(Mark One) |
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2017 |
OR |
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____ to ____ |
Commission file number 001-00035 |
GENERAL ELECTRIC COMPANY (Exact name of registrant as specified in its charter) |
New York | 14-0689340 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
41 Farnsworth Street, Boston, MA | 02210 | |
(Address of principal executive offices) | (Zip Code) | |
(Registrant’s telephone number, including area code) (617) 443-3000 _______________________________________________ (Former name, former address and former fiscal year, if changed since last report) |
Large accelerated filer þ | Accelerated filer ¨ |
Non-accelerated filer ¨ | Smaller reporting company ¨ |
Emerging growth company ¨ |
Page | |
FORWARD LOOKING STATEMENTS |
• | the strategy and portfolio review being undertaken by our new chief executive officer; |
• | our ability to reduce costs as we execute our announced plan to reduce the size of our financial services businesses; |
• | changes in law, economic and financial conditions, including interest and exchange rate volatility, commodity and equity prices and the value of financial assets; |
• | the impact of conditions in the financial and credit markets on the availability and cost of GE Capital funding, and GE Capital’s exposure to counterparties; |
• | pending and future mortgage loan repurchase claims, other litigation claims and the U.S. Department of Justice’s investigation under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and other investigations in connection with WMC, which may affect our estimates of liability, including possible loss estimates; |
• | our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; |
• | our ability to convert Industrial earnings into cash and the amount and timing of our cash flows and earnings, which may be impacted by long-term services agreement dynamics, and other conditions, all of which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; |
• | GE Capital’s ability to pay dividends to GE at the planned level, which may be affected by GE Capital’s cash flows and earnings, claims and investigations relating to WMC, charges that may be required in connection with GE Capital’s run-off insurance operations, and other factors; |
• | our ability to launch new products in a cost-effective manner; |
• | our ability to increase margins through restructuring and other cost reduction measures; |
• | our ability to convert pre-order commitments/wins into orders/bookings; |
• | the price we realize on orders/bookings since commitments/wins are stated at list prices; |
• | customer actions or developments such as early aircraft retirements or reduced energy demand, changes in economic conditions, including oil prices, and other factors that may affect the level of demand and financial performance of the major industries and customers we serve; |
• | the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of Alstom investigative and legal proceedings; |
• | our capital allocation plans, as such plans may change including with respect to the timing and size of share repurchases, acquisitions, joint ventures, dispositions and other strategic actions; |
• | our success in completing, including obtaining regulatory approvals and satisfying other closing conditions for, announced transactions, such as our announced plans and transactions to reduce the size of our financial services businesses and to sell our Water and Industrial Solutions businesses; |
• | our success in integrating acquired businesses and operating joint ventures, including Baker Hughes; |
• | our ability to realize revenue and cost synergies from announced transactions, acquired businesses and joint ventures, including Alstom and Baker Hughes; |
• | the impact of potential information technology or data security breaches; and |
• | the other factors that are described in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016. |
MD&A |
• | General Electric or the Company – the parent company, General Electric Company. |
• | GE – the adding together of all affiliates except GE Capital, whose continuing operations are presented on a one-line basis, giving effect to the elimination of transactions among such affiliates. As GE presents the continuing operations of GE Capital on a one-line basis, certain intercompany profits resulting from transactions between GE and GE Capital have been eliminated at the GE level. We present the results of GE in the center column of our consolidated statements of earnings, financial position and cash flows. An example of a GE metric is GE cash from operating activities (GE CFOA). |
• | General Electric Capital Corporation or GECC – predecessor to GE Capital Global Holdings, LLC. |
• | GE Capital Global Holdings, LLC or GECGH – successor of GECC. |
• | GE Capital or Financial Services – refers to GECGH, or its predecessor GECC, and is the adding together of all affiliates of GE Capital giving effect to the elimination of transactions among such affiliates. We present the results of GE Capital in the right-side column of our consolidated statements of earnings, financial position and cash flows. |
• | GE consolidated – the adding together of GE and GE Capital, giving effect to the elimination of transactions between the two. We present the results of GE consolidated in the left-side column of our consolidated statements of earnings, financial position and cash flows. |
• | Industrial – GE excluding the continuing operations of GE Capital. We believe that this provides investors with a view as to the results of our industrial businesses and corporate items. An example of an Industrial metric is Industrial CFOA (Non-GAAP), which is GE CFOA excluding the effects of dividends from GE Capital. |
• | Industrial segment – the sum of our seven industrial reporting segments, without giving effect to the elimination of transactions among such segments and between these segments and our Financial Services segment. This provides investors with a view as to the results of our industrial segments, without inter-segment eliminations and corporate items. An example of an industrial segment metric is industrial segment revenue growth. |
• | Total segment – the sum of our seven industrial segments and one financial services segment, without giving effect to the elimination of transactions between such segments. This provides investors with a view as to the results of all of our segments, without inter-segment eliminations and corporate items. |
• | Verticals or GE Capital Verticals – the adding together of GE Capital businesses that we expect to retain, principally its vertical financing businesses—GE Capital Aviation Services (GECAS), Energy Financial Services (EFS) and Industrial Finance (which includes Healthcare Equipment Finance, Working Capital Solutions and Industrial Financing Solutions)—that relate to the Company’s core industrial domain and other operations, including our run-off insurance activities, and allocated corporate costs. |
MD&A |
• | Backlog – unfilled customer orders for products and product services (expected life of contract sales for product services). |
• | Continuing earnings – unless otherwise indicated, we refer to the caption “earnings from continuing operations attributable to GE common shareowners” as continuing earnings or simply as earnings. |
• | Continuing earnings per share (EPS) – unless otherwise indicated, when we refer to continuing earnings per share, it is the diluted per-share amount of “earnings from continuing operations attributable to GE common shareowners”. |
• | Digital revenues – revenues related to internally developed software and associated hardware, including PredixTM and software solutions that improve our customers’ asset performance. In 2016, we reassessed the span of our digital product offerings, which now excludes software-enabled product upgrades. These revenues are largely generated from our operating businesses and are included in their segment results. Revenues of "Non-GE Verticals" refer to GE Digital revenues from customers operating in industries where GE does not have a presence. |
• | Equipment leased to others (ELTO) – rental equipment we own that is available to rent and is stated at cost less accumulated depreciation. |
• | GE Capital Exit Plan – our plan, announced on April 10, 2015, to reduce the size of our financial services businesses through the sale of most of the assets of GE Capital, and to focus on continued investment and growth in our industrial businesses. |
• | Industrial margin – GE revenues and other income excluding GE Capital earnings (loss) from continuing operations (Industrial revenues) minus GE total costs and expenses less GE interest and other financial charges divided by Industrial revenues. |
• | Industrial operating profit margin (Non-GAAP) – Industrial segment profit plus corporate items and eliminations (excluding gains, restructuring, and non-operating pension cost) divided by industrial segment revenues plus corporate items and eliminations (excluding gains and GE-GE Capital eliminations). |
• | Industrial segment gross margin - industrial segment sales less industrial segment cost of sales divided by sales. |
• | Net earnings – unless otherwise indicated, we refer to the caption “net earnings attributable to GE common shareowners” as net earnings. |
• | Net earnings per share (EPS) – unless otherwise indicated, when we refer to net earnings per share, it is the diluted per-share amount of “net earnings attributable to GE common shareowners”. |
• | Non-operating pension cost (Non-GAAP) – comprises the expected return on plan assets, interest cost on benefit obligations and net actuarial gain (loss) amortization for our principal pension plans. |
• | Operating earnings (Non-GAAP) – GE earnings from continuing operations attributable to common shareowners excluding the impact of non-operating pension costs. |
• | Operating earnings per share (Non-GAAP) – unless otherwise indicated, when we refer to operating earnings per share, it is the diluted per-share amount of “operating earnings”. |
• | Operating pension cost (Non-GAAP) – comprises the service cost of benefits earned, prior service cost amortization and curtailment gain (loss) for our principal pension plans. |
• | Organic revenues (Non-GAAP) – revenues excluding the effects of acquisitions, dispositions and translational foreign currency exchange. |
• | Product services – for purposes of the financial statement display of sales and costs of sales in our Statement of Earnings, “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 “product services,” which is an important part of our operations. We refer to “product services” simply as “services” within the MD&A. |
• | Product services agreements – contractual commitments, with multiple-year terms, to provide specified services for products in our Power, Renewable Energy, Oil & Gas, Aviation and Transportation installed base – for example, monitoring, maintenance, service and spare parts for a gas turbine/generator set installed in a customer’s power plant. |
• | Revenues – unless otherwise indicated, we refer to captions such as “revenues and other income” simply as revenues. |
• | Segment profit – refers to the operating profit of the industrial segments and the net earnings of the Financial Services segment. See the Segment Operations section within the MD&A for a description of the basis for segment profits. |
MD&A |
• | Industrial segment organic revenues |
• | Operating and non-operating pension cost |
• | Adjusted corporate costs (operating) |
• | Industrial operating earnings and GE Capital earnings (loss) from continuing operations and EPS |
• | Industrial operating + Verticals earnings and EPS |
• | Industrial operating profit and operating profit margin (excluding certain items) |
• | Industrial cash flows from operating activities (Industrial CFOA) and Industrial CFOA excluding deal taxes and GE Pension Plan funding |
MD&A |
Power(a) | Aviation | Energy Connections & Lighting(a) | |||
Renewable Energy | Healthcare | ||||
Oil & Gas | Transportation |
Capital |
(a) | Beginning in the third quarter of 2017, the Energy Connections business within the Energy Connections & Lighting segment is expected to be combined with the Power segment and presented as one reporting segment called Power. |
MD&A | KEY PERFORMANCE INDICATORS |
REVENUES PERFORMANCE |
2Q 2017 | YTD 2017 | |
Industrial Segment | (2)% | (1)% |
Industrial Segment Organic* | 2% | 4% |
Capital | (12)% | (9)% |
GE CFOA |
■ ■ Industrial CFOA(a)* ■ ■ GE Capital Dividend |
(a) 2016 included deal taxes of $(0.7) billion related to the sale of our Appliances business and in 2017 included deal taxes of $(0.1) billion related to the Baker Hughes transaction and GE Pension Plan funding of $(0.2) billion. |
INDUSTRIAL ORDERS |
INDUSTRIAL BACKLOG |
■ ■ Services ■ ■ Equipment |
■ ■ Services ■ ■ Equipment |
INDUSTRIAL PROFIT & MARGINS |
INDUSTRIAL OPERATING PROFIT & MARGINS (NON-GAAP)(a) |
(a) Excluded gains on disposals, non-operating pension cost, restructuring and other charges and noncontrolling interests |
MD&A | KEY PERFORMANCE INDICATORS |
NET EARNINGS |
NET EARNINGS PER SHARE |
OPERATING EARNINGS (NON-GAAP) |
OPERATING EARNINGS PER SHARE (NON-GAAP) |
INDUSTRIAL OPERATING + VERTICALS EARNINGS(NON-GAAP) |
INDUSTRIAL OPERATING + VERTICALS EPS (NON-GAAP) |
MD&A | CONSOLIDATED RESULTS |
• | On January 10, 2017, we completed the acquisition of ServiceMax, a leader in cloud-based field service management (FSM) solutions, for $0.9 billion, net of cash acquired. This acquisition is expected to provide enhanced capabilities to advance our Industrial Internet vision, enabling customers to immediately gain more value from their assets and find greater efficiency in their field service processes. |
• | On April 20, 2017, we completed the acquisition of LM Wind Power, one of the world’s largest wind turbine blade manufacturers for approximately $1.6 billion, net of cash acquired. |
• | On July 3, 2017, we completed the transaction to create Baker Hughes, a GE company (BHGE). Under the terms of the deal, which we announced in October 2016, we combined our Oil & Gas business and Baker Hughes Incorporated (Baker Hughes) to create a new company in which GE holds a 62.5% interest and former Baker Hughes shareholders hold a 37.5% interest. Baker Hughes shareholders also received a cash dividend funded by a $7.4 billion cash contribution from GE. The completion of the transaction followed the approval of Baker Hughes shareholders, regulatory approvals and other customary closing conditions. |
• | In October 2016, we announced our plan to sell our Water & Process Technologies business. In March 2017, we announced an agreement to sell the business for approximately $3.4 billion to Suez Environnement S.A. (Suez), a French-based utility company operating primarily in the water treatment and waste management sectors. The deal is expected to close in the second half of 2017, subject to customary closing conditions and regulatory approval. |
• | In the first quarter of 2017, we classified our Industrial Solutions business within our Energy Connections & Lighting segment as held for sale. We expect to complete the sale of the business by the end of the first quarter of 2018. |
MD&A | CONSOLIDATED RESULTS |
REVENUES | INDUSTRIAL AND FINANCIAL SERVICES REVENUES |
COMMENTARY: 2017 - 2016 |
• | Industrial revenues decreased $3.6 billion, or 12%, due to a decrease at Corporate of $3.0 billion as the prior year included a pre-tax gain of $3.1 billion from the sale of our Appliances business to Haier in the second quarter of 2016. The additional decrease in industrial revenues was due to a decrease in industrial segment revenues of approximately $0.6 billion, or 2%, as the net effects of dispositions of $1.2 billion and the effects of a stronger U.S. dollar of $0.2 billion were partially offset by organic revenue* increases of $0.6 billion and the net effects of acquisitions of $0.2 billion. In the second quarter of 2016, the net effects of acquisitions increased industrial revenues $3.2 billion while the net effects of dispositions and a stronger U.S. dollar decreased industrial revenues $1.1 billion and $0.1 billion, respectively. |
• | Financial Services revenues decreased $0.3 billion, or 12%, primarily due to higher impairments, organic revenue declines and lower gains. |
• | Industrial revenues decreased $3.6 billion, or 6%, due to a decrease at Corporate of $3.2 billion as the prior year included a pre-tax gain of $3.1 billion from the sale of our Appliances business to Haier in the second quarter of 2016. The additional decrease in industrial revenues was due to a decrease in industrial segment revenues of approximately $0.4 billion, or 1%, as the net effects of dispositions of $2.8 billion and the effects of a stronger U.S. dollar of $0.3 billion were partially offset by organic revenue* increases of $2.3 billion and the net effects of acquisitions of $0.3 billion. In the first six months of 2016, the net effects of acquisitions increased industrial revenues $6.0 billion while the net effects of dispositions and a stronger U.S. dollar decreased industrial revenues $1.6 billion and $0.7 billion, respectively. |
• | Financial Services revenues decreased $0.5 billion, or 9%, primarily due to organic revenue declines, lower gains and higher impairments. |
MD&A | CONSOLIDATED RESULTS |
CONTINUING EARNINGS | OPERATING EARNINGS* |
COMMENTARY: 2017 - 2016 |
▪ | Industrial earnings decreased $2.7 billion, or 54%, due to decreased Corporate gains of $3.1 billion as the prior year included a pre-tax gain of $3.1 billion from the sale of our Appliances business to Haier in the second quarter of 2016, partially offset by decreased restructuring and other costs of $0.6 billion. In addition, industrial segment profit decreased $0.2 billion, or 4%, due to the net effects of dispositions of $0.1 billion and organic operating decreases of $0.1 billion. |
▪ | Interest and other financial charges decreased $0.1 billion while the provision for income taxes increased $0.4 billion. |
▪ | The net effect of acquisitions on our consolidated operating earnings was an insignificant amount in the second quarter of 2017 and a decrease of $0.1 billion in the second quarter of 2016. The net effect of dispositions was a decrease of $2.4 billion in the second quarter of 2017 and a gain of $1.9 billion in the second quarter of 2016. |
▪ | Foreign exchange adversely affected industrial operating earnings by $0.1 billion as a result of both translational and transactional impacts related to remeasurement and mark-to-market charges on open hedges. |
▪ | Financial Services losses decreased $0.4 billion, or 71%, primarily due to lower treasury and headquarters operation expenses associated with the GE Capital Exit Plan. |
▪ | Earnings per share amounts for the second quarter of 2017 were positively impacted by the reduction in number of outstanding common shares compared to the second quarter of 2016. The average number of shares outstanding used to calculate second quarter 2017 earnings per share was 5% lower than in the second quarter of 2016 as a result of previously disclosed actions, primarily ongoing share buyback activities over the last 12 months funded in large part by dividends from GE Capital. |
▪ | Industrial earnings decreased $2.9 billion, or 42%, due to decreased Corporate gains of $3.2 billion as the prior year included a pre-tax gain of $3.1 billion from the sale of our Appliances business to Haier in the second quarter of 2016, partially offset by decreased restructuring and other costs of $0.3 billion and an increase in industrial segment profit of $0.1 billion, or 2%, as organic operating increases of $0.4 billion were partially offset by the net effects of dispositions of $0.2 billion. |
▪ | Interest and other financial charges decreased $0.2 billion while the provision for income taxes increased $0.4 billion. |
▪ | The net effect of acquisitions on our consolidated operating earnings was a decrease of $0.1 billion in 2017 and $0.2 billion in 2016. The net effect of dispositions on consolidated net earnings was a decrease of $2.6 billion in 2017 and a gain of $1.9 billion in 2016. |
▪ | Foreign exchange adversely affected industrial operating earnings by $0.2 billion as a result of both translational and transactional impacts related to remeasurement and mark-to-market charges on open hedges. |
▪ | Financial Services losses decreased $1.3 billion, or 85% primarily due to lower treasury and headquarters operation expenses, lower preferred dividend expenses associated with the January 2016 preferred equity exchange, and lower restructuring expenses associated with the GE Capital Exit Plan. |
▪ | Earnings per share amounts for 2017 were positively impacted by the reduction in number of outstanding common shares compared to 2016. The average number of shares outstanding used to calculate 2017 earnings per share was 5% lower than in 2016 as a result of previously disclosed actions, primarily ongoing share buyback activities over the last 12 months funded in large part by dividends from GE Capital. |
MD&A | SEGMENT OPERATIONS |
SUMMARY OF OPERATING SEGMENTS | |||||||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||||||
(In millions) | 2017 | 2016 | V% | 2017 | 2016 | V% | |||||||||||
Revenues | |||||||||||||||||
Power | $ | 6,969 | $ | 6,639 | 5 | % | $ | 13,058 | $ | 11,843 | 10 | % | |||||
Renewable Energy | 2,457 | 2,094 | 17 | % | 4,501 | 3,763 | 20 | % | |||||||||
Oil & Gas | 3,108 | 3,219 | (3) | % | 6,110 | 6,533 | (6 | )% | |||||||||
Aviation | 6,532 | 6,511 | — | % | 13,336 | 12,774 | 4 | % | |||||||||
Healthcare | 4,700 | 4,525 | 4 | % | 8,990 | 8,708 | 3 | % | |||||||||
Transportation | 1,071 | 1,240 | (14) | % | 2,110 | 2,222 | (5 | )% | |||||||||
Energy Connections & Lighting(a) | 3,210 | 4,401 | (27) | % | 5,957 | 8,657 | (31 | )% | |||||||||
Total industrial segment revenues | 28,047 | 28,630 | (2) | % | 54,063 | 54,499 | (1 | )% | |||||||||
Capital | 2,446 | 2,771 | (12) | % | 5,127 | 5,656 | (9 | )% | |||||||||
Total segment revenues | 30,493 | 31,401 | (3) | % | 59,190 | 60,155 | (2 | )% | |||||||||
