|
(4
|
)
|
Earnings (loss) from continuing operations attributable to the Company
|
954
|
|
261
|
|
|
175
|
|
(179
|
)
|
Preferred stock dividends
|
—
|
|
—
|
|
|
(40
|
)
|
(37
|
)
|
Earnings (loss) from continuing operations attributable
|
|
|
|
|
|
to GE common shareowners
|
954
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|
261
|
|
|
135
|
|
(215
|
)
|
Earnings (loss) from discontinued operations, net of taxes
|
2,592
|
|
(1,441
|
)
|
|
35
|
|
(1,553
|
)
|
Less net earnings (loss) attributable to
|
|
|
|
|
|
noncontrolling interests, discontinued operations
|
(2
|
)
|
4
|
|
|
—
|
|
—
|
|
Net earnings (loss) attributable to GE common shareowners
|
$
|
3,549
|
|
$
|
(1,184
|
)
|
|
$
|
171
|
|
$
|
(1,768
|
)
|
|
|
(a)
|
Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. See Note 1.
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Amounts may not add due to rounding.
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|
|
|
|
|
|
|
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
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|
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
|
|
|
(UNAUDITED)
|
Three months ended March 31
|
(In millions)
|
2019
|
|
2018
|
|
|
|
|
Net earnings (loss)
|
$
|
3,645
|
|
$
|
(1,113
|
)
|
Less net earnings (loss) attributable to noncontrolling interests
|
57
|
|
34
|
|
Net earnings (loss) attributable to the Company
|
$
|
3,588
|
|
$
|
(1,147
|
)
|
|
|
|
Other comprehensive income (loss)
|
|
|
Investment securities
|
$
|
24
|
|
$
|
99
|
|
Currency translation adjustments
|
423
|
|
830
|
|
Cash flow hedges
|
38
|
|
55
|
|
Benefit plans
|
545
|
|
717
|
|
Other comprehensive income (loss)
|
1,031
|
|
1,702
|
|
Less other comprehensive income (loss) attributable to noncontrolling interests
|
101
|
|
160
|
|
Other comprehensive income (loss) attributable to the Company
|
$
|
930
|
|
$
|
1,542
|
|
|
|
|
Comprehensive income (loss)
|
$
|
4,675
|
|
$
|
588
|
|
Less comprehensive income (loss) attributable to noncontrolling interests
|
158
|
|
194
|
|
Comprehensive income (loss) attributable to the Company
|
$
|
4,517
|
|
$
|
395
|
|
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
|
General Electric Company
and consolidated affiliates
|
(In millions, except share amounts)
|
March 31, 2019
|
|
December 31, 2018
|
|
|
(Unaudited)
|
|
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Assets
|
|
|
Cash, cash equivalents and restricted cash(a)
|
$
|
34,905
|
|
$
|
34,847
|
|
Investment securities (Note 3)
|
38,275
|
|
33,835
|
|
Current receivables (Note 4)
|
19,518
|
|
19,484
|
|
Inventories (Note 5)
|
19,419
|
|
18,439
|
|
Financing receivables – net (Note 6)
|
7,111
|
|
7,699
|
|
Other GE Capital receivables
|
6,794
|
|
6,674
|
|
Property, plant and equipment – net (Note 7)
|
50,265
|
|
49,839
|
|
Operating lease right-of-use assets (Note 7)
|
4,016
|
|
—
|
|
Receivable from GE Capital
|
—
|
|
—
|
|
Investment in GE Capital
|
—
|
|
—
|
|
Goodwill (Note 8)
|
53,194
|
|
58,730
|
|
Other intangible assets – net (Note 8)
|
17,053
|
|
17,897
|
|
Contract and other deferred assets (Note 10)
|
19,371
|
|
19,231
|
|
All other assets
|
19,381
|
|
19,893
|
|
Deferred income taxes (Note 14)
|
11,413
|
|
12,129
|
|
Assets of businesses held for sale (Note 2)
|
9,910
|
|
1,630
|
|
Assets of discontinued operations (Note 2)
|
4,459
|
|
9,257
|
|
Total assets(b)
|
$
|
315,082
|
|
$
|
309,585
|
|
|
|
|
Liabilities and equity
|
|
|
Short-term borrowings (Note 11)
|
$
|
15,953
|
|
$
|
12,821
|
|
Short-term borrowings assumed by GE (Note 11)
|
—
|
|
—
|
|
Accounts payable, principally trade accounts
|
17,059
|
|
16,722
|
|
Progress collections and deferred income (Note 10)
|
20,225
|
|
20,577
|
|
Dividends payable
|
94
|
|
95
|
|
Other GE current liabilities
|
17,881
|
|
15,770
|
|
Non-recourse borrowings of consolidated securitization entities (Note 11)
|
1,350
|
|
1,875
|
|
Long-term borrowings (Note 11)
|
90,223
|
|
95,234
|
|
Long-term borrowings assumed by GE (Note 11)
|
—
|
|
—
|
|
Operating lease liabilities (Note 7)
|
4,180
|
|
—
|
|
Insurance liabilities and annuity benefits (Note 12)
|
36,769
|
|
35,562
|
|
Non-current compensation and benefits
|
32,864
|
|
33,775
|
|
All other liabilities
|
18,980
|
|
20,837
|
|
Liabilities of businesses held for sale (Note 2)
|
1,801
|
|
708
|
|
Liabilities of discontinued operations (Note 2)
|
1,643
|
|
3,747
|
|
Total liabilities(b)
|
259,020
|
|
257,722
|
|
|
|
|
Redeemable noncontrolling interests (Note 15)
|
416
|
|
382
|
|
|
|
|
Preferred stock (5,939,875 shares outstanding at both March 31, 2019
and December 31, 2018)
|
6
|
|
6
|
|
Common stock (8,720,808,000 and 8,702,227,000 shares outstanding
at March 31, 2019 and December 31, 2018, respectively)
|
702
|
|
702
|
|
Accumulated other comprehensive income (loss) – net attributable to GE(c)
|
|
|
Investment securities
|
(16
|
)
|
(39
|
)
|
Currency translation adjustments
|
(5,810
|
)
|
(6,134
|
)
|
Cash flow hedges
|
49
|
|
13
|
|
Benefit plans
|
(7,708
|
)
|
(8,254
|
)
|
Other capital
|
34,345
|
|
35,504
|
|
Retained earnings
|
96,921
|
|
93,109
|
|
Less common stock held in treasury
|
(83,328
|
)
|
(83,925
|
)
|
Total GE shareowners’ equity
|
35,161
|
|
30,981
|
|
Noncontrolling interests(d) (Note 15)
|
20,485
|
|
20,500
|
|
Total equity (Note 15)
|
55,646
|
|
51,481
|
|
Total liabilities, redeemable noncontrolling interests and equity
|
$
|
315,082
|
|
$
|
309,585
|
|
|
|
(a)
|
Includes restricted cash of
$507 million
and
$492 million
at
March 31, 2019
and
December 31, 2018
, respectively.
|
|
|
(b)
|
Our consolidated assets at
March 31, 2019
included total assets of
$4,517 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
$2,851 million
within continuing operations and assets of discontinued operations of
$109 million
. Our consolidated liabilities at
March 31, 2019
included liabilities of certain VIEs for which the VIE creditors do not have recourse to GE. These liabilities included non-recourse borrowings of consolidated securitization entities (CSEs) of
$(1,350) million
within continuing operations. See Note 18.
|
|
|
(c)
|
The sum of accumulated other comprehensive income (loss) (AOCI) attributable to the Company was
$(13,485) million
and
$(14,414) million
at
March 31, 2019
and
December 31, 2018
, respectively.
|
|
|
(d)
|
Included AOCI attributable to noncontrolling interests of
$(350) million
and
$(451) million
at
March 31, 2019
and
December 31, 2018
, 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,
2019
|
|
December 31, 2018
|
|
|
March 31,
2019
|
|
December 31, 2018
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Assets
|
|
|
|
|
|
Cash, cash equivalents and restricted cash(b)
|
$
|
20,069
|
|
$
|
20,355
|
|
|
$
|
14,836
|
|
$
|
14,492
|
|
Investment securities (Note 3)
|
4,004
|
|
514
|
|
|
34,345
|
|
33,393
|
|
Current receivables (Note 4)
|
15,936
|
|
15,103
|
|
|
—
|
|
—
|
|
Inventories (Note 5)
|
19,370
|
|
18,389
|
|
|
49
|
|
50
|
|
Financing receivables - net (Note 6)
|
—
|
|
—
|
|
|
12,007
|
|
13,628
|
|
Other GE Capital receivables
|
—
|
|
—
|
|
|
14,063
|
|
15,361
|
|
Property, plant and equipment – net (Note 7)
|
20,640
|
|
21,056
|
|
|
30,000
|
|
29,510
|
|
Operating lease right-of-use assets (Note 7)
|
4,291
|
|
—
|
|
|
271
|
|
—
|
|
Receivable from GE Capital(c)(d)
|
21,684
|
|
22,513
|
|
|
—
|
|
—
|
|
Investment in GE Capital
|
11,744
|
|
11,412
|
|
|
—
|
|
—
|
|
Goodwill (Note 8)
|
52,316
|
|
57,826
|
|
|
878
|
|
904
|
|
Other intangible assets – net (Note 8)
|
16,833
|
|
17,661
|
|
|
220
|
|
236
|
|
Contract and other deferred assets (Note 10)
|
19,371
|
|
19,231
|
|
|
—
|
|
—
|
|
All other assets
|
10,385
|
|
10,164
|
|
|
9,315
|
|
9,819
|
|
Deferred income taxes (Note 14)
|
9,466
|
|
10,189
|
|
|
1,942
|
|
1,936
|
|
Assets of businesses held for sale (Note 2)
|
9,602
|
|
1,525
|
|
|
—
|
|
—
|
|
Assets of discontinued operations (Note 2)
|
187
|
|
4,573
|
|
|
4,272
|
|
4,610
|
|
Total assets
|
$
|
235,897
|
|
$
|
230,510
|
|
|
$
|
122,198
|
|
$
|
123,939
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
Short-term borrowings(c) (Note 11)
|
$
|
4,632
|
|
$
|
5,192
|
|
|
$
|
5,847
|
|
$
|
4,999
|
|
Short-term borrowings assumed by GE(c) (Note 11)
|
6,470
|
|
4,207
|
|
|
2,436
|
|
2,684
|
|
Accounts payable, principally trade accounts
|
21,018
|
|
22,085
|
|
|
2,086
|
|
1,612
|
|
Progress collections and deferred income (Note 10)
|
20,469
|
|
20,833
|
|
|
—
|
|
—
|
|
Dividends payable
|
94
|
|
95
|
|
|
—
|
|
—
|
|
Other GE current liabilities
|
17,881
|
|
15,770
|
|
|
—
|
|
—
|
|
Non-recourse borrowings of consolidated securitization entities (Note 11)
|
—
|
|
—
|
|
|
1,350
|
|
1,875
|
|
Long-term borrowings(d) (Note 11)
|
27,097
|
|
27,089
|
|
|
34,225
|
|
36,154
|
|
Long-term borrowings assumed by GE(c)(d) (Note 11)
|
28,964
|
|
32,054
|
|
|
19,249
|
|
19,828
|
|
Operating lease liabilities (Note 7)
|
4,467
|
|
—
|
|
|
257
|
|
—
|
|
Insurance liabilities and annuity benefits (Note 12)
|
—
|
|
—
|
|
|
37,313
|
|
35,994
|
|
Non-current compensation and benefits
|
32,244
|
|
32,910
|
|
|
611
|
|
856
|
|
All other liabilities
|
14,445
|
|
15,717
|
|
|
5,655
|
|
6,724
|
|
Liabilities of businesses held for sale (Note 2)
|
1,839
|
|
748
|
|
|
—
|
|
—
|
|
Liabilities of discontinued operations (Note 2)
|
222
|
|
1,947
|
|
|
1,421
|
|
1,800
|
|
Total liabilities
|
179,840
|
|
178,648
|
|
|
110,450
|
|
112,527
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests (Note 15)
|
416
|
|
382
|
|
|
—
|
|
—
|
|
|
|
|
|
|
|
Preferred stock (5,939,875 shares outstanding at both March 31, 2019
and December 31, 2018)
|
6
|
|
6
|
|
|
6
|
|
6
|
|
Common stock (8,720,808,000 and 8,702,227,000 shares outstanding
at March 31, 2019 and December 31, 2018, respectively)
|
702
|
|
702
|
|
|
—
|
|
—
|
|
Accumulated other comprehensive income (loss) - net attributable to GE
|
|
|
|
|
|
Investment securities
|
(16
|
)
|
(39
|
)
|
|
(10
|
)
|
(32
|
)
|
Currency translation adjustments
|
(5,810
|
)
|
(6,134
|
)
|
|
(303
|
)
|
(162
|
)
|
Cash flow hedges
|
49
|
|
13
|
|
|
71
|
|
53
|
|
Benefit plans
|
(7,708
|
)
|
(8,254
|
)
|
|
(627
|
)
|
(642
|
)
|
Other capital
|
34,345
|
|
35,504
|
|
|
12,997
|
|
12,883
|
|
Retained earnings
|
96,921
|
|
93,109
|
|
|
(392
|
)
|
(694
|
)
|
Less common stock held in treasury
|
(83,328
|
)
|
(83,925
|
)
|
|
—
|
|
—
|
|
Total GE shareowners’ equity
|
35,161
|
|
30,981
|
|
|
11,743
|
|
11,412
|
|
Noncontrolling interests (Note 15)
|
20,480
|
|
20,499
|
|
|
5
|
|
1
|
|
Total equity (Note 15)
|
55,641
|
|
51,480
|
|
|
11,748
|
|
11,412
|
|
Total liabilities, redeemable noncontrolling interests and equity
|
$
|
235,897
|
|
$
|
230,510
|
|
|
$
|
122,198
|
|
$
|
123,939
|
|
|
|
(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
$444 million
and
$459 million
at
March 31, 2019
and December 31, 2018, respectively, and GE Capital restricted cash was
$63 million
and
$33 million
at
March 31, 2019
and December 31, 2018, respectively.
|
|
|
(c)
|
At March 31, 2019, the remaining GE Capital borrowings that had been assumed by GE as part of the GE Capital Exit Plan was
$35,433 million
(
$6,470 million
short term and
$28,964 million
long term), for which GE has an offsetting receivable from GE Capital of
$21,684 million
. The difference of
$13,749 million
represents the amount of borrowings GE Capital had funded with available cash to GE via an intercompany loan in lieu of GE issuing borrowings externally. See Note 11 for further information.
|
|
|
(d)
|
At March 31, 2019, total GE borrowings comprises of GE-issued borrowings of
$31,729 million
(
$4,632 million
short term and
$27,097 million
long term) and the
$13,749 million
of borrowings from GE Capital as described in note (c) above for a total of
$45,478 million
(including
$6,315 million
BHGE borrowings). See Note 11 for further information.
|
Amounts may not add due to rounding.
|
|
|
|
|
|
|
|
STATEMENT OF CASH FLOWS
|
Three months ended March 31
|
(UNAUDITED)
|
General Electric Company
and consolidated affiliates
|
(In millions)
|
2019
|
|
2018
|
|
|
|
|
Cash flows – operating activities
|
|
|
Net earnings (loss)
|
$
|
3,645
|
|
$
|
(1,113
|
)
|
(Earnings) loss from discontinued operations
|
(2,592
|
)
|
1,441
|
|
Adjustments to reconcile net earnings (loss)
|
|
|
to cash provided from operating activities
|
|
|
Depreciation and amortization of property, plant and equipment (Note 7)
|
1,249
|
|
1,272
|
|
Amortization of intangible assets (Note 8)
|
463
|
|
602
|
|
(Earnings) loss from continuing operations retained by GE Capital
|
—
|
|
—
|
|
(Gains) losses on purchases and sales of business interests
|
(254
|
)
|
63
|
|
Principal pension plans cost (Note 13)
|
868
|
|
1,065
|
|
Principal pension plans employer contributions
|
(65
|
)
|
(345
|
)
|
Other postretirement benefit plans (net)
|
(296
|
)
|
(423
|
)
|
Provision (benefit) for income taxes
|
222
|
|
(50
|
)
|
Cash recovered (paid) during the year for income taxes
|
(356
|
)
|
(313
|
)
|
Decrease (increase) in contract and other deferred assets
|
(628
|
)
|
(299
|
)
|
Decrease (increase) in GE current receivables
|
315
|
|
752
|
|
Decrease (increase) in inventories
|
(1,382
|
)
|
(1,019
|
)
|
Increase (decrease) in accounts payable
|
173
|
|
(59
|
)
|
Increase (decrease) in GE progress collections
|
(271
|
)
|
(165
|
)
|
All other operating activities
|
(935
|
)
|
(1,092
|
)
|
Cash from (used for) operating activities – continuing operations
|
157
|
|
317
|
|
Cash from (used for) operating activities – discontinued operations
|
(115
|
)
|
(5
|
)
|
Cash from (used for) operating activities
|
42
|
|
312
|
|
|
|
|
Cash flows – investing activities
|
|
|
Additions to property, plant and equipment
|
(1,680
|
)
|
(1,790
|
)
|
Dispositions of property, plant and equipment
|
1,126
|
|
624
|
|
Additions to internal-use software
|
(77
|
)
|
(97
|
)
|
Net decrease (increase) in financing receivables
|
353
|
|
303
|
|
Proceeds from sale of discontinued operations
|
2,865
|
|
29
|
|
Proceeds from principal business dispositions
|
569
|
|
12
|
|
Net cash from (payments for) principal businesses purchased
|
—
|
|
—
|
|
All other investing activities
|
234
|
|
441
|
|
Cash from (used for) investing activities – continuing operations
|
3,390
|
|
(479
|
)
|
Cash from (used for) investing activities – discontinued operations
|
51
|
|
(87
|
)
|
Cash from (used for) investing activities
|
3,442
|
|
(566
|
)
|
|
|
|
Cash flows – financing activities
|
|
|
Net increase (decrease) in borrowings (maturities of 90 days or less)
|
(446
|
)
|
(1,281
|
)
|
Newly issued debt (maturities longer than 90 days)
|
731
|
|
199
|
|
Repayments and other debt reductions (maturities longer than 90 days)
|
(3,558
|
)
|
(9,256
|
)
|
Net dispositions (purchases) of GE shares for treasury
|
40
|
|
(8
|
)
|
Dividends paid to shareowners
|
(88
|
)
|
(1,043
|
)
|
All other financing activities
|
(244
|
)
|
(501
|
)
|
Cash from (used for) financing activities – continuing operations
|
(3,565
|
)
|
(11,890
|
)
|
Cash from (used for) financing activities – discontinued operations
|
(42
|
)
|
(9
|
)
|
Cash from (used for) financing activities
|
(3,607
|
)
|
(11,899
|
)
|
Effect of currency exchange rate changes on cash, cash equivalents and
restricted cash
|
78
|
|
208
|
|
Increase (decrease) in cash, cash equivalents and restricted cash
|
(45
|
)
|
(11,945
|
)
|
Cash, cash equivalents and restricted cash at beginning of year
|
35,548
|
|
44,724
|
|
Cash, cash equivalents and restricted cash at March 31
|
35,503
|
|
32,779
|
|
Less cash, cash equivalents and restricted cash of discontinued operations at March 31
|
598
|
|
779
|
|
Cash, cash equivalents and restricted cash of continuing operations at March 31
|
$
|
34,905
|
|
$
|
32,000
|
|
Amounts may not add due to rounding.
See accompanying notes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATEMENT OF CASH FLOWS (CONTINUED)
|
Three months ended March 31
|
(UNAUDITED)
|
GE(a)
|
|
Financial Services (GE Capital)
|
(In millions)
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
Cash flows – operating activities
|
|
|
|
|
|
Net earnings (loss)
|
$
|
3,606
|
|
$
|
(1,146
|
)
|
|
$
|
210
|
|
$
|
(1,735
|
)
|
(Earnings) loss from discontinued operations
|
(2,592
|
)
|
1,441
|
|
|
(35
|
)
|
1,553
|
|
Adjustments to reconcile net earnings (loss)
|
|
|
|
|
|
to cash provided from operating activities
|
|
|
|
|
|
Depreciation and amortization of property, plant and equipment (Note 7)
|
759
|
|
730
|
|
|
488
|
|
531
|
|
Amortization of intangible assets (Note 8)
|
449
|
|
590
|
|
|
13
|
|
12
|
|
(Earnings) loss from continuing operations retained by GE Capital(b)
|
(135
|
)
|
215
|
|
|
—
|
|
—
|
|
(Gains) losses on purchases and sales of business interests
|
(254
|
)
|
63
|
|
|
—
|
|
—
|
|
Principal pension plans cost (Note13)
|
868
|
|
1,065
|
|
|
—
|
|
—
|
|
Principal pension plans employer contributions
|
(65
|
)
|
(345
|
)
|
|
—
|
|
—
|
|
Other postretirement benefit plans (net)
|
(299
|
)
|
(417
|
)
|
|
3
|
|
(6
|
)
|
Provision (benefit) for income taxes
|
350
|
|
89
|
|
|
(128
|
)
|
(139
|
)
|
Cash recovered (paid) during the year for income taxes
|
(348
|
)
|
(294
|
)
|
|
(8
|
)
|
(19
|
)
|
Decrease (increase) in contract and other deferred assets
|
(628
|
)
|
(299
|
)
|
|
—
|
|
—
|
|
Decrease (increase) in GE current receivables
|
(287
|
)
|
(60
|
)
|
|
—
|
|
—
|
|
Decrease (increase) in inventories
|
(1,308
|
)
|
(1,023
|
)
|
|
3
|
|
8
|
|
Increase (decrease) in accounts payable
|
(58
|
)
|
(348
|
)
|
|
(41
|
)
|
49
|
|
Increase (decrease) in GE progress collections
|
(283
|
)
|
(12
|
)
|
|
—
|
|
—
|
|
All other operating activities (Note 20)
|
(658
|
)
|
(1,366
|
)
|
|
(455
|
)
|
285
|
|
Cash from (used for) operating activities – continuing operations
|
(884
|
)
|
(1,117
|
)
|
|
50
|
|
539
|
|
Cash from (used for) operating activities – discontinued operations
|
(345
|
)
|
105
|
|
|
(86
|
)
|
(33
|
)
|
Cash from (used for) operating activities
|
(1,229
|
)
|
(1,012
|
)
|
|
(36
|
)
|
506
|
|
|
|
|
|
|
|
Cash flows – investing activities
|
|
|
|
|
|
Additions to property, plant and equipment
|
(837
|
)
|
(854
|
)
|
|
(911
|
)
|
(972
|
)
|
Dispositions of property, plant and equipment
|
138
|
|
166
|
|
|
993
|
|
459
|
|
Additions to internal-use software
|
(74
|
)
|
(89
|
)
|
|
(3
|
)
|
(8
|
)
|
Net decrease (increase) in financing receivables
|
—
|
|
—
|
|
|
1,673
|
|
2,933
|
|
Proceeds from sale of discontinued operations
|
2,865
|
|
—
|
|
|
—
|
|
29
|
|
Proceeds from principal business dispositions
|
561
|
|
12
|
|
|
396
|
|
—
|
|
Net cash from (payments for) principal businesses purchased
|
(396
|
)
|
—
|
|
|
—
|
|
—
|
|
All other investing activities (Note 20)
|
(302
|
)
|
(658
|
)
|
|
1,655
|
|
46
|
|
Cash from (used for) investing activities – continuing operations
|
1,955
|
|
(1,425
|
)
|
|
3,802
|
|
2,487
|
|
Cash from (used for) investing activities – discontinued operations
|
215
|
|
(90
|
)
|
|
152
|
|
(74
|
)
|
Cash from (used for) investing activities
|
2,170
|
|
(1,515
|
)
|
|
3,954
|
|
2,412
|
|
|
|
|
|
|
|
Cash flows – financing activities
|
|
|
|
|
|
Net increase (decrease) in borrowings (maturities of 90 days or less)
|
(1,171
|
)
|
(1,277
|
)
|
|
(612
|
)
|
(892
|
)
|
Newly issued debt (maturities longer than 90 days)
|
248
|
|
412
|
|
|
483
|
|
72
|
|
Repayments and other debt reductions (maturities longer than 90 days)
|
(302
|
)
|
(916
|
)
|
|
(3,255
|
)
|
(8,383
|
)
|
Net dispositions (purchases) of GE shares for treasury
|
40
|
|
(8
|
)
|
|
—
|
|
—
|
|
Dividends paid to shareowners
|
(88
|
)
|
(1,043
|
)
|
|
(38
|
)
|
—
|
|
All other financing activities (Note 20)
|
(149
|
)
|
(469
|
)
|
|
(95
|
)
|
(32
|
)
|
Cash from (used for) financing activities – continuing operations
|
(1,422
|
)
|
(3,302
|
)
|
|
(3,518
|
)
|
(9,234
|
)
|
Cash from (used for) financing activities – discontinued operations
|
(41
|
)
|
(9
|
)
|
|
(1
|
)
|
—
|
|
Cash from (used for) financing activities
|
(1,464
|
)
|
(3,311
|
)
|
|
(3,519
|
)
|
(9,234
|
)
|
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash
|
68
|
|
133
|
|
|
10
|
|
75
|
|
Increase (decrease) in cash, cash equivalents and restricted cash
|
(455
|
)
|
(5,705
|
)
|
|
409
|
|
(6,241
|
)
|
Cash, cash equivalents and restricted cash at beginning of year
|
20,528
|
|
18,822
|
|
|
15,020
|
|
25,902
|
|
Cash, cash equivalents and restricted cash at March 31
|
20,073
|
|
13,118
|
|
|
15,429
|
|
19,661
|
|
Less cash, cash equivalents and restricted cash of discontinued operations at March 31
|
5
|
|
130
|
|
|
593
|
|
650
|
|
Cash, cash equivalents and restricted cash of continuing operations at March 31
|
$
|
20,069
|
|
$
|
12,988
|
|
|
$
|
14,836
|
|
$
|
19,012
|
|
|
|
(a)
|
Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. See Note 1.
|
|
|
(b)
|
Represents GE Capital earnings (loss) from continuing operations attributable to the Company, net of GE Capital common dividends paid to GE.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, 2018
that discusses our consolidation and financial statement presentation. As used in these financial statements, “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.
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, 2018
.
Our significant accounting policies are described in Note 1 to the consolidated financial statements of our aforementioned Annual Report. We include herein certain updates to those policies.
LEASE ACCOUNTING
We determine if an arrangement is a lease or a service contract at inception. Where an arrangement is a lease we determine if it is an operating lease or a finance lease. Subsequently, if the arrangement is modified we reevaluate our classification.
Lessee.
At lease commencement, we record a lease liability and corresponding right-of-use (ROU) asset. Lease liabilities represent the present value of our future lease payments over the expected lease term which includes options to extend or terminate the lease when it is reasonably certain those options will be exercised. We have elected to include lease and non-lease components in determining our lease liability for all leased assets except our vehicle leases. Non-lease components are generally services that the lessor performs for the Company associated with the leased asset. For those leases with payments based on an index, the lease liability is determined using the index at lease commencement. Lease payments based on increases in the index subsequent to lease commencement are recognized as variable lease expense as they occur. The present value of our lease liability is determined using our incremental collateralized borrowing rate at lease inception. ROU assets represent our right to control the use of the leased asset during the lease and are recognized in an amount equal to the lease liability. Over the lease term we use the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized to earning in a manner that results in a straight-line expense recognition in the Statement of Earnings. A ROU asset and lease liability is not recognized for leases with an initial term of 12 months or less and we recognize lease expense for these leases on a straight-line basis over the lease term.
Lessor.
Equipment leased to others under operating leases are included in property, plant and equipment and leases classified as finance leases are included in financing receivables on our Statement of Financial Position. Refer to Notes 6 and 7 for additional information.
ACCOUNTING CHANGES
On January 1, 2019, we adopted ASU No. 2016-02,
Leases
. Upon adoption, we recorded a
$317 million
increase to retained earnings, primarily attributable to the release of deferred gains on sale-lease back transactions. Our right-of-use assets and lease liabilities for operating leases excluding discontinued operations and held for sale were
$4,016 million
and
$4,180
million, respectively, as of March 31, 2019. After the adoption date, cash collections of principal on financing leases, will be classified as Cash from operating activities in our consolidated Statement of Cash Flows. Previously such flows were classified as Cash from investing activities.
On January 1, 2019, we adopted ASU No. 2017-12,
Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities
. The ASU requires certain changes to the presentation of hedge accounting in the financial statements and some new or modified disclosures. The ASU also simplifies the application of hedge accounting and expands the strategies that qualify for hedge accounting. Upon adoption, we recorded an increase to retained earnings and a decrease to borrowings of
$52 million
related to changes to the measurement of hedged interest rate risks.
|
|
|
|
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 February 25, 2019, we announced an agreement to sell our BioPharma business within our Healthcare segment to Danaher
Corporation for total consideration of approximately
$21.4 billion
. In the first quarter of 2019, we classified assets of
$8,388 million
(including goodwill of
$5,548
) and liabilities of
$1,091 million
of this business as held for sale. We expect to complete the sale of the business in the fourth quarter of 2019.
On November 13, 2017, the Company announced its intention to exit approximately
$20 billion
of assets over the next
one
to
two years
.
Since this announcement, GE has classified various businesses
across our Power, Aviation, and Healthcare segments, and Corporate as held for sale. As these businesses met the criteria for held for sale, we presented these businesses as a single asset and liability in our financial statements and recognized a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less cost to sell.
In the first quarter of 2019, we closed certain of these transactions within Corporate and our Power segment for total net proceeds of $
572
million, recognized a pre-tax gain of $
212
million in the caption “Other income” in our consolidated Statement of Earnings (Loss) and liquidated
$46 million
of our previously recorded valuation allowance. These transactions are subject to customary working capital and other post-close adjustments.
While we previously announced an orderly separation of ownership of BHGE over time, this business has not met the accounting criteria for held for sale classification as of March 31, 2019. That classification will depend on the nature and timing of the sale transactions.
|
|
|
|
|
|
|
|
FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE
(In millions)
|
March 31, 2019
|
|
December 31, 2018
|
|
|
|
|
|
Assets
|
|
|
|
Investment securities
|
$
|
28
|
|
$
|
—
|
|
Current receivables(a)
|
506
|
|
184
|
|
Inventories
|
953
|
|
529
|
|
Property, plant, and equipment – net and Operating lease right-of-use assets
|
1,075
|
|
423
|
|
Goodwill and Other intangible assets - net
|
6,601
|
|
884
|
|
Valuation allowance on disposal group classified as held for sale(b)
|
(935
|
)
|
(1,013
|
)
|
Deferred tax asset
|
942
|
|
—
|
|
Other assets
|
739
|
|
623
|
|
Assets of businesses held for sale
|
$
|
9,910
|
|
$
|
1,630
|
|
|
|
|
Liabilities
|
|
|
Accounts payable and Progress collections and deferred income(a)
|
$
|
927
|
|
$
|
428
|
|
Non-current compensation and benefits
|
539
|
|
152
|
|
Other liabilities
|
334
|
|
128
|
|
Liabilities of businesses held for sale
|
$
|
1,801
|
|
$
|
708
|
|
|
|
(a)
|
Includes GE current receivables sold to GE Capital of $
308
million and $
105
million at
March 31, 2019
and
December 31, 2018
,
respectively, and GE accounts payable for material procurement with GE Capital of
$
38
million and
$40 million
at March 31, 2019 and December 31, 2018, respectively. These intercompany balances, included within our held for sale businesses, are reported in the GE and GE Capital columns of our financial statements, and are eliminated in deriving our consolidated financial statements.
|
|
|
(b)
|
In the first quarter of 2019, we reduced the valuation allowance for certain held for sale businesses by
$32 million
.
|
DISCONTINUED OPERATIONS
Discontinued operations primarily relate to our Transportation segment and certain financial services businesses.