Corporate items and eliminations | (935 | ) | 2,093 | (1,972 | ) | 1,184 | |||||||||||
Consolidated revenues | $ | 29,558 | $ | 33,494 | (12) | % | $ | 57,219 | $ | 61,339 | (7 | )% | |||||
Segment profit (loss) | |||||||||||||||||
Power | $ | 1,031 | $ | 1,140 | (10) | % | $ | 1,827 | $ | 1,714 | 7 | % | |||||
Renewable Energy | 160 | 128 | 25 | % | 267 | 211 | 27 | % | |||||||||
Oil & Gas | 155 | 320 | (52) | % | 361 | 628 | (43 | )% | |||||||||
Aviation | 1,492 | 1,348 | 11 | % | 3,176 | 2,872 | 11 | % | |||||||||
Healthcare | 826 | 782 | 6 | % | 1,469 | 1,413 | 4 | % | |||||||||
Transportation | 203 | 273 | (26) | % | 359 | 437 | (18 | )% | |||||||||
Energy Connections & Lighting(a) | 80 | 131 | (39) | % | 109 | 162 | (33 | )% | |||||||||
Total industrial segment profit | 3,947 | 4,122 | (4) | % | 7,568 | 7,437 | 2 | % | |||||||||
Capital | (172 | ) | (600 | ) | 71 | % | (219 | ) | (1,492 | ) | 85 | % | |||||
Total segment profit (loss) | 3,775 | 3,523 | 7 | % | 7,349 | 5,944 | 24 | % | |||||||||
Corporate items and eliminations | (1,583 | ) | 974 | (3,592 | ) | (597 | ) | ||||||||||
GE interest and other financial charges | (637 | ) | (567 | ) | (1,200 | ) | (1,007 | ) | |||||||||
GE provision for income taxes | (218 | ) | (629 | ) | (361 | ) | (793 | ) | |||||||||
Earnings (loss) from continuing operations attributable to GE common shareowners | 1,338 | 3,300 | (59) | % | 2,196 | 3,548 | (38 | )% | |||||||||
Earnings (loss) from discontinued operations, net of taxes | (146 | ) | (541 | ) | 73 | % | (385 | ) | (849 | ) | 55 | % | |||||
Less net earnings attributable to | |||||||||||||||||
noncontrolling interests, discontinued operations | 7 | 3 | 7 | 3 | |||||||||||||
Earnings (loss) from discontinued operations, | |||||||||||||||||
net of tax and noncontrolling interest | (152 | ) | (544 | ) | 72 | % | (392 | ) | (852 | ) | 54 | % | |||||
Consolidated net earnings (loss) attributable to the GE common shareowners | $ | 1,185 | $ | 2,756 | (57) | % | $ | 1,804 | $ | 2,695 | (33 | )% |
(a) | Beginning in the third quarter of 2017, the Energy Connections business within the Energy Connections & Lighting segment is expected to be combined with the Power segment and presented as one reporting segment called Power. |
MD&A | SEGMENT OPERATIONS |
• | Interest and other financial charges, income taxes and GE preferred stock dividends are excluded in determining segment profit (which we sometimes refer to as “operating profit”) for the industrial segments. |
• | Interest and other financial charges, income taxes and GE Capital preferred stock dividends are included in determining segment profit (which we sometimes refer to as “net earnings”) for the Capital segment. |
• | The translational foreign exchange impact is included within Foreign Exchange. |
• | The transactional impact of foreign exchange hedging is included in operating cost within Productivity and in other income within Other. |
MD&A | SEGMENT OPERATIONS |
INDUSTRIAL SEGMENT EQUIPMENT & SERVICES REVENUES |
INDUSTRIAL SEGMENT PROFIT |
■ ■ Services ■ ■ Equipment |
2017 – 2016 COMMENTARY: THREE MONTHS ENDED JUNE 30 |
• | Industrial segment revenues decreased $0.6 billion, or 2%, driven by decreases at Energy Connections & Lighting primarily due to the sale of the Appliances business in the second quarter of 2016, Transportation, and Oil & Gas primarily due to market conditions, and an unfavorable foreign exchange impact, partially offset by increases at Renewable Energy, Power and Healthcare. |
• | Industrial segment profit decreased $0.2 billion, or 4%, driven primarily by lower earnings at Oil & Gas, Power, and Transportation, as well as the effects of the sale of Appliances in the second quarter of 2016, partially offset by higher earnings at Aviation. |
• | Industrial segment margin decreased 30 bps to 14.1% in 2017 from 14.4% in 2016 driven by the effects of price and business mix, partially offset by positive cost productivity. The decrease in industrial segment margin reflects decreases at Oil & Gas, Transportation, Power and the sale of Appliances in the second quarter of 2016, offset by increases at Aviation, Renewable Energy and Healthcare. |
2017 – 2016 COMMENTARY: SIX MONTHS ENDED JUNE 30 |
• | Industrial segment revenues decreased $0.4 billion, or 1%, driven by decreases at Energy Connections & Lighting primarily due to the sale of the Appliances business in the second quarter of 2016, Oil & Gas primarily due to market conditions, and Transportation, and an unfavorable foreign exchange impact, partially offset by increases at Power, Renewable Energy, Aviation and Healthcare. |
• | Industrial segment profit increased $0.1 billion, or 2%, driven primarily by higher earnings at Aviation and Power, partially offset by lower earnings at Oil & Gas as well as an unfavorable foreign exchange impact and the effects of the sale of Appliances in the second quarter of 2016. |
• | Industrial segment margin increased 40 bps to 14.0% in 2017 from 13.6% in 2016 driven by positive cost productivity, partially offset by negative business mix. The increase in industrial segment margin reflects increases at Aviation, Renewable Energy and Healthcare, offset by decreases at Oil & Gas, Transportation, Power and the sale of Appliances in the second quarter of 2016. |
MD&A | SEGMENT OPERATIONS | POWER |
2017 YTD SUB-SEGMENT REVENUES |
EQUIPMENT/SERVICES REVENUES |
(a) Includes Distributed Power (b) Includes Water & Process Technologies and GE Hitachi Nuclear |
■ ■ Services ■ ■ Equipment |
ORDERS |
BACKLOG |
■ ■ Services ■ ■ Equipment |
■ ■ Services ■ ■ Equipment |
UNIT SALES | ||||||
2Q 2016 | 2Q 2017 | V | YTD 2016 | YTD 2017 | V | |
Gas Turbines | 26 | 21 | (5) | 39 | 41 | 2 |
MD&A | SEGMENT OPERATIONS | POWER |
SEGMENT REVENUES | SEGMENT PROFIT | SEGMENT PROFIT MARGIN |
■ ■ Services ■ ■ Equipment |
SEGMENT REVENUES & PROFIT WALK: | ||||||
THREE MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 6.6 | $ | 1.1 | ||
Volume | 0.4 | 0.1 | ||||
Price | (0.1 | ) | (0.1 | ) | ||
Foreign Exchange | — | — | ||||
(Inflation)/Deflation | N/A | — | ||||
Mix | N/A | (0.1 | ) | |||
Productivity | N/A | — | ||||
Other | — | — | ||||
June 30, 2017 | $ | 7.0 | $ | 1.0 | ||
SIX MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 11.8 | $ | 1.7 | ||
Volume | 1.3 | 0.2 | ||||
Price | (0.1 | ) | (0.1 | ) | ||
Foreign Exchange | (0.1 | ) | — | |||
(Inflation)/Deflation | N/A | — | ||||
Mix | N/A | (0.3 | ) | |||
Productivity | N/A | 0.2 | ||||
Other | 0.1 | 0.1 | ||||
June 30, 2017 | $ | 13.1 | $ | 1.8 |
COMMENTARY: 2017 - 2016 |
• | The increase in revenues was driven by higher equipment volume, primarily at Gas Power Systems as a result of extended scope including higher balance of plant as well as six more Heat Recovery Steam Generator shipments than in the prior year, partially offset by five fewer gas turbine shipments and lower prices. |
• | The decrease in profit was due to lower prices, an unfavorable business mix due to higher equipment volume versus services volume and negative variable cost productivity, partially offset by positive base cost productivity and higher overall volume. |
• | The increase in revenues was driven by higher equipment volume, primarily at Gas Power Systems as a result of extended scope including higher balance of plant as well as two more gas turbine shipments and 29 more Heat Recovery Steam Generator shipments than in the prior year. Revenue also increased due to increased other income including a reduction in foreign exchange transactional losses, partially offset by lower prices and the effects of a stronger U.S. dollar versus the euro. |
• | The increase in profit was due to positive base cost productivity on higher volume as well as increased other income including a reduction in foreign exchange transactional losses, partially offset by an unfavorable business mix due to higher equipment volume versus services volume, negative variable cost productivity and lower prices. |
MD&A | SEGMENT OPERATIONS | RENEWABLE ENERGY |
2017 YTD SUB-SEGMENT REVENUES |
EQUIPMENT/SERVICES REVENUES |
■ ■ Services ■ ■ Equipment |
ORDERS |
BACKLOG |
■ ■ Services ■ ■ Equipment |
■ ■ Services ■ ■ Equipment |
UNIT SALES | ||||||
2Q 2016 | 2Q 2017 | V | YTD 2016 | YTD 2017 | V | |
Wind Turbines | 856 | 757 | (99) | 1,524 | 1,324 | (200) |
MD&A | SEGMENT OPERATIONS | RENEWABLE ENERGY |
SEGMENT REVENUES | SEGMENT PROFIT | SEGMENT PROFIT MARGIN |
■ ■ Services ■ ■ Equipment |
SEGMENT REVENUES & PROFIT WALK: | ||||||
THREE MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 2.1 | $ | 0.1 | ||
Volume | 0.3 | — | ||||
Price | — | — | ||||
Foreign Exchange | — | — | ||||
(Inflation)/Deflation | N/A | — | ||||
Mix | N/A | — | ||||
Productivity | N/A | — | ||||
Other | 0.1 | — | ||||
June 30, 2017 | $ | 2.5 | $ | 0.2 | ||
SIX MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 3.8 | $ | 0.2 | ||
Volume | 0.6 | — | ||||
Price | (0.1 | ) | (0.1 | ) | ||
Foreign Exchange | 0.1 | — | ||||
(Inflation)/Deflation | N/A | 0.1 | ||||
Mix | N/A | — | ||||
Productivity | N/A | (0.2 | ) | |||
Other | 0.2 | 0.2 | ||||
June 30, 2017 | $ | 4.5 | $ | 0.3 |
COMMENTARY: 2017 - 2016 |
• | The increase in revenues was primarily driven by higher volume due to higher equipment sales at Hydro and increased repowering projects at Onshore Wind. In addition, while there were 99 fewer wind turbine shipments than in the prior year, megawatts shipped increased by 8%. Revenue also increased due to increased other income including a reduction in foreign exchange transactional losses. |
• | The increase in profit was due to material deflation and increased other income including a reduction in foreign exchange transactional losses. These increases were partially offset by negative cost productivity. |
• | The increase in revenues was primarily driven by higher volume due to higher equipment sales at Hydro and increased repowering projects at Onshore Wind. In addition, while there were 200 fewer wind turbine shipments than in the prior year, megawatts shipped increased by 4%. Revenue also increased due to the effects of a weaker U.S. dollar versus the Brazilian real and increased other income including a reduction in foreign exchange transactional losses, partially offset by lower prices. |
• | The increase in profit was due to material deflation and increased other income including a reduction in foreign exchange transactional losses. These increases were partially offset by negative cost productivity and lower prices. |
MD&A | SEGMENT OPERATIONS | OIL & GAS |
2017 YTD SUB-SEGMENT REVENUES |
EQUIPMENT/SERVICES REVENUES |
■ ■ Services ■ ■ Equipment |
ORDERS |
BACKLOG |
■ ■ Services ■ ■ Equipment |
■ ■ Services ■ ■ Equipment |
MD&A | SEGMENT OPERATIONS | OIL & GAS |
SEGMENT REVENUES | SEGMENT PROFIT | SEGMENT PROFIT MARGIN |
■ ■ Services ■ ■ Equipment |
SEGMENT REVENUES & PROFIT WALK: | ||||||
THREE MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 3.2 | $ | 0.3 | ||
Volume | (0.1 | ) | — | |||
Price | (0.1 | ) | (0.1 | ) | ||
Foreign Exchange | — | — | ||||
(Inflation)/Deflation | N/A | 0.1 | ||||
Mix | N/A | — | ||||
Productivity | N/A | (0.2 | ) | |||
Other | 0.1 | 0.1 | ||||
June 30, 2017 | $ | 3.1 | $ | 0.2 | ||
SIX MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 6.5 | $ | 0.6 | ||
Volume | (0.3 | ) | — | |||
Price | (0.2 | ) | (0.2 | ) | ||
Foreign Exchange | (0.1 | ) | — | |||
(Inflation)/Deflation | N/A | 0.1 | ||||
Mix | N/A | — | ||||
Productivity | N/A | (0.2 | ) | |||
Other | 0.1 | 0.1 | ||||
June 30, 2017 | $ | 6.1 | $ | 0.4 |
COMMENTARY: 2017 - 2016 |
• | The decrease in revenues was primarily driven by negative market conditions which resulted in lower prices as well as lower equipment volume primarily in Subsea & Drilling. |
• | The decrease in operating profit was primarily market driven resulting in lower prices. Despite the effects of restructuring actions, profit decreased due to negative variable cost productivity. These decreases were partially offset by material deflation and increased other income including a reduction in foreign exchange transactional losses. |
• | The decrease in revenues was primarily driven by negative market conditions that resulted in lower equipment volume in Subsea & Drilling and Turbomachinery & Process Solutions. Revenues also decreased due to lower prices and the effects of a stronger U.S. dollar versus the euro and the pound sterling, partially offset by increased other income including a reduction in foreign exchange transactional losses. |
• | The decrease in operating profit was primarily market driven resulting in lower prices. Despite the effects of restructuring actions and an increase in earnings in our long-term service contracts, profit decreased due to negative variable cost productivity. These decreases were partially offset by material deflation and increased other income including a reduction in foreign exchange transactional losses. |
MD&A | SEGMENT OPERATIONS | AVIATION |
2017 YTD SUB-SEGMENT REVENUES |
EQUIPMENT/SERVICES REVENUES |
■ ■ Services ■ ■ Equipment |
ORDERS |
BACKLOG |
■ ■ Services ■ ■ Equipment |
■ ■ Services ■ ■ Equipment |
UNIT SALES | ||||||||||||||||||
2Q 2016 | 2Q 2017 | V | YTD 2016 | YTD 2017 | V | |||||||||||||
Commercial Engines | 724 | 651 | (73 | ) | 1,401 | 1282 | (119 | ) | ||||||||||
LEAP Engines(a) | 11 | 93 | 82 | 11 | 174 | 163 | ||||||||||||
Military Engines | 151 | 137 | (14 | ) | 302 | 257 | (45 | ) | ||||||||||
Spares Rate(b) | $ | 19.0 | $ | 21.6 | $ | 2.6 | $ | 18.1 | $ | 21.6 | $ | 3.5 | ||||||
(a) LEAP engines are a subset of commercial engines (b) Commercial externally shipped spares and spares used in time & material shop visits in millions of dollars per day |
MD&A | SEGMENT OPERATIONS | AVIATION |
SEGMENT REVENUES | SEGMENT PROFIT | SEGMENT PROFIT MARGIN |
■ ■ Services ■ ■ Equipment |
SEGMENT REVENUES & PROFIT WALK: | ||||||
THREE MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 6.5 | $ | 1.3 | ||
Volume | — | — | ||||
Price | — | — | ||||
Foreign Exchange | — | — | ||||
(Inflation)/Deflation | N/A | — | ||||
Mix | N/A | — | ||||
Productivity | N/A | 0.2 | ||||
Other | — | — | ||||
June 30, 2017 | $ | 6.5 | $ | 1.5 | ||
SIX MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 12.8 | $ | 2.9 | ||
Volume | 0.5 | 0.1 | ||||
Price | 0.1 | 0.1 | ||||
Foreign Exchange | — | — | ||||
(Inflation)/Deflation | N/A | — | ||||
Mix | N/A | (0.1 | ) | |||
Productivity | N/A | 0.3 | ||||
Other | — | — | ||||
June 30, 2017 | $ | 13.3 | $ | 3.2 |
COMMENTARY: 2017 - 2016 |
• | Revenues remained flat as an increase in services volume including an increase in the commercial spares shipment rate, was offset by a decrease in equipment volume. Equipment volume decreased primarily due to 73 fewer Commercial engine shipments and 14 fewer Military engine shipments, partially offset by higher valued commercial shipments including 82 more LEAP engine shipments than in the prior year. |
• | The increase in profit was mainly driven by positive cost productivity which more than offset negative LEAP margin impact. |
• | The increase in revenues was primarily due to higher services volume including an increase in the commercial spares shipment rate as well as military spare parts shipments, and higher prices. Equipment revenue decreased primarily due to 119 fewer Commercial engine shipments and 45 fewer Military engine shipments, partially offset by higher valued commercial shipments including 163 more LEAP engine shipments than in the prior year. |
• | The increase in profit was mainly driven by positive cost productivity, higher services volume and higher prices for Commercial Engines & Services, partially offset by unfavorable business mix due to negative LEAP margin impact. |
MD&A | SEGMENT OPERATIONS | HEALTHCARE |
2017 YTD SUB-SEGMENT REVENUES |
EQUIPMENT/SERVICES REVENUES |
■ ■ Services ■ ■ Equipment |
ORDERS |
BACKLOG |
■ ■ Services ■ ■ Equipment |
■ ■ Services ■ ■ Equipment |
MD&A | SEGMENT OPERATIONS | HEALTHCARE |
SEGMENT REVENUES | SEGMENT PROFIT | SEGMENT PROFIT MARGIN |
■ ■ Services ■ ■ Equipment |
SEGMENT REVENUES & PROFIT WALK: | ||||||
THREE MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 4.5 | $ | 0.8 | ||
Volume | 0.3 | 0.1 | ||||
Price | (0.1 | ) | (0.1 | ) | ||
Foreign Exchange | — | — | ||||
(Inflation)/Deflation | N/A | — | ||||
Mix | N/A | — | ||||
Productivity | N/A | 0.1 | ||||
Other | — | — | ||||
June 30, 2017 | $ | 4.7 | $ | 0.8 | ||
SIX MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 8.7 | $ | 1.4 | ||
Volume | 0.5 | 0.1 | ||||
Price | (0.1 | ) | (0.1 | ) | ||
Foreign Exchange | (0.1 | ) | — | |||
(Inflation)/Deflation | N/A | (0.1 | ) | |||
Mix | N/A | — | ||||
Productivity | N/A | 0.3 | ||||
Other | — | — | ||||
June 30, 2017 | $ | 9.0 | $ | 1.5 |
COMMENTARY: 2017 - 2016 |
• | The increase in revenues was due to higher services and equipment volume driven by Healthcare Systems and Life Sciences, partially offset by lower prices at Healthcare Systems. |
• | The increase in profit was mainly due to positive cost productivity driven by cost savings resulting from previous restructuring actions, as well as higher volume, partially offset by lower prices at Healthcare Systems. |
• | The increase in revenues was due to higher services and equipment volume driven by Healthcare Systems and Life Sciences, partially offset by lower prices at Healthcare Systems and the effects of a stronger U.S. dollar versus the euro and the Chinese renminbi. |
• | The increase in profit was mainly due to positive cost productivity driven by cost savings resulting from previous restructuring actions, as well as higher volume, partially offset by lower prices at Healthcare Systems and inflation. |
MD&A | SEGMENT OPERATIONS | TRANSPORTATION |
2017 YTD SUB-SEGMENT REVENUES |
EQUIPMENT/SERVICES REVENUES |
(a) Includes Marine, Stationary, Drilling and Digital |
■ ■ Services ■ ■ Equipment |
ORDERS |
BACKLOG |
■ ■ Services ■ ■ Equipment |
■ ■ Services ■ ■ Equipment |
UNIT SALES | ||||||
2Q 2016 | 2Q 2017 | V | YTD 2016 | YTD 2017 | V | |
Locomotives | 222 | 120 | (102) | 378 | 277 | (101) |
MD&A | SEGMENT OPERATIONS | TRANSPORTATION |
SEGMENT REVENUES | SEGMENT PROFIT | SEGMENT PROFIT MARGIN |
■ ■ Services ■ ■ Equipment |
SEGMENT REVENUES & PROFIT WALK: | ||||||
THREE MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 1.2 | $ | 0.3 | ||
Volume | (0.2 | ) | — | |||
Price | — | — | ||||
Foreign Exchange | — | — | ||||
(Inflation)/Deflation | N/A | — | ||||
Mix | N/A | — | ||||
Productivity | N/A | — | ||||
Other | — | — | ||||
June 30, 2017 | $ | 1.1 | $ | 0.2 | ||
SIX MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 2.2 | $ | 0.4 | ||
Volume | (0.1 | ) | — | |||
Price | — | — | ||||
Foreign Exchange | — | — | ||||
(Inflation)/Deflation | N/A | — | ||||
Mix | N/A | — | ||||
Productivity | N/A | (0.1 | ) | |||
Other | — | — | ||||
June 30, 2017 | $ | 2.1 | $ | 0.4 |
COMMENTARY: 2017 - 2016 |
• | The decrease in revenues was due to lower locomotive equipment volume as a result of decreased North America shipments, partially offset by increased international shipments. |
• | The decrease in profit was driven by lower volume and negative cost productivity. |
• | The decrease in revenues was due to lower locomotive equipment volume as a result of decreased North America shipments, partially offset by increased international shipments. |
• | The decrease in profit was driven by negative cost productivity and lower volume, partially offset by a favorable business mix. |
MD&A | SEGMENT OPERATIONS | ENERGY CONNECTIONS & LIGHTING |
2017 YTD SUB-SEGMENT REVENUES |
EQUIPMENT/SERVICES REVENUES |
(a) Includes Current, powered by GE |
■ ■ Services ■ ■ Equipment |
ORDERS |
BACKLOG |
■ ■ Services ■ ■ Equipment |
■ ■ Services ■ ■ Equipment |
MD&A | SEGMENT OPERATIONS | ENERGY CONNECTIONS & LIGHTING |
SEGMENT REVENUES | SEGMENT PROFIT | SEGMENT PROFIT MARGIN |
■ ■ Services ■ ■ Equipment |
SEGMENT REVENUES & PROFIT WALK: | ||||||
THREE MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 4.4 | $ | 0.1 | ||
Volume | (1.1 | ) | (0.1 | ) | ||
Price | — | — | ||||
Foreign Exchange | (0.1 | ) | — | |||
(Inflation)/Deflation | N/A | — | ||||
Mix | N/A | — | ||||
Productivity | N/A | 0.1 | ||||
Other | — | — | ||||
June 30, 2017 | $ | 3.2 | $ | 0.1 | ||
SIX MONTHS | ||||||
Revenues | Profit | |||||
June 30, 2016 | $ | 8.7 | $ | 0.2 | ||
Volume | (2.6 | ) | (0.2 | ) | ||
Price | (0.1 | ) | (0.1 | ) | ||
Foreign Exchange | (0.1 | ) | — | |||
(Inflation)/Deflation | N/A | — | ||||
Mix | N/A | — | ||||
Productivity | N/A | 0.2 | ||||
Other | — | — | ||||
June 30, 2017 | $ | 6.0 | $ | 0.1 |
COMMENTARY: 2017 - 2016 |
• | The decrease in revenues was mainly due to the Appliances disposition in June 2016 as well as lower GE Lighting revenues driven by declines in traditional lighting product. Energy Connections revenues remained flat as increased volume at Grid Solutions was offset by a decrease at Power Conversion. Revenues also decreased due to the effects of a stronger U.S. dollar versus the pound sterling and the euro. |
• | The decrease in profit was due to lower volume driven by the Appliances disposition in June 2016, partially offset by increases across Energy Connections, Current, and GE Lighting due to positive cost productivity including the effects of classifying Industrial Solutions as a business held for sale in the first quarter of 2017. |
• | The decrease in revenues was mainly due to the Appliances disposition in June 2016 as well as lower GE Lighting revenues driven by declines in traditional lighting product. Energy Connections remained flat as increased volume at Grid Solutions was offset by a decrease at Power Conversion. Revenues also decreased due to lower prices and the effects of a stronger U.S. dollar versus the pound sterling and the euro. |
• | The decrease in profit was due to lower volume driven by the Appliances disposition in June 2016, as well as lower prices, partially offset by increases across Energy Connections, Current, and GE Lighting due to positive cost productivity including the effects of classifying Industrial Solutions as a business held for sale in the first quarter of 2017. |
MD&A | SEGMENT OPERATIONS | CAPITAL |
2017 YTD SUB-SEGMENT REVENUES |
SEGMENT REVENUES |
SEGMENT PROFIT (LOSS)(a) |
■ ■ Verticals ■ ■ Other Continuing |
■ ■ Verticals ■ ■ Other Continuing |
(a) Includes interest and other financial charges and income taxes |
SIGNIFICANT TRENDS & DEVELOPMENTS |
• | As of March 30, 2017, GE Capital’s non-US activities are no longer subject to consolidated supervision by the U.K.’s Prudential Regulation Authority (PRA). This completes GE Capital’s global exit from consolidated supervision, having had its designation as a Systemically Important Financial Institution (SIFI) removed in June 2016. |
• | GE Capital paid common dividends of $2.0 billion and $4.0 billion to GE in the three months and six months ended June 30, 2017, respectively. |
• | We test future policy benefit reserves associated with our run-off insurance activities for premium deficiencies annually. We have recently experienced elevated claim experience for a portion of our long-term care insurance products, which may result in a deficiency in reserves plus future premiums compared to future benefit payments. Should such a deficiency exist, we would record a charge to earnings in the second half of 2017 upon completion of this review. See Note 11 of the consolidated financial statements for further information. |
MD&A | SEGMENT OPERATIONS | CAPITAL |
COMMENTARY: 2017 - 2016 |
• | Within Capital, Verticals net earnings increased $0.1 billion, or 20%, due to core increases ($0.1 billion), partially offset by lower gains. |
• | Other Capital losses decreased $0.3 billion, or 32%, primarily associated with the GE Capital Exit Plan as follows: |
• | Lower headquarters operation expenses of $0.2 billion |
• | Lower treasury operation expenses of $0.1 billion reflecting lower excess interest expense, including costs associated with the May 2016 debt tender and derivative activities that reduce or eliminate interest rate, currency or market risk between financial assets and liabilities. |
• | Within Capital, Verticals net earnings increased $0.1 billion, or 14%, due to core increases ($0.2 billion) and lower impairments ($0.1 billion), partially offset by lower gains ($0.1 billion). |
• | Other Capital losses decreased $1.1 billion, or 47%, primarily associated with the GE Capital Exit Plan as follows: |
• | Lower treasury operation expenses of $0.5 billion reflecting lower excess interest expense, including costs associated with the February and May 2016 debt tenders and derivative activities that reduce or eliminate interest rate, currency or market risk between financial assets and liabilities. |
• | Lower headquarters operation expenses of $0.4 billion. |
• | Lower preferred dividend expenses of $0.2 billion associated with the January 2016 preferred equity exchange. |
MD&A | CORPORATE ITEMS AND ELIMINATIONS |
CORPORATE ITEMS AND ELIMINATIONS | ||||||||||||||
REVENUES AND OPERATING PROFIT (COST) | ||||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||
Revenues | ||||||||||||||
Gains (losses) on disposals | $ | — | $ | 3,129 | $ | 2 | $ | 3,188 | ||||||
Eliminations and other | (935 | ) | (1,036 | ) | (1,973 | ) | (2,004 | ) | ||||||
Total Corporate Items and Eliminations | $ | (935 | ) | $ | 2,093 | $ | (1,972 | ) | $ | 1,184 | ||||
Operating profit (cost) | ||||||||||||||
Gains (losses) on disposals | $ | — | $ | 3,129 | $ | 2 | $ | 3,188 | ||||||
Restructuring and other charges | (709 | ) | (1,188 | ) | (1,728 | ) | (1,874 | ) | ||||||
Principal retirement plans(a) | (551 | ) | (479 | ) | (1,085 | ) | (947 | ) | ||||||
Eliminations and other | (323 | ) | (487 | ) | (780 | ) | (964 | ) | ||||||
Total Corporate Items and Eliminations | $ | (1,583 | ) | $ | 974 | $ | (3,592 | ) | $ | (597 | ) | |||
CORPORATE COSTS | ||||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||
Total Corporate Items and Eliminations | $ | (1,583 | ) | $ | 974 | $ | (3,592 | ) | $ | (597 | ) | |||
Less: non-operating pension cost | (560 | ) | (511 | ) | (1,138 | ) | (1,023 | ) | ||||||
Total Corporate costs (operating)* | $ | (1,023 | ) | $ | 1,485 | $ | (2,454 | ) | $ | 426 | ||||
Less: restructuring and other charges | (709 | ) | (1,188 | ) | (1,728 | ) | (1,874 | ) | ||||||
Less: gains (losses) on disposals | $ | — | 3,129 | 2 | 3,188 | |||||||||
Adjusted total corporate costs (operating)* | $ | (314 | ) | $ | (456 | ) | $ | (728 | ) | $ | (887 | ) |
(a) | Included non-operating pension cost* of $0.6 billion and $0.5 billion in the three months ended June 30, 2017 and 2016, respectively, and $1.1 billion and $1.0 billion in the six months ended June 30, 2017 and 2016, respectively, which includes expected return on plan assets, interest costs and non-cash amortization of actuarial gains and losses. |
• | $3.1 billion of lower gains due to the nonrecurrence of the sale of our Appliances business to Haier in the second quarter of 2016. |
• | $3.1 billion of lower gains due to the nonrecurrence of the sale of our Appliances business to Haier in the second quarter of 2016, and |
• | $0.1 billion of higher costs associated with our principal retirement plans, including the effects of lower discount rates. |
• | $0.5 billion of lower restructuring and other charges, and |
• | $0.1 billion of lower corporate structural costs. |
MD&A | CORPORATE ITEMS AND ELIMINATIONS |
• | $3.2 billion of lower gains due to the nonrecurrence of a $3.1 billion gain from the sale of our Appliances business to Haier in the second quarter of 2016 and a $0.1 billion gain from the sale of two floors in 30 Rockefeller Plaza, New York City in the first quarter of 2016. |
• | $3.2 billion of lower gains due to the nonrecurrence of a $3.1 billion gain from the sale of our Appliances business to Haier in the second quarter of 2016 and a $0.1 billion gain from the sale of two floors in 30 Rockefeller Plaza, New York City in the first quarter of 2016, and |
• | $0.1 billion of higher costs associated with our principal retirement plans, including the effects of lower discount rates. |
• | $0.2 billion of lower corporate structural costs, and |
• | $0.1 billion of lower restructuring and other charges. |
RESTRUCTURING & OTHER CHARGES | ||||||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(In billions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Workforce reductions | $ | 0.2 | $ | 0.4 | $ | 0.7 | $ | 0.6 | ||||||||
Plant closures & associated costs and other asset write-downs | 0.3 | 0.6 | 0.5 | 0.7 | ||||||||||||
Acquisition/disposition net charges | 0.2 | 0.1 | 0.4 | 0.4 | ||||||||||||
Other | — | 0.1 | 0.1 | 0.2 | ||||||||||||
Total | $ | 0.7 | $ | 1.2 | $ | 1.7 | $ | 1.9 |
MD&A | CORPORATE ITEMS AND ELIMINATIONS |
COSTS | |||||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||||
(In billions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Power | $ | 0.1 | $ | 0.3 | $ | 0.5 | $ | 0.5 | |||||||
Renewable Energy | 0.1 | 0.1 | 0.2 | 0.2 | |||||||||||
Oil & Gas | 0.1 | 0.4 | 0.2 | 0.5 | |||||||||||
Aviation | — | — | — | 0.1 | |||||||||||
Healthcare | 0.1 | 0.1 | 0.1 | 0.3 | |||||||||||
Transportation | — | 0.1 | 0.1 | 0.2 | |||||||||||
Energy Connections & Lighting | 0.1 | 0.1 | 0.3 | 0.2 | |||||||||||
Total | $ | 0.6 | $ | 1.2 | $ | 1.4 | $ | 1.9 |
MD&A | OTHER CONSOLIDATED INFORMATION |
PROVISION (BENEFIT) FOR INCOME TAXES |
• | The consolidated income tax rate was 1% and 12% for the quarters ended June 30, 2017 and 2016, respectively. |
• | The second quarter 2017 consolidated tax rate reflects a 104% tax rate on $0.2 billion of pre-tax loss at GE Capital and a 13% tax rate on $1.7 billion of pre-tax income at GE. |
• | The second quarter 2016 consolidated tax rate reflects a 27% tax rate on $0.6 billion of pre-tax loss at GE Capital and a 14% tax rate on $4.4 billion of pre-tax income at GE. |
• | The consolidated tax provision includes $0.2 billion and $0.6 billion for GE (excluding GE Capital) for the second quarters of 2017 and 2016, respectively. |
• | Consolidated income tax expense was insignificant in the second quarter of 2017 and $0.5 billion for the second quarter of 2016. The decrease in tax expense is primarily due to the decrease in pre-tax income taxed at above the average tax rate primarily from the non-repeat of the Appliances disposition and a larger benefit from global activities, partially offset by a smaller adjustment in the second quarter of 2017 compared to the second quarter of 2016 to bring the tax rate in-line with the lower projected full-year rate and the non-repeat of deductible stock loss. |
MD&A | OTHER CONSOLIDATED INFORMATION |
• | The consolidated tax rate was 1% in the first six months of 2017 compared to 7% in the first six months of 2016. |
• | The first six months of 2017 consolidated tax rate reflects a 99% tax rate on $0.3 billion of pre-tax loss at GE Capital and a 14% tax rate on $2.7 billion of pre-tax income at GE. |
• | The first six months of 2016 consolidated tax rate reflects a 32% tax rate on $1.6 billion of pre-tax loss at GE Capital and a 14% tax rate on $5.6 billion of pre-tax income at GE. |
• | The consolidated tax provision includes $0.4 billion and $0.8 billion for GE (excluding GE Capital) for the first six months of 2017 and 2016, respectively. |
• | Consolidated income tax expense was insignificant for the first six months of 2017 compared to $0.3 billion for the first six months of 2016. The decrease in tax expense is primarily due to the decrease in pre-tax income taxed at above the average tax rate primarily from the non-repeat of the Appliances disposition and a larger benefit from global activities. This decrease was partially offset by the adjustment to increase the 2017 year-to-date rate to be in-line with the higher projected full-year rate compared to the decrease in the 2016 year-to-date rate to be in-line with the lower projected full-year rate and the non-repeat of deductible stock loss. |
MD&A | STATEMENT OF FINANCIAL POSITION |
• | Cash and equivalents decreased $4.1 billion. GE Cash and equivalents increased $3.7 billion due to the issuance of long-term debt, primarily to fund acquisitions, of $8.6 billion, long-term intercompany loans from GE Capital of $4.1 billion and common dividends from GE Capital of $4.0 billion. The increase was partially offset by payments of dividends to shareowners of $4.2 billion, treasury stock net purchases of $2.7 billion (cash basis), business acquisitions of $2.6 billion, net PP&E additions of $1.4 billion, the settlement of the remaining portion of a 2016 short-term loan from GE Capital of $1.3 billion and cash used for industrial operating activities of $0.4 billion. GE Capital Cash and equivalents decreased $7.8 billion primarily driven by $13.0 billion net repayments of debt, $4.2 billion in payments of dividends to shareowners, long-term intercompany loans to GE of $4.1 billion, partially offset by $5.0 billion in maturities of liquidity investments, $2.8 billion in net collections of financing receivables, $2.2 billion related to cash collections from discontinued operations, $1.8 billion of proceeds from borrowings assumed by the buyer in a business disposition and $1.3 billion settlement of the remaining portion of a 2016 short-term loan to GE. See the Statement of Cash Flows section for additional information. |
• | Investment securities decreased $4.3 billion, primarily due to maturities of liquidity portfolio investments at GE Capital. See Note 3 to the consolidated financial statements for additional information. |
• | Contract assets increased $3.8 billion, primarily due to adjustments driven by lower forecasted cost to complete the contracts and timing of billings relative to revenue recognition on our long-term equipment and service contracts. |
• | Assets of businesses held for sale increased $2.4 billion, primarily due to the classification of our Industrial Solutions business, within our Energy Connections & Lighting segment, as held for sale in the first quarter of 2017. See Note 2 to the consolidated financial statements for additional information. |
• | Assets of discontinued operations decreased $7.0 billion, primarily due to the disposition of businesses at GE Capital. See Note 2 to the consolidated financial statements for additional information. |
• | Borrowings decreased $1.8 billion, primarily due to net repayment of debt at GE Capital of $13.0 billion, partially offset by the issuance of long-term debt at GE of $8.6 billion, primarily to fund acquisitions, and the effects of currency exchange of $2.5 billion. See Note 10 to the consolidated financial statements for additional information. |
• | Liabilities of discontinued operations decreased $3.2 billion, primarily driven by the disposition of businesses at GE Capital. See Note 2 to the consolidated financial statements for additional information. |
• | Common stock held in treasury increased $2.6 billion, primarily due to treasury stock purchases of $3.6 billion (book basis), partially offset by treasury stock issuances of $1.0 billion. |
MD&A | FINANCIAL RESOURCES AND LIQUIDITY |
June 30, 2017 (in billions) | GE | GE Capital | Consolidated(a) | ||||||
External debt | $ | 81.9 | $ | 54.7 | $ | 134.4 | |||
Debt assumed by GE from GE Capital | (52.3 | ) | 52.3 | — | |||||
Intercompany loans | 4.1 | (4.1 | ) | — | |||||
Total intercompany payable (receivable) between GE and GE Capital | (48.2 | ) | 48.2 | — | |||||
Debt adjusted for assumed debt and intercompany loans | $ | 33.7 | $ | 102.9 | $ | 134.4 |
(a) | Includes $2.2 billion elimination of other intercompany borrowings between GE and GE Capital. |
MD&A | FINANCIAL RESOURCES AND LIQUIDITY |
CASH AND EQUIVALENTS | ||||||||
(In billions) | June 30, 2017 | June 30, 2017 | ||||||
GE(a) | $ | 14.2 | U.S. | $ | 9.8 | |||
GE Capital(b) | 29.8 | Non-U.S.(c) | 34.3 |
(a) | At June 30, 2017, $4.4 billion of GE cash and equivalents was held in countries with currency controls that may restrict the transfer of funds to the U.S. or limit our ability to transfer funds to the U.S. without incurring substantial costs. These funds are available to fund operations and growth in these countries and we do not currently anticipate a need to transfer these funds to the U.S. |
(b) | At June 30, 2017, GE Capital cash and equivalents of about $0.4 billion were primarily in insurance entities and were subject to regulatory restrictions. |
(c) | Of this amount at June 30, 2017, $4.8 billion is held outside of the U.S. and is available to fund operations and other growth of non-U.S. subsidiaries; it is also available to fund our needs in the U.S. on a short-term basis through short-term loans, without being subject to U.S. tax. Under the Internal Revenue Code, these loans are permitted to be outstanding for 30 days or less and the total of all such loans is required to be outstanding for less than 60 days during the year. If we were to repatriate this cash, we would be subject to additional U.S. income taxes and foreign withholding taxes. |
COMMERCIAL PAPER | |||||||
(In billions) | GE | GE Capital | |||||
Average commercial paper borrowings during the second quarter of 2017 | $ | 16.0 | $ | 5.0 | |||
Maximum commercial paper borrowings outstanding during the second quarter of 2017 | 19.6 | 5.1 |
MD&A | FINANCIAL RESOURCES AND LIQUIDITY |
OPERATING CASH FLOWS | INVESTING CASH FLOWS | FINANCING CASH FLOWS | |||||
2016 | 2017 | 2016 | 2017 | 2016 | 2017 |
MD&A | FINANCIAL RESOURCES AND LIQUIDITY |
• | GE Capital paid common dividends to GE totaling $4.0 billion in 2017 compared to $11.0 billion in 2016. |
• | Cash used for industrial operating activities amounted to $0.4 billion and $0.2 billion in 2017 and 2016, respectively, primarily due to the following: |
• | Net income plus depreciation and deferred income taxes of $3.4 billion in 2017 compared to $6.6 billion in 2016, which included an after-tax gain of $1.8 billion from the sale of Appliances. |
• | Cash used for working capital of $0.6 billion and $1.9 billion in 2017 and 2016, respectively. The decrease was primarily due to reduction in inventory build, partially offset by an increase in cash used for accounts payable. |
• | An increase in contract assets of $3.2 billion and $2.4 billion in 2017 and 2016, respectively, primarily due to adjustments driven by lower forecasted cost to complete the contracts and timing of billings relative to revenue recognition on our long-term equipment and service contracts. |
• | See Note 21 to the consolidated financial statements for further information regarding cash sources and uses as well as non-cash adjustments to net income reported as All other operating activities. |
• | Business acquisition activities of $2.6 billion, primarily driven by the acquisition of LM Wind Power for $1.6 billion (net of cash acquired) and ServiceMax for $0.9 billion (net of cash acquired) in 2017. |
• | The sale of our Appliances business for proceeds of $4.8 billion in 2016. |
• | This is partially offset by the funding of a joint venture at our Aviation business of $0.3 billion in 2016. |
• | Net repurchases of GE treasury shares of $2.7 billion and $14.3 billion in 2017 and 2016, respectively. |
• | A net increase in borrowings of $11.7 billion in 2017, mainly driven by the issuance of long-term debt of $8.6 billion, primarily to fund acquisitions, and long-term loans from GE Capital to GE of $4.1 billion, partially offset by the settlement of the remaining portion of a 2016 short-term loan from GE Capital to GE of $1.3 billion, compared to a net increase in borrowings of $5.5 billion in 2016, primarily driven by a short-term loan from GE Capital to GE of $5.0 billion. |
OPERATING CASH FLOWS | INVESTING CASH FLOWS | FINANCING CASH FLOWS | |||||
2016 | 2017 | 2016 | 2017 | 2016 | 2017 |
MD&A | FINANCIAL RESOURCES AND LIQUIDITY |
• | Lower income tax payments of $1.1 billion and a general increase in cash generated from earnings of continuing operations. |
• | These increases were partially offset by a net decrease in cash collateral received from counterparties on derivative contracts of $0.5 billion. |
• | Net proceeds from the sales of our discontinued operations of $0.8 billion in 2017 compared to $42.9 billion in 2016. |
• | Investments and maturities of $6.8 billion related to interest bearing deposits reflecting maturities of $10.4 billion and investments of $3.6 billion in 2016. |
• | Net cash received from derivative settlements of $0.1 billion in 2017 compared to $1.0 billion in 2016. |
• | These decreases were partially offset by the following increases: |
• | Investment securities of $10.7 billion related to investments of $5.7 billion in 2016 and maturities of $5.0 billion in 2017. |
▪ | Long-term loans from GE Capital to GE of $4.1 billion, partially offset by the settlement of the remaining portion of a 2016 short-term loan from GE Capital to GE of $1.3 billion in 2017 compared to a short-term loan from GE Capital to GE of $5.0 billion in 2016. |
• | Higher net collections of financing receivables of $1.6 billion in 2017. |
• | A general reduction in funding related to discontinued operations. |
• | Lower net repayments of borrowings of $13.0 billion compared to $44.5 billion in 2016. |
• | GE Capital paid common dividends to GE totaling $4.0 billion compared to $11.0 billion in 2016. |
OPERATING CASH FLOWS | INVESTING CASH FLOWS | FINANCING CASH FLOWS | |||||
2016 | 2017 | 2016 | 2017 | 2016 | 2017 |
• | Lower cash paid for income taxes in 2017. |
• | The sale of bank deposits of $16.5 billion resulting in net cash paid in conjunction with the sale of GE Capital Bank's U.S. online deposit platform during 2016. |
• | Reduction in funding from continuing operations (primarily our treasury operations). |
• | Sale of bank deposits for $0.5 billion resulting in net cash paid related to our Consumer platform during 2017. |
MD&A | FINANCIAL RESOURCES AND LIQUIDITY |
• | Debt issued of $1.8 billion by a discontinued business sold during the first quarter of 2017. |
• | Lower repayment of borrowings and bank deposit activity of $0.7 billion. |
• | GE Capital dividends to GE, |
• | GE Capital working capital solutions to optimize GE cash management, |
• | GE Capital enabled GE industrial orders, and |
• | Aircraft engines, power equipment, renewable energy equipment and healthcare equipment manufactured by GE that are installed on GE Capital investments, including leased equipment. |
• | Expenses related to parent-subsidiary pension plans, |
• | Buildings and equipment leased between GE and GE Capital, including sale-leaseback transactions, |
• | Information technology (IT) and other services sold to GE Capital by GE |
• | Settlements of tax liabilities, and |
• | Various investments, loans and allocations of GE corporate overhead costs. |
MD&A | FINANCIAL RESOURCES AND LIQUIDITY |
MD&A | CRITICAL ACCOUNTING ESTIMATES |
MD&A | OTHER ITEMS |
MD&A | OTHER ITEMS |
MD&A | OTHER ITEMS |
MD&A | SUPPLEMENTAL INFORMATION |
• | Industrial segment organic revenues |
• | Operating and non-operating pension cost |
• | Adjusted corporate costs (operating) |
• | Industrial operating earnings and GE Capital earnings (loss) from continuing operations and EPS |
• | Industrial operating + Verticals earnings and EPS |
• | Industrial operating profit and operating profit margin (excluding certain items) |
• | Industrial cash flows from operating activities (Industrial CFOA) and Industrial CFOA excluding deal taxes and GE Pension Plan funding |
MD&A | SUPPLEMENTAL INFORMATION |
INDUSTRIAL SEGMENT ORGANIC REVENUES | |||||||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||||||
(In millions) | 2017 | 2016 | V% | 2017 | 2016 | V% | |||||||||||
Industrial segment revenues (GAAP) | $ | 28,047 | $ | 28,630 | (2 | )% | $ | 54,063 | $ | 54,499 | (1 | )% | |||||
Adjustments: | |||||||||||||||||
Acquisitions | 218 | 14 | 349 | 16 | |||||||||||||
Business dispositions | — | 1,239 | 10 | 2,795 | |||||||||||||
Currency exchange rates | (162 | ) | — | (270 | ) | — | |||||||||||
Industrial segment organic revenues (Non-GAAP) | $ | 27,992 | $ | 27,376 | 2 | % | $ | 53,973 | $ | 51,688 | 4 | % |
OPERATING AND NON-OPERATING PENSION COST | |||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||
Service cost for benefits earned | $ | 254 | $ | 291 | $ | 543 | $ | 606 | |||||
Prior service cost amortization | 72 | 76 | 145 | 152 | |||||||||
Curtailment loss (gain) | — | (1 | ) | 43 | (1 | ) | |||||||