On February 25, 2019, we completed the spin-off and subsequent merger of our Transportation business with Wabtec, a U.S. rail equipment manufacturer. In the transaction, GE shareholders received shares of Wabtec common stock representing an approximate
24.3%
ownership interest in Wabtec common stock. GE received
$2,865 million
in cash (net of certain deal related costs) as well as shares of Wabtec common stock and Wabtec non-voting convertible preferred stock that, together, represent approximately
24.9%
ownership interest in Wabtec. In addition, GE is entitled to additional cash consideration up to
$470 million
for tax benefits that Wabtec realizes from the transaction. We reclassified our Transportation segment to discontinued operations in the first quarter of 2019.
As part of the transaction, we recorded a gain of
$3,471 million
(
$2,508 million
after-tax) in discontinued operations and a net after-tax decrease of
$852
million in additional paid in capital in connection with the spin-off of
approximately
49.4%
of Transportation to our shareholders. The fair value of our interest in Wabtec’s common and preferred shares was
$3,513 million
based on the opening share price of
$73.45
at the date of the transaction and was recorded in the caption “Investment securities” in our consolidated Statement of Financial Position. Any subsequent changes in fair value will be recognized in earnings in continuing operations. See Note 3 for further information. This interest is subject to certain trading restrictions and must be sold before the third anniversary of the transaction closing date.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Discontinued operations for our financial services businesses primarily relate to the GE Capital Exit Plan (our plan announced in 2015 to reduce the size of our financial services businesses) and were previously reported in the Capital segment. These 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.
During the first quarter of 2018, we recorded a reserve of
$1,500 million
in discontinued operations in connection with the United States Department of Justice (DOJ) ongoing investigation regarding potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) by WMC and GE Capital.
In January 2019, we announced an agreement in principle with the United States to settle this matter, and in April 2019, the parties entered into a definitive settlement agreement. Under the agreement, which concludes this investigation, GE, without admitting liability or wrongdoing, paid the United States a civil penalty of
$1,500 million
on behalf of itself and WMC.
Results of operations, financial position and cash flows for these businesses are reported as discontinued operations for all periods pr
esented.
|
|
|
|
|
|
|
|
|
FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS
(In millions)
|
Three months ended March 31
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
Operations
|
|
|
|
|
|
Sales of goods and services
|
$
|
549
|
|
$
|
872
|
|
|
GE Capital revenues and other income (loss)
|
39
|
|
(1,472
|
)
|
(a)
|
Cost of goods and services sold
|
(478
|
)
|
(615
|
)
|
|
Other costs and expenses
|
(84
|
)
|
(224
|
)
|
|
|
|
|
|
Earnings (loss) of discontinued operations before income taxes
|
$
|
26
|
|
$
|
(1,439
|
)
|
|
Benefit (provision) for income taxes
|
13
|
|
(5
|
)
|
|
Earnings (loss) of discontinued operations, net of taxes
|
$
|
39
|
|
$
|
(1,444
|
)
|
|
|
|
|
|
Disposal
|
|
|
|
Gain (loss) on disposal before income taxes
|
$
|
3,518
|
|
$
|
4
|
|
|
Benefit (provision) for income taxes
|
(964
|
)
|
(1
|
)
|
|
Gain (loss) on disposal, net of taxes
|
$
|
2,553
|
|
$
|
3
|
|
|
|
|
|
|
Earnings (loss) from discontinued operations, net of taxes
|
$
|
2,592
|
|
$
|
(1,441
|
)
|
|
|
|
|
|
Gains (loss) on disposals, net of taxes - Transportation
|
2,508
|
|
—
|
|
|
Gains (loss) on disposals, net of taxes - Capital
|
45
|
|
3
|
|
|
Earnings (loss) from discontinued operations, net of taxes - Transportation
|
2,557
|
|
112
|
|
|
Earnings (loss) from discontinued operations, net of taxes - Capital
|
35
|
|
(1,553
|
)
|
|
|
|
(a)
|
Included a
$1,500
million charge related to the DOJ investigation of potential violations of FIRREA by WMC and GE Capital.
|
|
|
|
|
|
|
|
|
|
FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS
(In millions)
|
March 31, 2019
|
|
December 31, 2018
|
|
|
|
|
Assets
|
|
|
|
Cash, cash equivalents and restricted cash
|
$
|
598
|
|
$
|
701
|
|
|
Investment securities
|
204
|
|
195
|
|
|
Current receivables
|
149
|
|
389
|
|
|
Inventories
|
—
|
|
832
|
|
|
Financing receivables held for sale
|
2,656
|
|
2,745
|
|
|
Property, plant and equipment - net and Operating lease right-of-use assets
|
152
|
|
910
|
|
|
Goodwill and Intangible assets - net
|
—
|
|
1,146
|
|
|
Deferred income taxes
|
513
|
|
1,175
|
|
|
All other assets
|
188
|
|
1,163
|
|
|
Assets of discontinued operations
|
$
|
4,459
|
|
$
|
9,257
|
|
(a)
|
|
|
|
|
Liabilities
|
|
|
|
Accounts payable and Progress collections and deferred income
|
$
|
53
|
|
$
|
1,248
|
|
|
Operating lease liabilities
|
250
|
|
0
|
|
|
Other GE current liabilities
|
125
|
|
590
|
|
|
All other liabilities
|
1,215
|
|
1,909
|
|
|
Liabilities of discontinued operations
|
$
|
1,643
|
|
$
|
3,747
|
|
(a)
|
|
|
(a)
|
Included
$4,573
million of assets and
$1,871
million of liabilities related to our Transportation business as of December 31, 2018, which we classified as discontinued operations in the first quarter of 2019.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 3. INVESTMENT SECURITIES
All of our debt securities are classified as available-for-sale and substantially all are investment-grade debt securities supporting obligations to annuitants and policyholders in our run-off insurance operations. All of our equity securities have readily determinable fair values and changes in fair value are recorded to earnings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
(In millions)
|
Amortized
cost
|
|
Gross
unrealized
gains
|
|
Gross
unrealized
losses (a)
|
|
Estimated
fair value (b)
|
|
|
Amortized
cost
|
|
Gross
unrealized
gains
|
|
Gross
unrealized
losses (a)
|
|
Estimated
fair value (b)
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
|
|
|
|
|
|
|
U.S. corporate
|
$
|
21,390
|
|
$
|
2,903
|
|
$
|
(71
|
)
|
$
|
24,222
|
|
|
$
|
21,306
|
|
$
|
2,257
|
|
$
|
(357
|
)
|
$
|
23,206
|
|
Non-U.S. corporate
|
1,848
|
|
96
|
|
(12
|
)
|
1,932
|
|
|
1,906
|
|
53
|
|
(76
|
)
|
1,883
|
|
State and municipal
|
3,136
|
|
455
|
|
(37
|
)
|
3,555
|
|
|
3,320
|
|
367
|
|
(54
|
)
|
3,633
|
|
Mortgage and asset-backed
|
3,184
|
|
75
|
|
(15
|
)
|
3,244
|
|
|
3,325
|
|
51
|
|
(54
|
)
|
3,322
|
|
Government and agencies
|
1,604
|
|
79
|
|
(1
|
)
|
1,682
|
|
|
1,603
|
|
63
|
|
(20
|
)
|
1,645
|
|
Equity(a)
|
3,639
|
|
—
|
|
—
|
|
3,639
|
|
|
146
|
|
—
|
|
—
|
|
146
|
|
Total
|
$
|
34,802
|
|
$
|
3,608
|
|
$
|
(134
|
)
|
$
|
38,275
|
|
|
$
|
31,605
|
|
$
|
2,792
|
|
$
|
(561
|
)
|
$
|
33,835
|
|
|
|
(a)
|
Primarily comprises interest in Wabtec that was received as consideration from the merger of our Transportation business with Wabtec as described in Note 2. Net unrealized gains (losses) recorded to earnings for equity securities were
$19 million
and
$(29) million
for the three months ended
March 31, 2019
and 2018, respectively
.
|
At
March 31, 2019
estimated fair values have increased primarily due to our interest in Wabtec and decreases in market yields since December 31, 2018. Total pre-tax, other-than-temporary impairments on debt securities recognized in earnings were
$35 million
and
zero
for the
three
months ended
March 31, 2019
and 2018, respectively.
Gross unrealized losses of
$(18) million
and
$(116) million
are associated with securities with a fair value of
$1,756 million
and
$3,416 million
that have been in a loss position for less than 12 months and 12 months or more, respectively, at
March 31, 2019
. Gross unrealized losses of
$(310) million
and
$(251) million
of gross unrealized losses are associated with securities with a fair value of
$7,231 million
and
$3,856 million
that have been in a loss position for less than 12 months and 12 months or more, respectively, at December 31, 2018. Unrealized losses are not indicative of the amount of credit loss that would be recognized and we presently do not intend to sell these debt securities until anticipated recovery of our amortized cost.
Investments with a fair value of
$4,431 million
and
$4,301 million
were classified within Level 3 (significant inputs to the valuation model are unobservable) at
March 31, 2019
and December 31, 2018, respectively. During the
three
months ended
March 31, 2019
and 2018, there were no significant transfers into or out of Level 3. The remaining investments are substantially all classified within Level 2 (determined based on significant observable inputs).
|
|
|
|
|
|
|
|
CONTRACTUAL MATURITIES OF INVESTMENT IN AVAILABLE-FOR-SALE DEBT SECURITIES (EXCLUDING MORTGAGE AND ASSET-BACKED SECURITIES)
(In millions)
|
Amortized
cost
|
|
Estimated
fair value
|
|
|
|
|
Due(a)
|
|
|
Within one year
|
$
|
434
|
|
$
|
436
|
|
After one year through five years
|
2,957
|
|
3,092
|
|
After five years through ten years
|
6,117
|
|
6,741
|
|
After ten years
|
18,532
|
|
21,195
|
|
|
|
(a)
|
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 debt 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. Proceeds from investment securities sales and early redemptions by issuers totaled
$1,421 million
and
$322
million in the three months ended March 31, 2019 and 2018, respectively. Gross realized gains on investment securities were
$44 million
and
$16 million
, and gross realized losses were
$(39) million
and
$(1) million
in the three months ended
March 31, 2019
and 2018, respectively.
In addition to the equity securities described above, we hold
$1,115 million
and
$1,085 million
of equity securities without readily determinable fair value at
March 31, 2019
and December 31, 2018, respectively that are classified within "All other assets". We recognize these assets at cost and have recorded insignificant fair value increases, net of impairment, for the three months ended March 31, 2019 and 2018, respectively and cumulatively based on observable transactions for securities owned
as of March 31, 2019.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 4. CURRENT RECEIVABLES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
GE
|
(In millions)
|
March 31, 2019
|
|
December 31, 2018
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
|
|
|
|
|
|
Current receivables
|
$
|
20,578
|
|
$
|
20,481
|
|
|
$
|
16,990
|
|
$
|
16,092
|
|
Allowance for losses
|
(1,060
|
)
|
(997
|
)
|
|
(1,055
|
)
|
(989
|
)
|
Total
|
$
|
19,518
|
|
$
|
19,484
|
|
|
$
|
15,936
|
|
$
|
15,103
|
|
GE current receivables
balances at
March 31, 2019
and
December 31, 2018
, include $
5,091
million and $
4,316
million, respectively, which primarily arise from supplier advances, revenue sharing programs and other non-income based tax receivables.
The balance of the Deferred Purchase Price (DPP) owned by GE Capital at March 31, 2019 and December 31, 2018, was $
451
million and $
468
million, respectively.
SALES OF GE CURRENT RECEIVABLES
During the three months ended March 31, 2019 and 2018, GE sold approximately
50%
and
57%
(
65%
and
70%
excluding BHGE), respectively, of its current receivables to GE Capital or third parties primarily to manage GE short-term liquidity and credit exposure.
Activity related to current receivables purchased by GE Capital and third parties is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
2019
|
|
2018
|
(In millions)
|
GE Capital
|
|
|
Third Parties
|
|
GE Capital
|
|
|
Third Parties
|
|
|
|
|
|
|
|
|
Balance at January 1
|
$
|
4,386
|
|
|
$
|
7,885
|
|
|
$
|
9,877
|
|
|
$
|
5,718
|
|
GE sales to GE Capital
|
9,403
|
|
|
—
|
|
|
12,135
|
|
|
—
|
|
GE sales to third parties
|
—
|
|
|
1,161
|
|
|
—
|
|
|
1,112
|
|
GE Capital sales to third parties
|
(6,580
|
)
|
|
6,580
|
|
|
(6,684
|
)
|
|
6,684
|
|
Collections and other
|
(3,552
|
)
|
|
(7,905
|
)
|
|
(7,214
|
)
|
|
(7,898
|
)
|
Balance as of March 31
|
$
|
3,658
|
|
|
$
|
7,721
|
|
|
$
|
8,113
|
|
|
$
|
5,616
|
|
At March 31, 2019 and 2018, GE Capital had partial or full recourse to GE for approximately
35%
and
41%
, respectively, of the receivables it owned.
Current receivables sold to third parties
include
$5,093
million and
$5,208
million sold to GE Capital, which GE Capital then sold to third parties under the receivables facilities during the three months ended March 31, 2019 and 2018, respectively. The company received total cash collections of $
5,232
million and
$5,315
million on previously sold current receivables owed to the purchasing entities during the three months ended March 31, 2019 and 2018, respectively. The purchasing entities invested $
5,071
million and $
4,251
million including $
4,253
million and $
3,531
million of collections to purchase newly originated current receivables from the Company during the three months ended March 31, 2019 and 2018, respectively. In addition, during the three months ended March 31, 2019 and 2018, GE Capital received additional non-cash DPP related to the sale of new current receivables of
$44 million
and
$1,139 million
, respectively, and received cash payments on the DPP of
$61 million
and
$1,120 million
, respectively.
The majority of GE sales of current receivables made to third parties are arranged by GE Capital acting as an agent.
NOTE 5. INVENTORIES
|
|
|
|
|
|
|
|
(In millions)
|
March 31, 2019
|
|
December 31, 2018
|
|
|
|
|
Raw materials and work in process
|
$
|
10,412
|
|
$
|
10,102
|
|
Finished goods
|
8,836
|
|
8,136
|
|
Unbilled shipments
|
170
|
|
201
|
|
Total Inventories
|
$
|
19,419
|
|
$
|
18,439
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 6. GE CAPITAL FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES
|
|
|
|
|
|
|
|
GE CAPITAL FINANCING RECEIVABLES, NET
(In millions)
|
March 31, 2019
|
|
December 31, 2018
|
|
|
|
|
Loans, net of deferred income
|
$
|
9,620
|
|
$
|
10,834
|
|
Investment in financing leases, net of deferred income(a)
|
2,408
|
|
2,822
|
|
|
12,028
|
|
13,656
|
|
Allowance for losses
|
(21
|
)
|
(28
|
)
|
Financing receivables – net
|
$
|
12,007
|
|
$
|
13,628
|
|
|
|
(a)
|
Finance lease income was
$45 million
and
$72 million
in the three months ended March 31, 2019 and 2018, respectively.
|
We manage our GE Capital financing receivables portfolio using delinquency and nonaccrual data as key performance indicators. At March 31, 2019,
2.3%
,
1.9%
and
1.0%
of financing receivables were over 30 days past due, over 90 days past due and on nonaccrual, respectively, with the vast majority of nonaccrual financing receivables secured by collateral. At December 31, 2018,
2.4%
,
1.8%
and
0.9%
of financing receivables were over 30 days past due, over 90 days past due and on nonaccrual, respectively.
The GE Capital financing receivables portfolio includes
$1,276 million
and
$1,380 million
of current receivables at March 31, 2019 and December 31, 2018, respectively, which are purchased from GE with full or limited recourse. These receivables are classified within current receivables at a consolidated level and are excluded from the balance of GE Capital delinquency and nonaccrual. The portfolio also includes
$571 million
and
$688 million
of financing receivables that are guaranteed by GE, of which
$101 million
and
$96 million
of these loans are on nonaccrual at the consolidated level at March 31, 2019 and December 31, 2018, respectively. Additional allowance for loan losses of
$35
million and
$43 million
are recorded at GE and on the consolidated level for these guaranteed loans at March 31, 2019 and December 31, 2018, respectively.
NOTE 7. PROPERTY, PLANT AND EQUIPMENT AND OPERATING LEASE RIGHT-OF-USE ASSETS AND LIABILITIES
|
|
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT
(In millions)
|
March 31, 2019
|
|
December 31, 2018
|
|
|
|
|
Original cost
|
$
|
86,037
|
|
$
|
85,476
|
|
Less accumulated depreciation and amortization
|
(35,773
|
)
|
(35,637
|
)
|
Property, plant and equipment – net
|
$
|
50,265
|
|
$
|
49,839
|
|
Consolidated depreciation and amortization on property, plant and equipment was
$1,249 million
and
$1,272 million
in the three months ended
March 31, 2019
and
2018
, respectively.
Operating lease income on our equipment leased to others was
$1,139 million
and
$1,182 million
for the three months ended March 31, 2019 and 2018, respectively, and comprises fixed lease income of
$776 million
and
$823 million
and variable lease income of
$363 million
and
$359 million
, respectively.
OPERATING LEASE RIGHT-OF-USE ASSETS AND LIABILITIES
Our right-of-use assets and lease liabilities for operating leases were $
4,016 million
and $
4,180 million
,
respectively, as of March 31, 2019. Substantially all of our operating leases have remaining lease terms of
12 years
or less
, some of which may include options to extend.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING LEASE EXPENSE
|
Long-term (fixed)
|
Long-term (Variable)
|
Short-term
|
Total Operating lease expense
|
March 31 (In millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Total
|
$
|
269
|
|
$
|
310
|
|
$
|
61
|
|
$
|
63
|
|
$
|
170
|
|
$
|
118
|
|
$
|
499
|
|
$
|
492
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
MATURITY OF LEASE LIABILITIES
(In millions)
|
Total
|
|
2019
(excluding three months ended March 31, 2019)
|
$
|
819
|
|
2020
|
929
|
|
2021
|
743
|
|
2022
|
617
|
|
2023
|
491
|
|
Thereafter
|
1,434
|
|
Total undiscounted lease payments
|
5,034
|
|
Less: imputed interest
|
(854
|
)
|
Total lease liability
|
$
|
4,180
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES
(Dollars in millions)
|
March 31, 2019
|
|
Operating cash flows used for operating leases
|
$
|
274
|
|
Right-of-use assets obtained in exchange for new lease liabilities
|
$
|
201
|
|
Weighted-average remaining lease term
|
7.6 years
|
|
Weighted-average discount rate
|
5.0
|
%
|
NOTE 8. GOODWILL AND OTHER INTANGIBLE ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GOODWILL
(In millions)
|
January 1, 2019
|
|
Acquisitions
|
|
Dispositions,
currency
exchange
and other
|
|
Balance at
March 31, 2019
|
|
|
|
|
|
|
|
|
Power
|
$
|
1,772
|
|
$
|
—
|
|
$
|
14
|
|
$
|
1,787
|
|
Renewable Energy
|
3,971
|
|
—
|
|
23
|
|
3,994
|
|
Aviation
|
9,839
|
|
—
|
|
2
|
|
9,841
|
|
Oil & Gas
|
24,455
|
|
—
|
|
60
|
|
24,514
|
|
Healthcare
|
17,226
|
|
—
|
|
(5,500
|
)
|
11,727
|
|
Capital
|
904
|
|
—
|
|
(26
|
)
|
878
|
|
Corporate
|
563
|
|
—
|
|
(109
|
)
|
454
|
|
Total
|
$
|
58,730
|
|
$
|
—
|
|
$
|
(5,536
|
)
|
$
|
53,194
|
|
Goodwill balances decreased primarily as a result of transferring our BioPharma business within our Healthcare segment to held for sale of
$5,548 million
.
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 market capitalization below book value (and the magnitude and duration of those declines), if any. In the first quarter of 2019, we performed a qualitative review of our reporting units in our BHGE segment, Grid reporting unit in our Power segment, Hydro reporting unit in our Renewable Energy segment, and our Additive reporting unit in our Aviation segment. We did not identify any reporting units that required an interim impairment test.
As of March 31, 2019, we believe goodwill is recoverable for all of our reporting units. While the goodwill in our Grid reporting unit, Hydro reporting unit, and Oil & Gas reporting units is not currently impaired, the power and oil and 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 BHGE share price or any future declines in macroeconomic or business conditions affecting these reporting units. In addition, we will continue to measure our ability to meet our cash flow forecasts and to monitor the operating results of our Additive reporting unit, which could impact the fair value of this reporting unit in the future.
|
|
|
|
|
|
|
|
OTHER INTANGIBLE ASSETS - NET
(In millions)
|
March 31, 2019
|
|
December 31, 2018
|
|
|
|
|
Intangible assets subject to amortization
|
$
|
14,812
|
|
$
|
15,675
|
|
Indefinite-lived intangible assets(a)
|
2,242
|
|
2,222
|
|
Total
|
$
|
17,053
|
|
$
|
17,897
|
|
|
|
(a)
|
Indefinite-lived intangible assets comprises trademarks/trade names in our Oil & Gas segment.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Intangible assets subject to amortization decreased in the first quarter of 2019, primarily as a result of amortization, and the transfer of BioPharma within our Healthcare segment to held for sale of
$524 million
. Consolidated amortization expense was
$463 million
and
$602 million
in the three months ended
March 31, 2019
and
2018
, respectively.
NOTE 9. REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUIPMENT & SERVICES REVENUES(a)
|
Three months ended March 31
|
(In millions)
|
2019
|
|
2018
|
|
Equipment Revenues
|
Services Revenues
|
Total Revenues
|
|
Equipment Revenues
|
Services Revenues
|
Total Revenues
|
|
|
|
|
|
|
|
|
Power
|
$
|
2,424
|
|
$
|
3,235
|
|
$
|
5,659
|
|
|
$
|
3,524
|
|
$
|
3,698
|
|
$
|
7,222
|
|
Renewable Energy
|
1,123
|
|
481
|
|
1,604
|
|
|
1,204
|
|
442
|
|
1,646
|
|
Aviation
|
3,113
|
|
4,841
|
|
7,954
|
|
|
2,539
|
|
4,573
|
|
7,112
|
|
Oil & Gas
|
2,269
|
|
3,347
|
|
5,616
|
|
|
2,229
|
|
3,156
|
|
5,385
|
|
Healthcare
|
2,653
|
|
2,029
|
|
4,683
|
|
|
2,607
|
|
2,095
|
|
4,702
|
|
Total Industrial Segment Revenues
|
$
|
11,583
|
|
$
|
13,934
|
|
$
|
25,517
|
|
|
$
|
12,103
|
|
$
|
13,964
|
|
$
|
26,067
|
|
|
|
(a)
|
Revenues classification consistent with our MD&A defined Services revenue
|
|
|
|
|
|
|
|
|
|
SUB-SEGMENT REVENUES
|
Three months ended March 31
|
(In millions)
|
2019
|
|
|
2018
|
|
|
|
|
|
Gas Power
|
$
|
3,260
|
|
|
$
|
3,539
|
|
Power Portfolio
|
2,399
|
|
|
3,682
|
|
Power Revenues
|
$
|
5,659
|
|
|
$
|
7,222
|
|
|
|
|
|
Onshore Wind
|
$
|
1,441
|
|
|
$
|
1,260
|
|
Hydro and Offshore Wind
|
164
|
|
|
385
|
|
Renewable Energy Revenues
|
$
|
1,604
|
|
|
$
|
1,646
|
|
|
|
|
|
Commercial Engines & Services
|
$
|
5,949
|
|
|
$
|
5,272
|
|
Military
|
1,036
|
|
|
971
|
|
Systems & Other
|
969
|
|
|
870
|
|
Aviation Revenues
|
$
|
7,954
|
|
|
$
|
7,112
|
|
|
|
|
|
Turbomachinery & Process Solutions (TPS)
|
$
|
1,305
|
|
|
$
|
1,447
|
|
Oilfield Services (OFS)
|
2,986
|
|
|
2,678
|
|
Oilfield Equipment (OFE)
|
735
|
|
|
664
|
|
Digital Solutions
|
591
|
|
|
596
|
|
Oil & Gas Revenues
|
$
|
5,616
|
|
|
$
|
5,385
|
|
|
|
|
|
Healthcare Systems
|
$
|
3,433
|
|
|
$
|
3,576
|
|
Life Sciences
|
1,250
|
|
|
1,125
|
|
Healthcare Revenues
|
$
|
4,683
|
|
|
$
|
4,702
|
|
|
|
|
|
Total Industrial Segment Revenues
|
$
|
25,517
|
|
|
$
|
26,067
|
|
Capital Revenues(a)
|
2,227
|
|
|
2,173
|
|
Corporate items and eliminations
|
(458
|
)
|
|
(452
|
)
|
Consolidated Revenues(a)
|
$
|
27,286
|
|
|
$
|
27,788
|
|
|
|
(a)
|
Includes
$2,202 million
and
$2,117 million
for the three months ended
March 31, 2019
and 2018, respectively, of revenues at GE Capital outside of the scope of ASC 606.
|
REMAINING PERFORMANCE OBLIGATION
As of March 31, 2019, the aggregate amount of the contracted revenues allocated to our unsatisfied (or partially unsatisfied) performance obligations was
$241,381
million
. We expect to recognize revenue as we satisfy our remaining performance obligations as follows:
1)
equipment-related remaining performance obligation of
$46,147
million of which
54%
,
76%
and
86%
is expected to be satisfied within
1
,
2
and
5 years
, respectively, and the remaining thereafter;
and 2)
services-related remaining performance obligation of
$195,234
million of which
14%
,
45%
,
72%
and
86%
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
Contract and other deferred assets increased
$140 million
in the first quarter of 2019. Our long-term service agreements increased
$140 million
due to a favorable change in estimated profitability of
$150 million
, primarily at Aviation. In addition, our equipment related contract assets increased
$155 million
primarily due to the timing of revenue recognition ahead of billings at Power and Aviation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019 (In millions)
|
Power
|
Aviation
|
Oil & Gas
|
Renewable Energy
|
Other(a)
|
Total
|
|
|
|
|
|
|
|
Revenues in excess of billings
|
$
|
5,498
|
|
$
|
5,274
|
|
$
|
670
|
|
$
|
—
|
|
$
|
—
|
|
$
|
11,442
|
|
Billings in excess of revenues
|
(1,693
|
)
|
(3,108
|
)
|
(195
|
)
|
—
|
|
—
|
|
(4,996
|
)
|
Long-term service agreements(b)
|
3,805
|
|
2,166
|
|
475
|
|
—
|
|
—
|
|
6,446
|
|
Equipment contract revenues(c)(d)
|
4,032
|
|
438
|
|
1,040
|
|
328
|
|
492
|
|
6,329
|
|
Total contract assets
|
7,837
|
|
2,604
|
|
1,515
|
|
328
|
|
492
|
|
12,776
|
|
|
|
|
|
|
|
|
Deferred inventory costs
|
808
|
|
434
|
|
144
|
|
1,517
|
|
324
|
|
3,226
|
|
Nonrecurring engineering costs
|
125
|
|
2,005
|
|
48
|
|
22
|
|
34
|
|
2,234
|
|
Customer advances and other
|
—
|
|
1,136
|
|
—
|
|
—
|
|
—
|
|
1,136
|
|
Contract and other deferred assets
|
$
|
8,770
|
|
$
|
6,179
|
|
$
|
1,707
|
|
$
|
1,866
|
|
$
|
849
|
|
$
|
19,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 (In millions)
|
Power
|
Aviation
|
Oil & Gas
|
Renewable Energy
|
Other(a)
|
Total
|
|
|
|
|
|
|
|
Revenues in excess of billings
|
$
|
5,368
|
|
$
|
5,412
|
|
$
|
703
|
|
$
|
—
|
|
$
|
—
|
|
$
|
11,482
|
|
Billings in excess of revenues
|
(1,693
|
)
|
(3,297
|
)
|
(187
|
)
|
—
|
|
—
|
|
(5,176
|
)
|
Long-term service agreements(b)
|
3,675
|
|
2,115
|
|
516
|
|
—
|
|
—
|
|
6,306
|
|
Equipment contract revenues(c)(d)
|
3,899
|
|
352
|
|
1,085
|
|
287
|
|
551
|
|
6,174
|
|
Total contract assets
|
7,574
|
|
2,468
|
|
1,600
|
|
287
|
|
551
|
|
12,480
|
|
|
|
|
|
|
|
|
Deferred inventory costs
|
1,012
|
|
673
|
|
179
|
|
1,258
|
|
365
|
|
3,488
|
|
Nonrecurring engineering costs
|
124
|
|
1,916
|
|
22
|
|
22
|
|
34
|
|
2,117
|
|
Customer advances and other
|
—
|
|
1,146
|
|
—
|
|
—
|
|
—
|
|
1,146
|
|
Contract and other deferred assets
|
$
|
8,709
|
|
$
|
6,204
|
|
$
|
1,800
|
|
$
|
1,567
|
|
$
|
951
|
|
$
|
19,231
|
|
|
|
(a)
|
Primarily includes our Healthcare segment.
|
|
|
(b)
|
In our consolidated Statement of Financial Position, long-term service agreement balances are presented net of related billings in excess of revenues.
|
|
|
(c)
|
Included in this balance are revenues in excess of billings of
$714 million
and
$592 million
as of March 31, 2019 and December 31, 2018, primarily in our Aviation and Healthcare segments, related to short-term service agreements.
|
|
|
(d)
|
Included in this balance are amounts due from customers for the sale of service upgrades, which we collect through higher fixed or usage-based fees from servicing the equipment under long-term service agreements. Amounts due from these arrangements totaled
$895 million
and
$883 million
, as of March 31, 2019 and December 31, 2018, respectively.
|
Progress collections and deferred income decreased
$364 million
in the first quarter of 2019 primarily due to the timing of revenue recognition in excess of new collections received, primarily at Power and Renewable Energy. These decreases were partially offset by milestone payments received primarily at Aviation and Oil & Gas.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019 (In millions)
|
Power
|
Aviation
|
Oil & Gas
|
Renewable Energy
|
Other(a)
|
Total
|
|
|
|
|
|
|
|
Progress collections on equipment contracts
|
$
|
6,596
|
|
$
|
98
|
|
$
|
1,075
|
|
$
|
374
|
|
$
|
—
|
|
$
|
8,143
|
|
Other progress collections
|
535
|
|
4,159
|
|
535
|
|
3,283
|
|
277
|
|
8,789
|
|
Total progress collections
|
$
|
7,131
|
|
$
|
4,257
|
|
$
|
1,610
|
|
$
|
3,657
|
|
$
|
277
|
|
$
|
16,932
|
|
Deferred income
|
147
|
|
1,385
|
|
132
|
|
255
|
|
1,617
|
|
3,536
|
|
Progress collections and deferred income
|
$
|
7,278
|
|
$
|
5,642
|
|
$
|
1,742
|
|
$
|
3,912
|
|
$
|
1,894
|
|
$
|
20,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 (In millions)
|
Power
|
Aviation
|
Oil & Gas
|
Renewable Energy
|
Other(a)
|
Total
|
|
|
|
|
|
|
|
Progress collections on equipment contracts
|
$
|
6,690
|
|
$
|
114
|
|
$
|
878
|
|
$
|
423
|
|
$
|
—
|
|
$
|
8,105
|
|
Other progress collections
|
692
|
|
4,034
|
|
552
|
|
3,467
|
|
338
|
|
9,083
|
|
Total progress collections
|
$
|
7,382
|
|
$
|
4,148
|
|
$
|
1,430
|
|
$
|
3,890
|
|
$
|
338
|
|
$
|
17,188
|
|
Deferred income
|
163
|
|
1,338
|
|
164
|
|
241
|
|
1,739
|
|
3,645
|
|
Progress collections and deferred income
|
$
|
7,545
|
|
$
|
5,486
|
|
$
|
1,594
|
|
$
|
4,131
|
|
$
|
2,077
|
|
$
|
20,833
|
|
|
|
(a)
|
Primarily includes our Healthcare segment.