Operating pension cost (Non-GAAP) | 326 | 366 | 731 | 757 | |||||||||
Expected return on plan assets | (849 | ) | (836 | ) | (1,698 | ) | (1,670 | ) | |||||
Interest cost on benefit obligations | 712 | 735 | 1,429 | 1,469 | |||||||||
Net actuarial loss amortization | 697 | 612 | 1,407 | 1,224 | |||||||||
Non-operating pension cost (Non-GAAP) | 560 | 511 | 1,138 | 1,023 | |||||||||
Total principal pension plans cost (GAAP) | $ | 886 | $ | 877 | $ | 1,869 | $ | 1,780 |
MD&A | SUPPLEMENTAL INFORMATION |
ADJUSTED CORPORATE COSTS (OPERATING) | |||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||
Total Corporate Items and Eliminations (GAAP) | $ | (1,583 | ) | $ | 974 | $ | (3,592 | ) | $ | (597 | ) | ||
Less: non-operating pension cost (Non-GAAP) | (560 | ) | (511 | ) | (1,138 | ) | (1,023 | ) | |||||
Total Corporate costs (operating) (Non-GAAP) | $ | (1,023 | ) | $ | 1,485 | $ | (2,454 | ) | $ | 426 | |||
Less: restructuring and other charges | (709 | ) | (1,188 | ) | (1,728 | ) | (1,874 | ) | |||||
Less: gains (losses) on disposals | — | 3,129 | 2 | 3,188 | |||||||||
Adjusted total corporate costs (operating) (Non-GAAP) | $ | (314 | ) | $ | (456 | ) | $ | (728 | ) | $ | (887 | ) |
INDUSTRIAL OPERATING EARNINGS AND GE CAPITAL EARNINGS (LOSS) FROM CONTINUING OPERATIONS AND EPS | |||||||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||||||
(Dollars in millions; except per-share amounts) | 2017 | 2016 | V% | 2017 | 2016 | V% | |||||||||||
Consolidated earnings (loss) from continuing operations attributable to GE common shareowners (GAAP) | $ | 1,338 | $ | 3,300 | (59 | )% | $ | 2,196 | $ | 3,548 | (38 | )% | |||||
Non-operating pension cost | 560 | 511 | 1,138 | 1,023 | |||||||||||||
Tax effect on non-operating pension cost(a) | (196 | ) | (179 | ) | (398 | ) | (358 | ) | |||||||||
Adjustment: non-operating pension cost (net of tax) | 364 | 332 | 740 | 665 | |||||||||||||
Operating earnings (loss) (Non-GAAP) | 1,702 | 3,632 | (53 | )% | 2,936 | 4,213 | (30 | )% | |||||||||
Less: GE Capital earnings (loss) from continuing operations attributable to GE common shareowners | (172 | ) | (600 | ) | (219 | ) | (1,492 | ) | |||||||||
Industrial operating earnings (loss) (Non-GAAP) | $ | 1,873 | $ | 4,232 | (56 | )% | $ | 3,155 | $ | 5,705 | (45 | )% | |||||
Earnings (loss) per share (EPS) – diluted(b) | |||||||||||||||||
Consolidated EPS from continuing operations attributable to GE common shareowners (GAAP) | $ | 0.15 | $ | 0.36 | (58 | )% | $ | 0.25 | $ | 0.38 | (34 | )% | |||||
Adjustment: non-operating pension cost (net of tax) | 0.04 | 0.04 | 0.08 | 0.07 | |||||||||||||
Operating EPS (Non-GAAP) | 0.19 | 0.39 | (51 | )% | 0.33 | 0.45 | (27 | )% | |||||||||
Less: GE Capital EPS from continuing operations attributable to GE common shareowners (GAAP) | (0.02 | ) | (0.07 | ) | 71 | % | (0.02 | ) | (0.16 | ) | 88 | % | |||||
Industrial operating EPS (Non-GAAP) | $ | 0.21 | $ | 0.46 | (54 | )% | $ | 0.36 | $ | 0.61 | (41 | )% |
(a) | The tax effect on non-operating pension cost was calculated using a 35% U.S. federal statutory tax rate, based on its applicability to such cost. |
(b) | Earnings per share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total. |
MD&A | SUPPLEMENTAL INFORMATION |
INDUSTRIAL OPERATING + VERTICALS EARNINGS AND EPS | |||||||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||||||
(Dollars in millions; except per-share amounts) | 2017 | 2016 | V% | 2017 | 2016 | V% | |||||||||||
GE Capital earnings (loss) from continuing operations attributable to GE common shareowners (GAAP) | $ | (172 | ) | $ | (600 | ) | 71 | % | $ | (219 | ) | $ | (1,492 | ) | 85 | % | |
Less: GE Capital other continuing earnings (loss) (Other Capital)(a) | (716 | ) | (1,051 | ) | (1,298 | ) | (2,440 | ) | |||||||||
Verticals earnings(b) | 544 | 452 | 20 | % | 1,079 | 948 | 14 | % | |||||||||
Industrial operating earnings (Non-GAAP) | 1,873 | 4,232 | (56 | )% | 3,155 | 5,705 | (45 | )% | |||||||||
Industrial operating earnings + Verticals earnings (Non-GAAP) | $ | 2,418 | $ | 4,684 | (48 | )% | $ | 4,234 | $ | 6,653 | (36 | )% | |||||
Earnings (loss) per share (EPS) - diluted(c) | |||||||||||||||||
GE Capital EPS from continuing operations attributable to GE common shareowners | $ | (0.02 | ) | $ | (0.07 | ) | 71 | % | $ | (0.02 | ) | $ | (0.16 | ) | 88 | % | |
Less: GE Capital other continuing EPS (Other Capital) | (0.08 | ) | (0.11 | ) | (0.15 | ) | (0.26 | ) | |||||||||
Verticals EPS | $ | 0.06 | $ | 0.05 | 20 | % | $ | 0.12 | $ | 0.10 | 20 | % | |||||
Industrial operating EPS (Non-GAAP) | 0.21 | 0.46 | (54 | )% | 0.36 | 0.61 | (41 | )% | |||||||||
Industrial operating + Verticals EPS (Non-GAAP) | $ | 0.28 | $ | 0.51 | (45 | )% | $ | 0.48 | $ | 0.72 | (33 | )% | |||||
Consolidated EPS from continuing operations attributable to GE common shareowners (GAAP) | $ | 0.15 | $ | 0.36 | (58 | )% | $ | 0.25 | $ | 0.38 | (34 | )% | |||||
Less: non-operating pension cost (net of tax) | (0.04 | ) | (0.04 | ) | (0.08 | ) | (0.07 | ) | |||||||||
Less: Other Capital | (0.08 | ) | (0.11 | ) | (0.15 | ) | (0.26 | ) | |||||||||
Industrial operating + Verticals EPS (Non-GAAP) | $ | 0.28 | $ | 0.51 | (45 | )% | $ | 0.48 | $ | 0.71 | (32 | )% |
(a) | Includes interest on non-Verticals borrowings, restructuring costs and allocations of GE and GE Capital headquarters costs in excess of those allocated to the Verticals. |
(b) | Verticals include businesses expected to be retained (GECAS, Energy Financial Services, Industrial Finance, and run-off insurance activities), including allocated corporate after-tax costs of $25 million in both the three months ended June 30, 2017 and 2016, and $50 million in both the six months ended June 30, 2017 and 2016. |
(c) | Earnings per share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total. |
MD&A | SUPPLEMENTAL INFORMATION |
INDUSTRIAL OPERATING PROFIT AND OPERATING PROFIT MARGIN (EXCLUDING CERTAIN ITEMS) | |||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||
(Dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||
Revenues | |||||||||||||
GE total revenues and other income | $ | 27,421 | $ | 30,604 | $ | 52,902 | $ | 55,210 | |||||
Less: GE Capital earnings (loss) from continuing operations | (172 | ) | (600 | ) | (219 | ) | (1,492 | ) | |||||
GE revenues and other income excluding GE Capital earnings (loss) (Industrial revenues) (GAAP) | 27,593 | 31,204 | 53,121 | 56,702 | |||||||||
Less: gains on disposals | — | 3,129 | 2 | 3,188 | |||||||||
Adjusted Industrial revenues (Non-GAAP) | $ | 27,593 | $ | 28,075 | $ | 53,119 | $ | 53,515 | |||||
Costs | |||||||||||||
GE total costs and expenses | $ | 25,883 | $ | 26,756 | $ | 50,441 | $ | 51,069 | |||||
Less: GE interest and other financial charges | 637 | 567 | 1,200 | 1,007 | |||||||||
Industrial costs excluding interest and other financial charges (GAAP) | 25,247 | 26,189 | 49,241 | 50,062 | |||||||||
Less: non-operating pension cost | 560 | 511 | 1,138 | 1,023 | |||||||||
Less: restructuring and other charges | 709 | 1,188 | 1,728 | 1,874 | |||||||||
Less: noncontrolling interests | 18 | 82 | 96 | 199 | |||||||||
Adjusted Industrial costs (Non-GAAP) | $ | 23,960 | $ | 24,408 | $ | 46,278 | $ | 46,965 | |||||
Industrial profit (GAAP) | 2,346 | 5,015 | 3,881 | 6,640 | |||||||||
Industrial margins (GAAP) | 8.5 | % | 16.1 | % | 7.3 | % | 11.7 | % | |||||
Industrial operating profit (Non-GAAP) | $ | 3,633 | 3,667 | $ | 6,842 | $ | 6,550 | ||||||
Industrial operating profit margins (Non-GAAP) | 13.2 | % | 13.1 | % | 12.9 | % | 12.2 | % |
MD&A | SUPPLEMENTAL INFORMATION |
INDUSTRIAL CASH FLOWS FROM OPERATING ACTIVITIES (INDUSTRIAL CFOA) AND INDUSTRIAL CFOA EXCLUDING DEAL TAXES AND GE PENSION PLAN FUNDING | ||||||||
Six months ended June 30 | ||||||||
(In millions) | 2017 | 2016 | V% | |||||
Cash from GE's operating activities (continuing operations), as reported (GAAP) | $ | 3,585 | $ | 10,767 | (67 | )% | ||
Adjustments: dividends from GE Capital | 4,016 | 11,000 | ||||||
Industrial CFOA (Non-GAAP) | $ | (431 | ) | $ | (233 | ) | (85 | )% |
Adjustments: | ||||||||
Deal taxes | 51 | 700 | ||||||
GE Pension Plan funding | 217 | — | ||||||
Industrial CFOA excluding deal taxes and GE Pension Plan funding (Non-GAAP) | $ | (163 | ) | $ | 467 | U |
OTHER |
OTHER FINANCIAL DATA |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of our share repurchase program(a) | Approximate dollar value of shares that may yet be purchased under our share repurchase program(a) | ||||||
(Shares in thousands) | ||||||||||
2017 | ||||||||||
April | 32,144 | $ | 29.93 | 32,144 | ||||||
May | 5,036 | 27.91 | 5,036 | |||||||
June | 5,328 | 28.67 | 5,328 | |||||||
Total | 42,508 | $ | 29.53 | 42,508 | $ | 21.1 | billion |
(a) | Shares were repurchased through the 2015 GE Share Repurchase Program (the Program). As of June 30, 2017, we were authorized to repurchase up to $50.0 billion of our common stock through 2018 and we had repurchased a total of approximately $28.9 billion under the Program. The Program is flexible and shares will be acquired with a combination of borrowings and free cash flow from the public markets and other sources, including GE Stock Direct, a stock purchase plan that is available to the public. |
LEGAL PROCEEDINGS |
LEGAL PROCEEDINGS |
FINANCIAL STATEMENTS |
1 | |||
2 | |||
3 | |||
4 | Current Receivables | ||
5 | |||
6 | |||
7 | |||
8 | |||
9 | |||
10 | |||
11 | Investment contracts, insurance liabilities and insurance annuity benefits | ||
12 | |||
13 | |||
14 | |||
15 | |||
16 | |||
17 | |||
18 | Commitments, Guarantees, Product Warranties and Other Loss Contingencies | ||
19 | |||
20 | |||
21 |
FINANCIAL STATEMENTS |
STATEMENT OF EARNINGS (LOSS) | ||||||
(UNAUDITED) | ||||||
Three months ended June 30 | ||||||
General Electric Company and consolidated affiliates | ||||||
(In millions; per-share amounts in dollars) | 2017 | 2016 | ||||
Revenues and other income | ||||||
Sales of goods | $ | 18,364 | $ | 18,865 | ||
Sales of services | 8,875 | 9,163 | ||||
Other income | 298 | 3,150 | ||||
GE Capital earnings (loss) from continuing operations | — | — | ||||
GE Capital revenues from services | 2,022 | 2,316 | ||||
Total revenues and other income | 29,558 | 33,494 | ||||
Costs and expenses | ||||||
Cost of goods sold | 15,501 | 15,690 | ||||
Cost of services sold | 6,292 | 6,693 | ||||
Selling, general and administrative expenses | 4,287 | 4,883 | ||||
Interest and other financial charges | 1,174 | 1,326 | ||||
Investment contracts, insurance losses and insurance annuity benefits | 657 | 776 | ||||
Other costs and expenses | 133 | 303 | ||||
Total costs and expenses | 28,044 | 29,670 | ||||
Earnings (loss) from continuing operations before income taxes | 1,515 | 3,824 | ||||
Benefit (provision) for income taxes | (15 | ) | (461 | ) | ||
Earnings (loss) from continuing operations | 1,499 | 3,363 | ||||
Earnings (loss) from discontinued operations, net of taxes (Note 2) | (146 | ) | (541 | ) | ||
Net earnings (loss) | 1,354 | 2,823 | ||||
Less net earnings (loss) attributable to noncontrolling interests | (14 | ) | (86 | ) | ||
Net earnings (loss) attributable to the Company | 1,367 | 2,908 | ||||
Preferred stock dividends | (182 | ) | (152 | ) | ||
Net earnings (loss) attributable to GE common shareowners | $ | 1,185 | $ | 2,756 | ||
Amounts attributable to GE common shareowners | ||||||
Earnings (loss) from continuing operations | $ | 1,499 | $ | 3,363 | ||
Less net earnings (loss) attributable to noncontrolling interests, | ||||||
continuing operations | (21 | ) | (89 | ) | ||
Earnings (loss) from continuing operations attributable to the Company | 1,520 | 3,452 | ||||
Preferred stock dividends | (182 | ) | (152 | ) | ||
Earnings (loss) from continuing operations attributable | ||||||
to GE common shareowners | 1,338 | 3,300 | ||||
Earnings (loss) from discontinued operations, net of taxes | (146 | ) | (541 | ) | ||
Less net earnings (loss) attributable to | ||||||
noncontrolling interests, discontinued operations | 7 | 3 | ||||
Net earnings (loss) attributable to GE common shareowners | $ | 1,185 | $ | 2,756 | ||
Per-share amounts (Note 15) | ||||||
Earnings (loss) from continuing operations | ||||||
Diluted earnings (loss) per share | $ | 0.15 | $ | 0.36 | ||
Basic earnings (loss) per share | $ | 0.15 | $ | 0.36 | ||
Net earnings (loss) | ||||||
Diluted earnings (loss) per share | $ | 0.13 | $ | 0.30 | ||
Basic earnings (loss) per share | $ | 0.14 | $ | 0.30 | ||
Dividends declared per common share | $ | 0.24 | $ | 0.23 |
FINANCIAL STATEMENTS |
STATEMENT OF EARNINGS (LOSS) (CONTINUED) | |||||||||||||
(UNAUDITED) | |||||||||||||
Three months ended June 30 | |||||||||||||
GE(a) | Financial Services (GE Capital) | ||||||||||||
(In millions; per-share amounts in dollars) | 2017 | 2016 | 2017 | 2016 | |||||||||
Revenues and other income | |||||||||||||
Sales of goods | $ | 18,426 | $ | 18,912 | $ | 33 | $ | 29 | |||||
Sales of services | 8,867 | 9,238 | — | — | |||||||||
Other income | 300 | 3,054 | — | — | |||||||||
GE Capital earnings (loss) from continuing operations | (172 | ) | (600 | ) | — | — | |||||||
GE Capital revenues from services | — | — | 2,413 | 2,742 | |||||||||
Total revenues and other income | 27,421 | 30,604 | 2,446 | 2,771 | |||||||||
Costs and expenses | |||||||||||||
Cost of goods sold | 15,571 | 15,742 | 27 | 24 | |||||||||
Cost of services sold | 5,757 | 6,216 | 520 | 552 | |||||||||
Selling, general and administrative expenses | 3,919 | 4,231 | 498 | 733 | |||||||||
Interest and other financial charges | 637 | 567 | 771 | 958 | |||||||||
Investment contracts, insurance losses and insurance annuity benefits | — | — | 682 | 815 | |||||||||
Other costs and expenses | — | — | 144 | 313 | |||||||||
Total costs and expenses | 25,883 | 26,756 | 2,641 | 3,394 | |||||||||
Earnings (loss) from continuing operations before income taxes | 1,538 | 3,847 | (195 | ) | (623 | ) | |||||||
Benefit (provision) for income taxes | (218 | ) | (629 | ) | 202 | 168 | |||||||
Earnings (loss) from continuing operations | 1,320 | 3,218 | 7 | (454 | ) | ||||||||
Earnings (loss) from discontinued operations, net of taxes (Note 2) | (152 | ) | (544 | ) | (146 | ) | (541 | ) | |||||
Net earnings (loss) | 1,167 | 2,674 | (138 | ) | (995 | ) | |||||||
Less net earnings (loss) attributable to noncontrolling interests | (18 | ) | (82 | ) | 4 | (4 | ) | ||||||
Net earnings (loss) attributable to the Company | 1,185 | 2,756 | (142 | ) | (991 | ) | |||||||
Preferred stock dividends | — | — | (182 | ) | (152 | ) | |||||||
Net earnings (loss) attributable to GE common shareowners | $ | 1,185 | $ | 2,756 | $ | (324 | ) | $ | (1,143 | ) | |||
Amounts attributable to GE common shareowners: | |||||||||||||
Earnings (loss) from continuing operations | $ | 1,320 | $ | 3,218 | $ | 7 | $ | (454 | ) | ||||
Less net earnings (loss) attributable to noncontrolling interests, | |||||||||||||
continuing operations | (18 | ) | (82 | ) | (3 | ) | (7 | ) | |||||
Earnings (loss) from continuing operations attributable to the Company | 1,338 | 3,300 | 10 | (448 | ) | ||||||||
Preferred stock dividends | — | — | (182 | ) | (152 | ) | |||||||
Earnings (loss) from continuing operations attributable | |||||||||||||
to GE common shareowners | 1,338 | 3,300 | (172 | ) | (600 | ) | |||||||
Earnings (loss) from discontinued operations, net of taxes | (152 | ) | (544 | ) | (146 | ) | (541 | ) | |||||
Less net earnings (loss) attributable to | |||||||||||||
noncontrolling interests, discontinued operations | — | — | 7 | 3 | |||||||||
Net earnings (loss) attributable to GE common shareowners | $ | 1,185 | $ | 2,756 | $ | (324 | ) | $ | (1,143 | ) |
(a) | Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. See Note 1. |
MD&A |
STATEMENT OF EARNINGS (LOSS) | ||||||
(UNAUDITED) | ||||||
Six months ended June 30 | ||||||
General Electric Company | ||||||
and consolidated affiliates | ||||||
(In millions; per-share amounts in dollars) | 2017 | 2016 | ||||
Revenues and other income | ||||||
Sales of goods | $ | 35,176 | $ | 36,073 | ||
Sales of services | 17,291 | 17,269 | ||||
Other income | 465 | 3,158 | ||||
GE Capital earnings (loss) from continuing operations | — | — | ||||
GE Capital revenues from services | 4,286 | 4,838 | ||||
Total revenues and other income | 57,219 | 61,339 | ||||
Costs and expenses | ||||||
Cost of goods sold | 29,991 | 30,278 | ||||
Cost of services sold | 12,162 | 12,466 | ||||
Selling, general and administrative expenses | 8,793 | 9,491 | ||||
Interest and other financial charges | 2,313 | 3,062 | ||||
Investment contracts, insurance losses and insurance annuity benefits | 1,291 | 1,417 | ||||
Other costs and expenses | 323 | 562 | ||||
Total costs and expenses | 54,872 | 57,276 | ||||
Earnings (loss) from continuing operations before income taxes | 2,346 | 4,063 | ||||
Benefit (provision) for income taxes | (31 | ) | (284 | ) | ||
Earnings (loss) from continuing operations | 2,315 | 3,779 | ||||
Earnings (loss) from discontinued operations, net of taxes (Note 2) | (385 | ) | (849 | ) | ||
Net earnings (loss) | 1,931 | 2,930 | ||||
Less net earnings (loss) attributable to noncontrolling interests | (90 | ) | (207 | ) | ||
Net earnings (loss) attributable to the Company | 2,020 | 3,137 | ||||
Preferred stock dividends | (216 | ) | (441 | ) | ||
Net earnings (loss) attributable to GE common shareowners | $ | 1,804 | $ | 2,695 | ||
Amounts attributable to GE common shareowners | ||||||
Earnings (loss) from continuing operations | $ | 2,315 | $ | 3,779 | ||
Less net earnings (loss) attributable to noncontrolling interests, | ||||||
continuing operations | (97 | ) | (210 | ) | ||
Earnings (loss) from continuing operations attributable to the Company | 2,412 | 3,989 | ||||
Preferred stock dividends | (216 | ) | (441 | ) | ||
Earnings (loss) from continuing operations attributable | ||||||
to GE common shareowners | 2,196 | 3,548 | ||||
Earnings (loss) from discontinued operations, net of taxes | (385 | ) | (849 | ) | ||
Less net earnings (loss) attributable to noncontrolling interests, | ||||||
discontinued operations | 7 | 3 | ||||
Net earnings (loss) attributable to GE common shareowners | $ | 1,804 | $ | 2,695 | ||
Per-share amounts (Note 15) | ||||||
Earnings (loss) from continuing operations | ||||||
Diluted earnings (loss) per share | $ | 0.25 | $ | 0.38 | ||
Basic earnings (loss) per share | $ | 0.25 | $ | 0.39 | ||
Net earnings (loss) | ||||||
Diluted earnings (loss) per share | $ | 0.20 | $ | 0.29 | ||
Basic earnings (loss) per share | $ | 0.21 | $ | 0.29 | ||
Dividends declared per common share | $ | 0.48 | $ | 0.46 |
MD&A |
STATEMENT OF EARNINGS (LOSS) | |||||||||||||
(UNAUDITED) | |||||||||||||
Six months ended June 30 | |||||||||||||
GE(a) | Financial Services (GE Capital) | ||||||||||||
(In millions; per-share amounts in dollars) | 2017 | 2016 | 2017 | 2016 | |||||||||
Revenues and other income | |||||||||||||
Sales of goods | $ | 35,264 | $ | 36,124 | $ | 62 | $ | 54 | |||||
Sales of services | 17,420 | 17,432 | — | — | |||||||||
Other income | 437 | 3,146 | — | — | |||||||||
GE Capital earnings (loss) from continuing operations | (219 | ) | (1,492 | ) | — | — | |||||||
GE Capital revenues from services | — | — | 5,065 | 5,602 | |||||||||
Total revenues and other income | 52,902 | 55,210 | 5,127 | 5,656 | |||||||||
Costs and expenses | |||||||||||||
Cost of goods sold | 30,092 | 30,339 | 50 | 44 | |||||||||
Cost of services sold | 11,210 | 11,509 | 1,082 | 1,120 | |||||||||
Selling, general and administrative expenses | 7,939 | 8,214 | 1,073 | 1,607 | |||||||||
Interest and other financial charges | 1,200 | 1,007 | 1,582 | 2,389 | |||||||||
Investment contracts, insurance losses and insurance annuity benefits | — | — | 1,318 | 1,486 | |||||||||
Other costs and expenses | — | — | 358 | 581 | |||||||||
Total costs and expenses | 50,441 | 51,069 | 5,461 | 7,227 | |||||||||
Earnings (loss) from continuing operations before income taxes | 2,461 | 4,141 | (334 | ) | (1,571 | ) | |||||||
Benefit (provision) for income taxes | (361 | ) | (793 | ) | 330 | 509 | |||||||
Earnings (loss) from continuing operations | 2,100 | 3,349 | (4 | ) | (1,062 | ) | |||||||
Earnings (loss) from discontinued operations, net of taxes (Note 2) | (392 | ) | (852 | ) | (388 | ) | (849 | ) | |||||
Net earnings (loss) | 1,708 | 2,496 | (392 | ) | (1,911 | ) | |||||||
Less net earnings (loss) attributable to noncontrolling interests | (96 | ) | (199 | ) | 6 | (8 | ) | ||||||
Net earnings (loss) attributable to the Company | 1,804 | 2,695 | (398 | ) | (1,903 | ) | |||||||
Preferred stock dividends | — | — | (216 | ) | (441 | ) | |||||||
Net earnings (loss) attributable to GE common shareowners | $ | 1,804 | $ | 2,695 | $ | (614 | ) | $ | (2,344 | ) | |||
Amounts attributable to GE common shareowners: | |||||||||||||
Earnings (loss) from continuing operations | $ | 2,100 | $ | 3,349 | $ | (4 | ) | $ | (1,062 | ) | |||
Less net earnings (loss) attributable to noncontrolling interests, | |||||||||||||
continuing operations | (96 | ) | (199 | ) | (1 | ) | (11 | ) | |||||
Earnings (loss) from continuing operations attributable to the Company | 2,196 | 3,548 | (3 | ) | (1,051 | ) | |||||||
Preferred stock dividends | — | — | (216 | ) | (441 | ) | |||||||
Earnings (loss) from continuing operations attributable | |||||||||||||
to GE common shareowners | 2,196 | 3,548 | (219 | ) | (1,492 | ) | |||||||
Earnings (loss) from discontinued operations, net of taxes | (392 | ) | (852 | ) | (388 | ) | (849 | ) | |||||
Less net earnings (loss) attributable to noncontrolling interests, | |||||||||||||
discontinued operations | — | — | 7 | 3 | |||||||||
Net earnings (loss) attributable to GE common shareowners | $ | 1,804 | $ | 2,695 | $ | (614 | ) | $ | (2,344 | ) |
(a) | Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. See Note 1. |
FINANCIAL STATEMENTS |
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES | |||||||||||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||
(UNAUDITED) | |||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||
Net earnings (loss) | $ | 1,354 | $ | 2,823 | $ | 1,931 | $ | 2,930 | |||||
Less net earnings (loss) attributable to noncontrolling interests | (14 | ) | (86 | ) | (90 | ) | (207 | ) | |||||
Net earnings (loss) attributable to the Company | $ | 1,367 | $ | 2,908 | $ | 2,020 | $ | 3,137 | |||||
Other comprehensive income (loss) | |||||||||||||
Investment securities | $ | 243 | $ | 397 | $ | 191 | $ | 617 | |||||
Currency translation adjustments | 525 | 55 | 1,341 | 57 | |||||||||
Cash flow hedges | (10 | ) | (25 | ) | 9 | 30 | |||||||
Benefit plans | 560 | 382 | 1,610 | 933 | |||||||||
Other comprehensive income (loss) | 1,318 | 810 | 3,151 | 1,636 | |||||||||
Less other comprehensive income (loss) attributable to noncontrolling interests | 1 | 3 | 7 | 6 | |||||||||
Other comprehensive income (loss) attributable to the Company | $ | 1,317 | $ | 807 | $ | 3,144 | $ | 1,631 | |||||
Comprehensive income (loss) | $ | 2,672 | $ | 3,633 | $ | 5,082 | $ | 4,566 | |||||
Less comprehensive income (loss) attributable to noncontrolling interests | (13 | ) | (82 | ) | (83 | ) | (201 | ) | |||||
Comprehensive income (loss) attributable to the Company | $ | 2,685 | $ | 3,715 | $ | 5,164 | $ | 4,767 |
FINANCIAL STATEMENTS |
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES | |||||||
CONSOLIDATED STATEMENT OF CHANGES IN SHAREOWNERS' EQUITY | |||||||
(UNAUDITED) | |||||||
Six months ended June 30 | |||||||
(In millions) | 2017 | 2016 | |||||
Shareowners' equity balance at January 1 | $ | 75,828 | $ | 98,274 | |||
Net earnings (loss) attributable to the Company | 2,020 | 3,137 | |||||
Dividends and other transactions with shareowners | (4,393 | ) | (4,680 | ) | |||
Redemption value adjustment for redeemable noncontrolling interests | (114 | ) | (110 | ) | |||
Other comprehensive income (loss) attributable to the Company | 3,144 | 1,631 | |||||
Net sales (purchases) of shares for treasury | (2,579 | ) | (12,585 | ) | |||
Changes in other capital | 244 | (674 | ) | ||||
Ending balance at June 30 | 74,148 | 84,991 | |||||
Noncontrolling interests | 1,634 | 1,693 | |||||
Total equity balance at June 30 | $ | 75,783 | $ | 86,684 |
FINANCIAL STATEMENTS |
STATEMENT OF FINANCIAL POSITION | ||||||
General Electric Company and consolidated affiliates | ||||||
(In millions, except share amounts) | June 30, 2017 | December 31, 2016 | ||||
(Unaudited) | ||||||
Assets | ||||||
Cash and equivalents | $ | 44,049 | $ | 48,129 | ||
Investment securities (Note 3) | 39,968 | 44,313 | ||||
Current receivables (Note 4) | 21,447 | 24,076 | ||||
Inventories (Note 5) | 22,843 | 22,354 | ||||
Financing receivables – net (Note 6) | 12,149 | 12,242 | ||||
Other GE Capital receivables | 6,156 | 5,944 | ||||
Property, plant and equipment – net (Note 7) | 50,167 | 50,518 | ||||
Receivable from GE Capital (debt assumption) | — | — | ||||
Investment in GE Capital | — | — | ||||
Goodwill (Note 8) | 72,335 | 70,438 | ||||
Other intangible assets – net (Note 8) | 16,929 | 16,436 | ||||
Contract assets (Note 9) | 28,924 | 25,162 | ||||
All other assets | 27,318 | 27,176 | ||||
Deferred income taxes (Note 13) | 1,241 | 1,833 | ||||
Assets of businesses held for sale (Note 2) | 4,096 | 1,745 | ||||
Assets of discontinued operations (Note 2) | 7,850 | 14,815 | ||||
Total assets(a) | $ | 355,473 | $ | 365,183 | ||
Liabilities and equity | ||||||
Short-term borrowings (Note 10) | $ | 30,044 | $ | 30,714 | ||
Accounts payable, principally trade accounts | 13,283 | 14,435 | ||||
Progress collections and price adjustments accrued | 17,162 | 16,760 | ||||
Dividends payable | 2,090 | 2,107 | ||||
Other GE current liabilities | 16,755 | 17,564 | ||||
Non-recourse borrowings of consolidated securitization entities (Note 10) | 682 | 417 | ||||
Long-term borrowings (Note 10) | 103,676 | 105,080 | ||||
Investment contracts, insurance liabilities and insurance annuity benefits (Note 11) | 26,471 | 26,086 | ||||
Non-current compensation and benefits | 42,621 | 43,780 | ||||
All other liabilities | 21,607 | 22,912 | ||||
Liabilities of businesses held for sale (Note 2) | 1,195 | 656 | ||||
Liabilities of discontinued operations (Note 2) | 911 | 4,158 | ||||
Total liabilities(a) | 276,498 | 284,668 | ||||
Redeemable noncontrolling interests (Note 14) | 3,193 | 3,025 | ||||
Preferred stock (5,944,250 shares outstanding at both June 30, 2017 and December 31, 2016) | 6 | 6 | ||||
Common stock (8,657,946,000 and 8,742,614,000 shares outstanding at June 30, 2017 and December 31, 2016, respectively) | 702 | 702 | ||||
Accumulated other comprehensive income (loss) – net attributable to GE(b) | ||||||
Investment securities | 866 | 674 | ||||
Currency translation adjustments | (5,481 | ) | (6,816 | ) | ||
Cash flow hedges | 22 | 12 | ||||
Benefit plans | (10,860 | ) | (12,469 | ) | ||
Other capital | 37,468 | 37,224 | ||||
Retained earnings | 137,044 | 139,532 | ||||
Less common stock held in treasury | (85,617 | ) | (83,038 | ) | ||
Total GE shareowners’ equity | 74,148 | 75,828 | ||||
Noncontrolling interests(c) (Note 14) | 1,634 | 1,663 | ||||
Total equity (Note 14) | 75,783 | 77,491 | ||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 355,473 | $ | 365,183 |
(a) | Our consolidated assets at June 30, 2017 included total assets of $5,851 million of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs. These assets included current receivables and net financing receivables of $1,445 million and investment securities of $1,004 million within continuing operations and assets of discontinued operations of $285 million. Our consolidated liabilities at June 30, 2017 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 $(682) million within continuing operations. See Note 17. |
(b) | The sum of accumulated other comprehensive income (loss) (AOCI) attributable to the Company was $(15,454) million and $(18,598) million at June 30, 2017 and December 31, 2016, respectively. |
(c) | Included AOCI attributable to noncontrolling interests of $(271) million and $(278) million at June 30, 2017 and December 31, 2016, respectively. |
FINANCIAL STATEMENTS |
STATEMENT OF FINANCIAL POSITION (CONTINUED) | |||||||||||||
GE(a) | Financial Services (GE Capital) | ||||||||||||
(In millions, except share amounts) | June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | |||||||||
(Unaudited) | (Unaudited) | ||||||||||||
Assets | |||||||||||||
Cash and equivalents | $ | 14,220 | $ | 10,525 | $ | 29,829 | $ | 37,604 | |||||
Investment securities (Note 3) | 162 | 137 | 39,809 | 44,180 | |||||||||
Current receivables (Note 4) | 11,697 | 12,715 | — | — | |||||||||
Inventories (Note 5) | 22,754 | 22,263 | 89 | 91 | |||||||||
Financing receivables - net (Note 6) | — | — | 24,696 | 26,041 | |||||||||
Other GE Capital receivables | — | — | 15,996 | 15,576 | |||||||||
Property, plant and equipment – net (Note 7) | 19,593 | 19,103 | 31,491 | 32,225 | |||||||||
Receivable from GE Capital (debt assumption)(b) | 48,216 | 58,780 | — | — | |||||||||
Investment in GE Capital | 20,729 | 24,677 | — | — | |||||||||
Goodwill (Note 8) | 69,966 | 68,070 | 2,369 | 2,368 | |||||||||
Other intangible assets – net (Note 8) | 16,655 | 16,131 | 275 | 305 | |||||||||
Contract assets (Note 9) | 28,924 | 25,162 | — | — | |||||||||
All other assets | 13,411 | 12,007 | 13,445 | 14,608 | |||||||||
Deferred income taxes (Note 13) | 6,638 | 6,666 | (5,398 | ) | (4,833 | ) | |||||||
Assets of businesses held for sale (Note 2) | 3,816 | 1,629 | — | — | |||||||||
Assets of discontinued operations (Note 2) | — | 9 | 7,850 | 14,806 | |||||||||
Total assets | $ | 276,782 | $ | 277,874 | $ | 160,452 | $ | 182,970 | |||||
Liabilities and equity | |||||||||||||
Short-term borrowings (Note 10)(b) | $ | 20,331 | $ | 20,482 | $ | 23,373 | $ | 23,443 | |||||
Accounts payable, principally trade accounts | 19,384 | 20,876 | 1,723 | 1,605 | |||||||||
Progress collections and price adjustments accrued | 17,292 | 16,838 | — | — | |||||||||
Dividends payable | 2,090 | 2,107 | — | — | |||||||||
Other GE current liabilities | 16,755 | 17,564 | — | — | |||||||||
Non-recourse borrowings of consolidated securitization entities (Note 10) | — | — | 682 | 417 | |||||||||
Long-term borrowings (Note 10)(b) | 61,611 | 58,810 | 78,852 | 93,443 | |||||||||
Investment contracts, insurance liabilities and insurance annuity benefits (Note 11) | — | — | 27,016 | 26,546 | |||||||||
Non-current compensation and benefits | 41,573 | 42,770 | 1,040 | 1,001 | |||||||||
All other liabilities | 17,838 | 17,506 | 5,863 | 7,430 | |||||||||
Liabilities of businesses held for sale (Note 2) | 1,195 | 656 | — | — | |||||||||
Liabilities of discontinued operations (Note 2) | 23 | 35 | 888 | 4,123 | |||||||||
Total liabilities | 198,091 | 197,644 | 139,438 | 158,008 | |||||||||
Redeemable noncontrolling interests (Note 14) | 3,193 | 3,025 | — | — | |||||||||
Preferred stock (5,944,250 shares outstanding at both June 30, 2017 and December 31, 2016) | 6 | 6 | 6 | 6 | |||||||||
Common stock (8,657,946,000 and 8,742,614,000 shares outstanding at June 30, 2017 and December 31, 2016, respectively) | 702 | 702 | — | — | |||||||||
Accumulated other comprehensive income (loss) - net attributable to GE | |||||||||||||
Investment securities | 866 | 674 | 857 | 656 | |||||||||
Currency translation adjustments | (5,481 | ) | (6,816 | ) | (270 | ) | (740 | ) | |||||
Cash flow hedges | 22 | 12 | 10 | 43 | |||||||||
Benefit plans | (10,860 | ) | (12,469 | ) | (556 | ) | (622 | ) | |||||
Other capital | 37,468 | 37,224 | 12,737 | 12,669 | |||||||||
Retained earnings | 137,044 | 139,532 | 7,945 | 12,664 | |||||||||
Less common stock held in treasury | (85,617 | ) | (83,038 | ) | — | — | |||||||
Total GE shareowners’ equity | 74,148 | 75,828 | 20,729 | 24,677 | |||||||||
Noncontrolling interests (Note 14) | 1,349 | 1,378 | 285 | 285 | |||||||||
Total equity (Note 14) | 75,498 | 77,205 | 21,014 | 24,962 | |||||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 276,782 | $ | 277,874 | $ | 160,452 | $ | 182,970 |
(a) | Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. See Note 1. |
(b) | In 2015, senior unsecured notes and commercial paper were assumed by GE upon its merger with GE Capital, resulting in an intercompany receivable and payable between GE and GE Capital. See Note 10. |
FINANCIAL STATEMENTS |
STATEMENT OF CASH FLOWS | ||||||
(UNAUDITED) | ||||||
Six months ended June 30 | ||||||
General Electric Company and consolidated affiliates | ||||||
(In millions) | 2017 | 2016 | ||||
Cash flows – operating activities | ||||||
Net earnings (loss) | $ | 1,931 | $ | 2,930 | ||
Less net earnings (loss) attributable to noncontrolling interests | (90 | ) | (207 | ) | ||
Net earnings (loss) attributable to the Company | 2,020 | 3,137 | ||||
(Earnings) loss from discontinued operations | 385 | 849 | ||||
Adjustments to reconcile net earnings (loss) attributable to the | ||||||
Company to cash provided from operating activities | ||||||
Depreciation and amortization of property, plant and equipment | 2,318 | 2,505 | ||||
(Earnings) loss from continuing operations retained by GE Capital | — | — | ||||
Deferred income taxes | (170 | ) | 672 | |||
Decrease (increase) in GE current receivables | 2,385 | 1,879 | ||||
Decrease (increase) in inventories | (598 | ) | (2,629 | ) | ||
Increase (decrease) in accounts payable | (729 | ) | 132 | |||
Increase (decrease) in GE progress collections | (32 | ) | 510 | |||
All other operating activities | (2,190 | ) | (5,040 | ) | ||
Cash from (used for) operating activities – continuing operations | 3,389 | 2,014 | ||||
Cash from (used for) operating activities – discontinued operations | (895 | ) | (4,849 | ) | ||
Cash from (used for) operating activities | 2,494 | (2,835 | ) | |||
Cash flows – investing activities | ||||||
Additions to property, plant and equipment | (3,470 | ) | (3,052 | ) | ||
Dispositions of property, plant and equipment | 2,343 | 1,222 | ||||
Net decrease (increase) in GE Capital financing receivables | 1,053 | (1,146 | ) | |||
Proceeds from sale of discontinued operations | 789 | 42,874 | ||||
Proceeds from principal business dispositions | 145 | 5,609 | ||||
Net cash from (payments for) principal businesses purchased | (2,643 | ) | (206 | ) | ||
All other investing activities | 5,866 | (2,887 | ) | |||
Cash from (used for) investing activities – continuing operations | 4,083 | 42,414 | ||||
Cash from (used for) investing activities – discontinued operations | (1,922 | ) | (10,646 | ) | ||
Cash from (used for) investing activities | 2,161 | 31,768 | ||||
Cash flows – financing activities | ||||||
Net increase (decrease) in borrowings (maturities of 90 days or less) | 812 | 758 | ||||
Newly issued debt (maturities longer than 90 days) | 9,036 | 855 | ||||
Repayments and other debt reductions (maturities longer than 90 days) | (13,905 | ) | (45,467 | ) | ||
Net dispositions (purchases) of GE shares for treasury | (2,732 | ) | (14,292 | ) | ||
Dividends paid to shareowners | (4,332 | ) | (4,508 | ) | ||
All other financing activities | (968 | ) | (109 | ) | ||
Cash from (used for) financing activities – continuing operations | (12,089 | ) | (62,763 | ) | ||
Cash from (used for) financing activities – discontinued operations | 1,909 | (711 | ) | |||
Cash from (used for) financing activities | (10,181 | ) | (63,474 | ) | ||
Effect of currency exchange rate changes on cash and equivalents | 538 | (24 | ) | |||
Increase (decrease) in cash and equivalents | (4,988 | ) | (34,565 | ) | ||
Cash and equivalents at beginning of year | 49,558 | 90,878 | ||||
Cash and equivalents at June 30 | 44,571 | 56,313 | ||||
Less cash and equivalents of discontinued operations at June 30 | 522 | 4,190 | ||||
Cash and equivalents of continuing operations at June 30 | $ | 44,049 | $ | 52,123 |
FINANCIAL STATEMENTS |
STATEMENT OF CASH FLOWS (CONTINUED) | |||||||||||||
(UNAUDITED) | |||||||||||||
Six months ended June 30 | |||||||||||||
GE(a) | Financial Services (GE Capital) | ||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||
Cash flows – operating activities | |||||||||||||
Net earnings (loss) | $ | 1,708 | $ | 2,496 | $ | (392 | ) | $ | (1,911 | ) | |||
Less net earnings (loss) attributable to noncontrolling interests | (96 | ) | (199 | ) | 6 | (8 | ) | ||||||
Net earnings (loss) attributable to the Company | 1,804 | 2,695 | (398 | ) | (1,903 | ) | |||||||
(Earnings) loss from discontinued operations | 392 | 852 | 388 | 849 | |||||||||
Adjustments to reconcile net earnings (loss) attributable to the | |||||||||||||
Company to cash provided from operating activities | |||||||||||||
Depreciation and amortization of property, plant and equipment | 1,192 | 1,300 | 1,127 | 1,191 | |||||||||
(Earnings) loss from continuing operations retained by GE Capital(b) | 4,242 | 12,496 | — | — | |||||||||
Deferred income taxes | (222 | ) | 293 | 52 | 379 | ||||||||
Decrease (increase) in GE current receivables | 929 | 280 | — | — | |||||||||
Decrease (increase) in inventories | (592 | ) | (2,623 | ) | (9 | ) | 6 | ||||||
Increase (decrease) in accounts payable | (1,001 | ) | (30 | ) | (117 | ) | 10 | ||||||
Increase (decrease) in GE progress collections | 21 | 510 | — | — | |||||||||
All other operating activities | (3,180 | ) | (5,007 | ) | 921 | (91 | ) | ||||||
Cash from (used for) operating activities – continuing operations | 3,585 | 10,767 | 1,964 | 440 | |||||||||
Cash from (used for) operating activities – discontinued operations | — | — | (894 | ) | (4,848 | ) | |||||||
Cash from (used for) operating activities | 3,585 | 10,767 | 1,069 | (4,408 | ) | ||||||||
Cash flows – investing activities | |||||||||||||
Additions to property, plant and equipment | (2,135 | ) | (1,940 | ) | (1,704 | ) | (1,264 | ) | |||||
Dispositions of property, plant and equipment | 749 | 539 | 1,829 | 865 | |||||||||
Net decrease (increase) in GE Capital financing receivables | — | — | 2,824 | 1,191 | |||||||||
Proceeds from sale of discontinued operations | — | — | 789 | 42,874 | |||||||||
Proceeds from principal business dispositions | 145 | 4,836 | — | — | |||||||||
Net cash from (payments for) principal businesses purchased | (2,643 | ) | (206 | ) | — | — | |||||||
All other investing activities | (800 | ) | (1,054 | ) | 4,119 | (6,345 | ) | ||||||
Cash from (used for) investing activities – continuing operations | (4,684 | ) | 2,175 | 7,857 | 37,321 | ||||||||
Cash from (used for) investing activities – discontinued operations | — | — | (1,922 | ) | (10,646 | ) | |||||||
Cash from (used for) investing activities | (4,684 | ) | 2,175 | 5,935 | 26,675 | ||||||||
Cash flows – financing activities | |||||||||||||
Net increase (decrease) in borrowings (maturities of 90 days or less) | 469 | 601 | 332 | 31 | |||||||||
Newly issued debt (maturities longer than 90 days) | 12,780 | 5,126 | 356 | 715 | |||||||||
Repayments and other debt reductions (maturities longer than 90 days) | (1,529 | ) | (179 | ) | (13,705 | ) | (45,288 | ) | |||||
Net dispositions (purchases) of GE shares for treasury | (2,732 | ) | (14,292 | ) | — | — | |||||||
Dividends paid to shareowners | (4,184 | ) | (4,324 | ) | (4,164 | ) | (11,184 | ) | |||||
All other financing activities | (271 | ) | (186 | ) | (692 | ) | (57 | ) | |||||
Cash from (used for) financing activities – continuing operations | 4,533 | (13,256 | ) | (17,872 | ) | (55,783 | ) | ||||||
Cash from (used for) financing activities – discontinued operations | — | — | 1,909 | (711 | ) | ||||||||
Cash from (used for) financing activities | 4,533 | (13,256 | ) | (15,964 | ) | (56,494 | ) | ||||||
Effect of currency exchange rate changes on cash and equivalents | 261 | (127 | ) | 277 | 103 | ||||||||
Increase (decrease) in cash and equivalents | 3,695 | (440 | ) | (8,683 | ) | (34,124 | ) | ||||||
Cash and equivalents at beginning of year | 10,525 | 10,372 | 39,033 | 80,506 | |||||||||
Cash and equivalents at June 30 | 14,220 | 9,931 | 30,351 | 46,382 | |||||||||
Less cash and equivalents of discontinued operations at June 30 | — | — | 522 | 4,190 | |||||||||
Cash and equivalents of continuing operations at June 30 | $ | 14,220 | $ | 9,931 | $ | 29,829 | $ | 42,192 |
(a) | Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. |
(b) | Represents GE Capital earnings/loss from continuing operations attributable to the Company, net of GE Capital dividends paid to GE. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE | ||||||
(In millions) | June 30, 2017 | December 31, 2016 | ||||
Assets | ||||||
Current receivables(a) | $ | 698 | $ | 366 | ||
Inventories | 579 | 211 | ||||
Property, plant, and equipment – net | 1,034 | 632 | ||||
Goodwill | 1,258 | 212 | ||||
Other intangible assets – net | 237 | 123 | ||||
Contract assets | 195 | 125 | ||||
Other | 96 | 76 | ||||
Assets of businesses held for sale | $ | 4,096 | $ | 1,745 | ||
Liabilities | ||||||
Accounts payable | $ | 394 | $ | 190 | ||
Progress collections and price adjustments accrued | 155 | 141 | ||||
Other current liabilities | 264 | 133 | ||||
Non-current compensation and benefits | 219 | 82 | ||||
Other | 162 | 110 | ||||
Liabilities of businesses held for sale | $ | 1,195 | $ | 656 |
(a) | Included transactions in our industrial businesses that were made on an arms-length basis with GE Capital, consisting of GE customer receivables sold to GE Capital of $280 million and $117 million at June 30, 2017 and December 31, 2016, respectively. These intercompany balances included within our held for sale businesses are reported in the GE and GE Capital columns of our financial statements, but are eliminated in deriving our consolidated financial statements. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS | ||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | ||||||||
Operations | ||||||||||||
Total revenues and other income (loss) | $ | 9 | $ | 568 | $ | 88 | $ | 1,861 | ||||
Earnings (loss) from discontinued operations before income taxes | $ | (216 | ) | $ | (240 | ) | $ | (412 | ) | $ | (160 | ) |
Benefit (provision) for income taxes (a) | 66 | 170 | 128 | 182 | ||||||||
Earnings (loss) from discontinued operations, net of taxes | $ | (150 | ) | $ | (70 | ) | $ | (284 | ) | $ | 22 | |
Disposal | ||||||||||||
Gain (loss) on disposal before income taxes | $ | 8 | $ | (295 | ) | $ | (19 | ) | $ | (540 | ) | |
Benefit (provision) for income taxes (a) | (3 | ) | (177 | ) | (81 | ) | (331 | ) | ||||
Gain (loss) on disposal, net of taxes | $ | 4 | $ | (472 | ) | $ | (100 | ) | $ | (871 | ) | |
Earnings (loss) from discontinued operations, net of taxes(b)(c) | $ | (146 | ) | $ | (541 | ) | $ | (385 | ) | $ | (849 | ) |
(a) | GE Capital's total tax benefit (provision) for discontinued operations and disposals included current tax benefit (provision) of $253 million and $(47) million for the three months ended June 30, 2017 and 2016, respectively, and $(323) million and $(881) million for the six months ended June 30, 2017 and 2016, respectively, including current U.S. Federal tax benefit (provision) of $68 million and $29 million for the three months ended June 30, 2017 and 2016, respectively, and $(519) million and $(471) million for the six months ended June 30, 2017 and June 30, 2016, respectively. The deferred tax benefit (provision) was $(190) million and $40 million for the three months ended June 30, 2017 and 2016, respectively, and $370 million and $732 million for the six months ended June 30, 2017 and June 30, 2016, respectively. |
(b) | The sum of GE Industrial earnings (loss) from discontinued operations, net of taxes, and GE Capital earnings (loss) from discontinued operations, net of taxes, after adjusting for earnings (loss) attributable to noncontrolling interests related to discontinued operations, is reported within earnings (loss) from discontinued operations, net of taxes, in the GE Industrial column of the Consolidated Statement of Earnings (Loss). |
(c) | Earnings (loss) from discontinued operations attributable to the Company, before income taxes, was $(215) million and $(537) million for the three months ended June 30, 2017 and 2016, respectively, and $(438) million and $(703) million for the six months ended June 30, 2017 and 2016, respectively. |
(In millions) | June 30, 2017 | December 31, 2016 | ||||
Assets | ||||||
Cash and equivalents | $ | 522 | $ | 1,429 | ||
Investment securities | 1,729 | 2,626 | ||||
Deferred income taxes | 950 | 487 | ||||
Financing receivables held for sale | 3,711 | 8,547 | ||||
Other assets | 938 | 1,727 | ||||
Assets of discontinued operations | $ | 7,850 | $ | 14,815 | ||
Liabilities | ||||||
Accounts payable | 87 | 164 | ||||
Borrowings | — | 2,076 | ||||