|
Revenues recognized for balances included in contract liabilities at the beginning of the year were
$5,173 million
and
$5,593 million
for the three months ended March 31, 2019 and 2018, respectively
.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 11. BORROWINGS
|
|
|
|
|
|
|
|
(In millions)
|
March 31, 2019
|
December 31, 2018
|
|
|
|
Short-term borrowings
|
|
|
GE
|
|
|
Commercial paper
|
$
|
2,998
|
|
$
|
3,005
|
|
Current portion of long-term borrowings
|
86
|
|
103
|
|
Current portion of long-term borrowings assumed by GE(d)
|
6,470
|
|
4,207
|
|
Other
|
1,548
|
|
2,084
|
|
Total GE short-term borrowings
|
$
|
11,102
|
|
$
|
9,400
|
|
|
|
|
GE Capital
|
|
|
Commercial paper
|
$
|
—
|
|
$
|
5
|
|
Current portion of long-term borrowings(a)
|
5,462
|
|
3,984
|
|
Intercompany payable to GE(c)
|
2,436
|
|
2,684
|
|
Other
|
385
|
|
1,010
|
|
Total GE Capital short-term borrowings
|
$
|
8,283
|
|
$
|
7,684
|
|
|
|
|
Eliminations(c)
|
(3,432
|
)
|
(4,262
|
)
|
Total short-term borrowings
|
$
|
15,953
|
|
$
|
12,821
|
|
|
|
|
Long-term borrowings
|
|
|
GE
|
|
|
Senior notes(b)
|
$
|
26,668
|
|
$
|
26,628
|
|
Senior notes assumed by GE(d)
|
26,089
|
|
29,218
|
|
Subordinated notes assumed by GE(d)
|
2,875
|
|
2,836
|
|
Other
|
429
|
|
460
|
|
Other borrowings assumed by GE(d)
|
—
|
|
—
|
|
Total GE long-term borrowings
|
$
|
56,061
|
|
$
|
59,143
|
|
|
|
|
GE Capital
|
|
|
Senior notes
|
$
|
33,161
|
|
$
|
35,105
|
|
Subordinated notes
|
179
|
|
165
|
|
Intercompany payable to GE(c)
|
19,249
|
|
19,828
|
|
Other(a)
|
884
|
|
885
|
|
Total GE Capital long-term borrowings
|
$
|
53,473
|
|
$
|
55,982
|
|
|
|
|
Eliminations(c)
|
(19,311
|
)
|
(19,892
|
)
|
Total long-term borrowings
|
$
|
90,223
|
|
$
|
95,234
|
|
Non-recourse borrowings of consolidated securitization entities(e)
|
1,350
|
|
1,875
|
|
Total borrowings
|
$
|
107,526
|
|
$
|
109,930
|
|
|
|
(a)
|
Included
$127 million
and
$884 million
of short- and long-term borrowings, respectively, at
March 31, 2019
and
$161
million and
$885
million of short- and long-term borrowings, respectively, at
December 31, 2018
, of funding secured by aircraft and other collateral. Of this,
$219 million
and
$216 million
is non-recourse to GE Capital at
March 31, 2019
and
December 31, 2018
, respectively.
|
|
|
(b)
|
Included
$6,174
million and
$6,177
million of BHGE senior notes at
March 31, 2019
and
December 31, 2018
, respectively. Total BHGE borrowings were
$6,315
million and
$6,330
million at
March 31, 2019
and
December 31, 2018
, respectively.
|
|
|
(c)
|
Included a reduction of
$4,034 million
and
$1,523 million
for the current portion of intercompany loans from GE Capital to GE at
March 31, 2019
and
December 31, 2018
, respectively, and a reduction of
$9,715 million
and
$12,226 million
for long-term intercompany loans from GE Capital to GE at
March 31, 2019
and
December 31, 2018
, respectively. These loans bear the right of offset against amounts owed under the assumed debt agreement and can be prepaid by GE at any time in whole or in part, without premium or penalty.
|
|
|
(d)
|
At March 31, 2019, the remaining GE Capital borrowings that had been assumed by GE as part of the GE Capital Exit Plan was
$35,433 million
(
$6,470 million
short term and
$28,964
long term), for which GE has an offsetting Receivable from GE Capital of
$21,684 million
. The difference of
$13,749 million
represents the amount of borrowings GE Capital had funded with available cash to GE via an intercompany loan in lieu of GE issuing borrowings externally.
|
|
|
(e)
|
Included
$1,135 million
and
$225 million
of current portion of long-term borrowings at
March 31, 2019
and
December 31, 2018
, respectively. See Note 18 for further information.
|
GE has 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, 2019
, the Guarantee applies to
$37,061 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. INSURANCE LIABILITIES AND ANNUITY BENEFITS
Insurance liabilities and annuity benefits comprise mainly obligations to annuitants and insureds in our run-off insurance activities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019 (In millions)
|
Long-term care insurance contracts
|
Structured settlement annuities & life insurance contracts
|
Other
contracts
|
Other adjustments(a)
|
Total
|
|
|
|
|
|
|
Future policy benefit reserves
|
$
|
16,085
|
|
$
|
9,468
|
|
$
|
163
|
|
$
|
3,458
|
|
$
|
29,174
|
|
Claim reserves
|
3,977
|
|
231
|
|
1,174
|
|
—
|
|
5,382
|
|
Investment contracts
|
—
|
|
1,216
|
|
1,119
|
|
—
|
|
2,335
|
|
Unearned premiums and other
|
31
|
|
199
|
|
192
|
|
—
|
|
422
|
|
|
20,093
|
|
11,114
|
|
2,648
|
|
3,458
|
|
37,313
|
|
Eliminations
|
—
|
|
—
|
|
(544
|
)
|
—
|
|
(544
|
)
|
Total
|
$
|
20,093
|
|
$
|
11,114
|
|
$
|
2,104
|
|
$
|
3,458
|
|
$
|
36,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 (In millions)
|
Long-term care insurance contracts
|
Structured settlement annuities & life insurance contracts
|
Other
contracts
|
Other adjustments(a)
|
Total
|
|
|
|
|
|
|
Future policy benefit reserves
|
$
|
16,029
|
|
$
|
9,495
|
|
$
|
169
|
|
$
|
2,247
|
|
$
|
27,940
|
|
Claim reserves
|
3,917
|
|
230
|
|
1,178
|
|
—
|
|
5,324
|
|
Investment contracts
|
—
|
|
1,239
|
|
1,149
|
|
—
|
|
2,388
|
|
Unearned premiums and other
|
34
|
|
205
|
|
103
|
|
—
|
|
342
|
|
|
19,980
|
|
11,169
|
|
2,599
|
|
2,247
|
|
35,994
|
|
Eliminations
|
—
|
|
—
|
|
(432
|
)
|
—
|
|
(432
|
)
|
Total
|
$
|
19,980
|
|
$
|
11,169
|
|
$
|
2,167
|
|
$
|
2,247
|
|
$
|
35,562
|
|
|
|
(a)
|
To the extent that unrealized gains on specific investment securities supporting our insurance contracts would result in a premium deficiency should those gains be realized, an increase in future policy benefit reserves is recorded, with an after-tax reduction of net unrealized gains recognized through "Other comprehensive income" in our consolidated Statement of Earnings (Loss).
|
Claim reserves included incurred claims of
$473 million
and
$492 million
for the three months ended March 31, 2019 and 2018, respectively, of which
$2 million
and
$1 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, 2019 and 2018, respectively. Paid claims were
$421 million
and
$484 million
in the three months ended March 31, 2019 and 2018, respectively.
Reinsurance recoverables, net are included in the caption "Other GE Capital receivables" in our consolidated Statement of Financial Position, and amounted to
$2,336 million
and
$2,271 million
at March 31, 2019 and December 31, 2018, respectively.
Reinsurance recoveries were
$110 million
and
$61 million
for the three months ended March 31, 2019 and 2018, respectively.
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. Other pension plans include the U.S. and non-U.S. pension plans with pension assets or obligations greater than
$50 million
. 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. 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)
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
Service cost for benefits earned
|
$
|
158
|
|
|
$
|
232
|
|
|
Prior service cost amortization
|
33
|
|
|
36
|
|
|
Expected return on plan assets
|
(863
|
)
|
|
(820
|
)
|
|
Interest cost on benefit obligations
|
726
|
|
|
666
|
|
|
Net actuarial loss amortization
|
763
|
|
|
951
|
|
|
Curtailment loss
|
51
|
|
(a)
|
—
|
|
|
Pension plans cost
|
$
|
868
|
|
|
$
|
1,065
|
|
|
|
|
(a)
|
Curtailment loss resulting from the spin-off and subsequent merger of our Transportation segment with Wabtec which is included in "Earnings (loss) from discontinued operations" in our
consolidated Statement of Earnings (Loss).
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
Other pension plans
|
|
Three months ended March 31
|
(In millions)
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
Service cost for benefits earned
|
$
|
66
|
|
|
$
|
95
|
|
|
Expected return on plan assets
|
(309
|
)
|
|
(358
|
)
|
|
Interest cost on benefit obligations
|
157
|
|
|
156
|
|
|
Net actuarial loss amortization
|
83
|
|
|
82
|
|
|
Settlement loss
|
9
|
|
|
—
|
|
|
Pension plans cost (income)
|
$
|
6
|
|
|
$
|
(25
|
)
|
|
Principal retiree benefit plans income was $
61
million and $
21
million for the three months ended March 31, 2019 and 2018, respectively, which includes a curtailment gain of $
33
million in 2019 resulting from the spin-off and subsequent merger of our Transportation segment with Wabtec. The curtailment gain is included in "Earnings (loss) from discontinued operations" in our consolidated Statement of Earnings (Loss). The components of net periodic benefit costs other than the service cost component are included in the caption "Non-operating benefit costs" in our consolidated Statement of Earnings (Loss).
We also have a defined contribution plan for eligible U.S. employees that provides discretionary contributions. Defined contribution plan costs were
$101 million
and
$117 million
for the three months ended March 31, 2019 and 2018, respectively.
NOTE 14. INCOME TAXES
Our consolidated effective income tax rate was
17.4%
and
(18.1)%
during the three months ended March 31, 2019 and 2018, respectively. The rate for 2019 is lower than the U.S. statutory rate primarily due to favorable audit resolutions, the benefit of the lower-taxed disposition of our Digital ServiceMax business and U.S. business credits. This was partially offset by the cost of the recently enacted base erosion and global intangible low tax income provisions in excess of the benefit from other global activities. T
he negative rate for 2018 reflects a tax benefit on pretax income.
The rate for 2018 benefited from U.S. business credits and an adjustment for Baker Hughes related to the provisional estimate of the impact of the 2017 enactment of U.S. tax reform partially offset by the cost of the newly enacted base erosion and global intangible low tax income provisions in excess of the benefit from other global activities.
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. As a result of additional guidance issued during the first quarter of 2019, we recorded offsetting expense at GE and GE Capital that results in an insignificant charge associated with the adjustment of the impact of the 2017 enactment of U.S. tax reform. For the year ended December 31, 2018, we finalized our provisional estimate of the enactment of U.S. tax reform and recorded an additional expense of
$41 million
based on guidance issued during 2018. Further guidance may be issued and any resulting effects will be recorded in the quarter of issuance.
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. The United Kingdom tax authorities have disallowed interest deductions claimed by GE Capital for the years 2007-2015 that could result in a potential impact of approximately
$1 billion
, which includes a possible assessment of tax and reduction of deferred tax assets, not including interest and penalties. We are contesting the disallowance. We comply with all applicable tax laws and judicial doctrines of the United Kingdom and believe that the entire benefit is more likely than not to be sustained on its technical merit. 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
Total equity balance decreased by
$(17,547) million
in the last twelve months from March 31, 2018, primarily attributable to a non-cash after-tax goodwill impairment charge of
$(22,371) million
, partially offset by an increase in non-controlling interest of
$4,214 million
due to a reduction in our economic interest in BHGE in 2018. See our 2018 Form 10-K for further information.
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(In millions)
|
2019
|
|
2018
|
|
|
|
|
Preferred stock issued
|
$
|
6
|
|
$
|
6
|
|
Common stock issued
|
$
|
702
|
|
$
|
702
|
|
Accumulated other comprehensive income (loss)
|
|
|
Beginning balance
|
$
|
(14,414
|
)
|
$
|
(14,404
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
|
Investment securities - net of deferred taxes of $38 and $65(a)
|
28
|
|
109
|
|
Currency translation adjustments (CTA) - net of deferred taxes of $26 and $(149)
|
307
|
|
832
|
|
Cash flow hedges - net of deferred taxes of $11 and $31
|
34
|
|
105
|
|
Benefit plans - net of deferred taxes of $48 and $(1)
|
(116
|
)
|
(58
|
)
|
Total
|
$
|
253
|
|
$
|
988
|
|
Reclassifications from other comprehensive income
|
|
|
Investment securities - net of deferred taxes of $(1) and $(2)
|
(4
|
)
|
(10
|
)
|
Currency translation on dispositions - net of deferred taxes of $(4) and zero
|
117
|
|
(2
|
)
|
Cash flow hedges - net of deferred taxes of $(4) and $(15) (Note 17)
|
3
|
|
(50
|
)
|
Benefit plans - net of deferred taxes of $183 and $218
|
662
|
|
775
|
|
Total
|
$
|
778
|
|
$
|
713
|
|
Other comprehensive income (loss)
|
1,031
|
|
1,702
|
|
Less other comprehensive income (loss) attributable to noncontrolling interests
|
101
|
|
160
|
|
Other comprehensive income (loss), net, attributable to GE
|
930
|
|
1,542
|
|
Ending Balance
|
$
|
(13,485
|
)
|
$
|
(12,862
|
)
|
Other capital
|
|
|
Beginning balance
|
35,504
|
|
37,384
|
|
Gains (losses) on treasury stock dispositions and other(b)
|
(1,159
|
)
|
(45
|
)
|
Ending Balance
|
$
|
34,345
|
|
$
|
37,339
|
|
Retained earnings
|
|
|
Beginning balance
|
93,109
|
|
117,245
|
|
Net earnings (loss) attributable to the Company
|
3,588
|
|
(1,147
|
)
|
Dividends and other transactions with shareowners
|
(126
|
)
|
(1,078
|
)
|
Redemption value adjustment on redeemable noncontrolling interests
|
(18
|
)
|
(44
|
)
|
Changes in accounting (Note 1)
|
368
|
|
500
|
|
Ending Balance
|
$
|
96,921
|
|
$
|
115,477
|
|
Common stock held in treasury
|
|
|
Beginning balance
|
(83,925
|
)
|
(84,902
|
)
|
Purchases
|
(38
|
)
|
(85
|
)
|
Dispositions
|
636
|
|
290
|
|
Ending Balance
|
$
|
(83,328
|
)
|
$
|
(84,697
|
)
|
Total equity
|
|
|
GE shareowners' equity balance
|
35,161
|
|
55,965
|
|
Noncontrolling interests balance
|
20,485
|
|
17,228
|
|
Total equity balance at March 31
|
$
|
55,646
|
|
$
|
73,193
|
|
|
|
(a)
|
Included adjustments of
$(957) million
and
$938 million
for the three months ended March 31, 2019 and 2018, 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 security gains been realized. See Note 12 for further information.
|
|
|
(b)
|
On February 25, 2019, we completed the spin off and subsequent merger of our Transportation segment with Wabtec. A gain on distribution of
$88 million
and related taxes of
$(940) million
were recorded on the transaction resulting in a net decrease to additional paid in capital of
$852
million. See Note 2 for further information.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
In 2016, we issued
$5,694 million
of GE Series D preferred stock, which are callable on January 21, 2021. In addition to Series D,
$250 million
of existing GE Series A, B and C preferred stock are also outstanding. The total carrying value of GE preferred stock at March 31, 2019 was
$5,613 million
and will increase to
$5,944 million
by the respective call dates 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
$40 million
and
$37 million
in the three months ended March 31, 2019 and 2018, respectively. In conjunction with 2016 exchange of GE Capital preferred stock into GE preferred stock, GE Capital issued preferred stock to GE for which the amount and terms mirrored the GE external preferred stock. In 2018, GE Capital and GE exchanged the existing Series D preferred stock issued to GE for new Series D preferred stock, which is mandatorily convertible into GE Capital Common stock on January 21, 2021. After this conversion, GE Capital will no longer pay preferred dividends to GE. The exchange of GE Capital Series D preferred stock has no impact on the GE Series D preferred stock, which remains callable for
$5,694 million
on January 21, 2021 or thereafter on dividend payment dates. Additionally, there were no changes to the existing Series A, B or C preferred stock issued to GE. See our Annual Report on Form 10-K for the year ended December 31, 2018 for further information.