Other liabilities | 825 | 1,918 | ||||
Liabilities of discontinued operations | $ | 911 | $ | 4,158 |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
June 30, 2017 | December 31, 2016 | ||||||||||||||||||||||||
(In millions) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value (a) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value (a) | |||||||||||||||||
Debt | |||||||||||||||||||||||||
U.S. corporate | $ | 20,129 | $ | 3,550 | $ | (50 | ) | $ | 23,629 | $ | 20,049 | $ | 3,081 | $ | (85 | ) | $ | 23,046 | |||||||
Non-U.S. corporate | 7,106 | 95 | (19 | ) | 7,182 | 11,917 | 98 | (27 | ) | 11,987 | |||||||||||||||
State and municipal | 3,934 | 504 | (67 | ) | 4,371 | 3,916 | 412 | (92 | ) | 4,236 | |||||||||||||||
Mortgage and asset-backed | 2,738 | 103 | (20 | ) | 2,821 | 2,787 | 111 | (37 | ) | 2,861 | |||||||||||||||
Government and agencies | 1,664 | 99 | (2 | ) | 1,761 | 1,842 | 160 | (26 | ) | 1,976 | |||||||||||||||
Equity (b) | 171 | 34 | (2 | ) | 204 | 154 | 55 | (1 | ) | 208 | |||||||||||||||
Total | $ | 35,743 | $ | 4,384 | $ | (159 | ) | $ | 39,968 | $ | 40,665 | $ | 3,917 | $ | (269 | ) | $ | 44,313 |
(a) | Includes $162 million and $137 million of investment securities held by GE at June 30, 2017 and December 31, 2016, respectively, of which $107 million and $86 million are equity securities. |
(b) | Estimated fair values include $75 million and $17 million of trading securities at June 30, 2017 and December 31, 2016, respectively. Net unrealized gains (losses) recorded to earnings related to these securities were $29 million and an insignificant amount for the three months ended and $29 million and $(2) million for the six months ended June 30, 2017 and 2016, respectively. |
ESTIMATED FAIR VALUE AND GROSS UNREALIZED LOSSES OF AVAILABLE-FOR-SALE INVESTMENT SECURITIES | |||||||||||||
In loss position for | |||||||||||||
Less than 12 months | 12 months or more | ||||||||||||
(In millions) | Estimated fair value | Gross unrealized losses | Estimated fair value | Gross unrealized losses | |||||||||
June 30, 2017 | |||||||||||||
Debt | |||||||||||||
U.S. corporate | $ | 957 | $ | (39 | ) | $ | 233 | $ | (11 | ) | |||
Non-U.S. corporate | 5,102 | (15 | ) | 12 | (4 | ) | |||||||
State and municipal | 210 | (15 | ) | 156 | (52 | ) | |||||||
Mortgage and asset-backed | 856 | (18 | ) | 42 | (2 | ) | |||||||
Government and agencies | 437 | (2 | ) | — | — | ||||||||
Equity | 9 | (2 | ) | — | — | ||||||||
Total | $ | 7,571 | $ | (90 | ) | $ | 443 | $ | (69 | ) | |||
December 31, 2016 | |||||||||||||
Debt | |||||||||||||
U.S. corporate | $ | 1,692 | $ | (55 | ) | $ | 359 | $ | (30 | ) | |||
Non-U.S. corporate | 5,352 | (26 | ) | 14 | (1 | ) | |||||||
State and municipal | 674 | (27 | ) | 158 | (64 | ) | |||||||
Mortgage and asset-backed | 822 | (21 | ) | 132 | (16 | ) | |||||||
Government and agencies | 549 | (26 | ) | — | — | ||||||||
Equity | 9 | (1 | ) | — | — | ||||||||
Total | $ | 9,098 | $ | (157 | ) | $ | 663 | $ | (111 | ) |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
CONTRACTUAL MATURITIES OF INVESTMENT IN AVAILABLE-FOR-SALE DEBT SECURITIES | ||||||
(EXCLUDING MORTGAGE AND ASSET-BACKED SECURITIES) | ||||||
(In millions) | Amortized cost | Estimated fair value | ||||
Due | ||||||
Within one year | $ | 5,902 | $ | 5,900 | ||
After one year through five years | 4,255 | 4,449 | ||||
After five years through ten years | 5,209 | 5,704 | ||||
After ten years | 17,468 | 20,890 |
Consolidated(a)(b) | GE(c) | ||||||||||||
(In millions) | June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | |||||||||
Current receivables | $ | 22,407 | $ | 24,935 | $ | 12,647 | $ | 13,562 | |||||
Allowance for losses | (960 | ) | (858 | ) | (949 | ) | (847 | ) | |||||
Total | $ | 21,447 | $ | 24,076 | $ | 11,697 | $ | 12,715 |
(a) | Included GE industrial customer receivables sold to a GE Capital affiliate and recorded on GE Capital’s balance sheet of $10,599 million and $12,304 million at June 30, 2017 and December 31, 2016, respectively. The consolidated total included a deferred purchase price receivable of $374 million and $483 million at June 30, 2017 and December 31, 2016, respectively, related to our Receivables Facility. |
(b) | In order to manage the credit exposure, the Company sells additional current receivables to third parties outside the Receivables Facility, substantially all of which are serviced by the Company. The outstanding balance of these current receivables was $2,532 million and $3,821 million at June 30, 2017 and December 31, 2016, respectively. Of these balances, $1,187 million and $2,504 million was sold by GE to GE Capital prior to the sale to third parties at June 30, 2017 and December 31, 2016, respectively. At June 30, 2017 and December 31, 2016, our maximum exposure to loss under the limited recourse arrangements is $143 million and $215 million, respectively. |
(c) | GE current receivables balances at June 30, 2017 and December 31, 2016, before allowance for losses, included $7,955 million and $8,927 million, respectively, from sales of goods and services to customers. The remainder of the balances primarily relates to supplier advances, revenue sharing programs and other non-income based tax receivables. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(In millions) | June 30, 2017 | December 31, 2016 | ||||
Raw materials and work in process | $ | 12,830 | $ | 12,636 | ||
Finished goods | 9,110 | 8,798 | ||||
Unbilled shipments | 427 | 536 | ||||
22,367 | 21,971 | |||||
Revaluation to LIFO | 476 | 383 | ||||
Total inventories | $ | 22,843 | $ | 22,354 |
FINANCING RECEIVABLES, NET | ||||||
(In millions) | June 30, 2017 | December 31, 2016 | ||||
Loans, net of deferred income | $ | 19,790 | $ | 21,101 | ||
Investment in financing leases, net of deferred income | 4,973 | 4,998 | ||||
24,764 | 26,099 | |||||
Allowance for losses | (68 | ) | (58 | ) | ||
Financing receivables – net | $ | 24,696 | $ | 26,041 |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(In millions) | June 30, 2017 | December 31, 2016 | ||||
Original cost | $ | 86,320 | $ | 85,875 | ||
Less accumulated depreciation and amortization | (36,153 | ) | (35,356 | ) | ||
Property, plant and equipment – net | $ | 50,167 | $ | 50,518 |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
CHANGES IN GOODWILL BALANCES | ||||||||||||
(In millions) | Balance at January 1, 2017 | Acquisitions (a) | Dispositions, currency exchange and other | Balance at June 30, 2017 | ||||||||
Power | $ | 19,816 | $ | 50 | $ | 237 | $ | 20,103 | ||||
Renewable Energy | 2,507 | 1,165 | 126 | 3,799 | ||||||||
Oil & Gas | 10,363 | — | 93 | 10,457 | ||||||||
Aviation | 9,455 | 16 | 269 | 9,739 | ||||||||
Healthcare | 17,424 | 47 | 38 | 17,509 | ||||||||
Transportation | 899 | — | 7 | 906 | ||||||||
Energy Connections & Lighting | 6,868 | — | (859 | ) | 6,009 | |||||||
Capital | 2,368 | — | 1 | 2,369 | ||||||||
Corporate | 739 | 688 | 19 | 1,446 | ||||||||
Total | $ | 70,438 | $ | 1,965 | $ | (69 | ) | $ | 72,335 |
OTHER INTANGIBLE ASSETS - NET | ||||||
(In millions) | June 30, 2017 | December 31, 2016 | ||||
Intangible assets subject to amortization | $ | 16,839 | $ | 16,336 | ||
Indefinite-lived intangible assets(a) | 90 | 100 | ||||
Total | $ | 16,929 | $ | 16,436 |
(a) | Indefinite-lived intangible assets principally comprise trademarks and in-process research and development. |
INTANGIBLE ASSETS SUBJECT TO AMORTIZATION | |||||||||||||||||||
June 30, 2017 | December 31, 2016 | ||||||||||||||||||
(In millions) | Gross carrying amount | Accumulated amortization | Net | Gross carrying amount | Accumulated amortization | Net | |||||||||||||
Customer-related | $ | 9,446 | $ | (2,742 | ) | $ | 6,704 | $ | 9,172 | $ | (2,408 | ) | $ | 6,764 | |||||
Patents and technology | 9,461 | (3,502 | ) | 5,959 | 8,693 | (3,325 | ) | 5,368 | |||||||||||
Capitalized software | 7,939 | (4,806 | ) | 3,135 | 7,652 | (4,538 | ) | 3,114 | |||||||||||
Trademarks | 1,209 | (365 | ) | 843 | 1,165 | (307 | ) | 858 | |||||||||||
Lease valuations | 129 | (69 | ) | 59 | 143 | (59 | ) | 84 | |||||||||||
Present value of future profits(a) | 701 | (701 | ) | — | 684 | (684 | ) | — | |||||||||||
All other | 239 | (99 | ) | 140 | 273 | (124 | ) | 149 | |||||||||||
Total | $ | 29,124 | $ | (12,284 | ) | $ | 16,839 | $ | 27,781 | $ | (11,444 | ) | $ | 16,336 |
(a) | Balances at June 30, 2017 and December 31, 2016 include adjustments of $227 million and $241 million, respectively, to the present value of future profits in our run-off insurance activities to reflect the effects that would have been recognized had the related unrealized investment securities holding net gains actually been realized. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(In millions) | June 30, 2017 | December 31, 2016 | ||||
GE | ||||||
Revenues in excess of billings | ||||||
Long-term product service agreements(a) | $ | 14,764 | $ | 12,752 | ||
Long-term equipment contract revenues(b) | 6,774 | 5,859 | ||||
Total revenues in excess of billings | 21,538 | 18,611 | ||||
Deferred inventory costs(c) | 4,040 | 3,349 | ||||
Non-recurring engineering costs(d) | 2,295 | 2,185 | ||||
Other | 1,051 | 1,018 | ||||
Contract assets | $ | 28,924 | $ | 25,162 |
(a) | Long-term product service agreement balances are presented net of related billings in excess of revenues of $2,679 million and $3,750 million at June 30, 2017 and December 31, 2016, respectively. |
(b) | Reflects revenues earned in excess of billings on our long-term contracts to construct technically complex equipment (such as gas power systems). |
(c) | Represents cost deferral for shipped goods (such as components for wind turbine assembly within our Renewable Energy segment) and other costs for which the revenue recognition criteria has not yet been met. |
(d) | Includes costs incurred prior to production (such as requisition engineering) for long-term equipment production contracts, primarily within our Aviation segment, which are allocated ratably to each unit produced. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(In millions) | June 30, 2017 | December 31, 2016 | ||||
Short-term borrowings | ||||||
GE | ||||||
Commercial paper | $ | 2,000 | $ | 1,500 | ||
Current portion of long-term borrowings | 16,120 | 17,109 | ||||
Other | 2,211 | 1,874 | ||||
Total GE short-term borrowings(a) | 20,331 | 20,482 | ||||
GE Capital | ||||||
U.S. Commercial paper | 5,012 | 5,002 | ||||
Current portion of long-term borrowings(b) | 5,869 | 6,517 | ||||
Intercompany payable to GE(c) | 11,923 | 11,696 | ||||
Other | 569 | 229 | ||||
Total GE Capital short-term borrowings | 23,373 | 23,443 | ||||
Eliminations(c) | (13,660 | ) | (13,212 | ) | ||
Total short-term borrowings | $ | 30,044 | $ | 30,714 | ||
Long-term borrowings | ||||||
GE | ||||||
Senior notes | $ | 56,699 | $ | 54,396 | ||
Subordinated notes | 2,835 | 2,768 | ||||
Subordinated debentures(e) | 740 | 719 | ||||
Other | 1,337 | 928 | ||||
Total GE long-term borrowings(a) | 61,611 | 58,810 | ||||
GE Capital | ||||||
Senior notes | 40,927 | 44,131 | ||||
Subordinated notes | 218 | 236 | ||||
Intercompany payable to GE(d) | 36,293 | 47,084 | ||||
Other(b) | 1,414 | 1,992 | ||||
Total GE Capital long-term borrowings | 78,852 | 93,443 | ||||
Eliminations(d) | (36,786 | ) | (47,173 | ) | ||
Total long-term borrowings | $ | 103,676 | $ | 105,080 | ||
Non-recourse borrowings of consolidated securitization entities(f) | $ | 682 | $ | 417 | ||
Total borrowings | $ | 134,402 | $ | 136,210 |
(a) | Excluding assumed debt of GE Capital, the total amount of GE borrowings was $33,725 million and $20,512 million at June 30, 2017 and December 31, 2016, respectively. |
(b) | Included $1,781 million and $2,665 million of funding secured by aircraft and other collateral at June 30, 2017 and December 31, 2016, respectively, of which $591 million and $1,419 million is non-recourse to GE Capital at June 30, 2017 and December 31, 2016, respectively. |
(c) | Included a reduction of zero and $1,329 million for short-term intercompany loans from GE Capital to GE at June 30, 2017 and December 31, 2016, respectively, which bear the right of offset against amounts owed under the assumed debt agreement. Excluding intercompany loans, total short-term assumed debt was $11,923 million and $13,024 million at June 30, 2017 and December 31, 2016, respectively. The remaining short-term loan balance was paid in January 2017. |
(d) | Included a reduction of $4,075 million and zero for long-term intercompany loans from GE Capital to GE at June 30, 2017 and December 31, 2016, respectively, which bear the right of offset against amounts owed under the assumed debt agreement. Excluding intercompany loans, total long-term assumed debt was $40,368 million and $47,084 million at June 30, 2017 and December 31, 2016, respectively. The $4,075 million of intercompany loans collectively have a weighted average interest rate of 3.6% and term of approximately 15 years. |
(e) | Comprises subordinated debentures which constitute the sole assets of trusts that have issued trust preferred securities and where GE owns 100% of the common securities of the trusts. Obligations associated with these trusts are unconditionally guaranteed by GE. |
(f) | Included $528 million and $320 million of current portion of long-term borrowings at June 30, 2017 and December 31, 2016, respectively. See Note 17. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(In millions) | June 30, 2017 | December 31, 2016 | ||||
Future policy benefit reserves(a) | $ | 19,105 | $ | 18,741 | ||
Investment contracts | 2,671 | 2,813 | ||||
Other(b) | 5,241 | 4,992 | ||||
27,016 | 26,546 | |||||
Eliminations | (545) | (460) | ||||
Total | $ | 26,471 | $ | 26,086 |
(a) | The future policy benefit reserve is subject to an annual review to determine its adequacy. Should the liability for future policy benefits plus the present value of expected future gross premiums be insufficient to provide for the present value of expected future policy benefits and expenses, a premium deficiency would be recorded. |
(b) | Substantially all unpaid claims and claims adjustment expenses and unearned premiums. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
EFFECT ON OPERATIONS OF PENSION PLANS | ||||||||||||||||
Principal pension plans | ||||||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost for benefits earned | $ | 254 | $ | 291 | $ | 543 | $ | 606 | ||||||||
Prior service cost amortization | 72 | 76 | 145 | 152 | ||||||||||||
Expected return on plan assets | (849 | ) | (836 | ) | (1,698 | ) | (1,670 | ) | ||||||||
Interest cost on benefit obligations | 712 | 735 | 1,429 | 1,469 | ||||||||||||
Net actuarial loss amortization | 697 | 612 | 1,407 | 1,224 | ||||||||||||
Curtailment loss (gain) | — | (1 | ) | 43 | (a) | (1 | ) | |||||||||
Pension plans cost | $ | 886 | $ | 877 | $ | 1,869 | $ | 1,780 |
(a) | Curtailment loss resulting from our intent to sell the Industrial Solutions business within our Energy Connections & Lighting segment. |
Other pension plans | ||||||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost for benefits earned | $ | 123 | $ | 118 | $ | 274 | $ | 231 | ||||||||
Prior service credit amortization | (1 | ) | — | (2 | ) | (1 | ) | |||||||||
Expected return on plan assets | (301 | ) | (259 | ) | (595 | ) | (522 | ) | ||||||||
Interest cost on benefit obligations | 145 | 168 | 287 | 340 | ||||||||||||
Net actuarial loss amortization | 107 | 65 | 210 | 129 | ||||||||||||
Pension plans cost | $ | 73 | $ | 92 | $ | 174 | $ | 177 |
EFFECT ON OPERATIONS OF PRINCIPAL RETIREE BENEFIT PLANS | ||||||||||||||||
Principal retiree benefit plans | ||||||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost for benefits earned | $ | 26 | $ | 27 | $ | 52 | $ | 52 | ||||||||
Prior service credit amortization | (43 | ) | (41 | ) | (86 | ) | (82 | ) | ||||||||
Expected return on plan assets | (9 | ) | (11 | ) | (18 | ) | (22 | ) | ||||||||
Interest cost on benefit obligations | 56 | 63 | 113 | 126 | ||||||||||||
Net actuarial gain amortization | (20 | ) | (14 | ) | (41 | ) | (27 | ) | ||||||||
Curtailment loss | — | — | 3 | (a) | — | |||||||||||
Retiree benefit plans cost | $ | 10 | $ | 24 | $ | 23 | $ | 47 |
(a) | Curtailment loss resulting from our intent to sell the Industrial Solutions business within our Energy Connections & Lighting segment. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
UNRECOGNIZED TAX BENEFITS | ||||||
(In millions) | June 30, 2017 | December 31, 2016 | ||||
Unrecognized tax benefits | $ | 4,760 | $ | 4,692 | ||
Portion that, if recognized, would reduce tax expense and effective tax rate(a) | 2,894 | 2,886 | ||||
Accrued interest on unrecognized tax benefits | 682 | 615 | ||||
Accrued penalties on unrecognized tax benefits | 119 | 118 | ||||
Reasonably possible reduction to the balance of unrecognized tax benefits | ||||||
in succeeding 12 months | 0-600 | 0-600 | ||||
Portion that, if recognized, would reduce tax expense and effective tax rate(a) | 0-500 | 0-500 |
(a) | Some portion of such reduction may be reported as discontinued operations. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | ||||||||
Investment securities | ||||||||||||
Beginning balance | $ | 622 | $ | 680 | $ | 674 | $ | 460 | ||||
Other comprehensive income (loss) (OCI) before reclassifications – net of deferred taxes of $146, $222, $159 and $304 | 291 | 419 | 309 | 578 | ||||||||
Reclassifications from OCI – net of deferred taxes of $(25), $(9), $(61) and $31 | (48 | ) | (21 | ) | (118 | ) | 39 | |||||
Other comprehensive income (loss)(a) | 243 | 397 | 191 | 617 | ||||||||
Less OCI attributable to noncontrolling interests | — | — | — | — | ||||||||
Ending balance | $ | 866 | $ | 1,077 | $ | 866 | $ | 1,077 | ||||
Currency translation adjustments (CTA) | ||||||||||||
Beginning balance | $ | (6,004 | ) | $ | (5,500 | ) | $ | (6,816 | ) | $ | (5,499 | ) |
OCI before reclassifications – net of deferred taxes of $(207), $(50), $(241) and $217 | 491 | 26 | 753 | 141 | ||||||||
Reclassifications from OCI – net of deferred taxes of $(1), $(39), $(541) and $80 | 34 | 29 | 588 | (85 | ) | |||||||
Other comprehensive income (loss)(a) | 525 | 55 | 1,341 | 57 | ||||||||
Less OCI attributable to noncontrolling interests | 2 | 3 | 6 | 6 | ||||||||
Ending balance | $ | (5,481 | ) | $ | (5,448 | ) | $ | (5,481 | ) | $ | (5,448 | ) |
Cash flow hedges | ||||||||||||
Beginning balance | $ | 32 | $ | (26 | ) | $ | 12 | $ | (80 | ) | ||
OCI before reclassifications – net of deferred taxes of $(8), $2, $(2) and $(5) | 44 | (15 | ) | 64 | (40 | ) | ||||||
Reclassifications from OCI – net of deferred taxes of $(10), $(4), $(9) and $1 | (54 | ) | (10 | ) | (55 | ) | 69 | |||||
Other comprehensive income (loss)(a) | (10 | ) | (25 | ) | 9 | 30 | ||||||
Less OCI attributable to noncontrolling interests | — | — | — | — | ||||||||
Ending balance | $ | 22 | $ | (51 | ) | $ | 22 | $ | (51 | ) | ||
Benefit plans | ||||||||||||
Beginning balance | $ | (11,421 | ) | $ | (10,859 | ) | $ | (12,469 | ) | $ | (11,410 | ) |
Prior service credit (costs) - net of deferred taxes of $0, $0, $0 and $5 | — | — | — | 23 | ||||||||
Net actuarial gain (loss) – net of deferred taxes of $32, $(65), $133 and $(43) | 24 | (80 | ) | 500 | (12 | ) | ||||||
Net curtailment/settlement - net of deferred taxes of $0, $0, $16 and $0 | — | (1 | ) | 30 | (1 | ) | ||||||
Prior service cost amortization – net of deferred taxes of $19, $20, $38 and $41 | 10 | 17 | 21 | 33 | ||||||||
Net actuarial loss amortization – net of deferred taxes of $251, $217, $504 and $433 | 526 | 447 | 1,059 | 890 | ||||||||
Other comprehensive income (loss)(a) | 560 | 382 | 1,610 | 933 | ||||||||
Less OCI attributable to noncontrolling interests | (1 | ) | — | 1 | (1 | ) | ||||||
Ending balance | $ | (10,860 | ) | $ | (10,476 | ) | $ | (10,860 | ) | $ | (10,476 | ) |
Accumulated other comprehensive income (loss) at June 30 | $ | (15,454 | ) | $ | (14,898 | ) | $ | (15,454 | ) | $ | (14,898 | ) |
(a) | Total other comprehensive income (loss) was $1,318 million and $810 million in the three months ended June 30, 2017 and 2016, respectively, and $3,151 million and $1,636 million in the six months ended June 30, 2017 and 2016 respectively. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
RECLASSIFICATION OUT OF AOCI | ||||||||||||||
Three months ended | Six months ended | |||||||||||||
June 30 | June 30 | |||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | Statement of Earnings caption | |||||||||
Available-for-sale securities | ||||||||||||||
Gains (losses) on securities | $ | 73 | $ | 30 | $ | 178 | $ | (70 | ) | Total revenues and other income(a) | ||||
Income taxes | (25 | ) | (9 | ) | (61 | ) | 31 | Benefit (provision) for income taxes(b) | ||||||
Net of tax | $ | 48 | $ | 21 | $ | 118 | $ | (39 | ) | |||||
Currency translation adjustments | ||||||||||||||
Gains (losses) on dispositions | $ | (33 | ) | $ | 10 | $ | (47 | ) | $ | 5 | Total revenues and other income(c) | |||
Income taxes | (1 | ) | (39 | ) | (541 | ) | 80 | Benefit (provision) for income taxes(d) | ||||||
Net of tax | $ | (34 | ) | $ | (29 | ) | $ | (588 | ) | $ | 85 | |||
Cash flow hedges | ||||||||||||||
Gains (losses) on interest rate derivatives | $ | (15 | ) | $ | (26 | ) | $ | (15 | ) | $ | (55 | ) | Interest and other financial charges | |
Foreign exchange contracts | 78 | 37 | 78 | (5 | ) | (e) | ||||||||
Other | 1 | 2 | 1 | (11 | ) | (f) | ||||||||
Total before tax | 65 | 14 | 64 | (71 | ) | |||||||||
Income taxes | (10 | ) | (4 | ) | (9 | ) | 1 | Benefit (provision) for income taxes | ||||||
Net of tax | $ | 54 | $ | 10 | $ | 55 | $ | (69 | ) | |||||
Benefit plan items | ||||||||||||||
Curtailment gain (loss) | $ | — | $ | 1 | $ | (46 | ) | $ | 1 | (g) | ||||
Amortization of prior service costs | (29 | ) | (37 | ) | (59 | ) | (74 | ) | (g) | |||||
Amortization of actuarial gains (losses) | (777 | ) | (664 | ) | (1,563 | ) | (1,323 | ) | (g) | |||||
Total before tax | (806 | ) | (700 | ) | (1,668 | ) | (1,396 | ) | ||||||
Income taxes | 270 | 237 | 558 | 474 | Benefit (provision) for income taxes | |||||||||
Net of tax | $ | (536 | ) | $ | (463 | ) | $ | (1,110 | ) | $ | (922 | ) | ||
Total reclassification adjustments (net of tax) | $ | (467 | ) | $ | (461 | ) | $ | (1,525 | ) | $ | (946 | ) |
(a) | Included an insignificant amount and $6 million for the three months ended June 30, 2017 and 2016, and an insignificant amount and $(72)million for the six months ended June 30, 2017 and 2016, respectively in earnings (loss) from discontinued operations, net of taxes. |
(b) | Included an insignificant amount and $(1) million for the three months ended June 30, 2017 and 2016, and an insignificant amount and $31 million for the six months ended June 30, 2017 and 2016 respectively in earnings (loss) from discontinued operations, net of taxes. |
(c) | Included $3 million and $77 million for the three months ended June 30, 2017 and 2016, and $32 million and $71 million for the six months ended June 30, 2017 and 2016 respectively in earnings (loss) from discontinued operations, net of taxes. |
(d) | Included $(1) million and $(39) million for the three months ended June 30, 2017 and 2016, and $(541) million and $80 million for the six months ended June 30, 2017 and 2016 respectively in earnings (loss) from discontinued operations, net of taxes |
(e) | Primarily includes $76 million and $53 million in GE Capital revenues from services and $(10) million and $(17) million in interest and other financial charges in the three months ended June 30, 2017 and 2016, respectively and $101 million and $31 million in GE Capital revenues from services and $(23) million and $(36) million in interest and other financial charges in the six months ended June 30, 2017 and 2016, respectively. |
(f) | Primarily recorded in costs and expenses. |
(g) | Curtailment gain (loss), amortization of prior service costs and actuarial gains and losses out of AOCI are included in the computation of net periodic pension costs. See Note 12 for further information. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
CHANGES TO NONCONTROLLING INTERESTS | |||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||
Beginning balance | $ | 1,639 | $ | 1,667 | $ | 1,663 | $ | 1,864 | |||||
Net earnings (loss) | 14 | 1 | 20 | (68 | ) | ||||||||
Dividends | (22 | ) | (14 | ) | (31 | ) | (21 | ) | |||||
Dispositions | 5 | — | (8 | ) | (42 | ) | |||||||
Other (including AOCI)(a)(b) | (3 | ) | 39 | (10 | ) | (40 | ) | ||||||
Ending balance at June 30 | $ | 1,634 | $ | 1,693 | $ | 1,634 | $ | 1,693 |
(a) | Includes research & development partner funding arrangements and acquisitions. |
(b) | 2016 included $(123) million for deconsolidation of investment funds managed by GE Asset Management (GEAM) upon the adoption of ASU 2015-02, Amendments to the Consolidation Analysis, and prior to the July 1, 2016 sale of GEAM. |
CHANGES TO REDEEMABLE NONCONTROLLING INTERESTS | |||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||
Beginning balance | $ | 3,054 | $ | 3,036 | $ | 3,025 | $ | 2,972 | |||||
Net earnings (loss) | (28 | ) | (86 | ) | (109 | ) | (139 | ) | |||||
Dividends | — | — | (11 | ) | (9 | ) | |||||||
Redemption value adjustment | 43 | 79 | 114 | 110 | |||||||||
Other | 125 | 42 | 173 | 135 | |||||||||
Ending balance at June 30(a) | $ | 3,193 | $ | 3,070 | $ | 3,193 | $ | 3,070 |
(a) | Included $2,894 million and $2,950 million related to the Alstom joint ventures at June 30, 2017 and 2016, respectively. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Three months ended June 30 | |||||||||||||
2017 | 2016 | ||||||||||||
(In millions; per-share amounts in dollars) | Diluted | Basic | Diluted | Basic | |||||||||
Amounts attributable to the Company: | |||||||||||||
Consolidated | |||||||||||||
Earnings from continuing operations for per-share calculation(a)(b) | $ | 1,514 | $ | 1,514 | $ | 3,446 | $ | 3,449 | |||||
Preferred stock dividends | (182 | ) | (182 | ) | (152 | ) | (152 | ) | |||||
Earnings from continuing operations attributable to common shareowners for per-share calculation(a)(b) | $ | 1,332 | $ | 1,332 | $ | 3,294 | $ | 3,297 | |||||
Loss from discontinued operations for per-share calculation(a)(b) | (157 | ) | (157 | ) | (546 | ) | (543 | ) | |||||
Net earnings attributable to GE common shareowners for per-share calculation(a)(b) | $ | 1,179 | $ | 1,179 | $ | 2,751 | $ | 2,753 | |||||
Average equivalent shares | |||||||||||||
Shares of GE common stock outstanding | 8,671 | 8,671 | 9,079 | 9,079 | |||||||||
Employee compensation-related shares (including stock options) | 89 | — | 108 | — | |||||||||
Total average equivalent shares | 8,760 | 8,671 | 9,187 | 9,079 | |||||||||
Per-share amounts | |||||||||||||
Earnings from continuing operations | $ | 0.15 | $ | 0.15 | $ | 0.36 | $ | 0.36 | |||||
Loss from discontinued operations | (0.02 | ) | (0.02 | ) | (0.06 | ) | (0.06 | ) | |||||
Net earnings | 0.13 | 0.14 | 0.30 | 0.30 |
Six months ended June 30 | |||||||||||||
2017 | 2016 | ||||||||||||
(In millions; per-share amounts in dollars) | Diluted | Basic | Diluted | Basic | |||||||||
Amounts attributable to the Company: | |||||||||||||
Consolidated | |||||||||||||
Earnings from continuing operations for per-share calculation(a)(b) | $ | 2,401 | $ | 2,400 | $ | 3,981 | $ | 3,983 | |||||
Preferred stock dividends | (216 | ) | (216 | ) | (441 | ) | (441 | ) | |||||
Earnings from continuing operations attributable to common shareowners for per-share calculation(a)(b) | $ | 2,185 | $ | 2,184 | $ | 3,540 | $ | 3,542 | |||||
Loss from discontinued operations for per-share calculation(a)(b) | (399 | ) | (400 | ) | (861 | ) | (858 | ) | |||||
Net earnings attributable to GE common shareowners for per-share calculation(a)(b) | $ | 1,793 | $ | 1,793 | $ | 2,687 | $ | 2,690 | |||||
Average equivalent shares | |||||||||||||
Shares of GE common stock outstanding | 8,695 | 8,695 | 9,179 | 9,179 | |||||||||
Employee compensation-related shares (including stock options) | 94 | — | 101 | — | |||||||||
Total average equivalent shares | 8,789 | 8,695 | 9,281 | 9,179 | |||||||||
Per-share amounts | |||||||||||||
Earnings from continuing operations | $ | 0.25 | $ | 0.25 | $ | 0.38 | $ | 0.39 | |||||
Loss from discontinued operations | (0.05 | ) | (0.05 | ) | (0.09 | ) | (0.09 | ) | |||||
Net earnings | 0.20 | 0.21 | 0.29 | 0.29 |
(a) | Our unvested restricted stock unit awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities. For the three months ended June 30, 2017 pursuant to the two-class method, as a result of excess dividends in respect to the current period earnings, losses were not allocated to the participating securities. For the three months ended June 30, 2016, participating securities are included in the computation of earnings per share pursuant to the two-class method and the application of this treatment had an insignificant effect. For the six months ended June 30, 2017 and 2016, pursuant to the two-class method, as a result of excess dividends in respect to the current period earnings, losses were not allocated to the participating securities. |
(b) | Included an insignificant amount of dividend equivalents in each of the periods presented. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
June 30, 2017 | December 31, 2016 | ||||||||||||
(In millions) | Carrying amount (net) | Estimated fair value | Carrying amount (net) | Estimated fair value | |||||||||
GE | |||||||||||||
Assets | |||||||||||||
Investments and notes receivable | $ | 1,305 | $ | 1,355 | $ | 1,526 | $ | 1,595 | |||||
Liabilities | |||||||||||||
Borrowings(a)(b) | 29,650 | 30,455 | 19,184 | 19,923 | |||||||||
Borrowings (debt assumed)(a)(c) | 52,291 | 59,603 | 60,109 | 66,998 | |||||||||
GE Capital | |||||||||||||
Assets | |||||||||||||
Loans | 19,740 | 19,774 | 21,060 | 20,830 | |||||||||
Other commercial mortgages | 1,471 | 1,554 | 1,410 | 1,472 | |||||||||
Loans held for sale | 604 | 604 | 473 | 473 | |||||||||
Other financial instruments(d) | 116 | 149 | 121 | 150 | |||||||||
Liabilities | |||||||||||||
Borrowings(a)(e)(f)(g) | 54,691 | 58,752 | 58,523 | 62,024 | |||||||||
Investment contracts | 2,671 | 3,130 | 2,813 | 3,277 |
(a) | See Note 10. |
(b) | Included $107 million and $115 million of accrued interest in estimated fair value at June 30, 2017 and December 31, 2016, respectively. |
(c) | Included $553 million and $803 million of accrued interest in estimated fair value at June 30, 2017 and December 31, 2016, respectively. |
(d) | Principally comprises cost method investments. |
(e) | Fair values exclude interest rate and currency derivatives designated as hedges of borrowings. Had they been included, the fair value of borrowings at June 30, 2017 and December 31, 2016 would have been reduced by $2,478 million and $2,397 million, respectively. |
(f) | Included $808 million and $775 million of accrued interest in estimated fair value at June 30, 2017 and December 31, 2016, respectively. |
(g) | Excluded $48,216 million and $58,780 million of net intercompany payable to GE at June 30, 2017 and December 31, 2016, respectively. |
NOTIONAL AMOUNTS OF LOAN COMMITMENTS | ||||||
(In millions) | June 30, 2017 | December 31, 2016 | ||||
Ordinary course of business lending commitments(a) | $ | 789 | $ | 687 | ||
Unused revolving credit lines | 229 | 238 |
(a) | Excluded investment commitments of $259 million and $522 million at June 30, 2017 and December 31, 2016, respectively. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
FINANCIAL STATEMENT EFFECTS - CASH FLOW HEDGES | |||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||
Balance sheet changes | |||||||||||||
Fair value of derivatives increase (decrease) | $ | 34 | $ | 11 | $ | 56 | $ | (45 | ) | ||||
Shareowners' equity (increase) decrease | (34 | ) | (12 | ) | (56 | ) | 45 | ||||||
Earnings (loss) related to ineffectiveness | — | — | — | 1 | |||||||||
Earnings (loss) effect of derivatives(a) | 65 | 14 | 64 | (71 | ) |
(a) | Offsets earnings effect of the hedged forecasted transaction |
FINANCIAL STATEMENT EFFECTS - FAIR VALUE HEDGES | ||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | ||||||||
Balance sheet changes | ||||||||||||
Fair value of derivative increase (decrease) | $ | (57 | ) | $ | 888 | $ | (282 | ) | $ | 2,610 | ||
Adjustment to carrying amount of hedged debt (increase) decrease | 2 | (933 | ) | 164 | (2,688 | ) | ||||||
Earnings (loss) related to hedge ineffectiveness | (56 | ) | (46 | ) | (118 | ) | (77 | ) |
FINANCIAL STATEMENT EFFECTS - NET INVESTMENT HEDGES | ||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | ||||||||
Balance sheet changes | ||||||||||||
Fair value of derivatives increase (decrease) | $ | (98 | ) | $ | (282 | ) | $ | (191 | ) | $ | 47 | |
Fair value of non-derivative instruments (increase) decrease | (389 | ) | (322 | ) | (859 | ) | (49 | ) | ||||
Shareowners' equity (increase) decrease | 490 | 609 | 1,063 | 40 | ||||||||
Earnings (loss) related to | ||||||||||||
spot-forward differences and ineffectiveness | 3 | 5 | 13 | 37 | ||||||||
Earnings (loss) related to | ||||||||||||
reclassification upon sale or liquidation(a) | — | (380 | ) | 59 | (1,072 | ) |
(a) | Included zero and $(380) million recorded in discontinued operations in the three months ended June 30, 2017 and 2016 and $59 million and $(1,072) million recorded in discontinued operations in the six months ended June 30, 2017 and 2016, respectively. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
FINANCIAL STATEMENT EFFECTS - ECONOMIC HEDGES | ||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | ||||||||
Balance sheet changes | ||||||||||||
Change in fair value of economic hedge increase (decrease) | $ | 979 | $ | 157 | $ | 641 | $ | (122 | ) | |||
Change in carrying amount of item being hedged increase (decrease) | (1,180 | ) | (286 | ) | (956 | ) | (198 | ) | ||||
Earnings (loss) effect of economic hedges(a) | (200 | ) | (130 | ) | (315 | ) | (321 | ) |
(a) | Offset by the future earnings effects of economically hedged item. |
CARRYING AMOUNTS RELATED TO DERIVATIVES | ||||||
(In millions) | June 30, 2017 | December 31, 2016 | ||||
Derivative assets | $ | 4,077 | $ | 5,467 | ||
Derivative liabilities | (2,511 | ) | (4,883) | |||
Accrued interest | 484 | 792 | ||||
Cash collateral & credit valuation adjustment | (1,599 | ) | (672) | |||
Net Derivatives | 451 | 703 | ||||
Securities held as collateral | (432 | ) | (442) | |||
Net amount | $ | 19 | $ | 262 |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||||
(In millions) | Effect on hedging instrument | Effect on underlying | Effect on earnings | Effect on hedging instrument | Effect on underlying | Effect on earnings | ||||||||||||
2017 | ||||||||||||||||||
Cash flow hedges | $ | 34 | $ | (34 | ) | $ | — | $ | 56 | $ | (56 | ) | $ | — | ||||
Fair value hedges | (57 | ) | 2 | (56 | ) | (282 | ) | 164 | (118 | ) | ||||||||
Net investment hedges(a) | (487 | ) | 490 | 3 | (1,050 | ) | 1,063 | 13 | ||||||||||
Economic hedges(b) | 979 | (1,180 | ) | (200 | ) | 641 | (956 | ) | (315 | ) | ||||||||
Total | $ | (253 | ) | $ | (420 | ) | ||||||||||||
2016 | ||||||||||||||||||
Cash flow hedges | $ | 11 | $ | (12 | ) | $ | — | $ | (45 | ) | $ | 45 | $ | 1 | ||||
Fair value hedges | 888 | (933 | ) | (46 | ) | 2,610 | (2,688 | ) | (77 | ) | ||||||||
Net investment hedges(a) | (604 | ) | 609 | 5 | (2 | ) | 40 | 37 | ||||||||||
Economic hedges(b) | 157 | (286 | ) | (130 | ) | (122 | ) | (198 | ) | (321 | ) | |||||||
Total | $ | (171 | ) | $ | (360 | ) |
(a) | Both derivatives and non-derivatives hedging instruments are included. |
(b) | Net effect is substantially offset by the change in fair value of the hedged item that will affect earnings in future periods. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
ASSETS AND LIABILITIES OF CONSOLIDATED VIEs | ||||||||||||
GE Capital | ||||||||||||
(In millions) | GE | Customer Notes receivables(a) | Other | Total | ||||||||
June 30, 2017 | ||||||||||||
Assets | ||||||||||||
Financing receivables, net | $ | — | $ | — | $ | 881 | $ | 881 | ||||
Current receivables | 56 | 560 | — | 616 | ||||||||
Investment securities | — | — | 1,004 | 1,004 | ||||||||
Other assets | 587 | 1,320 | 2,101 | 4,008 | ||||||||
Total | $ | 643 | $ | 1,880 | $ | 3,986 | $ | 6,509 | ||||
Liabilities | ||||||||||||
Borrowings | $ | 38 | $ | — | $ | 1,134 | $ | 1,172 | ||||
Non-recourse borrowings | — | 667 | 16 | 683 | ||||||||
Other liabilities | 494 | 1,185 | 1,555 | 3,234 | ||||||||
Total | $ | 532 | $ | 1,852 | $ | 2,705 | $ | 5,089 | ||||
December 31, 2016 | ||||||||||||
Assets | ||||||||||||
Financing receivables, net | $ | — | $ | — | $ | 1,035 | $ | 1,035 | ||||
Current receivables | 57 | 670 | — | 727 | ||||||||
Investment securities | — | — | 982 | 982 | ||||||||
Other assets | 492 | 1,122 | 1,747 | 3,361 | ||||||||
Total | $ | 549 | $ | 1,792 | $ | 3,764 | $ | 6,105 | ||||
Liabilities | ||||||||||||
Borrowings | $ | 1 | $ | — | $ | 818 | $ | 819 | ||||
Non-recourse borrowings | — | 401 | 16 | 417 | ||||||||
Other liabilities | 457 | 1,378 | 1,482 | 3,317 | ||||||||
Total | $ | 458 | $ | 1,779 | $ | 2,316 | $ | 4,553 |
(a) | Two funding vehicles established to purchase customer notes receivable from GE, one of which is partially funded by third-party debt. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Six months ended June 30 | ||||||
(In millions) | 2017 | 2016 | ||||
Balance at January 1 | $ | 1,920 | $ | 1,723 | ||
Current-year provisions | 354 | 339 | ||||
Expenditures | (414 | ) | (343 | ) | ||
Other changes(a) | 109 | 113 | ||||
Balance as of June 30 | $ | 1,969 | $ | 1,832 |
ROLLFORWARD OF THE RESERVE | |||||||||||||||
Three months ended June 30 | Six months ended June 30 | ||||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Balance, beginning of period | $ | 626 | $ | 833 | $ | 626 | $ | 875 | |||||||
Provision | 10 | 27 | 10 | 84 | |||||||||||
Claim resolutions / rescissions | — | — | — | (99 | ) | ||||||||||
Balance, end of period | $ | 636 | $ | 860 | $ | 636 | $ | 860 |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
• | GE Capital dividends to GE, |
• | GE Capital working capital solutions to optimize GE cash management, |
• | GE Capital enabled GE industrial orders, and |
• | Aircraft engines, power equipment, renewable energy equipment and healthcare equipment manufactured by GE that are installed on GE Capital investments, including leased equipment. |
• | Expenses related to parent-subsidiary pension plans, |
• | Buildings and equipment leased between GE and GE Capital, including sale-leaseback transactions, |
• | Information technology (IT) and other services sold to GE Capital by GE |
• | Settlements of tax liabilities, and |
• | Various investments, loans and allocations of GE corporate overhead costs. |
Six months ended June 30 | ||||||
(In millions) | 2017 | 2016 | ||||
Cash from (used for) operating activities-continuing operations | ||||||
Combined | $ | 5,549 | $ | 11,207 | ||
GE current receivables sold to GE Capital | 1,598 | 1,313 | ||||
GE Capital dividends to GE | (4,016 | ) | (11,000 | ) | ||
Other reclassifications and eliminations(a) | 258 | 494 | ||||
Total cash from (used for) operating activities-continuing operations | $ | 3,389 | $ | 2,014 | ||
Cash from (used for) investing activities-continuing operations | ||||||
Combined | $ | 3,173 | $ | 39,495 | ||
GE current receivables sold to GE Capital | (1,760 | ) | (1,643 | ) | ||
GE Capital long-term loans to GE | 4,075 | — | ||||
GE Capital short-term loan to GE | (1,329 | ) | 5,002 | |||
Other reclassifications and eliminations(a) | (76 | ) | (441 | ) | ||
Total cash from (used for) investing activities-continuing operations | $ | 4,083 | $ | 42,414 | ||
Cash from (used for) financing activities-continuing operations | ||||||
Combined | $ | (13,339 | ) | $ | (69,038 | ) |
GE current receivables sold to GE Capital | 162 | 330 | ||||
GE Capital dividends to GE | 4,016 | 11,000 | ||||
GE Capital long-term loans to GE | (4,075 | ) | — | |||
GE Capital short-term loan to GE | 1,329 | (5,002 | ) | |||
Other reclassifications and eliminations(a) | (182 | ) | (52 | ) | ||
Total cash from (used for) financing activities-continuing operations | $ | (12,089 | ) | $ | (62,763 | ) |
(a) | Includes eliminations of other cash flows activities including those related to GE Capital enabled GE industrial orders, various investments, loans and allocations of GE corporate overhead costs. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
• | General Electric Company (the Parent Company Guarantor) - prepared with investments in subsidiaries accounted for under the equity method of accounting and excluding any inter-segment eliminations; |
• | GE Capital International Funding Company Unlimited Company (the Subsidiary Issuer) – finance subsidiary 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 |
• | 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 JUNE 30, 2017 (UNAUDITED) | ||||||||||||||||||
(in millions) | Parent Company Guarantor | Subsidiary Issuer | Subsidiary Guarantor | Non- Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||
Revenues and other income | ||||||||||||||||||
Sales of goods and services | $ | 8,080 | $ | — | $ | — | $ | 37,615 | $ | (18,456 | ) | $ | 27,239 | |||||
Other income | 27,632 | — | — | 28,005 | (55,339 | ) | 298 | |||||||||||
Equity in earnings (loss) of affiliates | (25,246 | ) | — | 450 | 13,982 | 10,813 | — | |||||||||||
GE Capital revenues from services | — | 173 | 188 | 2,589 | (928 | ) | 2,022 | |||||||||||
Total revenues and other income | 10,467 | 173 | 638 | 82,191 | (63,910 | ) | 29,558 | |||||||||||
Costs and expenses | ||||||||||||||||||
Interest and other financial charges | 767 | 159 | 489 | 1,221 | (1,463 | ) | 1,174 | |||||||||||
Other costs and expenses | 8,557 | — | 9 | 37,570 | (19,265 | ) | 26,870 | |||||||||||
Total costs and expenses | 9,324 | 159 | 497 | 38,791 | (20,728 | ) | 28,044 | |||||||||||
Earnings (loss) from continuing operations before income taxes | 1,143 | 14 | 141 | 43,400 | (43,183 | ) | 1,515 | |||||||||||
Benefit (provision) for income taxes | 370 | (2 | ) | — | (230 | ) | (154 | ) | (15 | ) | ||||||||
Earnings (loss) from continuing operations | 1,513 | 12 | 141 | 43,170 | (43,336 | ) | 1,499 | |||||||||||
Earnings (loss) from discontinued operations, net of taxes | (146 | ) | — | (5 | ) | 3 | 2 | (146 | ) | |||||||||
Net earnings (loss) | 1,367 | 12 | 136 | 43,172 | (43,334 | ) | 1,354 | |||||||||||
Less net earnings (loss) attributable to noncontrolling interests | — | — | — | 16 | (30 | ) | (14 | ) | ||||||||||
Net earnings (loss) attributable to the Company | 1,367 | 12 | 136 | 43,156 | (43,304 | ) | 1,367 | |||||||||||
Other comprehensive income (loss) | 1,317 | — | 32 | (25,537 | ) | 25,505 | 1,317 | |||||||||||
Comprehensive income (loss) attributable to the Company | $ | 2,685 | $ | 12 | $ | 168 | $ | 17,619 | $ | (17,799 | ) | $ | 2,685 |
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||
FOR THE THREE MONTHS ENDED JUNE 30, 2016 (UNAUDITED) | ||||||||||||||||||
(in millions) | Parent Company Guarantor | Subsidiary Issuer | Subsidiary Guarantor | Non- Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||
Revenues and other income | ||||||||||||||||||
Sales of goods and services | $ | 10,664 | $ | — | $ | — | $ | 38,202 | $ | (20,838 | ) | $ | 28,028 | |||||
Other income | (264 | ) | — | — | 16,043 | (12,629 | ) | 3,150 | ||||||||||
Equity in earnings (loss) of affiliates | 5,228 | — | (5 | ) | 15,305 | (20,528 | ) | 0 | ||||||||||
GE Capital revenues from services | 0 | 200 | 722 | 1,760 | (365 | ) | 2,316 | |||||||||||
Total revenues and other income | 15,628 | 200 | 717 | 71,310 | (54,359 | ) | 33,494 | |||||||||||
Costs and expenses | ||||||||||||||||||
Interest and other financial charges | 851 | 175 | 677 | 1,412 | (1,790 | ) | 1,326 | |||||||||||
Other costs and expenses | 11,601 | — | 19 | 38,786 | (22,062 | ) | 28,344 | |||||||||||
Total costs and expenses | 12,453 | 175 | 695 | 40,198 | (23,852 | ) | 29,670 | |||||||||||
Earnings (loss) from continuing operations before income taxes | 3,175 | 25 | 21 | 31,111 | (30,508 | ) | 3,824 | |||||||||||
Benefit (provision) for income taxes | 312 | (3 | ) | (43 | ) | (473 | ) | (254 | ) | (461 | ) | |||||||
Earnings (loss) from continuing operations | 3,486 | 22 | (22 | ) | 30,639 | (30,762 | ) | 3,363 | ||||||||||
Earnings (loss) from discontinued operations, net of taxes | (541 | ) | — | (521 | ) | 600 | (80 | ) | (541 | ) | ||||||||
Net earnings (loss) | 2,946 | 22 | (542 | ) | 31,239 | (30,841 | ) | 2,823 | ||||||||||