Noncontrolling interests in equity of consolidated affiliates amounted to
$20,485 million
and
$20,500 million
, including
$19,271 million
and
$19,239 million
attributable to the BHGE Class A shareholders at March 31, 2019 and December 31, 2018, respectively. Net earnings attributable to noncontrolling interests were
$30 million
and
$67 million
, and dividends attributable to noncontrolling interests were
$(106) million
and
$(83) million
for the three months ended March 31, 2019 and 2018, respectively.
As previously announced, we plan an orderly separation of our ownership interest in BHGE over time. Any reduction in our ownership interest below 50% will result in us losing control of BHGE. At that point, we would deconsolidate our Oil & Gas segment, recognize any remaining interest at fair value and recognize any difference between carrying value and fair value of our interest in earnings. Depending on the form and timing of our separation, and if BHGE’s stock price remains below our current carrying value, we may recognize a significant loss in earnings. Based on BHGE's share price at April 26, 2019 of
$25.58
per share, the incremental loss upon deconsolidation from a sale of our interest would be approximately
$7,300 million
.
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 and amounted to
$416 million
and
$382 million
as of March 31, 2019 and December 31, 2018, respectively. Net earnings (loss) attributable to redeemable noncontrolling interests was
$27 million
and
$(33) million
for the three months ended March 31, 2019 and March 31, 2018, respectively.
On October 2, 2018 we settled the redeemable noncontrolling interest balance associated with
three
joint ventures with Alstom, for a payment amount of
$3,105 million
in accordance with contractual payment terms.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 16. EARNINGS PER SHARE INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
|
2019
|
|
2018
|
(In millions; per-share amounts in dollars)
|
Diluted
|
|
Basic
|
|
|
Diluted
|
|
Basic
|
|
|
|
|
|
|
|
Amounts attributable to the Company:
|
|
|
|
|
|
Earnings from continuing operations for per-share calculation(a)(b)(c)
|
$
|
973
|
|
$
|
991
|
|
|
$
|
292
|
|
$
|
293
|
|
Preferred stock dividends
|
(40
|
)
|
(40
|
)
|
|
(37
|
)
|
(37
|
)
|
Earnings from continuing operations attributable to
common shareowners for per-share calculation(a)(b)(c)
|
933
|
|
951
|
|
|
255
|
|
256
|
|
Earnings (loss) from discontinued operations
for per-share calculation(a)(b)
|
2,568
|
|
2,586
|
|
|
(1,448
|
)
|
(1,447
|
)
|
Net earnings (loss) attributable to GE common
shareowners for per-share calculation(a)(b)(c)
|
$
|
3,519
|
|
$
|
3,537
|
|
|
$
|
(1,189
|
)
|
$
|
(1,189
|
)
|
|
|
|
|
|
|
Average equivalent shares
|
|
|
|
|
|
Shares of GE common stock outstanding
|
8,711
|
|
8,711
|
|
|
8,683
|
|
8,683
|
|
Employee compensation-related shares (including stock options)
|
15
|
|
—
|
|
|
13
|
|
—
|
|
Total average equivalent shares
|
8,726
|
|
8,711
|
|
|
8,696
|
|
8,683
|
|
|
|
|
|
|
|
Per-share amounts(d)
|
|
|
|
|
|
Earnings from continuing operations
|
$
|
0.11
|
|
$
|
0.11
|
|
|
$
|
0.03
|
|
$
|
0.03
|
|
Earnings (loss) from discontinued operations
|
0.29
|
|
0.30
|
|
|
(0.17
|
)
|
(0.17
|
)
|
Net earnings (loss)
|
0.40
|
|
0.41
|
|
|
(0.14
|
)
|
(0.14
|
)
|
|
|
(a)
|
Our unvested restricted stock unit awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities, and, therefore, are included in the computation of earnings per share pursuant to the two-class method. For the three months ended March 31, 2019, application of this treatment had an insignificant effect. For the three months ended March 31, 2018, 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.
|
|
|
(c)
|
Included in 2019 is a dilutive adjustment for the change in income for forward purchase contracts that may be settled in stock.
|
|
|
(d)
|
Earnings per share amounts are computed independently for earnings from continuing operations, earnings 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.
|
For the three months ended
March 31, 2019
and
2018
, approximately
471 million
and
395 million
of outstanding stock awards were not included in the computation of diluted earnings per share because their effect was antidilutive.
NOTE 17. FINANCIAL INSTRUMENTS
The following table provides information about assets and liabilities not carried at fair value and excludes finance leases, equity securities without readily determinable fair value and non-financial assets and liabilities. Substantially all of these assets are considered to be Level 3 and the vast majority of our liabilities’ fair value are considered Level 2.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
(In millions)
|
Carrying
amount
(net)
|
|
Estimated
fair value
|
|
|
Carrying
amount
(net)
|
|
Estimated
fair value
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Loans and other receivables
|
$
|
8,345
|
|
$
|
8,375
|
|
|
$
|
8,812
|
|
$
|
8,830
|
|
Liabilities
|
|
|
|
|
|
Borrowings(a)(b)(c)
|
107,526
|
|
109,822
|
|
|
109,930
|
|
106,221
|
|
Investment contracts(d)
|
2,335
|
|
2,586
|
|
|
2,388
|
|
2,630
|
|
|
|
(b)
|
Included $
1,174
million and $
1,361
million of accrued interest in estimated fair value at
March 31, 2019
and
December 31, 2018
, respectively.
|
|
|
(c)
|
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, 2019
and
December 31, 2018
would be reduced by $
1,533
million and $
1,300
million, respectively.
|
DERIVATIVES AND HEDGING
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, 2019
|
|
December 31, 2018
|
(In millions)
|
Gross Notional(a)
|
|
Assets
|
|
Liabilities
|
|
|
Gross Notional(a)
|
|
Assets
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Derivatives accounted for as hedges
|
|
|
|
|
|
|
|
Interest rate contracts
|
$
|
21,830
|
|
$
|
1,530
|
|
$
|
24
|
|
|
$
|
22,904
|
|
$
|
1,335
|
|
$
|
23
|
|
Currency exchange contracts
|
7,128
|
|
115
|
|
110
|
|
|
7,970
|
|
175
|
|
121
|
|
|
$
|
28,958
|
|
$
|
1,645
|
|
$
|
135
|
|
|
$
|
30,873
|
|
$
|
1,511
|
|
$
|
145
|
|
|
|
|
|
|
|
|
|
Derivatives not accounted for as hedges
|
|
|
|
|
|
|
|
Interest rate contracts
|
$
|
7,547
|
|
$
|
28
|
|
$
|
1
|
|
|
$
|
6,198
|
|
$
|
28
|
|
$
|
2
|
|
Currency exchange contracts
|
78,808
|
|
685
|
|
1,035
|
|
|
83,841
|
|
727
|
|
1,546
|
|
Other contracts
|
2,541
|
|
37
|
|
135
|
|
|
2,622
|
|
13
|
|
209
|
|
|
$
|
88,896
|
|
$
|
750
|
|
$
|
1,171
|
|
|
$
|
92,662
|
|
$
|
769
|
|
$
|
1,757
|
|
|
|
|
|
|
|
|
|
Gross derivatives recognized in statement of financial position
|
|
|
|
|
|
|
|
Gross derivatives
|
$
|
117,854
|
|
$
|
2,395
|
|
$
|
1,306
|
|
|
$
|
123,535
|
|
$
|
2,279
|
|
$
|
1,902
|
|
Gross accrued interest
|
|
133
|
|
10
|
|
|
|
209
|
|
6
|
|
|
|
$
|
2,528
|
|
$
|
1,315
|
|
|
|
$
|
2,489
|
|
$
|
1,908
|
|
|
|
|
|
|
|
|
|
Amounts offset in statement of financial position
|
|
|
|
|
|
|
|
Netting adjustments(b)
|
|
$
|
(828
|
)
|
$
|
(829
|
)
|
|
|
$
|
(963
|
)
|
$
|
(971
|
)
|
Cash collateral(c)
|
|
(1,034
|
)
|
(168
|
)
|
|
|
(1,042
|
)
|
(267
|
)
|
|
|
$
|
(1,862
|
)
|
$
|
(997
|
)
|
|
|
$
|
(2,005
|
)
|
$
|
(1,238
|
)
|
|
|
|
|
|
|
|
|
Net derivatives recognized in statement of financial position
|
|
|
|
|
|
|
|
Net derivatives
|
|
$
|
666
|
|
$
|
318
|
|
|
|
$
|
483
|
|
$
|
670
|
|
|
|
|
|
|
|
|
|
Amounts not offset in statement of financial position
|
|
|
|
|
|
|
|
Securities held as collateral(d)
|
|
$
|
(326
|
)
|
$
|
—
|
|
|
|
$
|
(235
|
)
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Net amount(e)
|
|
$
|
340
|
|
$
|
318
|
|
|
|
$
|
248
|
|
$
|
670
|
|
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)
|
Total gross notional at March 31, 2019 comprises
$75,714 million
in GE Capital and
$42,139 million
in GE and at December 31, 2018 comprises
$79,082 million
in GE Capital and
$44,453 million
in GE. GE Capital notional relates primarily to managing interest rate and currency risk between financial assets and liabilities, and GE notional relates primarily to managing currency risk.
|
|
|
(b)
|
Netting 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, which, at
March 31, 2019
and
December 31, 2018
, was insignificant.
|
|
|
(c)
|
Excluded excess cash collateral received and posted of
$41 million
and
$239 million
at
March 31, 2019
, respectively, and
$3 million
and
$439 million
at
December 31, 2018
, respectively. Excess cash collateral posted includes initial margin for cleared trades.
|
|
|
(d)
|
Excluded excess securities collateral received of
$50 million
and
zero
at
March 31, 2019
and
December 31, 2018
, respectively.
|
|
|
(e)
|
At March 31, 2019, our exposures to counterparties (including accrued interest), net of collateral we held, was
$256 million
. Counterparties' exposures to our derivative liability (including accrued interest), net of collateral posted by us, was
$281 million
at March 31, 2019. These exposures exclude embedded derivatives.
|
FAIR VALUE HEDGES
We use derivatives to hedge the effects of interest rate and currency exchange rate changes on our debt. At March 31, 2019, the cumulative amount of hedging adjustments of
$3,712
million (comprising
$40 million
and
$3,672 million
on short- and long-term borrowings, respectively) was included in the carrying amount of the hedged liability of
$58,885 million
(comprising
$9,081 million
and
$49,804 million
of short- and long-term borrowings, respectively). The cumulative amount of hedging adjustments on discontinued hedging relationships was
$18 million
and
$2,667 million
for short- and long-term borrowings, respectively.
CASH FLOW HEDGES
Changes in the fair value of cash flow hedges are recorded in 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.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
$
|
4
|
|
$
|
(4
|
)
|
|
$
|
(3
|
)
|
$
|
(2
|
)
|
Currency exchange contracts
|
43
|
|
146
|
|
|
3
|
|
66
|
|
Total
|
$
|
47
|
|
$
|
142
|
|
|
$
|
—
|
|
$
|
65
|
|
The total pre-tax amount in AOCI related to cash flow hedges of forecasted transactions was a
$67 million
gain at
March 31, 2019. We expect to reclassify
$54 million
of
loss to earnings in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions. For the three months ended March 31, 2019 and 2018, 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, 2019 and 2018, the maximum term of derivative instruments that hedge forecasted transactions was
14 years
and
15 years
,
respectively.
NET INVESTMENT HEDGES
For these hedges, the portion of the fair value changes of the derivatives or debt instruments that relates to changes in spot currency exchange rates is recorded in a separate component of AOCI. The portion of the fair value changes of the derivatives related to differences between spot and forward rates is recorded in earnings each period. The amounts recorded in AOCI affect earnings if the hedged investment is sold, substantially liquidated, or control is lost.
For the three months ended March 31, 2019, the total loss recognized in AOCI on hedging instruments was
$(68) million
, comprising
$(27) million
on currency exchange contracts and
$(41) million
on foreign currency debt. For the three months ended March 31, 2018, the total loss recognized in AOCI on hedging instruments was
$(605) million
, comprising
$(9) million
on currency exchange contracts and
$(596) million
on foreign currency debt. The carrying value of foreign currency debt designated as net investment hedges was
$12,502 million
and
$13,627 million
at March 31, 2019 and 2018, respectively.
The total reclassified from AOCI into earnings from continuing and discontinued operations was insignificant for the three months ended March 31, 2019 and 2018 respectively.
Amount of gain (loss) recognized in earnings on derivative amount excluded from effectiveness was insignificant for the three months ended March 31, 2019 and 2018, respectively.
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.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
The following table summarizes the effect of fair value and cash flow hedges on earnings and the location.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2019
|
|
Three months ended March 31, 2018
|
(In millions)
|
Sales
|
Cost of sales
|
Interest and other financial charges
|
SG&A
|
Revenues from financial services
|
|
Sales
|
Cost of sales
|
Interest and other financial charges
|
SG&A
|
Revenues from financial services
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amounts of line items presented in the Consolidated Statement of Earnings (Loss) in which the effects are recorded
|
$
|
25,342
|
|
$
|
20,353
|
|
$
|
1,133
|
|
$
|
4,146
|
|
$
|
1,944
|
|
|
$
|
26,002
|
|
$
|
20,911
|
|
$
|
1,282
|
|
$
|
4,088
|
|
$
|
1,786
|
|
Cash Flow Hedges
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
|
|
|
|
|
|
|
|
|
|
Gain/(loss) reclassified from AOCI into income
|
$
|
—
|
|
$
|
—
|
|
$
|
(6
|
)
|
$
|
—
|
|
$
|
3
|
|
|
|
|
$
|
(5
|
)
|
|
$
|
3
|
|
Currency exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
Gain/(loss) reclassified from AOCI into income
|
(1
|
)
|
(9
|
)
|
(4
|
)
|
(1
|
)
|
17
|
|
|
4
|
|
6
|
|
(5
|
)
|
|
61
|
|
Total effect of cash flow hedges
|
$
|
(1
|
)
|
$
|
(9
|
)
|
$
|
(10
|
)
|
$
|
(1
|
)
|
$
|
21
|
|
|
$
|
4
|
|
$
|
6
|
|
$
|
(10
|
)
|
|
$
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Hedges
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
|
|
|
|
|
|
|
|
|
|
Hedged items
|
|
|
$
|
(527
|
)
|
|
|
|
|
|
|
|
$
|
672
|
|
Derivatives designated as hedging instruments
|
|
|
515
|
|
|
|
|
|
|
|
|
(697
|
)
|
Total effect of fair value hedges
|
|
|
$
|
(11
|
)
|
|
|
|
|
|
|
|
$
|
(26
|
)
|
The following table summarizes the effect of derivatives not designated as hedges on earnings and the location.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2019
|
|
Three months ended March 31, 2018
|
(In millions)
|
Revenues from financial services
|
Cost of sales
|
Interest and other financial charges
|
SG&A
|
Other Income
|
|
Revenues from financial services
|
Cost of sales
|
Interest and other financial charges
|
SG&A
|
Other Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
$
|
(20
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
(14
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Currency exchange contracts
|
453
|
|
8
|
|
(63
|
)
|
(45
|
)
|
3
|
|
|
653
|
|
7
|
|
(69
|
)
|
(130
|
)
|
51
|
|
Other
|
—
|
|
—
|
|
96
|
|
—
|
|
14
|
|
|
(5
|
)
|
|
(35
|
)
|
|
9
|
|
Total(a)
|
$
|
433
|
|
$
|
8
|
|
$
|
33
|
|
$
|
(45
|
)
|
$
|
17
|
|
|
$
|
634
|
|
$
|
7
|
|
$
|
(104
|
)
|
$
|
(130
|
)
|
$
|
60
|
|
|
|
(a)
|
Substantially all of the gain or loss recognized in earnings is offset by either the current period change in value of the item being hedged which is recorded in earnings in the current period or a future period for hedges of future exposures.
|
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.