Less net earnings (loss) attributable to noncontrolling interests | — | — | — | (66 | ) | (20 | ) | (86 | ) | |||||||||
Net earnings (loss) attributable to the Company | 2,946 | 22 | (542 | ) | 31,305 | (30,822 | ) | 2,908 | ||||||||||
Other comprehensive income (loss) | 807 | — | 246 | 579 | (825 | ) | 807 | |||||||||||
Comprehensive income (loss) attributable to the Company | $ | 3,753 | $ | 22 | $ | (297 | ) | $ | 31,884 | $ | (31,646 | ) | $ | 3,715 |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2017 (UNAUDITED) | ||||||||||||||||||
(in millions) | Parent Company Guarantor | Subsidiary Issuer | Subsidiary Guarantor | Non- Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||
Revenues and other income | ||||||||||||||||||
Sales of goods and services | $ | 16,872 | $ | — | $ | — | $ | 73,705 | $ | (38,110 | ) | $ | 52,467 | |||||
Other income | 27,686 | — | — | 32,625 | (59,845 | ) | 465 | |||||||||||
Equity in earnings (loss) of affiliates | (22,802 | ) | — | 692 | 50,664 | (28,555 | ) | — | ||||||||||
GE Capital revenues from services | — | 329 | 374 | 4,859 | (1,275 | ) | 4,286 | |||||||||||
Total revenues and other income | 21,756 | 329 | 1,066 | 161,853 | (127,786 | ) | 57,219 | |||||||||||
Costs and expenses | ||||||||||||||||||
Interest and other financial charges | 1,677 | 309 | 943 | 2,303 | (2,920 | ) | 2,313 | |||||||||||
Other costs and expenses | 18,186 | — | 22 | 73,511 | (39,159 | ) | 52,560 | |||||||||||
Total costs and expenses | 19,862 | 309 | 965 | 75,814 | (42,078 | ) | 54,872 | |||||||||||
Earnings (loss) from continuing operations before income taxes | 1,894 | 20 | 101 | 86,039 | (85,707 | ) | 2,346 | |||||||||||
Benefit (provision) for income taxes | 514 | (2 | ) | 115 | (699 | ) | 41 | (31 | ) | |||||||||
Earnings (loss) from continuing operations | 2,408 | 17 | 215 | 85,341 | (85,666 | ) | 2,315 | |||||||||||
Earnings (loss) from discontinued operations, net of taxes | (388 | ) | — | 278 | 3 | (278 | ) | (385 | ) | |||||||||
Net earnings (loss) | 2,020 | 17 | 493 | 85,344 | (85,944 | ) | 1,931 | |||||||||||
Less net earnings (loss) attributable to noncontrolling interests | — | — | — | (32 | ) | (57 | ) | (90 | ) | |||||||||
Net earnings (loss) attributable to the Company | 2,020 | 17 | 493 | 85,376 | (85,887 | ) | 2,020 | |||||||||||
Other comprehensive income (loss) | 3,144 | — | 649 | (26,994 | ) | 26,345 | 3,144 | |||||||||||
Comprehensive income (loss) attributable to the Company | $ | 5,164 | $ | 17 | $ | 1,142 | $ | 58,382 | $ | (59,542 | ) | $ | 5,164 |
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2016 (UNAUDITED) | ||||||||||||||||||
(in millions) | Parent Company Guarantor | Subsidiary Issuer | Subsidiary Guarantor | Non- Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||
Revenues and other income | ||||||||||||||||||
Sales of goods and services | $ | 20,676 | $ | — | $ | — | $ | 71,961 | $ | (39,295 | ) | $ | 53,342 | |||||
Other income | (38 | ) | — | — | 19,484 | (16,288 | ) | 3,158 | ||||||||||
Equity in earnings (loss) of affiliates | 6,135 | — | 665 | 28,928 | (35,728 | ) | 0 | |||||||||||
GE Capital revenues from services | 0 | 596 | 1,019 | 6,344 | (3,121 | ) | 4,838 | |||||||||||
Total revenues and other income | 26,774 | 596 | 1,683 | 126,717 | (94,431 | ) | 61,339 | |||||||||||
Costs and expenses | ||||||||||||||||||
Interest and other financial charges | 1,662 | 547 | 1,608 | 3,171 | (3,927 | ) | 3,062 | |||||||||||
Other costs and expenses | 22,057 | — | 55 | 74,624 | (42,522 | ) | 54,214 | |||||||||||
Total costs and expenses | 23,719 | 548 | 1,663 | 77,795 | (46,449 | ) | 57,276 | |||||||||||
Earnings (loss) from continuing operations before income taxes | 3,055 | 48 | 20 | 48,922 | (47,983 | ) | 4,063 | |||||||||||
Benefit (provision) for income taxes | 931 | (6 | ) | (46 | ) | (958 | ) | (205 | ) | (284 | ) | |||||||
Earnings (loss) from continuing operations | 3,986 | 42 | (26 | ) | 47,964 | (48,187 | ) | 3,779 | ||||||||||
Earnings (loss) from discontinued operations, net of taxes | (849 | ) | — | (996 | ) | 174 | 821 | (849 | ) | |||||||||
Net earnings (loss) | 3,137 | 42 | (1,022 | ) | 48,138 | (47,366 | ) | 2,930 | ||||||||||
Less net earnings (loss) attributable to noncontrolling interests | — | — | — | (91 | ) | (116 | ) | (207 | ) | |||||||||
Net earnings (loss) attributable to the Company | 3,137 | 42 | (1,022 | ) | 48,230 | (47,250 | ) | 3,137 | ||||||||||
Other comprehensive income (loss) | 1,631 | (12 | ) | 63 | 847 | (898 | ) | 1,631 | ||||||||||
Comprehensive income (loss) attributable to the Company | $ | 4,767 | $ | 30 | $ | (958 | ) | $ | 49,076 | $ | (48,148 | ) | $ | 4,767 |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
CONDENSED CONSOLIDATING STATEMENT OF FINANCIAL POSITION | ||||||||||||||||||
JUNE 30, 2017 (UNAUDITED) | ||||||||||||||||||
(In millions) | Parent Company Guarantor | Subsidiary Issuer | Subsidiary Guarantor | Non- Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||
Assets | ||||||||||||||||||
Cash and equivalents | $ | 4,420 | $ | — | $ | 3 | $ | 40,174 | $ | (547 | ) | $ | 44,049 | |||||
Investment securities | 1 | — | — | 42,065 | (2,098 | ) | 39,968 | |||||||||||
Receivables - net | 54,549 | 17,233 | 31,020 | 80,421 | (143,470 | ) | 39,753 | |||||||||||
Inventories | 5,265 | — | — | 22,111 | (4,533 | ) | 22,843 | |||||||||||
Property, plant and equipment - net | 5,891 | — | — | 46,284 | (2,007 | ) | 50,167 | |||||||||||
Investment in subsidiaries(a) | 284,471 | — | 80,491 | 472,477 | (837,439 | ) | 0 | |||||||||||
Goodwill and intangible assets | 7,207 | — | — | 50,518 | 31,539 | 89,264 | ||||||||||||
All other assets | 15,238 | 44 | 79 | 205,041 | (158,823 | ) | 61,579 | |||||||||||
Assets of discontinued operations | — | — | — | — | 7,850 | 7,850 | ||||||||||||
Total assets | $ | 377,041 | $ | 17,278 | $ | 111,593 | $ | 959,089 | $ | (1,109,528 | ) | $ | 355,473 | |||||
Liabilities and equity | ||||||||||||||||||
Short-term borrowings | $ | 177,190 | $ | — | $ | 45,994 | $ | 25,300 | $ | (218,441 | ) | $ | 30,044 | |||||
Accounts payable | (1,380 | ) | — | — | 56,038 | (41,375 | ) | 13,283 | ||||||||||
Other current liabilities | 11,732 | 34 | 3 | 24,489 | (251 | ) | 36,007 | |||||||||||
Long-term and non-recourse borrowings | 71,784 | 16,703 | 34,601 | 53,234 | (71,963 | ) | 104,359 | |||||||||||
All other liabilities | 43,567 | 352 | 279 | 55,363 | (7,667 | ) | 91,894 | |||||||||||
Liabilities of discontinued operations | — | — | — | — | 911 | 911 | ||||||||||||
Total Liabilities | 302,893 | 17,089 | 80,878 | 214,424 | (338,786 | ) | 276,498 | |||||||||||
Redeemable noncontrolling interests | — | — | — | 2,433 | 760 | 3,193 | ||||||||||||
GE shareowners' equity | 74,148 | 189 | 30,716 | 740,746 | (771,651 | ) | 74,148 | |||||||||||
Noncontrolling interests | — | — | — | 1,486 | 148 | 1,634 | ||||||||||||
Total equity | 74,148 | 189 | 30,716 | 742,232 | (771,503 | ) | 75,783 | |||||||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 377,041 | $ | 17,278 | $ | 111,593 | $ | 959,089 | $ | (1,109,528 | ) | $ | 355,473 |
(a) | Included within the subsidiaries of the Subsidiary Guarantor are cash and cash equivalent balances of $21,419 million and net assets of discontinued operations of $3,711 million. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
CONDENSED CONSOLIDATING STATEMENT OF FINANCIAL POSITION | ||||||||||||||||||
DECEMBER 31, 2016 | ||||||||||||||||||
(In millions) | Parent Company Guarantor | Subsidiary Issuer | Subsidiary Guarantor | Non- Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||
Assets | ||||||||||||||||||
Cash and equivalents | $ | 2,558 | $ | — | $ | 3 | $ | 46,994 | $ | (1,426 | ) | $ | 48,129 | |||||
Investment securities | 1 | — | — | 47,394 | (3,082 | ) | 44,313 | |||||||||||
Receivables - net | 63,620 | 17,157 | 30,470 | 79,401 | (148,385 | ) | 42,263 | |||||||||||
Inventories | 4,654 | — | — | 21,076 | (3,377 | ) | 22,354 | |||||||||||
Property, plant and equipment - net | 5,768 | — | — | 46,366 | (1,615 | ) | 50,518 | |||||||||||
Investment in subsidiaries(a) | 272,685 | — | 80,481 | 492,674 | (845,840 | ) | — | |||||||||||
Goodwill and intangible assets | 8,128 | — | — | 42,074 | 36,673 | 86,875 | ||||||||||||
All other assets | 14,692 | 44 | 39 | 201,276 | (160,134 | ) | 55,917 | |||||||||||
Assets of discontinued operations | — | — | — | — | 14,815 | 14,815 | ||||||||||||
Total assets | $ | 372,107 | $ | 17,202 | $ | 110,992 | $ | 977,255 | $ | (1,112,372 | ) | $ | 365,183 | |||||
Liabilities and equity | ||||||||||||||||||
Short-term borrowings | $ | 167,089 | $ | 1 | $ | 46,432 | $ | 25,919 | $ | (208,727 | ) | $ | 30,714 | |||||
Accounts payable | 5,412 | — | — | 47,366 | (38,343 | ) | 14,435 | |||||||||||
Other current liabilities | 11,072 | 33 | 117 | 25,095 | 114 | 36,431 | ||||||||||||
Long-term and non-recourse borrowings | 68,983 | 16,486 | 34,389 | 68,912 | (83,273 | ) | 105,496 | |||||||||||
All other liabilities | 43,722 | 511 | 481 | 58,376 | (9,656 | ) | 93,434 | |||||||||||
Liabilities of discontinued operations | — | — | — | — | 4,158 | 4,158 | ||||||||||||
Total Liabilities | 296,279 | 17,030 | 81,419 | 225,667 | (335,727 | ) | 284,668 | |||||||||||
Redeemable noncontrolling interests | — | — | — | 2,223 | 802 | 3,025 | ||||||||||||
GE shareowners' equity | 75,828 | 171 | 29,573 | 747,719 | (777,463 | ) | 75,828 | |||||||||||
Noncontrolling interests | — | — | — | 1,647 | 16 | 1,663 | ||||||||||||
Total equity | 75,828 | 171 | 29,573 | 749,366 | (777,447 | ) | 77,491 | |||||||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 372,107 | $ | 17,202 | $ | 110,992 | $ | 977,255 | $ | (1,112,372 | ) | $ | 365,183 |
(a) | Included within the subsidiaries of the Subsidiary Guarantor are cash and cash equivalent balances of $28,516 million and net assets of discontinued operations of $6,012 million. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS | ||||||||||||||||||
SIX MONTHS ENDED JUNE 30, 2017 (UNAUDITED) | ||||||||||||||||||
(In millions) | Parent Company Guarantor | Subsidiary Issuer | Subsidiary Guarantor | Non- Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||
Cash flows – operating activities | ||||||||||||||||||
Cash from (used for) operating activities - continuing operations | $ | 12,674 | $ | 25 | $ | 225 | $ | 113,799 | $ | (123,335 | ) | $ | 3,389 | |||||
Cash from (used for) operating activities - discontinued operations | (388 | ) | — | — | (507 | ) | — | (895 | ) | |||||||||
Cash from (used for) operating activities | 12,286 | 25 | 225 | 113,292 | (123,335 | ) | 2,494 | |||||||||||
Cash flows – investing activities | ||||||||||||||||||
Cash from (used for) investing activities – continuing operations | (26,871 | ) | (25 | ) | 608 | (60,997 | ) | 91,369 | 4,083 | |||||||||
Cash from (used for) investing activities – discontinued operations | — | — | — | (1,922 | ) | — | (1,922 | ) | ||||||||||
Cash from (used for) investing activities | (26,871 | ) | (25 | ) | 608 | (62,919 | ) | 91,369 | 2,161 | |||||||||
Cash flows – financing activities | ||||||||||||||||||
Cash from (used for) financing activities – continuing operations | 16,446 | — | (833 | ) | (60,547 | ) | 32,845 | (12,089 | ) | |||||||||
Cash from (used for) financing activities – discontinued operations | — | — | — | 1,909 | — | 1,909 | ||||||||||||
Cash from (used for) financing activities | 16,446 | — | (833 | ) | (58,639 | ) | 32,845 | (10,181 | ) | |||||||||
Effect of currency exchange rate changes on cash and equivalents | — | — | — | 538 | — | 538 | ||||||||||||
Increase (decrease) in cash and equivalents | 1,861 | — | — | (7,728 | ) | 879 | (4,988 | ) | ||||||||||
Cash and equivalents at beginning of year | 2,558 | — | 3 | 48,423 | (1,426 | ) | 49,558 | |||||||||||
Cash and equivalents at June 30 | 4,420 | — | 3 | 40,696 | (547 | ) | 44,571 | |||||||||||
Less cash and equivalents of discontinued operations at June 30 | — | — | — | 522 | — | 522 | ||||||||||||
Cash and equivalents of continuing operations at June 30 | $ | 4,420 | $ | — | $ | 3 | $ | 40,174 | $ | (547 | ) | $ | 44,049 |
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS | ||||||||||||||||||
SIX MONTHS ENDED JUNE 30, 2016 (UNAUDITED) | ||||||||||||||||||
(In millions) | Parent Company Guarantor | Subsidiary Issuer | Subsidiary Guarantor | Non- Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | ||||||||||||
Cash flows – operating activities | ||||||||||||||||||
Cash from (used for) operating activities - continuing operations | $ | (21,014 | ) | $ | 182 | $ | 1,032 | $ | 10,275 | $ | 11,539 | $ | 2,014 | |||||
Cash from (used for) operating activities - discontinued operations | (849 | ) | — | (996 | ) | (3,826 | ) | 821 | (4,849 | ) | ||||||||
Cash from (used for) operating activities | (21,863 | ) | 182 | 37 | 6,449 | 12,361 | (2,835 | ) | ||||||||||
Cash flows – investing activities | ||||||||||||||||||
Cash from (used for) investing activities – continuing operations | 17,416 | 16,084 | 7,995 | 97,631 | (96,712 | ) | 42,414 | |||||||||||
Cash from (used for) investing activities – discontinued operations | — | — | — | (10,646 | ) | — | (10,646 | ) | ||||||||||
Cash from (used for) investing activities | 17,416 | 16,084 | 7,995 | 86,985 | (96,712 | ) | 31,768 | |||||||||||
Cash flows – financing activities | ||||||||||||||||||
Cash from (used for) financing activities – continuing operations | 3,174 | (16,265 | ) | (7,995 | ) | (142,451 | ) | 100,775 | (62,763 | ) | ||||||||
Cash from (used for) financing activities – discontinued operations | — | — | — | (711 | ) | — | (711 | ) | ||||||||||
Cash from (used for) financing activities | 3,174 | (16,265 | ) | (7,995 | ) | (143,162 | ) | 100,775 | (63,474 | ) | ||||||||
Effect of currency exchange rate changes on cash and equivalents | — | — | — | (24 | ) | — | (24 | ) | ||||||||||
Increase (decrease) in cash and equivalents | (1,274 | ) | — | 37 | (49,752 | ) | 16,424 | (34,565 | ) | |||||||||
Cash and equivalents at beginning of year | 4,137 | — | — | 107,350 | (20,609 | ) | 90,878 | |||||||||||
Cash and equivalents at June 30 | 2,863 | — | 37 | 57,598 | (4,185 | ) | 56,313 | |||||||||||
Less cash and equivalents of discontinued operations at June 30 | — | — | — | 4,190 | — | 4,190 | ||||||||||||
Cash and equivalents of continuing operations at June 30 | $ | 2,863 | $ | — | $ | 37 | $ | 53,408 | $ | (4,185 | ) | $ | 52,123 |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Six months ended June 30 | ||||||
(In millions) | 2017 | 2016 | ||||
GE | ||||||
All other operating activities | ||||||
(Gains) losses on purchases and sales of business interests | $ | (42 | ) | $ | (3,140 | ) |
Contract assets (net)(a) | (3,202 | ) | (2,431 | ) | ||
Income taxes(b) | (709 | ) | (1,184 | ) | ||
Interest charges(c) | 353 | 182 | ||||
Principal pension plans(d) | 1,542 | 1,680 | ||||
Other | (1,122 | ) | (114 | ) | ||
$ | (3,180 | ) | $ | (5,007 | ) | |
Net dispositions (purchases) of GE shares for treasury | ||||||
Open market purchases under share repurchase program | $ | (3,344 | ) | $ | (14,244 | ) |
Other purchases | — | (776 | ) | |||
Dispositions | 612 | 726 | ||||
$ | (2,732 | ) | $ | (14,292 | ) |
(a) | Contract assets are presented net of related billings in excess of revenues on our long-term product service agreements. See Note 9. |
(b) | Reflected the effects of current tax expense (benefit) of $583 million and $500 million and net cash paid during the year for income taxes of $(1,292) million and $(1,684) million for the six months ended June 30, 2017 and 2016, respectively. Cash flows effects of deferred tax provisions (benefits) are shown separately within cash flows from operating activities. |
(c) | Reflected the effects of interest expense of $1,200 million and $1,007 million and cash paid for interest of $(848) million and $(825) million for the six months ended June 30, 2017 and 2016, respectively. |
(d) | Reflected the effects of pension costs of $1,869 million and $1,780 million and employer contributions of $(327) million and $(100) million for the six months ended June 30, 2017 and 2016, respectively. See Note 12. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
FAIR VALUE OF DERIVATIVES | |||||||||||||
June 30, 2017 | December 31, 2016 | ||||||||||||
(In millions) | Assets | Liabilities | Assets | Liabilities | |||||||||
Derivatives accounted for as hedges | |||||||||||||
Interest rate contracts | $ | 2,728 | $ | 109 | $ | 3,106 | $ | 210 | |||||
Currency exchange contracts | 62 | 160 | 402 | 624 | |||||||||
Other contracts | — | — | — | — | |||||||||
2,790 | 269 | 3,508 | 834 | ||||||||||
Derivatives not accounted for as hedges | |||||||||||||
Interest rate contracts | 58 | 10 | 62 | 20 | |||||||||
Currency exchange contracts | 1,132 | 2,199 | 1,778 | 4,011 | |||||||||
Other contracts | 97 | 34 | 119 | 17 | |||||||||
1,287 | 2,242 | 1,958 | 4,048 | ||||||||||
Gross derivatives recognized in statement of financial position | |||||||||||||
Gross derivatives | 4,077 | 2,511 | 5,467 | 4,883 | |||||||||
Gross accrued interest | 470 | (13 | ) | 768 | (24 | ) | |||||||
4,547 | 2,497 | 6,234 | 4,859 | ||||||||||
Amounts offset in statement of financial position | |||||||||||||
Netting adjustments(a) | (1,606 | ) | (1,605 | ) | (3,097 | ) | (3,094 | ) | |||||
Cash collateral(b) | (2,059 | ) | (462 | ) | (2,025 | ) | (1,355 | ) | |||||
(3,665 | ) | (2,066 | ) | (5,121 | ) | (4,449 | ) | ||||||
Net derivatives recognized in statement of financial position | |||||||||||||
Net derivatives | 882 | 431 | 1,113 | 410 | |||||||||
Amounts not offset in statement of financial position | |||||||||||||
Securities held as collateral(c) | (432 | ) | — | (442 | ) | — | |||||||
Net amount | $ | 450 | $ | 431 | $ | 671 | $ | 410 |
(a) | The netting of derivative receivables and payables is permitted when a legally enforceable master netting agreement exists. Amounts include fair value adjustments related to our own and counterparty non-performance risk. At June 30, 2017 and December 31, 2016, the cumulative adjustment for non-performance risk was $(1) million and $(3) million, respectively. |
(b) | Excluded excess cash collateral received and posted of $284 million and $142 million at June 30, 2017, respectively, and $6 million and $177 million at December 31, 2016, respectively. |
(c) | Excluded excess securities collateral received of $68 million and zero at June 30, 2017 and December 31, 2016, respectively. |
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
CASH FLOW HEDGE ACTIVITY | |||||||||||||
Gain (loss) recognized in AOCI | Gain (loss) reclassified from AOCI into earnings | ||||||||||||
for the three months ended June 30 | for the three months ended June 30 | ||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||
Interest rate contracts | $ | 3 | $ | 12 | $ | (6 | ) | $ | (26 | ) | |||
Currency exchange contracts | 32 | 1 | 71 | 40 | |||||||||
Commodity contracts | (2 | ) | (1 | ) | — | (1 | ) | ||||||
Total(a) | $ | 34 | $ | 12 | $ | 65 | $ | 14 |
CASH FLOW HEDGE ACTIVITY | |||||||||||||
Gain (loss) recognized in AOCI | Gain (loss) reclassified from AOCI into earnings | ||||||||||||
for the six months ended June 30 | for the six months ended June 30 | ||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||
Interest rate contracts | $ | 2 | $ | 31 | $ | (15 | ) | $ | (55 | ) | |||
Currency exchange contracts | 54 | (77 | ) | 79 | (13 | ) | |||||||
Commodity contracts | — | — | — | (3 | ) | ||||||||
Total(a) | $ | 56 | $ | (45 | ) | $ | 64 | $ | (71 | ) |
(a) | Gain (loss) is recorded in "GE Capital revenues from services", "Interest and other financial charges", and "Other costs and expenses" in our Statement of Earnings when reclassified. |
OTHER ITEMS |
Exhibit 3.1 | ||
Exhibit 11 Exhibit 12(a) Exhibit 12(b) | Computation of Per Share Earnings.* Computation of Ratio of Earnings to Fixed Charges. Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. | |
Exhibit 31(a) | Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended. | |
Exhibit 31(b) | Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended. | |
Exhibit 32 | Certification Pursuant to 18 U.S.C. Section 1350. | |
Exhibit 101 | The following materials from General Electric Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language); (i) Statement of Earnings (Loss) for the three and six months ended June 30, 2017 and 2016, (ii) Consolidated Statement of Comprehensive Income (Loss) for the three and six months ended June 30, 2017 and 2016, (iii) Consolidated Statement of Changes in Shareowners’ Equity for the six months ended June 30, 2017 and 2016, (iv) Statement of Financial Position at June 30, 2017 and December 31, 2016, (v) Statement of Cash Flows for the six months ended June 30, 2017 and 2016, and (vi) Notes to Consolidated Financial Statements. | |
* | Data required by Financial Accounting Standards Board Accounting Standards Codification 260, Earnings Per Share, is provided in Note 15 to the Consolidated Financial Statements in this Report. |
OTHER ITEMS |
Item Number | Page(s) | |||
Part I – FINANCIAL INFORMATION | ||||
Item 1. | Financial Statements | 59-104 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4-54 | ||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | Not applicable(a) | ||
Item 4. | Controls and Procedures | 55 | ||
Part II – OTHER INFORMATION | ||||
Item 1. | Legal Proceedings | 57-58 | ||
Item 1A. | Risk Factors | Not applicable(b) | ||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 56 | ||
Item 3. | Defaults Upon Senior Securities | Not applicable | ||
Item 4. | Mine Safety Disclosures | Not applicable | ||
Item 5. | Other Information | Not applicable | ||
Item 6. | Exhibits | 105 | ||
Signatures | 107 |
(a) | There have been no significant changes to our market risk since December 31, 2016. For a discussion of our exposure to market risk, refer to our Annual Report on Form 10-K for the year ended December 31, 2016. |
(b) | There have been no significant changes to our risk factors since December 31, 2016. For a discussion of our risk factors, refer to our Annual Report on Form 10-K for the year ended December 31, 2016. |
General Electric Company (Registrant) | ||
July 28, 2017 | /s/ Jan R. Hauser | |
Date | Jan R. Hauser Vice President and Controller Duly Authorized Officer and Principal Accounting Officer |