Additionally, our master agreements typically contain mutual downgrade provisions that provide the ability of each party to require termination if the credit rating of the counterparty were to fall below specified ratings levels agreed upon with the counterparty, primarily BBB/Baa2. 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.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 18.
VARIABLE INTEREST ENTITIES
The table below provides information about assets and liabilities of consolidated VIEs, showing the Statement of Financial Position lines that the assets and liabilities are consolidated within. These entities have no features that could expose us to losses that would significantly exceed the difference between the consolidated assets and liabilities.
|
|
|
|
|
|
|
|
ASSETS AND LIABILTIES OF CONSOLIDATED VIES
(In millions)
|
March 31, 2019
|
December 31, 2018
|
|
|
|
Assets
|
|
|
Financing receivables, net
|
$
|
2,423
|
|
$
|
2,704
|
|
Current receivables
|
451
|
|
496
|
|
Investment securities
|
35
|
|
35
|
|
Other assets
|
1,996
|
|
2,367
|
|
Total
|
$
|
4,906
|
|
$
|
5,601
|
|
|
|
|
Liabilities
|
|
|
Borrowings
|
$
|
754
|
|
$
|
850
|
|
Non-recourse borrowings
|
1,350
|
|
1,875
|
|
Other liabilities
|
2,010
|
|
1,801
|
|
Total
|
$
|
4,114
|
|
$
|
4,526
|
|
Our investments in unconsolidated VIEs were
$2,264 million
and
$2,346 million
at March 31, 2019 and December 31, 2018, respectively. Substantially all of these investments are held by Energy Financial Services (EFS). Obligations to make additional investments in these entities are not significant.
NOTE 19. COMMITMENTS, GUARANTEES, PRODUCT WARRANTIES AND OTHER LOSS CONTINGENCIES
COMMITMENTS
The GE Capital Aviation Services (GECAS) business within the Capital segment has placed multiple-year orders for various Boeing, Airbus and other aircraft manufacturers with list prices approximating $
33,269
million
(including
391
new aircraft with delivery dates of
16%
in 2019,
20%
in 2020 and
64%
in 2021 through 2024) and secondary orders with airlines for used aircraft of approximately $
1,906
million (including
39
used aircraft with delivery dates of
87%
in 2019 and
13%
in 2020) at
March 31, 2019
.
When we purchase aircraft, it is at a contractual price, which is usually less than the aircraft manufacturer’s list price and excludes any pre-delivery payments made in advance. As of
March 31, 2019
, we have made
$2,954 million
of pre-delivery payments to aircraft manufacturers.
GE Capital had total investment commitments of
$1,246 million
at March 31, 2019 that primarily comprise project financing investments in thermal and wind energy projects of
$874 million
as of March 31, 2019.
As of
March 31, 2019
, in our Aviation segment, we have committed to provide financing assistance of $
2,482
million of future customer acquisitions of aircraft equipped with our engines as of March 31, 2019.
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, 2019
, we were committed under the following guarantee arrangements beyond those provided on behalf of VIEs. See Note 18 for further information.
Credit Support.
At
March 31, 2019
, we have provided $
1,504
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 our 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 for the term of the related financing arrangements or transactions. The liability for such credit support was $
46
million at
March 31, 2019
.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Indemnification Agreements – Continuing Operations.
At
March 31, 2019
, we have $
1,607
million of other indemnification commitments, including representations and warranties in sales of businesses or assets, for which we recorded a liability of $
136
million.
We also have agreements that require us to fund up to $
200
million at
March 31, 2019
under residual value guarantees on a variety of leased equipment. Under most of our residual value guarantees, our commitment is secured by the leased asset. The liability for these indemnification agreements was $
6
million at March 31, 2019.
Indemnification Agreements – Discontinued Operations.
At
March 31, 2019
, we provided specific indemnities to buyers of GE
Capital’s businesses and assets that, in the aggregate, represent a maximum potential claim of $
1,211
million with related reserves of
$212 million
.
During the first quarter of 2019, we received confirmation of a favorable court ruling reducing the maximum potential claim and related reserves by
$679 million
and
$55 million
, respectively
. 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.
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)
|
2019
|
|
2018
|
|
|
|
|
Balance at January 1
|
$
|
2,428
|
|
$
|
2,268
|
|
Current-year provisions
|
164
|
|
236
|
|
Expenditures
|
(158
|
)
|
(221
|
)
|
Other changes
|
1
|
|
149
|
|
Balance as of March 31
|
$
|
2,435
|
|
$
|
2,431
|
|
LEGAL MATTERS
In the normal course of our business, we are involved from time to time in various arbitrations, class actions, commercial litigation, investigations and other legal, regulatory or governmental actions, including the significant matters described below. In many proceedings, it is inherently difficult to determine whether any loss is probable or even reasonably possible or to estimate the size or range of the possible loss, and accruals for legal matters are not recorded until a loss for a particular matter is considered probable and reasonably estimable. Given the nature of legal matters and the complexities involved, it is often difficult to predict and determine a meaningful estimate of loss or range of loss until we know, among other factors, the particular claims involved, the likelihood of success of our defenses to those claims, the damages or other relief sought, how discovery or other procedural considerations will affect the outcome, the settlement posture of other parties and other factors that may have a material effect on the outcome. Moreover, it is not uncommon for legal matters to be resolved over many years, during which time relevant developments and new information must be continuously evaluated.
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, 2019, such claims consisted of
$185 million
of individual claims generally submitted before the filing of a lawsuit (compared to
$144 million
at December 31, 2018) and
$756 million
of additional claims asserted against WMC in litigation without making a prior claim (Litigation Claims) (compared to
$433 million
at December 31, 2018). The total amount of these claims,
$941 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 decisions of the New York Court of Appeals in ACE Securities Corp. v. DB Structured Products, Inc., (June 11, 2015) and Deutsche Bank National Trust Company v. Flagstar Capital Markets Corporation (October 16, 2018) on the statute of limitations period governing such claims.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Reserves related to repurchase claims made against WMC were
$185 million
at March 31, 2019, reflecting a net decrease to reserves in the three months ended March 31, 2019 of
$25 million
, primarily due to settlements. The reserve estimate takes into account recent settlement activity and is based upon WMC’s evaluation of the remaining exposures as a percentage of estimated lifetime mortgage loan losses within the pool of loans supporting each securitization for which timely claims have been asserted in litigation against WMC. Settlements in prior periods reduced WMC’s exposure on claims asserted in certain securitizations and the claim amounts reported above give effect to these settlements. During the first quarter of 2018, we also recorded a reserve of
$1,500 million
in connection with the U.S. Department of Justice's (DOJ) ongoing investigation regarding potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) by WMC and GE Capital discussed in Legal Proceedings. This charge was recorded in the first quarter of 2018 based upon our estimate of the loss contingency at that time, including the status of our settlement discussions with the DOJ in the first quarter of 2018 and an assessment of prior settlements reached in similar matters.
In January 2019, we announced an agreement in principle with the United States to settle this matter, and in April 2019, the parties entered into a definitive settlement agreement. Under the agreement, which concludes this investigation, GE, without admitting liability or wrongdoing, paid the United States a civil penalty of
$1,500 million
.
In April 2019, WMC commenced a case under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. WMC intends to file a Chapter 11 plan seeking an efficient and orderly resolution of all claims, demands, rights, and/or liabilities to be asserted by or against WMC as the debtor. GE Capital will provide
$25 million
of debtor-in-possession financing to fund administrative expenses associated with the Chapter 11 proceeding. As a result of WMC commencing the Chapter 11 case, we will no longer consolidate WMC’s financial results or position on the books and records of GE Capital beginning in the second quarter 2019.
Alstom legacy matters.
On November 2, 2015, we acquired the Thermal, Renewables and Grid businesses from Alstom. Prior to the acquisition, the seller was the subject of
two
significant cases involving anti-competitive activities and improper payments: (1) in January 2007, Alstom was fined
€65 million
by the European Commission for participating in a gas insulated switchgear cartel that operated from 1988 to 2004 (that fine was later reduced to
€59 million
), and (2) in December 2014, Alstom pled guilty in the United States to multiple violations of the Foreign Corrupt Practices Act and paid a criminal penalty of
$772 million
. As part of GE’s accounting for the acquisition, we established a reserve amounting to
$858 million
for legal and compliance matters related to the legacy business practices that were the subject of these and related cases in various jurisdictions. At
March 31, 2019
, this reserve balance was
$888 million
. The increase is primarily driven by foreign currency movements.
Regardless of jurisdiction, the allegations relate to claimed anti-competitive conduct or improper payments in the pre-acquisition period as the source of legal violations and/or damages. Given the significant litigation and compliance activity related to these matters and our ongoing efforts to resolve them, it is difficult to assess whether the disbursements will ultimately be consistent with the reserve established. The estimation of this reserve involved significant judgment and may not reflect the full range of uncertainties and unpredictable outcomes inherent in litigation and investigations of this nature, and at this time we are unable to develop a meaningful estimate of the range of reasonably possible additional losses beyond the amount of this reserve. 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 and related 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, political and social influences within each jurisdiction, and tax consequences of any settlements or previous deductions, among other considerations. Actual losses arising from claims in these and related matters could exceed the amount provided.
ENVIRONMENTAL, HEALTH AND SAFETY 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, 2018
.
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
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 our consolidated Statement of Cash Flows are net of cash transferred and included certain deal-related costs. Amounts reported in the “Net cash from (payments for) principal businesses purchased” line are net of cash acquired and included certain deal-related costs and debt assumed and immediately repaid in acquisitions.
GE
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(In millions)
|
2019
|
|
2018
|
|
|
|
|
All other operating activities
|
|
|
Increase (decrease) in employee benefit liabilities
|
$
|
(556
|
)
|
$
|
(369
|
)
|
Other gains on investing activities
|
(63
|
)
|
(72
|
)
|
Restructuring and other charges(a)
|
(21
|
)
|
155
|
|
Increase (decrease) in equipment project accruals
|
54
|
|
(577
|
)
|
Other(b)
|
(72
|
)
|
(503
|
)
|
|
$
|
(658
|
)
|
$
|
(1,366
|
)
|
All other investing activities
|
|
|
Derivative settlements (net)
|
$
|
24
|
|
$
|
(163
|
)
|
Investments in intangible assets (net)
|
(3
|
)
|
(584
|
)
|
Other(c)
|
(323
|
)
|
89
|
|
|
$
|
(302
|
)
|
$
|
(658
|
)
|
All other financing activities
|
|
|
Acquisition of noncontrolling interests
|
$
|
(28
|
)
|
$
|
(394
|
)
|
Dividends paid to noncontrolling interests
|
(123
|
)
|
(79
|
)
|
Other
|
2
|
|
4
|
|
|
$
|
(149
|
)
|
$
|
(469
|
)
|
|
|
(a)
|
Reflected the effects of restructuring and other charges of $
325 million
and
$593 million
and restructuring and other cash expenditures of
$(346) million
and
$(438) million
for the
three months ended
March 31
, 2019 and 2018, respectively. Excludes non-cash adjustments reflected as "Depreciation and amortization of property, plant and equipment" or "Amortization of intangible assets" in the Statement of Cash Flows.
|
|
|
(b)
|
Included other adjustments to net income, such as write-downs of assets and the impacts of acquisition accounting and changes in other assets and other liabilities classified as operating activities, such as the timing of payments of customer allowances.
|
|
|
(c)
|
Other primarily included net activity related to settlements between our continuing operations and businesses in discontinued operations.
|
|
|
|
|
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 GE and GE Capital columns of our financial statements, which we believe provide useful supplemental information to our consolidated financial statements. These transactions are eliminated in consolidation and may include, but are not limited to, the following:
|
|
•
|
GE Capital working capital services to GE, including current receivables and supply chain finance programs
,
|
|
|
•
|
GE Capital enabled GE industrial orders, including related GE guarantees to GE Capital,
|
|
|
•
|
GE Capital financing of GE long-term receivables, and
|
|
|
•
|
Aircraft engines, power equipment and
renewable energy 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 unconsolidated GE and GE Capital totals to the consolidated cash flows.
|
|
|
|
|
|
|
|
|
Three months ended March 31
|
(In millions)
|
2019
|
|
2018
|
|
|
|
|
|
|
Cash from (used for) operating activities - continuing operations
|
|
|
|
|
Combined
|
$
|
(834
|
)
|
$
|
(578
|
)
|
GE current receivables sold to GE Capital(a)
|
537
|
|
788
|
|
GE long-term receivables sold to GE Capital
|
174
|
|
108
|
|
Other reclassifications and eliminations(b)
|
280
|
|
(1
|
)
|
Total cash from (used for) operating activities - continuing operations
|
$
|
157
|
|
$
|
317
|
|
Cash from (used for) investing activities - continuing operations
|
|
|
Combined
|
$
|
5,756
|
|
$
|
1,062
|
|
GE current receivables sold to GE Capital(a)
|
(1,306
|
)
|
(1,344
|
)
|
GE long-term receivables sold to GE Capital
|
(174
|
)
|
(108
|
)
|
GE Capital long-term loan to GE
|
—
|
|
285
|
|
Other reclassifications and eliminations(b)
|
(886
|
)
|
(374
|
)
|
Total cash from (used for) investing activities - continuing operations
|
$
|
3,390
|
|
$
|
(479
|
)
|
Cash from (used for) financing activities - continuing operations
|
|
|
Combined
|
$
|
(4,941
|
)
|
$
|
(12,536
|
)
|
GE current receivables sold to GE Capital(a)
|
769
|
|
556
|
|
GE Capital long-term loan to GE
|
—
|
|
(285
|
)
|
Other reclassifications and eliminations(b)
|
607
|
|
375
|
|
Total cash from (used for) financing activities - continuing operations
|
$
|
(3,565
|
)
|
$
|
(11,890
|
)
|
|
|
(a)
|
Excludes
$61 million
and
$1,120 million
related to cash payments received on the Receivable facility DPP in the three months ended March 31, 2019 and 2018 respectively, which are reflected as Cash from investing activities in the GE Capital and the consolidated GE Company columns of our Statement of Cash Flows. Sales of current receivables from GE to GE Capital are classified as Cash from operating activities in the GE column of our Statement of Cash Flows. See Note 4.
|
|
|
(b)
|
Includes eliminations of other cash flows activities, including financing of supply chain finance programs of $
323 million
and
$
305 million
in the three months ended March 31, 2019 and 2018 respectively, and various investments, loans and allocations of GE corporate overhead costs.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 22. GUARANTOR 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.
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, specifically a Condensed Consolidating Statements of Earnings and Comprehensive Income for the
three
months ended
March 31, 2019
and
2018
, Condensed Consolidating Statements of Financial Position as of
March 31, 2019
and
December 31, 2018
and Condensed Consolidating Statements of Cash Flows for the
three
months ended
March 31, 2019
and
2018
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 that issued the guaranteed notes for debt;
|
|
|
•
|
GE Capital International Holdings Limited (GECIHL)
(the Subsidiary Guarantor)
– prepared with investments in non-guarantor subsidiaries accounted for under the equity method of accounting;
|
|
|
•
|
Non-Guarantor Subsidiaries
– prepared on an aggregated basis excluding any elimination or consolidation adjustments and includes predominantly all non-cash adjustments for cash flows;
|
|
|
•
|
Consolidating Adjustments
– adjusting entries necessary to consolidate the Parent Company Guarantor with the Subsidiary Issuer, the Subsidiary Guarantor and Non-Guarantor Subsidiaries and in the comparative periods, this category includes the impact of new accounting policies adopted as described in Note 1; and
|
|
|
•
|
Consolidated
– prepared on a consolidated basis.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
|
FOR THE THREE MONTHS ENDED MARCH 31, 2019 (UNAUDITED)
|
|
(In millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
Sales of goods and services
|
$
|
4,580
|
|
$
|
—
|
|
$
|
—
|
|
$
|
38,456
|
|
$
|
(17,694
|
)
|
$
|
25,342
|
|
GE Capital revenues from services
|
—
|
|
233
|
|
75
|
|
2,580
|
|
(944
|
)
|
1,944
|
|
Total revenues
|
4,580
|
|
233
|
|
75
|
|
41,035
|
|
(18,638
|
)
|
27,286
|
|
|
|
|
|
|
|
|
Costs and expenses
|
|
|
|
|
|
|
Interest and other financial charges
|
2,316
|
|
231
|
|
379
|
|
1,977
|
|
(3,770
|
)
|
1,133
|
|
Other costs and expenses
|
6,557
|
|
—
|
|
—
|
|
37,480
|
|
(18,281
|
)
|
25,757
|
|
Total costs and expenses
|
8,873
|
|
231
|
|
380
|
|
39,457
|
|
(22,051
|
)
|
26,889
|
|
Other income (loss)
|
(6,740
|
)
|
—
|
|
—
|
|
16,963
|
|
(9,344
|
)
|
878
|
|
Equity in earnings (loss) of affiliates
|
14,926
|
|
—
|
|
375
|
|
11,013
|
|
(26,315
|
)
|
—
|
|
Earnings (loss) from continuing operations before income taxes
|
3,893
|
|
3
|
|
71
|
|
29,555
|
|
(32,246
|
)
|
1,275
|
|
Benefit (provision) for income taxes
|
(335
|
)
|
—
|
|
—
|
|
(658
|
)
|
772
|
|
(222
|
)
|
Earnings (loss) from continuing operations
|
3,558
|
|
2
|
|
71
|
|
28,896
|
|
(31,475
|
)
|
1,053
|
|
Earnings (loss) from discontinued operations, net of taxes
|
30
|
|
—
|
|
—
|
|
—
|
|
2,562
|
|
2,592
|
|
Net earnings (loss)
|
3,588
|
|
2
|
|
71
|
|
28,896
|
|
(28,912
|
)
|
3,645
|
|
Less net earnings (loss) attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
58
|
|
57
|
|
Net earnings (loss) attributable to the Company
|
3,588
|
|
2
|
|
71
|
|
28,897
|
|
(28,970
|
)
|
3,588
|
|
Other comprehensive income (loss)
|
929
|
|
—
|
|
(1,082
|
)
|
(443
|
)
|
1,524
|
|
930
|
|
Comprehensive income (loss) attributable to the Company
|
$
|
4,517
|
|
$
|
2
|
|
$
|
(1,011
|
)
|
$
|
28,454
|
|
$
|
(27,446
|
)
|
$
|
4,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
(19,682
|
)
|
$
|
26,002
|
|
GE Capital revenues from services
|
—
|
|
208
|
|
226
|
|
1,557
|
|
(205
|
)
|
1,786
|
|
Total revenues
|
7,704
|
|
208
|
|
226
|
|
39,538
|
|
(19,887
|
)
|
27,788
|
|
|
|
|
|
|
|
|
Costs and expenses
|
|
|
|
|
|
|
Interest and other financial charges
|
1,380
|
|
206
|
|
547
|
|
1,263
|
|
(2,115
|
)
|
1,282
|
|
Other costs and expenses
|
8,137
|
|
—
|
|
—
|
|
38,143
|
|
(19,846
|
)
|
26,434
|
|
Total costs and expenses
|
9,517
|
|
206
|
|
547
|
|
39,407
|
|
(21,962
|
)
|
27,716
|
|
Other income (loss)
|
275
|
|
—
|
|
—
|
|
(1,873
|
)
|
1,802
|
|
204
|
|
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
|
)
|
823
|
|
277
|
|
Benefit (provision) for income taxes
|
(648
|
)
|
—
|
|
—
|
|
600
|
|
99
|
|
50
|
|
Earnings (loss) from continuing operations
|
406
|
|
2
|
|
299
|
|
(1,301
|
)
|
922
|
|
328
|
|
Earnings (loss) from discontinued operations, net of taxes
|
(1,553
|
)
|
—
|
|
(17
|
)
|
1
|
|
128
|
|
(1,441
|
)
|
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
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF FINANCIAL POSITION
|
MARCH 31, 2019 (UNAUDITED)
|
|
(In millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash
|
$
|
9,541
|
|
$
|
—
|
|
$
|
—
|
|
$
|
25,949
|
|
$
|
(585
|
)
|
$
|
34,905
|
|
Receivables - net
|
26,339
|
|
17,717
|
|
2,979
|
|
62,698
|
|
(76,312
|
)
|
33,422
|
|
Investment in subsidiaries(a)
|
223,211
|
|
—
|
|
45,002
|
|
718,299
|
|
(986,512
|
)
|
—
|
|
All other assets
|
31,676
|
|
12
|
|
—
|
|
372,836
|
|
(157,768
|
)
|
246,755
|
|
Total assets
|
$
|
290,767
|
|
$
|
17,729
|
|
$
|
47,982
|
|
$
|
1,179,781
|
|
$
|
(1,221,177
|
)
|
$
|
315,082
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
Short-term borrowings
|
$
|
160,578
|
|
$
|
—
|
|
$
|
10,867
|
|
$
|
9,748
|
|
$
|
(165,241
|
)
|
$
|
15,953
|
|
Long-term and non-recourse borrowings
|
49,405
|
|
16,297
|
|
23,868
|
|
45,257
|
|
(43,253
|
)
|
91,573
|
|
All other liabilities
|
45,624
|
|
385
|
|
111
|
|
146,141
|
|
(40,766
|
)
|
151,494
|
|
Total Liabilities
|
255,606
|
|
16,682
|
|
34,846
|
|
201,146
|
|
(249,260
|
)
|
259,020
|
|
|
|
|
|
|
|
|
Total liabilities, redeemable noncontrolling interests and equity
|
$
|
290,767
|
|
$
|
17,729
|
|
$
|
47,982
|
|
$
|
1,179,781
|
|
$
|
(1,221,177
|
)
|
$
|
315,082
|
|
|
|
(a)
|
Included within the subsidiaries of the Subsidiary Guarantor are cash and cash equivalent balances of
$7,214 million
and net assets of discontinued operations of
$3,010 million
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF FINANCIAL POSITION
|
DECEMBER 31, 2018
|
|
(In millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash
|
$
|
9,561
|
|
$
|
—
|
|
$
|
—
|
|
$
|
25,975
|
|
$
|
(689
|
)
|
$
|
34,847
|
|
Receivables - net
|
28,426
|
|
17,467
|
|
2,792
|
|
69,268
|
|
(84,095
|
)
|
33,857
|
|
Investment in subsidiaries(a)
|
215,434
|
|
—
|
|
45,832
|
|
733,535
|
|
(994,801
|
)
|
—
|
|
All other assets
|
29,612
|
|
12
|
|
—
|
|
359,066
|
|
(147,810
|
)
|
240,880
|
|
Total assets
|
$
|
283,033
|
|
$
|
17,479
|
|
$
|
48,623
|
|
$
|
1,187,844
|
|
$
|
(1,227,394
|
)
|
$
|
309,585
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
Short-term borrowings
|
$
|
150,426
|
|
$
|
—
|
|
$
|
9,854
|
|
$
|
9,649
|
|
$
|
(157,108
|
)
|
$
|
12,821
|
|
Long-term and non-recourse borrowings
|
59,800
|
|
16,115
|
|
24,341
|
|
41,066
|
|
(44,213
|
)
|
97,109
|
|
All other liabilities
|
41,826
|
|
336
|
|
245
|
|
152,889
|
|
(47,504
|
)
|
147,792
|
|
Total Liabilities
|
252,052
|
|
16,452
|
|
34,439
|
|
203,604
|
|
(248,825
|
)
|
257,722
|
|
|
|
|
|
|
|
|
Total liabilities, redeemable noncontrolling interests and equity
|
$
|
283,033
|
|
$
|
17,479
|
|
$
|
48,623
|
|
$
|
1,187,844
|
|
$
|
(1,227,394
|
)
|
$
|
309,585
|
|
|
|
(a)
|
Included within the subsidiaries of the Subsidiary Guarantor are cash and cash equivalent balances of
$6,892 million
and net assets of discontinued operations of
$3,482 million
.
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
|
THREE MONTHS ENDED MARCH 31, 2019 (UNAUDITED)
|
|
|
|
|
|
|
|
(In millions)
|
Parent
Company
Guarantor
|
|
Subsidiary
Issuer
|
|
Subsidiary
Guarantor
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Cash from (used for) operating activities(a)
|
$
|
(6,630
|
)
|
$
|
611
|
|
$
|
(1,063
|
)
|
$
|
19,123
|
|
$
|
(11,999
|
)
|
$
|
42
|
|
|
|
|
|
|
|
|
Cash from (used for) investing activities
|
$
|
7,165
|
|
$
|
(611
|
)
|
$
|
(61
|
)
|
$
|
10,259
|
|
$
|
(13,311
|
)
|
$
|
3,442
|
|
|
|
|
|
|
|
|
Cash from (used for) financing activities
|
$
|
(555
|
)
|
$
|
—
|
|
$
|
1,124
|
|
$
|
(29,416
|
)
|
$
|
25,240
|
|
$
|
(3,607
|
)
|
|
|
|
|
|
|
|
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
—
|
|
—
|
|
78
|
|
—
|
|
78
|
|
Increase (decrease) in cash, cash equivalents and restricted cash
|
(20
|
)
|
—
|
|
—
|
|
44
|
|
(70
|
)
|
(45
|
)
|
Cash, cash equivalents and restricted cash at beginning of year
|
9,561
|
|
—
|
|
1
|
|
26,502
|
|
(516
|
)
|
35,548
|
|
Cash, cash equivalents and restricted cash at March 31
|
9,541
|
|
—
|
|
—
|
|
26,547
|
|
(585
|
)
|
35,503
|
|
Less cash, cash equivalents and restricted cash of discontinued operations at March 31
|
—
|
|
—
|
|
—
|
|
598
|
|
—
|
|
598
|
|
Cash, cash equivalents and restricted cash of continuing operations at March 31
|
$
|
9,541
|
|
$
|
—
|
|
$
|
—
|
|
$
|
25,949
|
|
$
|
(585
|
)
|
$
|
34,905
|
|
|
|
(a)
|
Parent Company Guarantor cash flows included cash from (used for) operating activities of discontinued operations of
$(2,946) million
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 from (used for) operating activities(a)
|
$
|
17,593
|
|
$
|
146
|
|
$
|
(427
|
)
|
$
|
(16,722
|
)
|
$
|
(278
|
)
|
$
|
312
|
|
|
|
|
|
|
|
|
Cash from (used for) investing activities
|
$
|
6,994
|
|
$
|
(75
|
)
|
$
|
(788
|
)
|
$
|
(14,924
|
)
|
$
|
8,228
|
|
$
|
(566
|
)
|
|
|
|
|
|
|
|
Cash from (used for) financing activities
|
$
|
(28,041
|
)
|
$
|
(70
|
)
|
$
|
1,214
|
|
$
|
22,974
|
|
$
|
(7,977
|
)
|
$
|
(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
|
)
|
—
|
|
—
|
|
(8,464
|
)
|
(27
|
)
|
(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
|
|
33,529
|
|
(770
|
)
|
32,779
|
|
Less cash, cash equivalents and restricted cash of discontinued operations at March 31
|
—
|
|
—
|
|
—
|
|
779
|
|
—
|
|
779
|
|
Cash, cash equivalents and restricted cash of continuing operations at March 31
|
$
|
18
|
|
$
|
—
|
|
$
|
3
|
|
$
|
32,750
|
|
$
|
(770
|
)
|
$
|
32,000
|
|
|
|
(a)
|
Parent Company Guarantor cash flows included cash from (used for) operating activities of discontinued operations of
$(2,383) million
.
|
GLOSSARY
FINANCIAL TERMS
|
|
•
|
Continuing earnings
– we refer to the caption “earnings from continuing operations attributable to GE common shareowners” as continuing earnings.
|
|
|
•
|
Continuing earnings per share (EPS)
– when we refer to continuing earnings per share, it is the diluted per-share amount of “earnings from continuing operations attributable to GE common shareowners.”
|
|
|
•
|
GE Cash Flows from Operating Activities (GE CFOA)
- unless otherwise indicated, GE CFOA is from continuing operations.
|
|
|
•
|
Net earnings (loss)
– we refer to the caption “net earnings (loss) attributable to GE common shareowners” as net earnings.
|
|
|
•
|
Net earnings (loss) per share (EPS)
– when we refer to net earnings (loss) per share, it is the diluted per-share amount of “net earnings attributable to GE common shareowners.”
|
|
|
•
|
Segment profit
– refers to the profit of the industrial segments and the net earnings of the financial services segment, both of which include other income. See the Segment Operations section within the MD&A for a description of the basis for segment profits.
|
OPERATIONAL TERMS
|
|
•
|
Organic
– We integrate acquisitions as quickly as possible. Revenues and earnings from the date we complete the acquisition through the end of the fourth quarter following the acquisition are considered the acquisition effect of such businesses.
|
|
|
•
|
Product services agreements
– contractual commitments, with multiple-year terms, to provide specified services for products in our Power, Renewable Energy, Aviation, Oil & Gas and Transportation installed base – for example, monitoring, maintenance, service and spare parts for a gas turbine/generator set installed in a customer’s power plant. See Revenues from Services section within Note 1 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018 for further information.
|
|
|
•
|
Services
– for purposes of the financial statement display of sales and costs of sales in our consolidated Statement of Earnings (Loss), “goods” is required by SEC regulations to include all sales of tangible products, and "services" must include all other sales, including other services activities. In our MD&A section of this report, we refer to sales under product services agreements and sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs) as sales of “services,” which is an important part of our operations.
|
EXHIBITS
|
|
|
|
|
|
|
|
|
|
|
|
|
Computation of Per Share Earnings.*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 101
|
The following materials from General Electric Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, formatted in XBRL (eXtensible Business Reporting Language); (i) Statement of Earnings (Loss) for the three months ended March 31, 2019 and 2018, (ii) Consolidated Statement of Comprehensive Income (Loss) for the three months ended March 31, 2019 and 2018, (iii) Statement of Financial Position at March 31, 2019 and December 31, 2018, (v) Statement of Cash Flows for the three months ended March 31, 2019 and 2018, 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
|
|
37-73
|
|
|
|
|
|
Item 2.
|
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
4-32
|
|
|
|
|
|
Item 3.
|
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
Not applicable(a)
|
|
|
|
|
|
Item 4.
|
|
Controls and Procedures
|
|
33
|
|
|
|
|
|
Part II – OTHER INFORMATION
|
Item 1.
|
|
Legal Proceedings
|
|
35-36
|
|
|
|
|
|
Item 1A.
|
|
Risk Factors
|
|
34
|
|
|
|
|
|
Item 2.
|
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
33
|
|
|
|
|
|
Item 3.
|
|
Defaults Upon Senior Securities
|
|
Not applicable
|
|
|
|
|
|
Item 4.
|
|
Mine Safety Disclosures
|
|
27
|
|
|
|
|
|
Item 5.
|
|
Other Information
|
|
Not applicable
|
|
|
|
|
|
Item 6.
|
|
Exhibits
|
|
74
|
|
|
|
|
|
Signatures
|
|
|
76
|
|
|
(a)
|
There have been no significant changes to our market risk since
December 31, 2018
. For a discussion of our exposure to market risk, refer to our Annual Report on Form 10-K for the year ended
December 31, 2018
.
|
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.
|
|
|
|
April 30, 2019
|
|
/s/ Thomas S. Timko
|
Date
|
|
Thomas S. Timko
Vice President, Chief Accounting Officer and Controller
Principal Accounting Officer
|
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